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(Mark One) | ||
þ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the fiscal year ended December 31, 2004 | ||
OR | ||
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 13-1024020 | |
(State of Incorporation) | (I.R.S. Employer Identification No.) |
Title of Each Class | Name of Each Exchange on Which Registered | |
Common Stock, $0.10 par value | New York Stock Exchange | |
Series A Mandatory Convertible Preferred Stock, no par value | New York Stock Exchange |
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 the filing requirements for at least the past 90 days. | Yes o No þ |
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. | o |
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). | Yes þ Noo |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). | Yes o No þ |
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• | We have corrected our presentation of the restatement to recognize a tax benefit in periods prior to 2000 and a tax provision in 2001 attributable to restatement adjustments related to revenue recognition for customer contracts. These changes appear on pages 15 and 16 in Item 6 and pages 61-63, 65, 75, 78 and 83 in Item 7. These changes do not affect the cumulative impact of the restatement or our Consolidated Financial Statements for any period subsequent to December 31, 2001. We do not believe that the change is material to the 2001 financial statements. | |
• | In our presentation of the effects of restatement adjustments on income statement and balance sheet accounts for full year and quarterly periods, we have corrected the allocation of tax effects between the “Other Adjustments” category and the other restatement categories in the tables. These changes appear on pages 62-65, 70, and 73-75 in Item 7 and on pages 121-123, 127, 128, 132, 134, and 201-204 in Item 8. These changes do not affect the cumulative impact of the restatement of our Consolidated Financial Statements and had no impact on any year in the 2000 to 2004 periods. | |
• | We have also corrected for miscellaneous typographical errors. |
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• | risks arising from material weaknesses in our internal control over financial reporting, including material weaknesses in our control environment; | |
• | potential adverse effects to our financial condition, results of operations or prospects as a result of our restatement of prior period financial statements; | |
• | risks associated with our inability to satisfy covenants under our syndicated credit facilities; | |
• | our ability to satisfy certain reporting covenants under our indentures; | |
• | our ability to attract new clients and retain existing clients; | |
• | our ability to retain and attract key employees; | |
• | potential adverse effects if we are required to recognize additional impairment charges or other adverse accounting-related developments; | |
• | potential adverse developments in connection with the ongoing SEC investigation; | |
• | potential downgrades in the credit ratings of our securities; | |
• | risks associated with the effects of global, national and regional economic and political conditions, including with respect to fluctuations in interest rates and currency exchange rates; and | |
• | developments from changes in the regulatory and legal environment for advertising and marketing services companies around the world. |
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• | Item 6, Selected Financial Data, contains restated financial results; | |
• | Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, contains restated financial results, the reconciliation of restated amounts to previously released financial information, and an in depth discussion of each category of adjustment recorded; | |
• | Item 8, Financial Statements and Supplementary Data, Note 2, Restatement of Previously Issued Financial Statements, presents restated financial results, the reconciliation of restated amounts to previously released financial information, and an in-depth discussion of each category of adjustment recorded; | |
• | Item 8, Financial Statements and Supplementary Data, Note 20, Results by Quarter, presents restated financial results and the reconciliation of restated amounts to previously released financial information; | |
• | Item 8, Management’s Assessment on Internal Control Over Financial Reporting; and | |
• | Item 9A, Controls and Procedures. |
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Item 1. | Business |
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• | McCann Erickson Worldwide | |
• | Foote Cone & Belding Worldwide | |
• | Lowe Worldwide |
• | Campbell-Ewald | |
• | Carmichael Lynch | |
• | Deutsch | |
• | Hill Holliday | |
• | The Martin Agency | |
• | Springer & Jacoby |
• | Austin Kelley | |
• | Avrett Free & Ginsberg | |
• | Campbell Mithun | |
• | Dailey & Associates | |
• | Gillespie | |
• | Gotham | |
• | Jay Advertising | |
• | Mullen | |
• | Tierney Communications | |
• | TM Advertising |
• | Draft Worldwide | |
• | MRM Partners Worldwide | |
• | The Hacker Group |
• | R/ GA | |
• | FCBi | |
• | Zentropy |
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• | Initiative | |
• | MAGNA Global | |
• | Universal McCann |
• | Marketing Drive | |
• | Momentum | |
• | The Properties Group | |
• | Zipatoni |
• | DeVries Public Relations | |
• | Golin Harris | |
• | MWW Group | |
• | Weber Shandwick |
• | Marketing Accountability Practice (marketing accountability/ ROI) | |
• | frank about women | |
• | KidCom (youth marketing) | |
• | NAS (recruitment) | |
• | Newspaper Services of America (newspaper services) | |
• | OSI (outdoor advertising) | |
• | Wahlstrom Group (yellowpages) | |
• | Women2Women Communications |
• | Bragman Nyman Cafarelli | |
• | Octagon | |
• | PMK/ HBH | |
• | Rogers & Cowan |
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• | Accent Marketing (Hispanic) | |
• | Casanova Pendrill (Hispanic) | |
• | GlobalHue (diverse segments) | |
• | IW Group (Asian-Pacific-American) | |
• | SiboneyUSA (Hispanic) | |
• | Ten Communications (Asian-American) |
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• | We have restated our previously issued financial statements. |
• | We have numerous material weaknesses in our internal control over financial reporting. |
• | We have extensive work remaining to remedy the material weaknesses in our internal control over financial reporting. |
• | Until our auditor can provide us with an opinion on management’s assessment and on the effectiveness of our internal control over financial reporting, we will continue to suffer certain adverse consequences under the federal securities laws. |
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• | We face substantial ongoing costs associated with complying with the requirements of Section 404 of the Sarbanes-Oxley Act. |
• | Ongoing SEC investigations regarding our accounting restatements could adversely affect us. |
• | We operate in a highly competitive industry. |
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• | We may lose or fail to attract and retain key employees and management personnel. |
• | As a marketing services company, our revenues are highly susceptible to declines as a result of unfavorable economic conditions. |
• | Our liquidity profile has recently been adversely affected. |
• | Downgrades of our credit ratings could adversely affect us. |
• | International business risks could adversely affect our operations. |
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• | In 2004 and prior years, we recognized substantial impairment charges and increased our deferred tax valuation allowances, and we may be required to record additional charges in the future related to these matters. |
• | We are subject to certain restrictions and must meet certain minimum financial covenants under our Revolving Credit Facility. |
• | We may not be able to meet our performance targets and milestones. |
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• | We are subject to regulations that could restrict our activities or negatively impact our revenues. |
Item 2. | Properties |
Item 3. | Legal Proceedings |
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Item 4. | Submission of Matters to a Vote of Security Holders |
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Item 5. | Market for Registrant’s Common Equity and Related Stockholder Matters |
NYSE Sale Price | |||||||||
Period | High | Low | |||||||
2005: | |||||||||
Second Quarter | $ | 13.28 | $ | 12.11 | |||||
First Quarter | $ | 13.68 | $ | 11.50 | |||||
2004: | |||||||||
Fourth Quarter | $ | 13.50 | $ | 10.95 | |||||
Third Quarter | $ | 13.62 | $ | 10.51 | |||||
Second Quarter | $ | 16.43 | $ | 13.73 | |||||
First Quarter | $ | 17.19 | $ | 14.86 | |||||
2003: | |||||||||
Fourth Quarter | $ | 16.41 | $ | 13.55 | |||||
Third Quarter | $ | 15.44 | $ | 12.94 | |||||
Second Quarter | $ | 14.55 | $ | 9.30 | |||||
First Quarter | $ | 15.38 | $ | 8.01 |
Mellon Investor Services, Inc. |
• | On November 22, 2004, we issued 29,015 shares of our common stock to a shareholder of a company in connection with the purchase of 49% of the common stock of such company in the fourth quarter of 1999. The shares of our common stock had a market value of $351,114 as of the |
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date of issuance and were issued without registration in reliance on Section 4(2) under the Securities Act, based on the status of the shareholder as an accredited investor. | ||
• | On October 26, 2004, we issued 296,928 shares of our common stock to four former shareholders of a company as a final deferred payment for 100% of the shares of the company, which we acquired in the third quarter of 2000. The shares of our common stock were valued at $3,327,389 as of the date of issuance and were issued without registration in reliance on Regulation S under the Securities Act. | |
• | On October 19, 2004, we issued 115,838 shares of our common stock, and on November 18, 2004 we issued 242,713 shares of our common stock, to four former shareholders of a company for shares we acquired in the first quarter of 1997 and in the second quarter of 2004. The shares of our common stock were valued at $1,742,671 and $2,698,491, as of their respective dates of issuance, and were issued without registration in reliance on Regulation S under the Securities Act. |
Maximum | ||||||||||||||||
Number | ||||||||||||||||
of Shares | ||||||||||||||||
Average | Total Number of Shares | that May Yet Be | ||||||||||||||
Total Number | Price | Purchased as Part of | Purchased | |||||||||||||
of Shares | Paid per | Publicly Announced | Under the Plans | |||||||||||||
Purchased | Share(2) | Plans or Programs | or Programs | |||||||||||||
October 1-31 | 10,285 | $ | 11.34 | — | — | |||||||||||
November 1-30 | 2,461 | $ | 12.22 | — | — | |||||||||||
December 1-31 | 9,657 | $ | 12.97 | — | — | |||||||||||
Total(1) | 22,403 | $ | 12.14 | — | — |
(1) | Consists of restricted shares of our common stock withheld under the terms of grants under employee stock compensation plans to offset tax withholding obligations that occurred upon vesting and release of restricted shares (the “Withheld Shares”). |
(2) | The average price per month of the Withheld Shares was calculated by dividing the aggregate value of the tax withholding obligations for each month by the aggregate number of shares of our common stock withheld each month. |
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Item 6. | Selected Financial Data |
• | Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations | |
• | Item 8, Financial Statements and Supplementary Data, Note 2, Restatement of Previously Issued Financial Statements | |
• | Item 8, Financial Statements and Supplementary Data, Note 20, Results by Quarter |
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For the Years Ended December 31, | |||||||||||||||||||||
2004 | 2003 | 2002 | 2001 | 2000 | |||||||||||||||||
(Restated) | (Restated) | (Restated) | (Restated) | ||||||||||||||||||
(Amounts in Millions, Except Per Share Amounts) | |||||||||||||||||||||
REVENUE | $ | 6,387.0 | $ | 6,161.7 | $ | 6,059.1 | $ | 6,598.5 | $ | 6,872.2 | |||||||||||
OPERATING EXPENSES: | |||||||||||||||||||||
Salaries and related expenses | 3,733.5 | 3,500.6 | 3,396.7 | 3,634.5 | 3,830.8 | ||||||||||||||||
Office and general expenses | 2,249.8 | 2,225.7 | 2,248.7 | 2,398.5 | (1) | 2,173.0 | (1) | ||||||||||||||
Restructuring charges | 62.2 | 172.9 | 7.9 | 629.5 | 158.3 | ||||||||||||||||
Long-lived asset impairment and other charges | 322.2 | 294.0 | 130.0 | 300.7 | — | ||||||||||||||||
Motorsports contract termination costs | 113.6 | — | — | — | — | ||||||||||||||||
Total operating expenses | 6,481.3 | 6,193.2 | 5,783.3 | 6,963.2 | 6,162.1 | ||||||||||||||||
OPERATING INCOME (LOSS) | (94.3 | ) | (31.5 | ) | 275.8 | (364.7 | ) | 710.1 | |||||||||||||
EXPENSE AND OTHER INCOME: | |||||||||||||||||||||
Interest expense | (172.0 | ) | (207.0 | ) | (158.7 | ) | (169.0 | ) | (127.3 | ) | |||||||||||
Debt prepayment penalty | (9.8 | ) | (24.8 | ) | — | — | — | ||||||||||||||
Interest income | 50.7 | 39.3 | 30.6 | 41.7 | 57.4 | ||||||||||||||||
Investment impairments | (63.4 | ) | (71.5 | ) | (40.3 | ) | (212.4 | ) | (3.9 | ) | |||||||||||
Litigation charges | 32.5 | (127.6 | ) | — | — | — | |||||||||||||||
Other income (expense) | (10.7 | ) | 50.3 | 8.3 | 14.5 | 45.3 | |||||||||||||||
Total expense and other income | (172.7 | ) | (341.3 | ) | (160.1 | ) | (325.2 | ) | (28.5 | ) | |||||||||||
Income (loss) from continuing operations before provision for income taxes | (267.0 | ) | (372.8 | ) | 115.7 | (689.9 | ) | 681.6 | |||||||||||||
Provision for (benefit of) income taxes | 262.2 | 242.7 | 106.4 | (88.1 | ) | 305.9 | |||||||||||||||
Income (loss) from continuing operations of consolidated companies | (529.2 | ) | (615.5 | ) | 9.3 | (601.8 | ) | 375.7 | |||||||||||||
Income applicable to minority interests (net of tax) | (21.5 | ) | (27.0 | ) | (30.0 | ) | (27.3 | ) | (38.5 | ) | |||||||||||
Equity in net income (loss) of unconsolidated affiliates (net of tax) | 5.8 | 2.4 | 5.9 | 3.2 | (13.3 | ) | |||||||||||||||
Income (loss) from continuing operations | (544.9 | ) | (640.1 | ) | (14.8 | ) | (625.9 | ) | 323.9 | ||||||||||||
Dividends on preferred stock | 19.8 | — | — | — | — | ||||||||||||||||
Net income (loss) from continuing operations | (564.7 | ) | (640.1 | ) | (14.8 | ) | (625.9 | ) | 323.9 | ||||||||||||
Income from discontinued operations (net of tax) | 6.5 | 101.0 | 31.5 | 15.5 | 6.4 | ||||||||||||||||
NET INCOME (LOSS) APPLICABLE TO COMMON STOCKHOLDERS | $ | (558.2 | ) | $ | (539.1 | ) | $ | 16.7 | $ | (610.4 | ) | $ | 330.3 | ||||||||
Earnings (loss) per share of common stock: | |||||||||||||||||||||
Basic: | |||||||||||||||||||||
Continuing operations | $ | (1.36 | ) | $ | (1.66 | ) | $ | (0.04 | ) | $ | (1.70 | ) | $ | 0.90 | |||||||
Discontinued operations | 0.02 | 0.26 | 0.08 | 0.04 | 0.02 | ||||||||||||||||
Total* | $ | (1.34 | ) | $ | (1.40 | ) | $ | 0.04 | $ | (1.65 | ) | $ | 0.92 | ||||||||
Diluted: | |||||||||||||||||||||
Continuing operations | $ | (1.36 | ) | $ | (1.66 | ) | $ | (0.04 | ) | $ | (1.70 | ) | $ | 0.87 | |||||||
Discontinued operations | 0.02 | 0.26 | 0.08 | 0.04 | 0.02 | ||||||||||||||||
Total* | $ | (1.34 | ) | $ | (1.40 | ) | $ | 0.04 | $ | (1.65 | ) | $ | 0.89 | ||||||||
Weighted-average shares: | |||||||||||||||||||||
Basic | 415.3 | 385.5 | 376.1 | 369.0 | 359.6 | ||||||||||||||||
Diluted | 415.3 | 385.5 | 376.1 | 369.0 | 370.5 | ||||||||||||||||
OTHER DATA | |||||||||||||||||||||
Cash dividends per share of common stock | $ | — | $ | — | $ | 0.38 | $ | 0.38 | $ | 0.37 | |||||||||||
Cash dividends per share of preferred stock | $ | 2.69 | $ | — | $ | — | $ | — | $ | — | |||||||||||
Capital expenditures | $ | (194.0 | ) | $ | (159.6 | ) | $ | (171.4 | ) | $ | (257.5 | ) | $ | (246.9 | ) | ||||||
Actual number of employees | 43,700 | 43,400 | 45,800 | 50,500 | 58,400 |
(1) | Includes amortization expense of $161.0 and $132.3 in 2001 and 2000, respectively. |
* | Earnings (loss) per share does not add due to rounding. |
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As of December 31, | |||||||||||||||||||||
2004 | 2003 | 2002 | 2001 | 2000 | |||||||||||||||||
(Restated) | (Restated) | (Restated) | (Restated) | ||||||||||||||||||
ASSETS: | |||||||||||||||||||||
Cash and cash equivalents | $ | 1,550.4 | $ | 1,871.9 | $ | 953.2 | $ | 938.1 | $ | 848.8 | |||||||||||
Short-term marketable securities | 420.0 | 195.1 | 30.7 | 21.2 | 26.6 | ||||||||||||||||
Accounts receivable, net of allowances | 4,907.5 | 4,650.3 | 4,610.1 | 4,653.1 | 5,599.6 | ||||||||||||||||
Expenditures billable to clients | 345.2 | 303.3 | 387.7 | 358.4 | 473.2 | ||||||||||||||||
Deferred income taxes | 261.0 | 279.7 | 103.0 | 136.0 | 27.3 | ||||||||||||||||
Prepaid expenses and other current assets | 152.6 | 232.4 | 389.6 | 300.1 | 235.0 | ||||||||||||||||
Total current assets | 7,636.7 | 7,532.7 | 6,474.3 | 6,406.9 | 7,210.5 | ||||||||||||||||
Land, buildings and equipment, net | 722.9 | 697.9 | 851.1 | 871.0 | 845.6 | ||||||||||||||||
Deferred income taxes | 274.2 | 378.3 | 534.3 | 514.0 | 410.1 | ||||||||||||||||
Investments | 168.7 | 246.8 | 326.5 | 334.6 | 463.0 | ||||||||||||||||
Goodwill | 3,141.6 | 3,267.9 | 3,320.9 | 2,933.9 | 2,996.0 | ||||||||||||||||
Other intangible assets, net of amortization | 37.6 | 43.0 | 82.4 | 102.2 | 87.8 | ||||||||||||||||
Other assets | 290.6 | 279.3 | 315.5 | 277.7 | 264.6 | ||||||||||||||||
Total non-current assets | 4,635.6 | 4,913.2 | 5,430.7 | 5,033.4 | 5,067.1 | ||||||||||||||||
TOTAL ASSETS | $ | 12,272.3 | $ | 12,445.9 | $ | 11,905.0 | $ | 11,440.3 | $ | 12,277.6 | |||||||||||
LIABILITIES: | |||||||||||||||||||||
Accounts payable | $ | 6,128.7 | $ | 5,614.7 | $ | 5,370.8 | $ | 4,711.2 | $ | 5,901.5 | |||||||||||
Accrued liabilities | 1,108.6 | 1,256.7 | 1,273.9 | 1,536.5 | 1,342.1 | ||||||||||||||||
Short-term debt | 325.9 | 316.9 | 841.9 | 428.5 | 538.0 | ||||||||||||||||
Total current liabilities | 7,563.2 | 7,188.3 | 7,486.6 | 6,676.2 | 7,781.6 | ||||||||||||||||
Long-term debt | 1,936.0 | 2,198.7 | 1,822.2 | 2,484.6 | 1,533.8 | ||||||||||||||||
Deferred compensation and employee benefits | 590.7 | 548.6 | 534.9 | 438.6 | 525.5 | ||||||||||||||||
Other non-current liabilities | 408.9 | 326.7 | 270.7 | 177.3 | 163.6 | ||||||||||||||||
Minority interests in consolidated subsidiaries | 55.2 | 64.8 | 68.0 | 84.0 | 93.1 | ||||||||||||||||
Total non-current liabilities | 2,990.8 | 3,138.8 | 2,695.8 | 3,184.5 | 2,316.0 | ||||||||||||||||
TOTAL LIABILITIES | 10,554.0 | 10,327.1 | 10,182.4 | 9,860.7 | 10,097.6 | ||||||||||||||||
TOTAL STOCKHOLDERS’ EQUITY | 1,718.3 | 2,118.8 | 1,722.6 | 1,579.6 | 2,180.0 | ||||||||||||||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 12,272.3 | $ | 12,445.9 | $ | 11,905.0 | $ | 11,440.3 | $ | 12,277.6 | |||||||||||
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Item 7. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
Our Business |
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Business Drivers |
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2004 Performance |
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• | We seek to accelerate organic revenue growthby strengthening collaboration among our agencies and increasing the number of marketing services used by each client. We have established a supplemental incentive plan, expanded internal tools and resources, and heightened internal communications aimed at encouraging collaboration. We analyze our performance by calculating the percentage increase in revenue related to organic growth between comparable periods. | |
• | We seek to improve operating marginby increasing revenue and by controlling salaries and related expenses, as well as office and general expenses. We analyze our performance by comparing revenue to prior periods and measuring salaries and related expenses, as well as office and general expenses, as a percentage of revenue. We define operating margin as operating income divided by reported revenue. |
For the Years | ||||||||
Ended | ||||||||
December 31, | ||||||||
2004 | 2003 | |||||||
Organic revenue growth percentage (vs. prior year) | 1.2 | % | (3.0 | )% | ||||
Operating margin percentage | (1.5 | )% | (0.5 | )% | ||||
Salaries and related expenses as a percentage of revenue | 58.5 | % | 56.8 | % | ||||
Office and general expenses as a percentage revenue | 35.2 | % | 36.1 | % |
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• | Long-lived asset impairment charges of $322.2 were recorded, including $311.9 of goodwill impairments primarily at CMG, Lowe and Draft as a result of our annual impairment review. These were due to a decline in revenue, coupled with a drop in industry valuation metrics. Refer to Note 8 of the Consolidated Financial Statements for additional information. | |
• | Motorsports contract termination charges of $113.6 were recorded related to agreements with the British Racing Drivers Club and the Formula One Administration Limited, which released us from certain guarantees and lease obligations. We have exited this business and do not anticipate any additional material charges. Refer to Note 4 of the Consolidated Financial Statements for additional information. | |
• | Restructuring charges of $62.2 were recorded related to severance and termination costs and lease termination and other exit costs under the 2003 and 2001 restructuring programs, net of $32.0 of reserve reversals due to changes in our original estimates. These charges were primarily the result of vacating properties and employment terminations executed during 2004. Reserve reversals recorded during 2004 were the result of changes in management’s estimates impacted by events and circumstances which arose during the period. Refer to Note 5 of the Consolidated Financial Statements for additional information. | |
• | Investment impairment charges of $63.4 were recorded primarily related to an investment in an unconsolidated German advertising agency as a result of a decrease in projected operating results. Refer to Note 9 of the Consolidated Financial Statements for additional information. | |
• | Shareholder litigation settlement resulted in a reduction of expenses of $32.5, related to proceeds received of $20.0 from insurance policies (which a receivable had not previously accounted for) and the reversal of $12.5 in settlement reserves due to the decrease in share price between the tentative settlement date and the final settlement date as the share settlement was a fixed number. Refer to Note 19 of the Consolidated Financial Statements for additional information. | |
• | Prepayment penalty charges of $9.8 were recorded on the early retirement of $250.0 of the 7.875% Senior Unsecured Notes due in 2005. Refer to Note 11 of the Consolidated Financial Statements for additional information. | |
• | A total charge of $236.0 was recorded to increase our valuation allowance for deferred income tax assets primarily relating to foreign net operating loss carry forwards. Refer to Note 10 of the Consolidated Financial Statements for additional information. | |
• | Total salaries and related expenses and professional fees increased by approximately $232.9 and $87.6. These related primarily to increased headcount, the audit of our restated financial statements and the requirements of the Sarbanes-Oxley Act and are discussed in Consolidated Results of Operations — 2004 Compared to 2003. |
• | We replaced our previous 364-day and five-year revolving credit facilities totaling $875.0, with 364-Day and Three-Year Revolving Credit Facilities, maturing May 2007, totaling $700.0. |
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• | We completed the issuance and sale of $250.0 aggregate principal amount of 5.40% Senior Unsecured Notes maturing 2009 and $350.0 aggregate principal amount of 6.25% Senior Unsecured Notes maturing 2014. | |
• | Proceeds from the two debt issuances were used to pay down $250.0 of the 7.875% Senior Unsecured Notes due 2005 and redeem the $361.0 aggregate principal amount of 1.87% Convertible Subordinated Notes in December 2004. | |
• | All of the 1.80% Convertible Subordinate Notes were redeemed for approximately $246.0 in January 2004 using net proceeds from offerings of $246.0 of convertible preferred stock and common stock in late 2003. |
• | We entered into waivers and amendments to our 364-Day and Three-year Revolving Credit Facilities, to waive any breach or default related to not complying in a timely manner with our reporting requirements. In addition, financial covenants with respect to our interest coverage ratio, debt to EBITDA ratio and minimum EBITDA for certain fiscal quarters were amended. | |
• | In March 2005, we completed a consent solicitation to amend the indentures governing five series of our outstanding public debt to provide that our failure to timely file our SEC reports would not constitute a default under the indentures until September 30, 2005. | |
• | In July 2005, we completed the issuance and sale of $250.0 Floating Rate Notes maturing 2008. We used the proceeds to redeem the 7.875% Senior Unsecured Notes maturing October 2005 with an aggregate principal amount of $250.0. | |
• | Our Three-Year Revolving Credit Facility was amended and restated as of September 27, 2005. The effectiveness of the amended Three-Year Revolving Credit Facility is subject to certain conditions. The amendment revises certain of the negative and financial covenants under our existing Three-Year Revolving Credit Facility. The 364-day Revolving Credit Facility will expire on September 30, 2005. |
Management Changes |
• | In February 2004, Stephen Gatfield was hired as our Executive Vice President, Global Operations and Innovation. | |
• | In May 2004, Nick Cyprus was hired as our Senior Vice President, Controller and Chief Accounting Officer. | |
• | In June 2004, Robert Thompson was named our Executive Vice President and Chief Financial Officer. He resigned in July 2005. | |
• | In July 2004, Michael Roth was hired as our Executive Chairman. | |
• | In November 2004, Tony Wright was hired as Chief Executive Officer of Lowe Worldwide and Ed Powers was named Chief Operating Officer of Lowe Worldwide. |
Subsequent to 2004 |
• | In January 2005, Michael Roth was named our Chairman and Chief Executive Officer. Concurrently, David Bell, our Chairman and Chief Executive Officer since 2003 was named Co-Chairman. |
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• | In May 2005, Steve Centrillo was hired as our Executive Vice President and Chief Growth Officer. | |
• | In May 2005, Mark Rosenthal was hired as our Chairman and Chief Executive Officer of Media Operations. | |
• | In June 2005, Steve Blamer, who had been hired as Chief Executive Officer of Foote, Cone and Belding Worldwide in December 2004, assumed his responsibility following the expiration of a prior non-compete agreement. | |
• | In July 2005, Frank Mergenthaler was hired as our Executive Vice President and Chief Financial Officer. |
REVENUE |
Total | Domestic | International | |||||||||||||||||||||||||||||||
$ | % Change | $ | % Change | % of Total | $ | % Change | % of Total | ||||||||||||||||||||||||||
2003 (Restated) | $ | 6,161.7 | $ | 3,459.3 | 56.1 | % | $ | 2,702.4 | 43.9 | % | |||||||||||||||||||||||
Foreign currency changes | 237.7 | 3.9 | % | — | — | 237.7 | 8.8 | % | |||||||||||||||||||||||||
Net acquisitions/divestitures | (88.0 | ) | (1.4 | )% | (35.4 | ) | (1.0 | )% | (52.6 | ) | (1.9 | )% | |||||||||||||||||||||
Organic | 75.6 | 1.2 | % | 85.3 | 2.5 | % | (9.7 | ) | (0.4 | )% | |||||||||||||||||||||||
Total change | 225.3 | 3.7 | % | 49.9 | 1.4 | % | 175.4 | 6.5 | % | ||||||||||||||||||||||||
2004 | $ | 6,387.0 | $ | 3,509.2 | 54.9 | % | $ | 2,877.8 | 45.1 | % | |||||||||||||||||||||||
23
Table of Contents
OPERATING EXPENSES |
For the Years Ended December 31, | |||||||||||||||||||||||||
2004 | 2003 | ||||||||||||||||||||||||
% of | % of | ||||||||||||||||||||||||
$ | Revenue | $ | Revenue | $ Change | % Change | ||||||||||||||||||||
(Restated) | |||||||||||||||||||||||||
Salaries and related expenses | $ | 3,733.5 | 58.5 | % | $ | 3,500.6 | 56.8 | % | $ | 232.9 | 6.7 | % | |||||||||||||
Office and general expenses | 2,249.8 | 35.2 | % | 2,225.7 | 36.1 | % | 24.1 | 1.1 | % | ||||||||||||||||
Restructuring charges | 62.2 | 172.9 | (110.7 | ) | (64.0 | )% | |||||||||||||||||||
Long-lived asset impairment and other charges | 322.2 | 294.0 | 28.2 | 9.6 | % | ||||||||||||||||||||
Motorsports contract termination costs | 113.6 | — | 113.6 | — | |||||||||||||||||||||
Total operating expenses | $ | 6,481.3 | $ | 6,193.2 | $ | 288.1 | 4.7 | % | |||||||||||||||||
Salaries and Related Expenses |
Total | ||||||||||||
% of | ||||||||||||
$ | % Change | Revenue | ||||||||||
2003 (Restated) | $ | 3,500.6 | 56.8 | % | ||||||||
Foreign currency changes | 129.4 | 3.7 | % | |||||||||
Net acquisitions/divestitures | (40.5 | ) | (1.2 | )% | ||||||||
Organic | 144.0 | 4.1 | % | |||||||||
Total change | 232.9 | 6.7 | % | |||||||||
2004 | $ | 3,733.5 | 58.5 | % | ||||||||
24
Table of Contents
Total | ||||||||||||
% of | ||||||||||||
$ | % Change | Revenue | ||||||||||
2003 (Restated) | $ | 2,225.7 | 36.1 | % | ||||||||
Foreign currency changes | 102.9 | 4.6 | % | |||||||||
Net acquisitions/divestitures | (63.9 | ) | (2.9 | )% | ||||||||
Organic | (14.9 | ) | (0.7 | )% | ||||||||
Total change | 24.1 | 1.1 | % | |||||||||
2004 | $ | 2,249.8 | 35.2 | % | ||||||||
25
Table of Contents
Restructuring Charges |
Lease Termination and | |||||||||||||||||||||||||||||
Other Exit Costs | Severance and Termination Costs | ||||||||||||||||||||||||||||
2003 | 2001 | 2003 | 2001 | ||||||||||||||||||||||||||
Program | Program | Total | Program | Program | Total | Total | |||||||||||||||||||||||
2004 Net (Income) Expense | |||||||||||||||||||||||||||||
IAN | $ | 40.3 | $ | (7.3 | ) | $ | 33.0 | $ | 14.1 | $ | (4.3 | ) | $ | 9.8 | $ | 42.8 | |||||||||||||
CMG | 8.1 | 4.0 | 12.1 | 5.1 | (0.7 | ) | 4.4 | 16.5 | |||||||||||||||||||||
Corporate | 3.7 | (1.0 | ) | 2.7 | 0.3 | (0.1 | ) | 0.2 | 2.9 | ||||||||||||||||||||
Total | $ | 52.1 | $ | (4.3 | ) | $ | 47.8 | $ | 19.5 | $ | (5.1 | ) | $ | 14.4 | $ | 62.2 | |||||||||||||
2003 Net (Income) Expense (Restated) | |||||||||||||||||||||||||||||
IAN | $ | 23.1 | $ | 8.8 | $ | 31.9 | $ | 106.6 | $ | (0.1 | ) | $ | 106.5 | $ | 138.4 | ||||||||||||||
CMG | 12.7 | 6.1 | 18.8 | 15.7 | — | 15.7 | 34.5 | ||||||||||||||||||||||
Motorsports | — | — | — | 0.4 | — | 0.4 | 0.4 | ||||||||||||||||||||||
Corporate | (2.2 | ) | (1.3 | ) | (3.5 | ) | 3.1 | — | 3.1 | (0.4 | ) | ||||||||||||||||||
Total | $ | 33.6 | $ | 13.6 | $ | 47.2 | $ | 125.8 | $ | (0.1 | ) | $ | 125.7 | $ | 172.9 | ||||||||||||||
Lease termination and other exit costs |
2003 Program |
2001 Program |
26
Table of Contents
Adjustments to Estimates |
Severance and termination costs |
2003 Program |
2001 Program |
Adjustments to Estimates |
Long-Lived Asset Impairment and Other Charges |
27
Table of Contents
For the Years Ended December 31, | |||||||||||||||||||||||||||||||||
2004 | 2003 (Restated) | ||||||||||||||||||||||||||||||||
Motor- | �� | Motor- | |||||||||||||||||||||||||||||||
IAN | CMG | sports | Total | IAN | CMG | sports | Total | ||||||||||||||||||||||||||
Goodwill impairment | $ | 220.2 | $ | 91.7 | $ | — | $ | 311.9 | $ | 0.4 | $ | 218.0 | $ | — | $ | 218.4 | |||||||||||||||||
Fixed asset impairment | 2.0 | 0.4 | 3.0 | 5.4 | 2.3 | — | 63.8 | 66.1 | |||||||||||||||||||||||||
Other | 4.9 | — | — | 4.9 | 9.1 | 0.4 | — | 9.5 | |||||||||||||||||||||||||
Total | $ | 227.1 | $ | 92.1 | $ | 3.0 | $ | 322.2 | $ | 11.8 | $ | 218.4 | $ | 63.8 | $ | 294.0 | |||||||||||||||||
2004 Impairments |
2003 Impairments |
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Table of Contents
Motorsports Contract Termination Costs |
EXPENSE AND OTHER INCOME |
For the Years Ended | |||||||||||||||||
December 31, | |||||||||||||||||
2004 | 2003 | $ Change | % Change | ||||||||||||||
(Restated) | |||||||||||||||||
Interest expense | $ | (172.0 | ) | $ | (207.0 | ) | $ | 35.0 | (16.9 | )% | |||||||
Debt prepayment penalty | (9.8 | ) | (24.8 | ) | 15.0 | (60.5 | )% | ||||||||||
Interest income | 50.7 | 39.3 | 11.4 | 29.0 | % | ||||||||||||
Investment impairments | (63.4 | ) | (71.5 | ) | 8.1 | (11.3 | )% | ||||||||||
Litigation charges | 32.5 | (127.6 | ) | 160.1 | (125.5 | )% | |||||||||||
Other income (expense) | (10.7 | ) | 50.3 | (61.0 | ) | (121.3 | )% | ||||||||||
Total | $ | (172.7 | ) | $ | (341.3 | ) | $ | 168.6 | (49.4 | )% | |||||||
Interest Expense |
Debt Prepayment Penalty |
Interest Income |
Investment Impairments |
29
Table of Contents
Litigation Charges |
Other Income (Expense) |
OTHER ITEMS |
Income Taxes |
For the Years Ended | ||||||||
December 31, | ||||||||
2004 | 2003 | |||||||
(Restated) | ||||||||
Provision for income taxes | $ | 262.2 | $ | 242.7 | ||||
Effective tax rate | 98.2 | % | 65.1 | % | ||||
30
Table of Contents
Valuation Allowance |
Minority Interest and Unconsolidated Affiliates |
For the Years Ended | ||||||||
December 31, | ||||||||
2004 | 2003 | |||||||
(Restated) | ||||||||
Income applicable to minority interests, net of tax | $ | (21.5 | ) | $ | (27.0 | ) | ||
Equity in net income of unconsolidated affiliates, net of tax | $ | 5.8 | $ | 2.4 | ||||
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Table of Contents
NET INCOME (LOSS) |
For the Years Ended | ||||||||||||||||
December 31, | ||||||||||||||||
2004 | 2003 | $ Change | % Change | |||||||||||||
(Restated) | ||||||||||||||||
Loss from continuing operations | $ | (544.9 | ) | $ | (640.1 | ) | $ | 95.2 | 14.9 | % | ||||||
Less: preferred stock dividends | 19.8 | — | 19.8 | — | ||||||||||||
Net loss from continuing operations | (564.7 | ) | (640.1 | ) | 75.4 | 11.8 | % | |||||||||
Income from discontinued operations, net of taxes of $3.5 and $8.3, respectively | 6.5 | 101.0 | (94.5 | ) | (93.6 | )% | ||||||||||
Net loss applicable to common stockholders | $ | (558.2 | ) | $ | (539.1 | ) | $ | (19.1 | ) | 3.5 | % | |||||
32
Table of Contents
For the Years Ended | |||||||||||||||||
December 31, | |||||||||||||||||
2004 | 2003 | $ Change | % Change | ||||||||||||||
(Restated) | |||||||||||||||||
Revenue: | |||||||||||||||||
IAN | $ | 5,399.2 | $ | 5,140.5 | $ | 258.7 | 5 | % | |||||||||
CMG | 935.8 | 942.4 | (6.6 | ) | (0.7 | )% | |||||||||||
Motorsports | 52.0 | 78.8 | (26.8 | ) | (34.0 | )% | |||||||||||
Consolidated revenue | $ | 6,387.0 | $ | 6,161.7 | $ | 225.3 | 3.7 | % | |||||||||
Segment operating income (loss): | |||||||||||||||||
IAN | $ | 577.2 | $ | 551.9 | $ | 25.3 | 4.6 | % | |||||||||
CMG | 83.7 | 55.7 | 28.0 | 50.3 | % | ||||||||||||
Motorsports | (14.0 | ) | (43.6 | ) | 29.6 | 67.9 | % | ||||||||||
Corporate and other | (243.2 | ) | (128.6 | ) | (114.6 | ) | 89.1 | % |
For the Years Ended December 31, | ||||||||||||||||||||||||||||||||||||||||
2004 | 2003 (Restated) | |||||||||||||||||||||||||||||||||||||||
Reconciliation to segment | IAN | CMG | Motorsports | Corporate | Total | IAN | CMG | Motorsports | Corporate | Total | ||||||||||||||||||||||||||||||
operating income: | ||||||||||||||||||||||||||||||||||||||||
Consolidated operating income (loss) | $ | 307.3 | $ | (24.9 | ) | $ | (130.6 | ) | $ | (246.1 | ) | $ | (94.3 | ) | $ | 401.7 | $ | (197.2 | ) | $ | (107.8 | ) | $ | (128.2 | ) | $ | (31.5 | ) | ||||||||||||
Adjustments: | ||||||||||||||||||||||||||||||||||||||||
Restructuring charges | (42.8 | ) | (16.5 | ) | — | (2.9 | ) | (62.2 | ) | (138.4 | ) | (34.5 | ) | (0.4 | ) | 0.4 | (172.9 | ) | ||||||||||||||||||||||
Long lived asset impairment and other charges: | (227.1 | ) | (92.1 | ) | (116.6 | ) | — | (435.8 | ) | (11.8 | ) | (218.4 | ) | (63.8 | ) | — | (294.0 | ) | ||||||||||||||||||||||
Segment operating income | $ | 577.2 | $ | 83.7 | $ | (14.0 | ) | $ | (243.2 | ) | $ | 551.9 | $ | 55.7 | $ | (43.6 | ) | $ | (128.6 | ) | ||||||||||||||||||||
Total | Domestic | International | |||||||||||||||||||||||||||||||
$ | % Change | $ | % Change | % of Total | $ | % Change | % of Total | ||||||||||||||||||||||||||
2003 (Restated) | $ | 5,140.5 | $ | 2,864.4 | 55.7 | % | $ | 2,276.1 | 44.3 | % | |||||||||||||||||||||||
Foreign currency changes | 194.1 | 3.8 | % | — | — | 194.1 | 8.5 | % | |||||||||||||||||||||||||
Net acquisitions/divestitures | (40.0 | ) | (0.8 | )% | (27.5 | ) | (1.0 | )% | (12.5 | ) | (0.5 | )% | |||||||||||||||||||||
Organic | 104.6 | 2.0 | % | 96.4 | 3.4 | % | 8.2 | 0.4 | % | ||||||||||||||||||||||||
Total change | 258.7 | 5.0 | % | 68.9 | 2.4 | % | 189.8 | 8.3 | % | ||||||||||||||||||||||||
2004 | $ | 5,399.2 | $ | 2,933.3 | 54.3 | % | $ | 2,465.9 | 45.7 | % | |||||||||||||||||||||||
33
Table of Contents
SEGMENT OPERATING INCOME |
For the Years Ended | ||||||||||||||||
December 31, | ||||||||||||||||
2003 | ||||||||||||||||
2004 | (Restated) | $ Change | % Change | |||||||||||||
Segment operating income | $ | 577.2 | $ | 551.9 | $ | 25.3 | 4.6 | % | ||||||||
Operating margin | 10.7 | % | 10.7 | % | ||||||||||||
34
Table of Contents
REVENUE |
Total | Domestic | International | |||||||||||||||||||||||||||||||
$ | % Change | $ | % Change | % of Total | $ | % Change | % of Total | ||||||||||||||||||||||||||
2003 (Restated) | $ | 942.4 | $ | 593.2 | 62.9 | % | $ | 349.2 | 37.1 | % | |||||||||||||||||||||||
Foreign currency changes | 34.4 | 3.7 | % | — | — | 34.4 | 9.9 | % | |||||||||||||||||||||||||
Net acquisitions/divestitures | (11.0 | ) | (1.2 | )% | (7.9 | ) | (1.3 | )% | (3.1 | ) | (0.9 | )% | |||||||||||||||||||||
Organic | (30.0 | ) | (3.2 | )% | (9.3 | ) | (1.6 | )% | (20.7 | ) | (5.9 | )% | |||||||||||||||||||||
Total change | (6.6 | ) | (0.7 | )% | (17.2 | ) | (2.9 | )% | 10.6 | 3.0 | % | ||||||||||||||||||||||
2004 | $ | 935.8 | $ | 576.0 | 61.6 | % | $ | 359.8 | 38.4 | % | |||||||||||||||||||||||
For the Years Ended | ||||||||||||||||
December 31, | ||||||||||||||||
2004 | 2003 | $ Change | % Change | |||||||||||||
(Restated) | ||||||||||||||||
Segment operating income | $ | 83.7 | $ | 55.7 | $ | 28.0 | 50.3 | % | ||||||||
Operating margin | 8.9 | % | 5.9 | % | ||||||||||||
35
Table of Contents
For the Years Ended | |||||||||||||||||
December 31, | |||||||||||||||||
2004 | 2003 | $ Change | % Change | ||||||||||||||
(Restated) | |||||||||||||||||
Salaries and related expenses | $ | 151.2 | $ | 129.0 | $ | 22.2 | 17.2 | % | |||||||||
Professional fees | 143.4 | 49.8 | 93.6 | 188.0 | % | ||||||||||||
Rent and depreciation | 38.0 | 30.5 | 7.5 | 24.6 | % | ||||||||||||
Corporate Insurance | 29.7 | 26.5 | 3.2 | 12.1 | % | ||||||||||||
Bank fees | 2.8 | 1.6 | 1.2 | 75.0 | % | ||||||||||||
Other | 11.4 | 9.3 | 2.1 | 22.6 | % | ||||||||||||
Expenses allocated to operating divisions | (133.3 | ) | (118.1 | ) | (15.2 | ) | (12.9 | )% | |||||||||
Total corporate and other | $ | 243.2 | $ | 128.6 | $ | 114.6 | 89.1 | % | |||||||||
36
Table of Contents
Total | Domestic | International | |||||||||||||||||||||||||||||||
$ | % Change | $ | % Change | % of Total | $ | % Change | % of Total | ||||||||||||||||||||||||||
2002 (Restated) | $ | 6,059.1 | $ | 3,478.1 | 57.4 | % | $ | 2,581.0 | 42.6 | % | |||||||||||||||||||||||
Foreign currency changes | 293.7 | 4.8 | % | — | — | 293.7 | 11.4 | % | |||||||||||||||||||||||||
Net acquisitions/divestitures | (11.8 | ) | (0.2 | )% | 8.8 | 0.3 | % | (20.6 | ) | (0.8 | %) | ||||||||||||||||||||||
Organic | (179.3 | ) | (3.0 | )% | (27.6 | ) | (0.8 | )% | (151.7 | ) | (5.9 | %) | |||||||||||||||||||||
Total change | 102.6 | 1.7 | % | (18.8 | ) | (0.5 | )% | 121.4 | 4.7 | % | |||||||||||||||||||||||
2003 (Restated) | $ | 6,161.7 | $ | 3,459.3 | 56.1 | % | $ | 2,702.4 | 43.9 | % | |||||||||||||||||||||||
For the Years Ended | |||||||||||||||||||||||||
December 31, | |||||||||||||||||||||||||
2003 (Restated) | 2002 (Restated) | ||||||||||||||||||||||||
% of | % of | ||||||||||||||||||||||||
$ | Revenue | $ | Revenue | $ Change | % Change | ||||||||||||||||||||
Salaries and related expenses | $ | 3,500.6 | 56.8 | % | $ | 3,396.7 | 56.1 | % | $ | 103.9 | 3.1 | % | |||||||||||||
Office and general expenses | 2,225.7 | 36.1 | % | 2,248.7 | 37.1 | % | (23.0 | ) | (1.0 | )% | |||||||||||||||
Restructuring charges | 172.9 | 2.8 | % | 7.9 | 0.1 | % | 165.0 | 2088.6 | % | ||||||||||||||||
Long-lived asset impairment and other charges | 294.0 | 4.8 | % | 130.0 | 2.1 | % | 164.0 | 126.2 | % | ||||||||||||||||
Total operating expenses | $ | 6,193.2 | $ | 5,783.3 | $ | 409.9 | 7.1 | % | |||||||||||||||||
37
Table of Contents
Total | |||||||||||||
% of | |||||||||||||
$ | % Change | Revenue | |||||||||||
2002 (Restated) | $ | 3,396.7 | 56.1 | % | |||||||||
Foreign currency changes | 156.7 | 4.6 | % | ||||||||||
Net acquisitions/divestitures | (2.3 | ) | (0.1 | )% | |||||||||
Organic | (50.5 | ) | (1.5 | )% | |||||||||
Total change | 103.9 | 3.1 | % | ||||||||||
2003 (Restated) | $ | 3,500.6 | 56.8 | % | |||||||||
Total | |||||||||||||
% of | |||||||||||||
$ | % Change | Revenue | |||||||||||
2002 (Restated) | $ | 2,248.7 | 37.1 | % | |||||||||
Foreign currency changes | 121.1 | 5.4 | % | ||||||||||
Net acquisitions/divestitures | (13.4 | ) | (0.6 | )% | |||||||||
Organic | (130.7 | ) | (5.8 | )% | |||||||||
Total change | (23.0 | ) | (1.0 | )% | |||||||||
2003 (Restated) | $ | 2,225.7 | 36.1 | % | |||||||||
38
Table of Contents
Lease Termination and Other | |||||||||||||||||||||||||||||
Exit Costs | Severance and Termination Costs | ||||||||||||||||||||||||||||
2003 | 2001 | 2003 | 2001 | ||||||||||||||||||||||||||
Program | Program | Total | Program | Program | Total | Total | |||||||||||||||||||||||
2003 Net (Income) Expense (Restated) | |||||||||||||||||||||||||||||
IAN | $ | 23.1 | $ | 8.8 | $ | 31.9 | $ | 106.6 | $ | (0.1 | ) | $ | 106.5 | $ | 138.4 | ||||||||||||||
CMG | 12.7 | 6.1 | 18.8 | 15.7 | — | 15.7 | 34.5 | ||||||||||||||||||||||
Motorsports | — | — | — | 0.4 | — | 0.4 | 0.4 | ||||||||||||||||||||||
Corporate | (2.2 | ) | (1.3 | ) | (3.5 | ) | 3.1 | — | 3.1 | (0.4 | ) | ||||||||||||||||||
Total | $ | 33.6 | $ | 13.6 | $ | 47.2 | $ | 125.8 | $ | (0.1 | ) | $ | 125.7 | $ | 172.9 | ||||||||||||||
2002 Net Expense (Restated) | |||||||||||||||||||||||||||||
IAN | $ | — | $ | 5.2 | $ | 5.2 | $ | — | $ | 7.9 | $ | 7.9 | $ | 13.1 | |||||||||||||||
CMG | — | 5.7 | 5.7 | — | (1.2 | ) | (1.2 | ) | 4.5 | ||||||||||||||||||||
Corporate | — | (4.3 | ) | (4.3 | ) | — | (5.4 | ) | (5.4 | ) | (9.7 | ) | |||||||||||||||||
Total | $ | — | $ | 6.6 | $ | 6.6 | $ | — | $ | 1.3 | $ | 1.3 | $ | 7.9 | |||||||||||||||
Lease termination and other exit costs |
2003 Program |
39
Table of Contents
2001 Program |
Adjustments to Estimates |
Severance and termination costs |
2003 Program |
2001 Program |
Adjustments to Estimates |
40
Table of Contents
Long-Lived Asset Impairment and Other Charges |
For the Years Ended December 31, | |||||||||||||||||||||||||||||
2003 | 2002 | ||||||||||||||||||||||||||||
IAN | CMG | Motorsports | Total | IAN | Motorsports | Total | |||||||||||||||||||||||
(Restated) | (Restated) | ||||||||||||||||||||||||||||
Goodwill impairment | $ | 0.4 | $ | 218.0 | $ | — | $ | 218.4 | $ | 2.9 | $ | 82.1 | $ | 85.0 | |||||||||||||||
Fixed asset impairment | 2.3 | — | 63.8 | 66.1 | — | 33.0 | 33.0 | ||||||||||||||||||||||
Other | 9.1 | 0.4 | — | 9.5 | — | 12.0 | 12.0 | ||||||||||||||||||||||
Total | $ | 11.8 | $ | 218.4 | $ | 63.8 | $ | 294.0 | $ | 2.9 | $ | 127.1 | $ | 130.0 | |||||||||||||||
41
Table of Contents
For the Years Ended | |||||||||||||||||
December 31, | |||||||||||||||||
2003 | 2002 | $ Change | % Change | ||||||||||||||
(Restated) | (Restated) | ||||||||||||||||
Interest expense | $ | (207.0 | ) | $ | (158.7 | ) | $ | (48.3 | ) | 30.4 | % | ||||||
Debt prepayment penalty | (24.8 | ) | — | (24.8 | ) | — | |||||||||||
Interest income | 39.3 | 30.6 | 8.7 | 28.4 | % | ||||||||||||
Investment impairments | (71.5 | ) | (40.3 | ) | (31.2 | ) | 77.4 | % | |||||||||
Litigation charges | (127.6 | ) | — | (127.6 | ) | — | |||||||||||
Other income | 50.3 | 8.3 | 42.0 | 506.0 | % | ||||||||||||
Total | $ | (341.3 | ) | $ | (160.1 | ) | $ | (181.2 | ) | 113.2 | % | ||||||
42
Table of Contents
For the Years Ended | ||||||||
December 31, | ||||||||
2003 | 2002 | |||||||
(Restated) | (Restated) | |||||||
Provision for income taxes | $ | 242.7 | $ | 106.4 | ||||
Effective tax rate | 65.1% | 91.9% | ||||||
For the Years Ended | ||||||||
December 31, | ||||||||
2003 | 2002 | |||||||
(Restated) | (Restated) | |||||||
Income applicable to minority interests | $ | (27.0 | ) | $ | (30.0 | ) | ||
Equity in net income of unconsolidated affiliates, net of tax | $ | 2.4 | $ | 5.9 | ||||
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For the Years Ended | ||||||||||||||||
December 31, | ||||||||||||||||
2003 | 2002 | $ Change | % Change | |||||||||||||
(Restated) | (Restated) | |||||||||||||||
Loss from continuing operations | $ | (640.1 | ) | $ | (14.8 | ) | $ | (625.3 | ) | 4225.0 | % | |||||
Income from discontinued operations net of taxes of $8.3 and $22.4, respectively | 101.0 | 31.5 | 69.5 | 220.6 | % | |||||||||||
Net income (loss) applicable to common stockholders | $ | (539.1 | ) | $ | 16.7 | $ | (555.8 | ) | (3328.1 | )% | ||||||
Loss from Continuing Operations |
Income from Discontinued Operations |
For the Years Ended | |||||||||||||||||
December 31, | |||||||||||||||||
2003 | 2002 | $ Change | % Change | ||||||||||||||
(Restated) | (Restated) | ||||||||||||||||
Revenue: | |||||||||||||||||
IAN | $ | 5,140.5 | $ | 4,994.7 | $ | 145.8 | 2.9 | % | |||||||||
CMG | 942.4 | 970.8 | (28.4 | ) | (2.9 | )% | |||||||||||
Motorsports | 78.8 | 93.6 | (14.8 | ) | (15.8 | )% | |||||||||||
Consolidated revenue | $ | 6,161.7 | $ | 6,059.1 | $ | 102.6 | 1.7 | % | |||||||||
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For the Years Ended | ||||||||||||||||
December 31, | ||||||||||||||||
2003 | 2002 | $ Change | % Change | |||||||||||||
(Restated) | (Restated) | |||||||||||||||
Segment operating income (loss): | ||||||||||||||||
IAN | $ | 551.9 | $ | 550.7 | $ | 1.2 | (0.2 | )% | ||||||||
CMG | 55.7 | 47.5 | 8.2 | 17.3 | % | |||||||||||
Motorsports | (43.5 | ) | (82.2 | ) | 38.7 | (47.1 | )% | |||||||||
Corporate and other | (128.7 | ) | (102.3 | ) | (26.4 | ) | 25.8 | % |
For the Years Ended December 31, | ||||||||||||||||||||||||||||||||||||||||
2003 (Restated) | 2002 (Restated) | |||||||||||||||||||||||||||||||||||||||
IAN | CMG | Motorsports | Corporate | Total | IAN | CMG | Motorsports | Corporate | Total | |||||||||||||||||||||||||||||||
Reconciliation to segment operating income: | ||||||||||||||||||||||||||||||||||||||||
Consolidated operating income (loss) | $ | 401.7 | $ | (197.2 | ) | $ | (107.7 | ) | $ | (128.3 | ) | $ | (31.5 | ) | $ | 534.7 | $ | 43.0 | $ | (209.3 | ) | $ | (92.6 | ) | $ | 275.8 | ||||||||||||||
Adjustments: | ||||||||||||||||||||||||||||||||||||||||
Restructuring charges | (138.4 | ) | (34.5 | ) | (0.4 | ) | 0.4 | (172.9 | ) | (13.1 | ) | (4.5 | ) | — | 9.7 | (7.9 | ) | |||||||||||||||||||||||
Long lived asset impairment and other charges: | (11.8 | ) | (218.4 | ) | (63.8 | ) | — | (294.0 | ) | (2.9 | ) | — | (127.1 | ) | — | (130.0 | ) | |||||||||||||||||||||||
Segment operating income (loss) | $ | 551.9 | $ | 55.7 | $ | (43.5 | ) | $ | (128.7 | ) | $ | 550.7 | $ | 47.5 | $ | (82.2 | ) | $ | (102.3 | ) | ||||||||||||||||||||
Domestic | International | ||||||||||||||||||||||||||||||||
Total | |||||||||||||||||||||||||||||||||
% of | % of | ||||||||||||||||||||||||||||||||
$ | % Change | $ | % Change | Total | $ | % Change | Total | ||||||||||||||||||||||||||
2002 (Restated) | $ | 4,994.7 | $ | 2,857.1 | 57.2 | % | $ | 2,137.6 | 42.8 | % | |||||||||||||||||||||||
Foreign currency changes | 244.6 | 4.9 | % | — | 0.0 | % | 244.6 | 11.4 | % | ||||||||||||||||||||||||
Net acquisitions/divestitures | 9.9 | 0.2 | % | 9.6 | 0.3 | % | 0.3 | 0.0 | % | ||||||||||||||||||||||||
Organic | (108.7 | ) | (2.2 | )% | (2.3 | ) | (0.1 | )% | (106.4 | ) | (5.0 | )% | |||||||||||||||||||||
Total change | 145.8 | 2.9 | % | 7.3 | 0.3 | % | 138.5 | 6.5 | % | ||||||||||||||||||||||||
2003 (Restated) | $ | 5,140.5 | $ | 2,864.4 | 55.7 | % | $ | 2,276.1 | 44.3 | % | |||||||||||||||||||||||
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For the Years Ended | ||||||||||||||||
December 31, | ||||||||||||||||
2003 | 2002 | $ Change | % Change | |||||||||||||
(Restated) | (Restated) | |||||||||||||||
Segment operating income | $ | 551.9 | $ | 550.7 | $ | 1.2 | 0.2 | % | ||||||||
Operating margin | 10.7 | % | 11.1 | % | ||||||||||||
Total | Domestic | International | ||||||||||||||||||||||||||||||
$% | Change | $ | % Change | % of Total | $ | % Change | % of Total | |||||||||||||||||||||||||
2002 (Restated) | $ | 970.8 | $ | 620.1 | 63.9 | % | $ | 350.7 | 36.1 | % | ||||||||||||||||||||||
Foreign currency changes | 38.6 | 4.0 | % | — | — | 38.6 | 11.0 | % | ||||||||||||||||||||||||
Net acquisitions/ divestitures | (1.8 | ) | (0.2 | )% | (0.2 | ) | 0.0 | % | (1.6 | ) | (0.5 | )% | ||||||||||||||||||||
Organic | (65.2 | ) | (6.7 | )% | (26.7 | ) | (4.3 | )% | (38.5 | ) | (11.0 | )% | ||||||||||||||||||||
Total change | (28.4 | ) | (2.9 | )% | (26.9 | ) | (4.3 | )% | (1.5 | ) | (0.4 | )% | ||||||||||||||||||||
2003 (Restated) | $ | 942.4 | $ | 593.2 | 62.9 | % | $ | 349.2 | 37.1 | % | ||||||||||||||||||||||
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For the Years Ended | ||||||||||||||||
December 31, | ||||||||||||||||
2003 | 2002 | $ Change | % Change | |||||||||||||
(Restated) | (Restated) | |||||||||||||||
Segment operating income | $ | 55.7 | $ | 47.5 | $ | 8.2 | 17.2% | |||||||||
Operating margin | 5.9 | % | 4.9 | % | ||||||||||||
For the Years Ended | ||||||||||||||||
December 31, | ||||||||||||||||
$ | ||||||||||||||||
2003 | 2002 | Change | % Change | |||||||||||||
(Restated) | (Restated) | |||||||||||||||
Salaries, benefits and related expenses | $ | 129.0 | $ | 131.1 | $ | (2.1 | ) | 1.6 | % | |||||||
Professional fees | 49.8 | 28.5 | 21.3 | 74.7 | % | |||||||||||
Rent and depreciation | 30.5 | 26.5 | 4.0 | 15.1 | % | |||||||||||
Corporate insurance | 26.5 | 12.5 | 14.0 | 112.0 | % | |||||||||||
Bank fees | 1.6 | 3.7 | (2.1 | ) | (56.8 | )% | ||||||||||
Other | 9.3 | 17.7 | (8.4 | ) | (47.5 | )% | ||||||||||
Expenses allocated to segments | (118.1 | ) | (117.7 | ) | (0.4 | ) | 0.3 | % | ||||||||
Total corporate and other | $ | 128.6 | $ | 102.3 | $ | 26.3 | 25.7 | % | ||||||||
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December 31, | |||||||||
2004 | 2003 | ||||||||
1.80% Convertible Subordinated Notes due 2004 (less unamortized discount of $5.9) | $ | — | $ | 244.1 | |||||
1.87% Convertible Subordinated Notes due 2006 (less unamortized discount of $23.5) | — | 337.5 | |||||||
7.875% Senior Unsecured Notes due 2005 | 255.0 | 522.1 | |||||||
7.25% Senior Unsecured Notes due 2011 | 500.0 | 500.0 | |||||||
5.40% Senior Unsecured Notes due 2009 (less unamortized discount of $0.3) | 249.7 | — | |||||||
6.25% Senior Unsecured Notes due 2014 (less unamortized discount of $1.0) | 347.3 | — | |||||||
4.50% Convertible Senior Notes due 2023 | 800.0 | 800.0 | |||||||
Other notes payable and capitalized leases — at interest rates from 4.5% to 22.23% | 42.1 | 42.1 | |||||||
Total long-term debt | 2,194.1 | 2,445.8 | |||||||
Less: current portion | 258.1 | 247.1 | |||||||
Long-term debt, excluding current portion | $ | 1,936.0 | $ | 2,198.7 | |||||
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2005 | $ | 258.1 | |||
2006 | 3.9 | ||||
2007 | 2.1 | ||||
2008 | 1.6 | ||||
2009 | 250.5 | ||||
Thereafter | 1,677.9 | ||||
Total long-term debt | $ | 2,194.1 | |||
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December 31, | |||||||||||||||||||||||||
2004 | 2003 | ||||||||||||||||||||||||
Total | Amount | Total | Total | Amount | Total | ||||||||||||||||||||
Facility | Outstanding | Available | Facility | Outstanding | Available | ||||||||||||||||||||
Committed | |||||||||||||||||||||||||
364-Day Revolving Credit Facility | $ | 250.0 | $ | — | $ | 250.0 | $ | 500.0 | $ | — | $ | 339.9 | ** | ||||||||||||
Three-Year Revolving Credit Facility | 450.0 | — | 284.6 | * | — | — | — | ||||||||||||||||||
Five-Year Revolving Credit Facility | — | — | — | 375.0 | — | 375.0 | |||||||||||||||||||
Other Facilities | 0.8 | — | 0.8 | 0.8 | — | 0.8 | |||||||||||||||||||
$ | 700.8 | $ | — | $ | 535.4 | $ | 875.8 | $ | — | $ | 715.7 | ||||||||||||||
Uncommitted | |||||||||||||||||||||||||
International | $ | 738.1 | $ | 67.8 | $ | 670.3 | $ | 744.8 | $ | 69.8 | $ | 675.0 |
* | Amount available is reduced by $165.4 of letters of credit issued under the Three-Year Revolving Credit Facility at December 31, 2004. |
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** | Amount available is reduced by $160.1 of letters of credit issued under the 364-Day Revolving Credit Facility at December 31, 2003. |
Fiscal Quarter Ending | Ratio | |||
September 30, 2005 | 2.15 to 1 | |||
December 31, 2005 | 1.75 to 1 | |||
March 31, 2006 | 1.85 to 1 | |||
June 30, 2006 | 1.45 to 1 | |||
September 30, 2006 | 1.75 to 1 | |||
December 31, 2006 | 2.15 to 1 | |||
March 31, 2007 | 2.50 to 1 |
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Fiscal Quarter Ending | Ratio | |||
September 30, 2005 | 5.20 to 1 | |||
December 31, 2005 | 6.30 to 1 | |||
March 31, 2006 | 5.65 to 1 | |||
June 30, 2006 | 6.65 to 1 | |||
September 30, 2006 | 5.15 to 1 | |||
December 31, 2006 | 4.15 to 1 | |||
March 31, 2007 | 3.90 to 1 |
Four Fiscal Quarters Ending | Amount | |||
September 30, 2005 | $ | 435.0 | ||
December 31, 2005 | $ | 360.0 | ||
March 31, 2006 | $ | 400.0 | ||
June 30, 2006 | $ | 340.0 | ||
September 30, 2006 | $ | 440.0 | ||
December 31, 2006 | $ | 545.0 | ||
March 31, 2007 | $ | 585.0 |
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Credit Agency Ratings |
December 31, | ||||||||||||||||||||||||
2004 | 2003 | |||||||||||||||||||||||
Senior | Senior | |||||||||||||||||||||||
Unsecured | Subordinated* | Outlook | Unsecured | Subordinated | Outlook | |||||||||||||||||||
Moody’s | Baa3 | — | Stable | Baa3 | Ba1 | Credit watch Negative | ||||||||||||||||||
Standard & Poor’s | BB+ | — | Credit watch Negative | BB+ | BB- | Stable | ||||||||||||||||||
Fitch | BB+ | — | Stable | BB+ | BB- | Stable |
* | As of December 31, 2004, we had no Subordinated debt outstanding. |
Convertible Preferred Stock |
Payment of Dividends |
CONTRACTUAL OBLIGATIONS |
2005 | 2006 | 2007 | 2008 | 2009 | Thereafter | Total | ||||||||||||||||||||||
Long-term debt | $ | 258.1 | $ | 3.9 | $ | 2.1 | $ | 1.6 | $ | 250.5 | $ | 1,677.9 | $ | 2,194.1 | ||||||||||||||
Interest payments | $ | 133.0 | $ | 125.5 | $ | 125.5 | $ | 121.0 | $ | 107.7 | $ | 667.9 | $ | 1,280.6 | ||||||||||||||
Non-cancelable operating lease obligations | $ | 269.9 | $ | 243.5 | $ | 212.9 | $ | 186.5 | $ | 155.5 | $ | 828.4 | $ | 1,896.7 |
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2005 | 2006 | 2007 | 2008 | 2009 | Thereafter | Total | |||||||||||||||||||||||
Deferred Acquisition Payments | |||||||||||||||||||||||||||||
Cash | $ | 48.0 | $ | 5.7 | $ | 2.1 | $ | 0.9 | $ | 4.3 | $ | — | $ | 61.0 | |||||||||||||||
Stock | 12.4 | 5.4 | — | — | — | — | 17.8 | ||||||||||||||||||||||
Put Options with Consolidated Affiliates* | |||||||||||||||||||||||||||||
Cash | 30.2 | 1.8 | 9.5 | 3.4 | 3.0 | 7.3 | 55.2 | ||||||||||||||||||||||
Stock | 0.1 | 0.1 | — | — | — | — | 0.2 | ||||||||||||||||||||||
Put Options with Unconsolidated Affiliates* | |||||||||||||||||||||||||||||
Cash | 5.4 | 3.4 | 3.9 | 3.0 | 2.2 | 1.4 | 19.3 | ||||||||||||||||||||||
Stock | 0.8 | 0.9 | — | 0.9 | — | 0.3 | 2.9 | ||||||||||||||||||||||
Call Options with Consolidated Affiliates* | |||||||||||||||||||||||||||||
Cash | 4.2 | 1.1 | — | — | — | 4.8 | 10.1 | ||||||||||||||||||||||
Stock | — | 0.5 | — | — | — | — | 0.5 | ||||||||||||||||||||||
Subtotal — Cash | $ | 87.8 | $ | 12.0 | $ | 15.5 | $ | 7.3 | $ | 9.5 | $ | 13.5 | $ | 145.6 | |||||||||||||||
Subtotal — Stock | $ | 13.3 | $ | 6.9 | $ | — | $ | 0.9 | $ | — | $ | 0.3 | $ | 21.4 | |||||||||||||||
Total Contingent Acquisition Payments | $ | 101.1 | $ | 18.9 | $ | 15.5 | $ | 8.2 | $ | 9.5 | $ | 13.8 | $ | 167.0 | |||||||||||||||
Compensation Expense — Related Payments | |||||||||||||||||||||||||||||
Cash | $ | 34.1 | $ | 4.9 | $ | 2.1 | $ | 1.4 | $ | — | $ | 1.3 | $ | 43.8 | |||||||||||||||
Stock | $ | 1.8 | $ | 0.2 | $ | — | $ | — | $ | — | $ | — | $ | 2.0 | |||||||||||||||
Subtotal | $ | 35.9 | $ | 5.1 | $ | 2.1 | $ | 1.4 | $ | — | $ | 1.3 | $ | 45.8 | |||||||||||||||
Total Payments | $ | 137.0 | $ | 24.0 | $ | 17.6 | $ | 9.6 | $ | 9.5 | $ | 15.1 | $ | 212.8 | |||||||||||||||
* | We have entered into certain acquisitions that contain both put and call options with similar terms and conditions. In such instances, we have included the related estimated contingent acquisition obligations with Put Options. |
DERIVATIVES AND HEDGING ACTIVITIES |
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INTERNAL CONTROL OVER FINANCIAL REPORTING |
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RESTATEMENT |
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For the Years Ended December 31, | |||||||||||||||||
Impact of Adjustments on Revenue | |||||||||||||||||
2003 | 2002 | 2001 | 2000 | ||||||||||||||
As previously reported | $ | 5,863.4 | $ | 5,737.5 | $ | 6,352.7 | $ | 6,728.5 | |||||||||
Revenue Recognition Related to Vendor Discounts or Credits | (50.6 | ) | (40.2 | ) | (42.8 | ) | (25.9 | ) | |||||||||
Revenue Recognition related to Customer Contracts | (18.7 | ) | (8.6 | ) | (3.6 | ) | (6.8 | ) | |||||||||
Revenue Presentation | 355.6 | 358.5 | 340.2 | 264.3 | |||||||||||||
Pre-Acquisition Earnings | — | (2.5 | ) | (4.2 | ) | (42.2 | ) | ||||||||||
Internal Investigations | (7.2 | ) | (6.1 | ) | (2.9 | ) | (4.6 | ) | |||||||||
Other Adjustments | 19.2 | 20.5 | (40.9 | ) | (41.1 | ) | |||||||||||
Total Adjustments | 298.3 | 321.6 | 245.8 | 143.7 | |||||||||||||
As restated | $ | 6,161.7 | $ | 6,059.1 | $ | 6,598.5 | $ | 6,872.2 | |||||||||
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Impact of Adjustments on Net Income (Loss) from Continuing Operations and Earnings per Share | |||||||||||||||||||||||||
For the Year Ended December 31, 2003 | For the Year Ended December 31, 2002 | ||||||||||||||||||||||||
Basic Earnings | Basic Earnings | ||||||||||||||||||||||||
(Loss) Per | Diluted Earnings | (Loss) Per | Diluted Earnings | ||||||||||||||||||||||
Share of | (Loss) Per | Share of | (Loss) Per | ||||||||||||||||||||||
Net Income | Common | Share of | Net Income | Common | Share of | ||||||||||||||||||||
(Loss) | Stock | Common Stock | (Loss) | Stock | Common Stock | ||||||||||||||||||||
As previously reported | $ | (552.9 | ) | $ | (1.43 | ) | $ | (1.43 | ) | $ | 68.0 | $ | 0.18 | $ | 0.18 | ||||||||||
Revenue Recognition Related to Vendor Discounts or Credits | (45.4 | ) | (0.12 | ) | (0.12 | ) | (32.9 | ) | (0.09 | ) | (0.09 | ) | |||||||||||||
Revenue Recognition Related to Customer Contracts | (15.8 | ) | (0.04 | ) | (0.04 | ) | (4.5 | ) | (0.01 | ) | (0.01 | ) | |||||||||||||
Future Obligations Related to Prior Acquisitions | (24.2 | ) | (0.06 | ) | (0.06 | ) | (13.8 | ) | (0.04 | ) | (0.04 | ) | |||||||||||||
Pre-Acquisition Earnings | — | — | — | (0.7 | ) | — | — | ||||||||||||||||||
Internal Investigations | (18.6 | ) | (0.05 | ) | (0.05 | ) | (14.4 | ) | (0.04 | ) | (0.04 | ) | |||||||||||||
International Compensation Arrangements | (8.8 | ) | (0.02 | ) | (0.02 | ) | (8.5 | ) | (0.02 | ) | (0.02 | ) | |||||||||||||
Accounting for Leases | (2.5 | ) | (0.01 | ) | (0.01 | ) | (0.3 | ) | — | — | |||||||||||||||
Other Adjustments | 28.1 | 0.07 | 0.07 | (7.7 | ) | (0.02 | ) | (0.02 | ) | ||||||||||||||||
Total Restatement Adjustments | (87.2 | ) | (0.23 | ) | (0.23 | ) | (82.8 | ) | (0.22 | ) | (0.22 | ) | |||||||||||||
As restated | $ | (640.1 | ) | $ | (1.66 | ) | $ | (1.66 | ) | $ | (14.8 | ) | $ | (0.04 | ) | $ | (0.04 | ) | |||||||
Weighted-average shares: | 385.5 | 385.5 | 376.1 | 376.1 |
Impact of Adjustments on Net Income (Loss) from Continuing Operations and Earnings per Share | |||||||||||||||||||||||||
For the Year Ended December 31, 2001 | For the Year Ended December 31, 2000 | ||||||||||||||||||||||||
Basic Earnings | Diluted | Basic Earnings | |||||||||||||||||||||||
(Loss) Per | Earnings | (Loss) Per | Diluted Earnings | ||||||||||||||||||||||
Share of | (Loss) Per | Share of | (Loss) Per | ||||||||||||||||||||||
Net Income | Common | Share of | Net Income | Common | Share of | ||||||||||||||||||||
(Loss) | Stock | Common Stock | (Loss) | Stock | Common Stock | ||||||||||||||||||||
As previously reported | $ | (550.1 | ) | $ | (1.49 | ) | $ | (1.49 | ) | $ | 386.4 | $ | 1.07 | $ | 1.04 | ||||||||||
Revenue Recognition Related to Vendor Discounts or Credits | (35.7 | ) | (0.10 | ) | (0.10 | ) | (19.6 | ) | (0.05 | ) | (0.05 | ) | |||||||||||||
Revenue Recognition Related to Customer Contracts | (2.4 | ) | (0.01 | ) | (0.01 | ) | (4.3 | ) | (0.01 | ) | (0.01 | ) | |||||||||||||
Future Obligations Related to Prior Acquisitions | (14.0 | ) | (0.04 | ) | (0.04 | ) | (10.1 | ) | (0.03 | ) | (0.03 | ) | |||||||||||||
Pre-Acquisition Earnings | 2.8 | 0.01 | 0.01 | (5.1 | ) | (0.01 | ) | (0.01 | ) | ||||||||||||||||
Internal Investigations | (10.9 | ) | (0.03 | ) | (0.03 | ) | (3.7 | ) | (0.01 | ) | (0.01 | ) | |||||||||||||
International Compensation Arrangements | (4.4 | ) | (0.01 | ) | (0.01 | ) | (4.6 | ) | (0.01 | ) | (0.01 | ) | |||||||||||||
Accounting for Leases | (2.9 | ) | (0.01 | ) | (0.01 | ) | (7.0 | ) | (0.02 | ) | (0.02 | ) | |||||||||||||
Other Adjustments | (8.3 | ) | (0.02 | ) | (0.02 | ) | (8.1 | ) | (0.02 | ) | (0.02 | ) | |||||||||||||
Total Restatement Adjustments* | (75.8 | ) | (0.21 | ) | (0.21 | ) | (62.5 | ) | (0.17 | ) | (0.17 | ) | |||||||||||||
As restated | $ | (625.9 | ) | $ | (1.70 | ) | $ | (1.70 | ) | $ | 323.9 | $ | 0.90 | $ | 0.87 | ||||||||||
Weighted-average shares | 369.0 | 369.0 | 359.6 | 370.5 |
* | Earnings (loss) per share does not add due to rounding. |
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Impact of Adjustments on Consolidated Balance Sheet Accounts | |||||||||||||||||||||||||
As of December 31, 2003 | As of December 31, 2002 | ||||||||||||||||||||||||
Total | Total | Stockholders’ | Total | Total | Stockholders’ | ||||||||||||||||||||
Assets | Liabilities | Equity | Assets | Liabilities | Equity | ||||||||||||||||||||
As previously reported | $ | 12,234.5 | $ | 9,628.6 | $ | 2,605.9 | $ | 11,793.7 | $ | 9,693.7 | $ | 2,100.0 | |||||||||||||
Revenue Recognition Related to Vendor Discounts or Credits | 36.3 | 198.5 | (162.2 | ) | 26.8 | 130.8 | (104.0 | ) | |||||||||||||||||
Revenue Recognition Related to Customer Contracts | 33.7 | 122.8 | (89.1 | ) | 37.5 | 101.1 | (63.6 | ) | |||||||||||||||||
Future Obligations Related to Prior Acquisitions | (2.3 | ) | 64.2 | (66.5 | ) | (5.0 | ) | 37.2 | (42.2 | ) | |||||||||||||||
Pre-Acquisition Earnings | (33.3 | ) | (2.6 | ) | (30.7 | ) | (32.9 | ) | (2.6 | ) | (30.3 | ) | |||||||||||||
Internal Investigations | 9.2 | 61.5 | (52.3 | ) | (3.4 | ) | 27.7 | (31.1 | ) | ||||||||||||||||
International Compensation Arrangements | 2.8 | 29.2 | (26.4 | ) | 2.1 | 19.6 | (17.5 | ) | |||||||||||||||||
Accounting for Leases | 38.8 | 67.5 | (28.7 | ) | 38.3 | 61.7 | (23.4 | ) | |||||||||||||||||
Other Adjustments | 126.2 | 157.4 | (31.2 | ) | 47.9 | 113.2 | (65.3 | ) | |||||||||||||||||
Total Adjustments | 211.4 | 698.5 | (487.1 | ) | 111.3 | 488.7 | (377.4 | ) | |||||||||||||||||
As restated | $ | 12,445.9 | $ | 10,327.1 | $ | 2,118.8 | $ | 11,905.0 | $ | 10,182.4 | $ | 1,722.6 | |||||||||||||
Impact of Adjustments on Consolidated Balance Sheet Accounts | |||||||||||||||||||||||||
As of December 31, 2001 | As of December 31, 2000 | ||||||||||||||||||||||||
Total | Total | Stockholders’ | Total | Total | Stockholders’ | ||||||||||||||||||||
Assets | Liabilities | Equity | Assets | Liabilities | Equity | ||||||||||||||||||||
As previously reported | $ | 11,375.3 | $ | 9,535.2 | $ | 1,840.1 | $ | 12,253.6 | $ | 9,883.3 | $ | 2,370.3 | |||||||||||||
Revenue Recognition Related to Vendor Discounts or Credits | 19.8 | 85.8 | (66.0 | ) | 11.0 | 42.3 | (31.3 | ) | |||||||||||||||||
Revenue Recognition Related to Customer Contracts | 32.6 | 86.3 | (53.7 | ) | 30.7 | 82.6 | (51.9 | ) | |||||||||||||||||
Future Obligations Related to Prior Acquisitions | (0.6 | ) | 28.2 | (28.8 | ) | (0.5 | ) | 14.5 | (15.0 | ) | |||||||||||||||
Pre-Acquisition Earnings | (32.3 | ) | (2.6 | ) | (29.7 | ) | (36.0 | ) | (2.7 | ) | (33.3 | ) | |||||||||||||
Internal Investigations | (1.4 | ) | 14.0 | (15.4 | ) | 0.6 | 5.4 | (4.8 | ) | ||||||||||||||||
International Compensation Arrangements | 1.2 | 10.2 | (9.0 | ) | 0.3 | 5.0 | (4.7 | ) | |||||||||||||||||
Accounting for Leases | 46.1 | 67.6 | (21.5 | ) | 37.9 | 57.4 | (19.5 | ) | |||||||||||||||||
Other Adjustments | (0.4 | ) | 36.0 | (36.4 | ) | (20.0 | ) | 9.8 | (29.8 | ) | |||||||||||||||
Total Adjustments | 65.0 | 325.5 | (260.5 | ) | 24.0 | 214.3 | (190.3 | ) | |||||||||||||||||
As restated | $ | 11,440.3 | $ | 9,860.7 | $ | 1,579.6 | $ | 12,277.6 | $ | 10,097.6 | $ | 2,180.0 | |||||||||||||
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Impact of | |||||
Adjustments on | |||||
Retained Earnings | |||||
As previously reported at December 31, 1999 | $ | 1,320.4 | |||
Revenue Recognition Related to Vendor Discounts or Credits | (12.7 | ) | |||
Revenue Recognition Related to Customer Contracts | (47.7 | ) | |||
Future Obligations Related to Prior Acquisitions | (5.2 | ) | |||
Pre-Acquisition Earnings | (31.8 | ) | |||
Internal Investigations | (1.1 | ) | |||
Accounting for Leases | (13.3 | ) | |||
Other Adjustments | (25.9 | ) | |||
Total Restatement Adjustments | (137.7 | ) | |||
As restated at January 1, 2000 | $ | 1,182.7 | |||
Description of Restatement Adjustments: |
Revenue Recognition |
Revenue Recognition related to Vendor Discounts or Credits: |
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Revenue Recognition Related to Vendor Discounts or Credits | Impact of Restatement | ||||||||||||||||
Increase (Decrease) for the Years Ended and as of December 31, | 2003 | 2002 | 2001 | 2000 | |||||||||||||
Consolidated Statement of Operations: | |||||||||||||||||
Revenue | (50.6 | ) | (40.2 | ) | (42.8 | ) | (25.9 | ) | |||||||||
Operating Income (Loss) | (53.3 | ) | (41.4 | ) | (48.8 | ) | (26.7 | ) | |||||||||
Provision for Income Taxes | (7.9 | ) | (8.5 | ) | (13.0 | ) | (7.1 | ) | |||||||||
Income (Loss) from Continuing Operations | (45.4 | ) | (32.9 | ) | (35.7 | ) | (19.6 | ) | |||||||||
Consolidated Balance Sheet: | |||||||||||||||||
Total Assets | 9.6 | 7.0 | 8.7 | 7.0 | |||||||||||||
Total Liabilities | 67.7 | 45.0 | 43.4 | 25.6 | |||||||||||||
Revenue Recognition related to Customer Contracts: |
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Revenue Recognition Related to Customer Contracts | Impact of Restatement | ||||||||||||||||
Increase (Decrease) for the Years Ended and as of December 31, | 2003 | 2002 | 2001 | 2000 | |||||||||||||
Consolidated Statement of Operations: | |||||||||||||||||
Revenue | (18.7 | ) | (8.6 | ) | (3.6 | ) | (6.8 | ) | |||||||||
Operating Income (Loss) | (17.2 | ) | (6.7 | ) | (3.6 | ) | (6.8 | ) | |||||||||
Provision for Income Taxes | (1.4 | ) | (2.1 | ) | (1.3 | ) | (2.5 | ) | |||||||||
Income (Loss) from Continuing Operations | (15.8 | ) | (4.5 | ) | (2.4 | ) | (4.3 | ) | |||||||||
Consolidated Balance Sheet: | |||||||||||||||||
Total Assets | (3.9 | ) | 4.9 | 1.9 | 3.4 | ||||||||||||
Total Liabilities | 21.6 | 14.8 | 3.7 | 7.6 | |||||||||||||
Accounting for Reimbursement of Out-of-Pocket Expenses: |
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Gross versus Net Revenue Presentation: |
Revenue Presentation | Impact of Restatement | ||||||||||||||||
Increase (Decrease) for the Years Ended and as of December 31, | 2003 | 2002 | 2001 | 2000 | |||||||||||||
Consolidated Statement of Operations: | |||||||||||||||||
Revenue | 355.6 | 358.5 | 340.2 | 264.3 | |||||||||||||
Operating Income (Loss) | — | — | — | — | |||||||||||||
Provision for Income Taxes | — | — | — | — | |||||||||||||
Income (Loss) from Continuing Operations | — | — | — | — | |||||||||||||
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Future Obligations Related to Prior Acquisitions | Impact of Restatement | ||||||||||||||||
Increase (Decrease) for the Years Ended and as of December 31, | 2003 | 2002 | 2001 | 2000 | |||||||||||||
Consolidated Statement of Operations: | |||||||||||||||||
Revenue | — | — | — | — | |||||||||||||
Operating Income (Loss) | (23.6 | ) | (13.8 | ) | (14.0 | ) | (10.1 | ) | |||||||||
Provision for Income Taxes | — | — | — | — | |||||||||||||
Income (Loss) from Continuing Operations | (24.2 | ) | (13.8 | ) | (14.0 | ) | (10.1 | ) | |||||||||
Consolidated Balance Sheet: | |||||||||||||||||
Total Assets | 2.8 | (4.5 | ) | (0.1 | ) | �� | (0.0 | ) | |||||||||
Total Liabilities | 27.0 | 8.9 | 13.7 | 9.8 | |||||||||||||
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Pre-Acquisition Earnings | Impact of Restatement | ||||||||||||||||
Increase (Decrease) for the Years Ended and as of December 31, | 2003 | 2002 | 2001 | 2000 | |||||||||||||
Consolidated Statement of Operations: | |||||||||||||||||
Revenue | — | (2.5 | ) | (4.2 | ) | (42.2 | ) | ||||||||||
Operating Income (Loss) | — | (1.2 | ) | 1.5 | (9.9 | ) | |||||||||||
Provision for Income Taxes | — | (0.1 | ) | (0.6 | ) | (4.6 | ) | ||||||||||
Income (Loss) from Continuing Operations | — | (0.7 | ) | 2.8 | (5.1 | ) | |||||||||||
Consolidated Balance Sheet: | |||||||||||||||||
Total Assets | (0.4 | ) | (0.5 | ) | 3.7 | (1.5 | ) | ||||||||||
Total Liabilities | (0.0 | ) | 0.1 | 0.1 | 0.0 | ||||||||||||
Internal Investigations |
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Internal Investigations | Impact of Restatement | ||||||||||||||||
Increase (Decrease) for the Years Ended and as of December 31, | 2003 | 2002 | 2001 | 2000 | |||||||||||||
Consolidated Statement of Operations: | |||||||||||||||||
Revenue | (7.2 | ) | (6.1 | ) | (2.9 | ) | (4.6 | ) | |||||||||
Operating Income (Loss) | (17.3 | ) | (12.7 | ) | (10.3 | ) | (4.0 | ) | |||||||||
Provision for Income Taxes | 1.2 | 1.9 | 0.7 | (0.3 | ) | ||||||||||||
Income (Loss) from Continuing Operations | (18.6 | ) | (14.4 | ) | (10.9 | ) | (3.7 | ) | |||||||||
Consolidated Balance Sheet: | |||||||||||||||||
Total Assets | 12.6 | (2.1 | ) | (1.9 | ) | 0.5 | |||||||||||
Total Liabilities | 33.8 | 13.7 | 8.6 | 4.3 | |||||||||||||
• | We have recorded adjustments with a cumulative impact on income for the years 2000 through 2004 of $31.8 including taxes, penalties and interest of $10.0 relating to errors we identified at our McCann agency in Turkey. These errors are attributable primarily to the retention of vendor discounts that should have been remitted to clients, the improper valuation of a previously acquired business and over-billing clients for payments to vendors. Our information to date indicates that these activities involved misconduct by local senior management. When the investigation is concluded, we will determine the appropriate personnel actions, which could include terminations of local senior management. | |
• | We have recorded adjustments with a cumulative impact on income for the years 2000 through 2004 of $14.5 relating to errors identified at our FCB agency in Turkey. These errors were attributable primarily to inappropriate charges to customers and evasion of local taxes. Our information to date indicates that these activities involved misconduct by local senior management. When the investigation is concluded, we will determine the appropriate personnel actions, which could include terminations of local senior management. | |
• | We have recorded adjustments with a cumulative impact on income for the years 2000 through 2004 of $10.8 relating to errors we identified at Media First in New York City. These errors are attributable primarily to inadequate recordkeeping but also included payment of certain employee salaries through accounts payable and without appropriate tax withholdings. The errors resulted in |
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increased earn-out payments. Some management personnel at the agency involved in this activity have been terminated. | ||
• | We have recorded adjustments with a cumulative impact on income for the years 2000 to 2004 of $10.5 relating to errors we identified at our FCB agency in Spain. These errors are attributable to the use of companies that were formed to account for the production and media volume discounts received from production suppliers on a separate set of books and records. As a result, discounts and rebates to which clients may have been entitled under local law were concealed to prevent detection in the event of a client audit. In addition, compensation was paid to an agency executive’s personal service company out of these companies without proper withholding for income taxes. At the same location, we have also recorded adjustments with a cumulative impact of $4.2. These errors are attributable to the inappropriate recognition of certain discounts and benefits that should have been remitted to clients. We plan to divest our interest in FCB Spain and sign an affiliation agreement with the management there with an appropriate control structure to assure future business is properly conducted. | |
• | We have recorded adjustments with a cumulative impact on income for the years 2000 through 2004 of $12.7 relating to errors we identified at our McCann agency in Greece. These errors are attributable primarily to retention of vendor discounts in excess of the level permitted under Greek law and the purchase of prepaid media on a speculative basis without the appropriate client commitment. In addition, we identified inappropriate related-party transactions and evidence of improper gifts. The senior officer and other management personnel at the agency have been terminated and parts of the agency’s business have been divested. | |
• | We have recorded adjustments with a cumulative impact on income for the years 2000 through 2004 of approximately $7.2 relating to errors we identified at our McCann agency in the Netherlands. These errors are attributable to the recognition as revenue of certain discounts and benefits that should have been returned to clients or vendors. We have terminated and/or replaced local financial and operating management. | |
• | We have recorded adjustments with a cumulative impact on income for the years 2000 through 2004 of $8.6 relating to errors identified at five McCann agencies in Azerbaijan, Ukraine, Uzbekistan, Bulgaria and Kazakhstan. These errors were attributable to failure to record and pay compensation-related taxes, value added taxes and corporate income taxes, and to inadequate record keeping. Management in these jurisdictions paid certain employees as contractors, often in cash, without accounting for the payments. In three of these countries, income and expenses were recorded by a service company located outside these jurisdictions to avoid corporate tax or value added tax. We have sold or are in the process of selling all of these entities. In the case of the Ukraine, we plan on signing an affiliation agreement with the management there with appropriate controls in place to assure our business is properly conducted. |
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Review of International Compensation Arrangements |
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International Compensation Arrangements | Impact of Restatement | ||||||||||||||||
Increase (Decrease) for the Years Ended and as of December 31, | 2003 | 2002 | 2001 | 2000 | |||||||||||||
Consolidated Statement of Operations: | |||||||||||||||||
Revenue | — | — | — | — | |||||||||||||
Operating Income (Loss) | (9.6 | ) | (9.4 | ) | (5.2 | ) | (5.0 | ) | |||||||||
Provision for Income Taxes | (0.7 | ) | (0.9 | ) | (0.8 | ) | (0.4 | ) | |||||||||
Income (Loss) from Continuing Operations | (8.8 | ) | (8.5 | ) | (4.4 | ) | (4.6 | ) | |||||||||
Consolidated Balance Sheet: | |||||||||||||||||
Total Assets | 0.7 | 0.9 | 0.8 | 0.4 | |||||||||||||
Total Liabilities | 9.6 | 9.4 | 5.2 | 5.0 | |||||||||||||
Accounting for Lease Related Expenses |
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Accounting for Leases | Impact of Restatement | ||||||||||||||||
Increase (Decrease) for the Years Ended and as of December 31, | 2003 | 2002 | 2001 | 2000 | |||||||||||||
Consolidated Statement of Operations: | |||||||||||||||||
Revenue | — | — | — | — | |||||||||||||
Operating Income (Loss) | (0.6 | ) | 0.2 | (4.0 | ) | (10.9 | ) | ||||||||||
Provision for Income Taxes | 1.6 | 0.2 | (1.4 | ) | (4.0 | ) | |||||||||||
Income (Loss) from Continuing Operations | (2.5 | ) | (0.3 | ) | (2.9 | ) | (7.0 | ) | |||||||||
Consolidated Balance Sheet: | |||||||||||||||||
Total Assets | 0.5 | (7.8 | ) | 8.3 | 10.0 | ||||||||||||
Total Liabilities | 5.9 | (5.9 | ) | 10.1 | 16.3 | ||||||||||||
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Other Adjustments | Impact of Restatement | ||||||||||||||||
Increase (Decrease) for the Years Ended and as of December 31, | 2003 | 2002 | 2001 | 2000 | |||||||||||||
Consolidated Statement of Operations: | |||||||||||||||||
Revenue | $ | 19.2 | $ | 20.5 | $ | (40.9 | ) | $ | (41.2 | ) | |||||||
Operating Income (Loss) | 38.2 | 1.8 | (13.6 | ) | (21.7 | ) | |||||||||||
Provision for Income Taxes | (3.9 | ) | (2.1 | ) | (6.3 | ) | (6.6 | ) | |||||||||
Income (Loss) from Continuing Operations | $ | 28.1 | $ | (7.7 | ) | $ | (8.3 | ) | $ | (8.1 | ) | ||||||
Consolidated Balance Sheet: | |||||||||||||||||
Total Assets | $ | 78.3 | $ | 48.3 | $ | 19.6 | $ | (26.8 | ) | ||||||||
Total Liabilities | $ | 44.2 | $ | 77.2 | $ | 26.2 | $ | (22.9 | ) | ||||||||
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Year Ended December 31, 2003 | |||||||||||||
As Previously | Effect of | As | |||||||||||
Reported | Restatement | Restated | |||||||||||
REVENUE | $ | 5,863.4 | $ | 298.3 | $ | 6,161.7 | |||||||
OPERATING EXPENSES: | |||||||||||||
Salaries and related expenses | 3,451.8 | 48.8 | 3,500.6 | ||||||||||
Office and general expenses | 1,896.9 | 328.8 | 2,225.7 | ||||||||||
Restructuring charges | 175.6 | (2.7 | ) | 172.9 | |||||||||
Long-lived asset impairment and other charges | 286.9 | 7.1 | 294.0 | ||||||||||
Total operating expenses | 5,811.2 | 382.0 | 6,193.2 | ||||||||||
OPERATING INCOME (LOSS) | 52.2 | (83.7 | ) | (31.5 | ) | ||||||||
EXPENSE AND OTHER INCOME: | |||||||||||||
Interest expense | (172.8 | ) | (34.2 | ) | (207.0 | ) | |||||||
Debt prepayment penalty | (24.8 | ) | — | (24.8 | ) | ||||||||
Interest income | 38.9 | 0.4 | 39.3 | ||||||||||
Investment impairments | (84.9 | ) | 13.4 | (71.5 | ) | ||||||||
Litigation charges | (127.6 | ) | — | (127.6 | ) | ||||||||
Other income | 50.0 | 0.3 | 50.3 | ||||||||||
Total expense and other income | (321.2 | ) | �� | (20.1 | ) | (341.3 | ) | ||||||
Loss from continuing operations before provision for income taxes | (269.0 | ) | (103.8 | ) | (372.8 | ) | |||||||
Provision for income taxes | 254.0 | (11.3 | ) | 242.7 | |||||||||
Loss from continuing operations of consolidated companies | (523.0 | ) | (92.5 | ) | (615.5 | ) | |||||||
Income applicable to minority interests (net of tax) | (30.9 | ) | 3.9 | (27.0 | ) | ||||||||
Equity in net income of unconsolidated affiliates (net of tax) | 1.0 | 1.4 | 2.4 | ||||||||||
Loss from continuing operations | (552.9 | ) | (87.2 | ) | (640.1 | ) | |||||||
Income from discontinued operations (net of tax) | 101.2 | (0.2 | ) | 101.0 | |||||||||
LOSS APPLICABLE TO COMMON STOCKHOLDERS | $ | (451.7 | ) | $ | (87.4 | ) | $ | (539.1 | ) | ||||
Earnings (loss) per share of common stock: | |||||||||||||
Basic: | |||||||||||||
Continuing operations | $ | (1.43 | ) | $ | (0.23 | ) | $ | (1.66 | ) | ||||
Discontinued operations | 0.26 | — | 0.26 | ||||||||||
$ | (1.17 | ) | $ | (0.23 | ) | $ | (1.40 | ) | |||||
Diluted: | |||||||||||||
Continuing operations | $ | (1.43 | ) | $ | (0.23 | ) | $ | (1.66 | ) | ||||
Discontinued operations | 0.26 | — | 0.26 | ||||||||||
Total | $ | (1.17 | ) | $ | (0.23 | ) | $ | (1.40 | ) | ||||
Weighted-average shares: | |||||||||||||
Basic | 385.5 | — | 385.5 | ||||||||||
Diluted | 385.5 | — | 385.5 |
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Year Ended December 31, 2002 | |||||||||||||
As Previously | Effect of | As | |||||||||||
Reported | Restatement | Restated | |||||||||||
REVENUE | $ | 5,737.5 | $ | 321.6 | $ | 6,059.1 | |||||||
OPERATING EXPENSES: | |||||||||||||
Salaries and related expenses | 3,350.0 | 46.7 | 3,396.7 | ||||||||||
Office and general expenses | 1,889.3 | 359.4 | 2,248.7 | ||||||||||
Restructuring charges | 12.1 | (4.2 | ) | 7.9 | |||||||||
Long-lived asset impairment and other charges | 127.1 | 2.9 | 130.0 | ||||||||||
Total operating expenses | 5,378.5 | 404.8 | 5,783.3 | ||||||||||
OPERATING INCOME | 359.0 | (83.2 | ) | 275.8 | |||||||||
EXPENSE AND OTHER INCOME: | |||||||||||||
Interest expense | (145.6 | ) | (13.1 | ) | (158.7 | ) | |||||||
Interest income | 29.8 | 0.8 | 30.6 | ||||||||||
Investment impairments | (39.7 | ) | (0.6 | ) | (40.3 | ) | |||||||
Other income | 7.9 | 0.4 | 8.3 | ||||||||||
Total expense and other income | (147.6 | ) | (12.5 | ) | (160.1 | ) | |||||||
Income from continuing operations before provision for income taxes | 211.4 | (95.7 | ) | 115.7 | |||||||||
Provision for income taxes | 117.9 | (11.5 | ) | 106.4 | |||||||||
Income from continuing operations of consolidated companies | 93.5 | (84.2 | ) | 9.3 | |||||||||
Income applicable to minority interests (net of tax) | (30.5 | ) | 0.5 | (30.0 | ) | ||||||||
Equity in net income of unconsolidated affiliates (net of tax) | 5.0 | 0.9 | 5.9 | ||||||||||
Income (loss) from continuing operations | 68.0 | (82.8 | ) | (14.8 | ) | ||||||||
Income from discontinued operations (net of tax) | 31.5 | 31.5 | |||||||||||
NET INCOME (LOSS) APPLICABLE TO COMMON STOCKHOLDERS | $ | 99.5 | $ | (82.8 | ) | $ | 16.7 | ||||||
Earnings (loss) per share of common stock: | |||||||||||||
Basic: | |||||||||||||
Continuing operations | $ | 0.18 | $ | (0.22 | ) | $ | (0.04 | ) | |||||
Discontinued operations | 0.08 | — | 0.08 | ||||||||||
Total | $ | 0.26 | $ | (0.22 | ) | $ | 0.04 | ||||||
Diluted: | |||||||||||||
Continuing operations | $ | 0.18 | $ | (0.22 | ) | $ | (0.04 | ) | |||||
Discontinued operations | 0.08 | — | 0.08 | ||||||||||
Total | $ | 0.26 | $ | (0.22 | ) | $ | 0.04 | ||||||
Weighted-average shares: | |||||||||||||
Basic | 376.1 | — | 376.1 | ||||||||||
Diluted | 381.3 | (5.2 | ) | 376.1 |
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Year Ended December 31, 2001 | |||||||||||||
As Previously | Effect of | As | |||||||||||
Reported | Restatement | Restated | |||||||||||
REVENUE | $ | 6,352.7 | $ | 245.8 | $ | 6,598.5 | |||||||
OPERATING EXPENSES: | |||||||||||||
Salaries and related expenses | 3,620.9 | 13.6 | 3,634.5 | ||||||||||
Office and general expenses | 2,060.7 | 337.8 | 2,398.5 | ||||||||||
Restructuring charges | 634.5 | (5.0 | ) | 629.5 | |||||||||
Long-lived asset impairment and other charges | 303.1 | (2.4 | ) | 300.7 | |||||||||
Total operating expenses | 6,619.2 | 344.0 | 6,963.2 | ||||||||||
OPERATING INCOME | (266.5 | ) | (98.2 | ) | (364.7 | ) | |||||||
EXPENSE AND OTHER INCOME: | |||||||||||||
Interest expense | (164.6 | ) | (4.4 | ) | (169.0 | ) | |||||||
Interest income | 41.8 | (0.1 | ) | 41.7 | |||||||||
Investment impairments | (210.8 | ) | (1.6 | ) | (212.4 | ) | |||||||
Other income | 13.7 | 0.8 | 14.5 | ||||||||||
Total expense and other income | (319.9 | ) | (5.3 | ) | (325.2 | ) | |||||||
Loss from continuing operations before provision for income taxes | (586.4 | ) | (103.5 | ) | (689.9 | ) | |||||||
Benefit for income taxes | (66.1 | ) | (22.0 | ) | (88.1 | ) | |||||||
Loss from continuing operations of consolidated companies | (520.3 | ) | (81.5 | ) | (601.8 | ) | |||||||
Income applicable to minority interests (net of tax) | (29.4 | ) | 2.1 | (27.3 | ) | ||||||||
Equity in net income of unconsolidated affiliates (net of tax) | (0.4 | ) | 3.6 | 3.2 | |||||||||
Loss from continuing operations | (550.1 | ) | (75.8 | ) | (625.9 | ) | |||||||
Income from discontinued operations (net of tax) | 15.6 | (0.1 | ) | 15.5 | |||||||||
LOSS APPLICABLE TO COMMON STOCKHOLDERS | $ | (534.5 | ) | ($ | 75.9 | ) | $ | (610.4 | ) | ||||
Earnings (loss) per share of common stock: | |||||||||||||
Basic: | |||||||||||||
Continuing operations | $ | (1.49 | ) | $ | (0.21 | ) | $ | (1.70 | ) | ||||
Discontinued operations | 0.04 | — | 0.04 | ||||||||||
Total* | $ | (1.45 | ) | $ | (0.20 | ) | $ | (1.65 | ) | ||||
Diluted: | |||||||||||||
Continuing operations | $ | (1.49 | ) | $ | (0.21 | ) | $ | (1.70 | ) | ||||
Discontinued operations | 0.04 | — | 0.04 | ||||||||||
Total* | $ | (1.45 | ) | $ | (0.20 | ) | $ | (1.65 | ) | ||||
Weighted-average shares: | |||||||||||||
Basic | 369.0 | — | 369.0 | ||||||||||
Diluted | 369.0 | — | 369.0 |
* | Earnings (loss) per share does not add due to rounding. |
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Year Ended December 31, 2000 | |||||||||||||
As Previously | Effect of | As | |||||||||||
Reported | Restatement | Restated | |||||||||||
REVENUE | $ | 6,728.5 | $ | 143.7 | $ | 6,872.2 | |||||||
OPERATING EXPENSES: | |||||||||||||
Salaries and related expenses | 3,845.7 | (14.9 | ) | 3,830.8 | |||||||||
Office and general expenses | 1,918.6 | 254.4 | 2,173.0 | ||||||||||
Restructuring charges | 159.1 | (0.8 | ) | 158.3 | |||||||||
Total operating expenses | 5,923.4 | 238.7 | 6,162.1 | ||||||||||
OPERATING INCOME | 805.1 | (95.0 | ) | 710.1 | |||||||||
EXPENSE AND OTHER INCOME: | |||||||||||||
Interest expense | (126.3 | ) | (1.0 | ) | (127.3 | ) | |||||||
Interest income | 57.5 | (0.1 | ) | 57.4 | |||||||||
Investment impairments | — | (3.9 | ) | (3.9 | ) | ||||||||
Other income | 42.6 | 2.7 | 45.3 | ||||||||||
Total expense and other income | (26.2 | ) | (2.3 | ) | (28.5 | ) | |||||||
Income from continuing operations before provision for income taxes | 778.9 | (97.3 | ) | 681.6 | |||||||||
Provision for income taxes | 332.1 | (26.2 | ) | 305.9 | |||||||||
Income from continuing operations of consolidated companies | 446.8 | (71.1 | ) | 375.7 | |||||||||
Income applicable to minority interests (net of tax) | (42.2 | ) | 3.7 | (38.5 | ) | ||||||||
Equity in loss of unconsolidated affiliates (net of tax) | (18.2 | ) | 4.9 | (13.3 | ) | ||||||||
Income from continuing operations | 386.4 | (62.5 | ) | 323.9 | |||||||||
Income from discontinued operations (net of tax) | 6.4 | — | 6.4 | ||||||||||
NET INCOME APPLICABLE TO COMMON STOCKHOLDERS | $ | 392.8 | $ | (62.5 | ) | $ | 330.3 | ||||||
Earnings per share of common stock: | |||||||||||||
Basic: | |||||||||||||
Continuing operations | $ | 1.07 | $ | (0.17 | ) | $ | 0.90 | ||||||
Discontinued operations | 0.02 | — | 0.02 | ||||||||||
Total | $ | 1.09 | $ | (0.17 | ) | $ | 0.92 | ||||||
Diluted: | |||||||||||||
Continuing operations | $ | 1.04 | $ | (0.17 | ) | $ | 0.87 | ||||||
Discontinued operations | 0.02 | — | 0.02 | ||||||||||
Total | $ | 1.06 | $ | (0.17 | ) | $ | 0.89 | ||||||
Weighted-average shares: | |||||||||||||
Basic | 359.6 | — | 359.6 | ||||||||||
Diluted | 370.5 | — | 370.5 |
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As of December 31, 2003 | |||||||||||||
As Previously | Effect of | As | |||||||||||
Reported | Restatement | Restated | |||||||||||
ASSETS: | |||||||||||||
Cash and cash equivalents | $ | 2,005.7 | $ | (133.8 | ) | $ | 1,871.9 | ||||||
Short-term marketable securities | — | 195.1 | 195.1 | ||||||||||
Accounts receivable, net of allowance of $134.1 | 4,632.4 | 17.9 | 4,650.3 | ||||||||||
Expenditures billable to clients | 242.1 | 61.2 | 303.3 | ||||||||||
Deferred income taxes | 201.7 | 78.0 | 279.7 | ||||||||||
Prepaid expenses and other current assets | 267.8 | (35.4 | ) | 232.4 | |||||||||
Total current assets | 7,349.7 | 183.0 | 7,532.7 | ||||||||||
Land, buildings and equipment, net | 657.1 | 40.8 | 697.9 | ||||||||||
Deferred income taxes | 344.5 | 33.8 | 378.3 | ||||||||||
Investments | 248.6 | (1.8 | ) | 246.8 | |||||||||
Goodwill | 3,310.6 | (42.7 | ) | 3,267.9 | |||||||||
Other intangible assets, net | 42.0 | 1.0 | 43.0 | ||||||||||
Other assets | 282.0 | (2.7 | ) | 279.3 | |||||||||
Total non-current assets | 4,884.8 | 28.4 | 4,913.2 | ||||||||||
TOTAL ASSETS | $ | 12,234.5 | $ | 211.4 | $ | 12,445.9 | |||||||
LIABILITIES: | |||||||||||||
Accounts payable | $ | 5,299.2 | $ | 315.5 | $ | 5,614.7 | |||||||
Accrued liabilities | 1,042.7 | 214.0 | 1,256.7 | ||||||||||
Short-term debt | 282.6 | 34.3 | 316.9 | ||||||||||
Total current liabilities | 6,624.5 | 563.8 | 7,188.3 | ||||||||||
Long-term debt | 2,191.7 | 7.0 | 2,198.7 | ||||||||||
Deferred compensation and employee benefits | 539.8 | 8.8 | 548.6 | ||||||||||
Other non-current liabilities | 202.6 | 124.1 | 326.7 | ||||||||||
Minority interests in consolidated subsidiaries | 70.0 | (5.2 | ) | 64.8 | |||||||||
Total non-current liabilities | 3,004.1 | 134.7 | 3,138.8 | ||||||||||
TOTAL LIABILITIES | 9,628.6 | 698.5 | 10,327.1 | ||||||||||
STOCKHOLDERS’ EQUITY: | 2,605.9 | (487.1 | ) | 2,118.8 | |||||||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 12,234.5 | $ | 211.4 | $ | 12,445.9 | |||||||
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As of December 31, 2002 | |||||||||||||
As Previously | Effect of | As | |||||||||||
Reported | Restatement | Restated | |||||||||||
ASSETS: | |||||||||||||
Cash and cash equivalents | $ | 933.0 | $ | 20.2 | $ | 953.2 | |||||||
Short-term marketable securities | — | 30.7 | 30.7 | ||||||||||
Accounts receivable, net of allowance of $139.8 | 4,517.6 | 92.5 | 4,610.1 | ||||||||||
Expenditures billable to clients | 407.6 | (19.9 | ) | 387.7 | |||||||||
Deferred income taxes | 37.0 | 66.0 | 103.0 | ||||||||||
Prepaid expenses and other current assets | 427.1 | (37.5 | ) | 389.6 | |||||||||
Total current assets | 6,322.3 | 152.0 | 6,474.3 | ||||||||||
Land, buildings and equipment, net | 825.7 | 25.4 | 851.1 | ||||||||||
Deferred income taxes | 509.9 | 24.4 | 534.3 | ||||||||||
Investments | 357.3 | (30.8 | ) | 326.5 | |||||||||
Goodwill | 3,377.1 | (56.2 | ) | 3,320.9 | |||||||||
Other intangible assets, net | 81.6 | 0.8 | 82.4 | ||||||||||
Other assets | 319.8 | (4.3 | ) | 315.5 | |||||||||
Total non-current assets | 5,471.4 | (40.7 | ) | 5,430.7 | |||||||||
TOTAL ASSETS | $ | 11,793.7 | $ | 111.3 | $ | 11,905.0 | |||||||
LIABILITIES: | |||||||||||||
Accounts payable | $ | 5,125.5 | $ | 245.3 | $ | 5,370.8 | |||||||
Accrued liabilities | 1,144.0 | 129.9 | 1,273.9 | ||||||||||
Short-term debt | 820.3 | 21.6 | 841.9 | ||||||||||
Total current liabilities | 7,089.8 | 396.8 | 7,486.6 | ||||||||||
Long-term debt | 1,817.7 | 4.5 | 1,822.2 | ||||||||||
Deferred compensation and employee benefits | 526.1 | 8.8 | 534.9 | ||||||||||
Other non-current liabilities | 189.7 | 81.0 | 270.7 | ||||||||||
Minority interests in consolidated subsidiaries | 70.4 | (2.4 | ) | 68.0 | |||||||||
Total non-current liabilities | 2,603.9 | 91.9 | 2,695.8 | ||||||||||
TOTAL LIABILITIES | 9,693.7 | 488.7 | 10,182.4 | ||||||||||
STOCKHOLDERS’ EQUITY: | 2,100.0 | (377.4 | ) | 1,722.6 | |||||||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 11,793.7 | $ | 111.3 | $ | 11,905.0 | |||||||
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As of December 31, 2001 | |||||||||||||
As Previously | Effect of | As | |||||||||||
Reported | Restatement | Restated | |||||||||||
ASSETS: | |||||||||||||
Cash and cash equivalents | $ | 935.2 | $ | 2.9 | $ | 938.1 | |||||||
Short-term marketable securities | — | 21.2 | 21.2 | ||||||||||
Accounts receivable, net of allowance of $90.7 | 4,673.2 | (20.1 | ) | 4,653.1 | |||||||||
Expenditures billable to clients | 325.5 | 32.9 | 358.4 | ||||||||||
Deferred income taxes | 80.0 | 56.0 | 136.0 | ||||||||||
Prepaid expenses and other current assets | 337.6 | (37.5 | ) | 300.1 | |||||||||
Total current assets | 6,351.5 | 55.4 | 6,406.9 | ||||||||||
Land, buildings and equipment, net | 847.7 | 23.3 | 871.0 | ||||||||||
Deferred income taxes | 495.0 | 19.0 | 514.0 | ||||||||||
Investments | 302.8 | 31.8 | 334.6 | ||||||||||
Goodwill | 2,994.3 | (60.4 | ) | 2,933.9 | |||||||||
Other intangible assets, net of amortization | 102.2 | — | 102.2 | ||||||||||
Other assets | 281.8 | (4.1 | ) | 277.7 | |||||||||
Total non-current assets | 5,023.8 | 9.6 | 5,033.4 | ||||||||||
TOTAL ASSETS | $ | 11,375.3 | $ | 65.0 | $ | 11,440.3 | |||||||
LIABILITIES: | |||||||||||||
Accounts payable | $ | 4,555.5 | $ | 155.7 | $ | 4,711.2 | |||||||
Accrued liabilities | 1,445.9 | 90.6 | 1,536.5 | ||||||||||
Short-term debt | 428.4 | 0.1 | 428.5 | ||||||||||
Total current liabilities | 6,429.8 | 246.4 | 6,676.2 | ||||||||||
Long-term debt | 2,480.6 | 4.0 | 2,484.6 | ||||||||||
Deferred compensation and employee benefits | 431.7 | 6.9 | 438.6 | ||||||||||
Other non-current liabilities | 103.8 | 73.5 | 177.3 | ||||||||||
Minority interests in consolidated subsidiaries | 89.3 | (5.3 | ) | 84.0 | |||||||||
Total non-current liabilities | 3,105.4 | 79.1 | 3,184.5 | ||||||||||
TOTAL LIABILITIES | 9,535.2 | 325.5 | 9,860.7 | ||||||||||
STOCKHOLDERS’ EQUITY: | 1,840.1 | (260.5 | ) | 1,579.6 | |||||||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 11,375.3 | $ | 65.0 | $ | 11,440.3 | |||||||
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As of December 31, 2000 | |||||||||||||
As Previously | Effect of | As | |||||||||||
Reported | Restatement | Restated | |||||||||||
ASSETS: | |||||||||||||
Cash and cash equivalents | $ | 844.6 | $ | 4.2 | $ | 848.8 | |||||||
Short-term marketable securities | — | 26.6 | 26.6 | ||||||||||
Accounts receivable, net of allowance of $84.1 | 5,643.5 | (43.9 | ) | 5,599.6 | |||||||||
Expenditures billable to clients | 436.7 | 36.5 | 473.2 | ||||||||||
Deferred income taxes | — | 27.3 | 27.3 | ||||||||||
Prepaid expenses and other current assets | 277.8 | (42.8 | ) | 235.0 | |||||||||
Total current assets | 7,202.6 | 7.9 | 7,210.5 | ||||||||||
Land, buildings and equipment, net | 825.0 | 20.6 | 845.6 | ||||||||||
Deferred income taxes | 382.5 | 27.6 | 410.1 | ||||||||||
Investments | 420.0 | 43.0 | 463.0 | ||||||||||
Goodwill | 3,146.9 | (150.9 | ) | 2,996.0 | |||||||||
Other intangible assets, net of amortization | — | 87.8 | 87.8 | ||||||||||
Other assets | 276.6 | (12.0 | ) | 264.6 | |||||||||
Total non-current assets | 5,051.0 | 16.1 | 5,067.1 | ||||||||||
TOTAL ASSETS | $ | 12,253.6 | 24.0 | $ | 12,277.6 | ||||||||
LIABILITIES: | |||||||||||||
Accounts payable | $ | 5,781.6 | $ | 119.9 | $ | 5,901.5 | |||||||
Accrued liabilities | 1,293.4 | 48.7 | 1,342.1 | ||||||||||
Short-term debt | 549.3 | (11.3 | ) | 538.0 | |||||||||
Total current liabilities | 7,624.3 | 157.3 | 7,781.6 | ||||||||||
Long-term debt | 1,531.8 | 2.0 | 1,533.8 | ||||||||||
Deferred compensation and employee benefits | 519.8 | 5.7 | 525.5 | ||||||||||
Other non-current liabilities | 106.8 | 56.8 | 163.6 | ||||||||||
Minority interests in consolidated subsidiaries | 100.6 | (7.5 | ) | 93.1 | |||||||||
Total non-current liabilities | 2,259.0 | 57.0 | 2,316.0 | ||||||||||
TOTAL LIABILITIES | 9,883.3 | 214.3 | 10,097.6 | ||||||||||
STOCKHOLDERS’ EQUITY: | 2,370.3 | (190.3 | ) | 2,180.0 | |||||||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 12,253.6 | $ | 24.0 | $ | 12,277.6 | |||||||
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Revenue Recognition |
84
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Allowance for Doubtful Accounts |
Income Taxes |
85
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Land, Buildings and Equipment |
Investments |
86
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Goodwill and Other Intangible Assets |
87
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Acquisitions |
Restructuring Reserves |
Pension and Postretirement Benefits |
88
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SEC Investigation |
89
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Item 7A. | Quantitative and Qualitative Disclosures About Market Risk |
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Item 8. | Financial Statements and Supplementary Data |
Page | ||||
92 | ||||
99 | ||||
105 | ||||
106 | ||||
107 | ||||
108 | ||||
110 | ||||
205 |
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i. | client contracts, incentives and rebates; | |
ii. | write-offs of aged accounts receivable, expenditures billable to clients and amounts billable to clients; | |
iii. | fixed assets purchases, disposals, and leases; | |
iv. | accounts payable and accrued liabilities; | |
v. | payments made for employee compensation; | |
vi. | cash and cash equivalents, wire transfers, and foreign currency transactions; | |
vii. | arrangements with derivative instruments; | |
viii. | intercompany transactions; | |
ix. | purchase of equity of investments in unconsolidated entities; and | |
x. | purchase, disposal or write-off of intangible assets. |
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i. compare revenue recorded to amounts billed to clients; | |
ii. identify contracts with potential client rebates; |
iii. | analyze collectibility of aged accounts receivable or expenditures billable to clients; |
iv. compare billable job costs to client cost estimates; | |
v. review fixed asset records for under utilized, missing or fully depreciated assets; |
vi. | ensure that the underlying records support liabilities related to employee compensation, including an inventory of foreign employee pension plans, census data to calculate pension liabilities and changes made to benefit plans which impact the Company’s compliance with certain employment and tax regulations; |
vii. review intercompany balances for appropriate classification; | |
viii. review foreign currency translation adjustments; | |
ix. analyze accrued expenses and underlying equity of investments in unconsolidated entities; | |
x. test intangible assets for impairments; or | |
xi. review equity accounts for appropriate roll-forward. |
This deficiency resulted in a restatement of 2004 (first three interim periods) and 2003 interim consolidated financial statements, the 2003 and 2002 annual consolidated financial statements and audit adjustments to the 2004 annual consolidated financial statements and certain interim periods, which impacted substantially all accounts in the Company’s consolidated financial statements. |
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Meeting with management of our financial and operating units to ensure their understanding of the procedures to be followed and requirements to be met prior to executing required internal management certification letters to accompany the financial statements they submit. These meetings have been occurring and will continue. | |
Requiring Interpublic Group Code of Conduct compliance certifications by all significant management of the Company and our agencies prior to the submission of the financial and operating unit’s |
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financial statements. This measure has already been implemented for our largest 400 entities (by revenue) and will continue to be implemented at other entities through 2005. | |
Continuing a focused effort to establish controls to deter and detect fraud with significant oversight and input by our Board of Directors and Audit Committee, including, but not limited to, ensuring proper follow-up and resolution of whistleblowers’ assertions. | |
Creating a centralized Project Management Office (“PMO”), charged with preparing management to report on our internal control over financial reporting by developing a centralized reporting process for our entities with respect to monitoring the documentation, testing and remediation associated with the assessment of internal control over financial reporting. The PMO, as well as the centralized reporting process, has been implemented. | |
Implementing a new enterprise-wide resource-planning software system, currently anticipated to be implemented at select entities during the latter part of 2005 with continuing rollout through early 2007. This implementation will allow for more transparency in the reporting of our results of operations and will also allow for numerous controls to be automated as part of the system. | |
Continuing the development throughout 2005 and 2006 of a shared service center program to consolidate various financial transactional functions to attain efficiencies and controls surrounding these activities. | |
Reorganizing and restructuring our Corporate Controllers Group by hiring additional qualified personnel and revising the reporting structure. We are also continuing our assessment of the accounting departments at our agencies and, in some cases, have already either replaced personnel or hired additional resources. This assessment is expected to continue throughout 2005, while the remediation may extend into the first half of 2006 before our agencies are fully staffed to levels we consider appropriate. | |
Instituting plans to modify the compensation structure of our top 300 managers to better align internal control environments with compensation, with approximately one-third of their bonuses to be based on improvements made to their respective internal control environments. | |
With assistance from the Corporate Controllers Group and the Internal Control Group, we have conducted surprise audits of selected income statement items and balance sheet accounts at various financial and operating units to ensure accuracy of results. | |
Updating and enhancing accounting and finance-related policies and procedures. The maintenance of policies is a constantly evolving process subject to continuous update, and in that regard, we have recently issued or in the process of updated policies with respect to revenue recognition, accounting for expenditures under real estate leases, and the processing of inter-company transactions among others. | |
Establishing an ongoing program of continuing professional education for financial employees in various areas and disciplines, including revenue recognition and ethics. | |
Establishing standard global manual documentation requirements at the local reporting levels for the assessment of processing and monitoring of inter-company transactions, appropriate revenue recognition and the proper recognition of expenditures under real estate leases. | |
Establishing and continuing to improve ongoing analytical review procedures, at the local reporting levels as well as the consolidated level, as part of the monthly closing process and continuing the detailed monthly results analysis and meetings with all significant entities by the Corporate Controllers Group. | |
Establishing revised quarterly reporting for tax accounts, update and enhance tax related policies and procedures, and increase tax training at regional and local levels. We also hired a team of professionals solely responsible for interacting with all levels of financial personnel in the agencies to ensure that the tax reporting information is being provided timely and accurately. |
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Engaging outside professional tax advisors to review local income tax returns of each subsidiary outside of the US prior to filing in order to ensure they are filed on a timely basis and are prepared in accordance with local law and regulations. | |
Requiring written approval of a corporate committee consisting of senior representatives of the human resources, tax, legal and accounting functions for any non-traditional employment arrangement or payroll practice. In addition, all existing non-traditional employment arrangements must be reviewed by senior agency financial executives and a formal plan proposed to eliminate those arrangements which are not supportable under both local law and practice as well as our policies and procedures. |
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i. client contracts, incentives and rebates; |
ii. | write-offs of aged accounts receivable, expenditures billable to clients and amounts billable to clients; |
iii. fixed assets purchases, disposals, and leases; | |
iv. accounts payable and accrued liabilities; | |
v. payments made for employee compensation; | |
vi. cash and cash equivalents, wire transfers, and foreign currency transactions; | |
vii. arrangements with derivative instruments; | |
viii. intercompany transactions; | |
ix. purchase of equity of investments in unconsolidated entities; and |
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x. purchase, disposal or write-off of intangible assets. |
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i. compare revenue recorded to amounts billed to clients; | |
ii. identify contracts with potential client rebates; |
iii. | analyze collectibility of aged accounts receivable or expenditures billable to clients; |
iv. compare billable job costs to client cost estimates; | |
v. review fixed asset records for under utilized, missing or fully depreciated assets; |
vi. | ensure that the underlying records support liabilities related to employee compensation, including an inventory of foreign employee pension plans, census data to calculate pension liabilities and changes made to benefit plans which impact the Company’s compliance with certain employment and tax regulations; |
vii. review intercompany balances for appropriate classification; | |
viii. review foreign currency translation adjustments; | |
ix. analyze accrued expenses and underlying equity of investments in unconsolidated entities; | |
x. test intangible assets for impairments; or | |
xi. review equity accounts for appropriate roll-forward. |
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Years Ended December 31, | |||||||||||||
2004 | 2003 | 2002 | |||||||||||
(Restated) | (Restated) | ||||||||||||
REVENUE | $ | 6,387.0 | $ | 6,161.7 | $ | 6,059.1 | |||||||
OPERATING EXPENSES: | |||||||||||||
Salaries and related expenses | 3,733.5 | 3,500.6 | 3,396.7 | ||||||||||
Office and general expenses | 2,249.8 | 2,225.7 | 2,248.7 | ||||||||||
Restructuring charges | 62.2 | 172.9 | 7.9 | ||||||||||
Long-lived asset impairment and other charges | 322.2 | 294.0 | 130.0 | ||||||||||
Motorsports contract termination costs | 113.6 | — | — | ||||||||||
Total operating expenses | 6,481.3 | 6,193.2 | 5,783.3 | ||||||||||
OPERATING INCOME (LOSS) | (94.3 | ) | (31.5 | ) | 275.8 | ||||||||
EXPENSE AND OTHER INCOME: | |||||||||||||
Interest expense | (172.0 | ) | (207.0 | ) | (158.7 | ) | |||||||
Debt prepayment penalty | (9.8 | ) | (24.8 | ) | — | ||||||||
Interest income | 50.7 | 39.3 | 30.6 | ||||||||||
Investment impairments | (63.4 | ) | (71.5 | ) | (40.3 | ) | |||||||
Litigation charges | 32.5 | (127.6 | ) | — | |||||||||
Other income (expense) | (10.7 | ) | 50.3 | 8.3 | |||||||||
Total expense and other income | (172.7 | ) | (341.3 | ) | (160.1 | ) | |||||||
Income (loss) from continuing operations before provision for income taxes | (267.0 | ) | (372.8 | ) | 115.7 | ||||||||
Provision for income taxes | 262.2 | 242.7 | 106.4 | ||||||||||
Income (loss) from continuing operations of consolidated companies | (529.2 | ) | (615.5 | ) | 9.3 | ||||||||
Income applicable to minority interests (net of tax) | (21.5 | ) | (27.0 | ) | (30.0 | ) | |||||||
Equity in net income of unconsolidated affiliates (net of tax) | 5.8 | 2.4 | 5.9 | ||||||||||
Loss from continuing operations | (544.9 | ) | (640.1 | ) | (14.8 | ) | |||||||
Dividends on preferred stock | 19.8 | — | — | ||||||||||
Net loss from continuing operations | (564.7 | ) | (640.1 | ) | (14.8 | ) | |||||||
Income from discontinued operations (net of tax) | 6.5 | 101.0 | 31.5 | ||||||||||
NET INCOME (LOSS) APPLICABLE TO COMMON STOCKHOLDERS | $ | (558.2 | ) | $ | (539.1 | ) | $ | 16.7 | |||||
Earnings (loss) per share of common stock: | |||||||||||||
Basic: | |||||||||||||
Continuing operations | (1.36 | ) | (1.66 | ) | (0.04 | ) | |||||||
Discontinued operations | 0.02 | 0.26 | 0.08 | ||||||||||
Total | $ | (1.34 | ) | $ | (1.40 | ) | $ | 0.04 | |||||
Diluted: | |||||||||||||
Continuing operations | (1.36 | ) | (1.66 | ) | (0.04 | ) | |||||||
Discontinued operations | 0.02 | 0.26 | 0.08 | ||||||||||
Total | $ | (1.34 | ) | $ | (1.40 | ) | $ | 0.04 | |||||
Weighted-average shares: | |||||||||||||
Basic | 415.3 | 385.5 | 376.1 | ||||||||||
Diluted | 415.3 | 385.5 | 376.1 |
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December 31, | |||||||||
2004 | 2003 | ||||||||
(Restated) | |||||||||
ASSETS: | |||||||||
Cash and cash equivalents | $ | 1,550.4 | $ | 1,871.9 | |||||
Marketable securities | 420.0 | 195.1 | |||||||
Accounts receivable, net of allowance of $136.1 in 2004 and $134.1 in 2003 | 4,907.5 | 4,650.3 | |||||||
Expenditures billable to clients | 345.2 | 303.3 | |||||||
Deferred income taxes | 261.0 | 279.7 | |||||||
Prepaid expenses and other current assets | 152.6 | 232.4 | |||||||
Total current assets | 7,636.7 | 7,532.7 | |||||||
Land, buildings and equipment, net | 722.9 | 697.9 | |||||||
Deferred income taxes | 274.2 | 378.3 | |||||||
Investments | 168.7 | 246.8 | |||||||
Goodwill | 3,141.6 | 3,267.9 | |||||||
Other intangible assets, net | 37.6 | 43.0 | |||||||
Other assets | 290.6 | 279.3 | |||||||
Total non-current assets | 4,635.6 | 4,913.2 | |||||||
TOTAL ASSETS | $ | 12,272.3 | $ | 12,445.9 | |||||
LIABILITIES: | |||||||||
Accounts payable | $ | 6,128.7 | $ | 5,614.7 | |||||
Accrued liabilities | 1,108.6 | 1,256.7 | |||||||
Short-term debt | 325.9 | 316.9 | |||||||
Total current liabilities | 7,563.2 | 7,188.3 | |||||||
Long-term debt | 1,936.0 | 2,198.7 | |||||||
Deferred compensation and employee benefits | 590.7 | 548.6 | |||||||
Other non-current liabilities | 408.9 | 326.7 | |||||||
Minority interests in consolidated subsidiaries | 55.2 | 64.8 | |||||||
Total non-current liabilities | 2,990.8 | 3,138.8 | |||||||
TOTAL LIABILITIES | 10,554.0 | 10,327.1 | |||||||
Commitments and contingencies (Note 19) | |||||||||
STOCKHOLDERS’ EQUITY: | |||||||||
Preferred stock, no par value, shares authorized: 20.0 | 373.7 | 373.7 | |||||||
shares issued and outstanding: 2004 — 7.5; 2003 — 7.5 | |||||||||
Common stock, $0.10 par value, shares authorized: 800.0 | 42.5 | 41.8 | |||||||
shares issued: 2004 — 424.9; 2003 — 418.4 | |||||||||
shares outstanding: 2004 — 424.7; 2003 — 418.2 | |||||||||
Additional paid-in capital | 2,208.9 | 2,076.0 | |||||||
Accumulated deficit | (578.2 | ) | (39.8 | ) | |||||
Accumulated other comprehensive loss, net of tax | (248.6 | ) | (259.1 | ) | |||||
1,798.3 | 2,192.6 | ||||||||
Less: | |||||||||
Treasury stock, at cost: 2004 — 0.2 shares; 2003 — 0.2 shares | (14.0 | ) | (11.3 | ) | |||||
Unamortized deferred compensation | (66.0 | ) | (62.5 | ) | |||||
TOTAL STOCKHOLDERS’ EQUITY | 1,718.3 | 2,118.8 | |||||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 12,272.3 | $ | 12,445.9 | |||||
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Years Ended December 31, | ||||||||||||||
2004 | 2003 | 2002 | ||||||||||||
(Restated) | (Restated) | |||||||||||||
(Amounts in millions) | ||||||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||||||||
Loss from continuing operations | $ | (544.9 | ) | $ | (640.1 | ) | $ | (14.8 | ) | |||||
Adjustments to reconcile net loss from continuing operations to cash provided by operating activities: | ||||||||||||||
Depreciation and amortization of fixed assets and intangible assets | 185.1 | 216.5 | 206.8 | |||||||||||
Provision for Bad Debt | 36.7 | 32.6 | 74.7 | |||||||||||
Amortization of restricted stock and other non-cash compensation | 31.4 | 38.8 | 50.0 | |||||||||||
Amortization of bond discounts and deferred financing costs | 22.9 | 35.0 | 33.0 | |||||||||||
Deferred income tax provision | 128.2 | 58.1 | 29.8 | |||||||||||
Equity in loss of unconsolidated affiliates | (5.8 | ) | (2.4 | ) | (5.9 | ) | ||||||||
Income applicable to minority interests | 21.5 | 27.0 | 30.0 | |||||||||||
Restructuring charges — non-cash | 6.7 | — | (4.9 | ) | ||||||||||
Long-lived asset impairment and other charges | 322.2 | 294.0 | 130.0 | |||||||||||
Investment impairments | 63.4 | 71.5 | 40.3 | |||||||||||
Litigation charges | (12.5 | ) | 127.6 | — | ||||||||||
Loss on sale of Modem Media and TNS | (0.8 | ) | (43.6 | ) | — | |||||||||
Other | 7.0 | (3.1 | ) | 0.5 | ||||||||||
Change in assets and liabilities, net of acquisitions: | ||||||||||||||
Accounts receivable | (73.4 | ) | 201.7 | 305.3 | ||||||||||
Expenditures billable to clients | (34.6 | ) | 62.8 | (62.3 | ) | |||||||||
Prepaid expenses and other current assets | 45.2 | 86.8 | (46.4 | ) | ||||||||||
Accounts payable and accrued expenses | 243.0 | (141.3 | ) | 106.2 | ||||||||||
Other non-current assets and liabilities | 14.2 | 77.8 | 6.6 | |||||||||||
Net cash provided by operating activities from continuing operations | 455.5 | 499.7 | 878.9 | |||||||||||
CASH FLOWS FROM INVESTING ACTIVITIES FROM CONTINUING OPERATIONS: | ||||||||||||||
Acquisitions, including deferred payments, net of cash acquired | (175.4 | ) | (224.6 | ) | (276.8 | ) | ||||||||
Capital expenditures | (194.0 | ) | (159.6 | ) | (171.4 | ) | ||||||||
Proceeds from sales of businesses and fixed assets | 30.4 | 26.8 | 14.0 | |||||||||||
Proceeds from sales of investments | 43.0 | 128.8 | 51.3 | |||||||||||
Purchases of investments | (34.3 | ) | (65.8 | ) | (115.4 | ) | ||||||||
Maturities of short-term marketable securities | 1,148.4 | 177.0 | 39.3 | |||||||||||
Purchases of short-term marketable securities | (1,372.7 | ) | (339.1 | ) | (21.9 | ) | ||||||||
Proceeds from the sale of discontinued operations, net of cash sold | 10.0 | 376.7 | — | |||||||||||
Net cash used in investing activities from continuing operations | (544.6 | ) | (79.8 | ) | (480.9 | ) | ||||||||
CASH FLOWS FROM FINANCING ACTIVITIES FROM CONTINUING OPERATIONS: | ||||||||||||||
Increase (decrease) in short-term bank borrowings | 7.0 | (214.4 | ) | (186.1 | ) | |||||||||
Payments of long-term debt | (843.0 | ) | (745.6 | ) | (175.4 | ) | ||||||||
Proceeds from long-term debt | 602.3 | 801.2 | 4.3 | |||||||||||
Proceeds from termination of interest rate swaps | — | — | 50.0 | |||||||||||
Debt issuance costs and consent fees | (8.0 | ) | (27.0 | ) | (1.3 | ) | ||||||||
Issuance of preferred stock, net of issuance costs | — | 361.6 | — | |||||||||||
Treasury stock transactions | — | — | (7.9 | ) | ||||||||||
Issuance of common stock, net of issuance costs | 25.6 | 335.3 | 59.0 | |||||||||||
Distributions to minority interests, net | (23.6 | ) | (26.4 | ) | (32.7 | ) | ||||||||
Dividends from unconsolidated affiliates | 9.3 | 8.8 | 3.1 | |||||||||||
Preferred stock dividends | (19.8 | ) | — | — | ||||||||||
Common stock dividends | — | — | (145.6 | ) | ||||||||||
Net cash provided by (used in) financing activities from continuing operations | (250.2 | ) | 493.5 | (432.6 | ) | |||||||||
Effect of exchange rates on cash and cash equivalents | 17.8 | 18.7 | 40.6 | |||||||||||
Net cash (used in) provided by discontinued operations | — | (13.4 | ) | 9.1 | ||||||||||
Increase (decrease) in cash and cash equivalents | (321.5 | ) | 918.7 | 15.1 | ||||||||||
Cash and cash equivalents at beginning of year | 1,871.9 | 953.2 | 938.1 | |||||||||||
Cash and cash equivalents at end of year | $ | 1,550.4 | $ | 1,871.9 | $ | 953.2 | ||||||||
SUPPLEMENTAL CASH FLOW INFORMATION | ||||||||||||||
Cash paid for interest | $ | 162.8 | $ | 155.6 | $ | 116.0 | ||||||||
Cash paid for income taxes, net of $46.7 and $132.5 of refunds in 2004 and 2003, respectively | $ | 66.2 | $ | 122.7 | $ | 51.3 |
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Years Ended December 31, | |||||||||||||
2004 | 2003 | 2002 | |||||||||||
(Restated) | (Restated) | ||||||||||||
COMMON STOCK | |||||||||||||
Balance at beginning of year | $ | 41.8 | $ | 38.9 | $ | 38.6 | |||||||
Restricted stock, net of forfeitures and amortization | 0.3 | — | 0.1 | ||||||||||
Employee stock purchases | 0.1 | 0.1 | 0.1 | ||||||||||
Exercise of stock options, including tax benefit | — | — | 0.1 | ||||||||||
Issuance of common stock, net of fees | — | 2.6 | — | ||||||||||
Issuance of shares for acquisitions | 0.2 | 0.2 | — | ||||||||||
Issuance of common stock-litigation settlement | 0.1 | — | — | ||||||||||
Balance at end of year | 42.5 | 41.8 | 38.9 | ||||||||||
PREFERRED STOCK | |||||||||||||
Balance at beginning of year | 373.7 | — | — | ||||||||||
Issuance of preferred stock | — | 373.7 | — | ||||||||||
Balance at end of year | 373.7 | 373.7 | — | ||||||||||
ADDITIONAL PAID IN CAPITAL | |||||||||||||
As Previously Reported | 2,075.1 | 1,797.0 | 1,785.2 | ||||||||||
Effect of restatement | 0.9 | 0.8 | 0.4 | ||||||||||
Balance at beginning of year | 2,076.0 | 1,797.8 | 1,785.6 | ||||||||||
Restricted stock, net of forfeitures and amortization | 26.4 | (3.9 | ) | 30.6 | |||||||||
Employee stock purchases | 7.6 | 9.6 | 15.9 | ||||||||||
Exercise of stock options, including tax benefit | 7.8 | 1.6 | 17.7 | ||||||||||
Issuance of common stock, net of fees | — | 326.9 | — | ||||||||||
Issuance of shares for acquisitions | 33.9 | (45.6 | ) | (53.7 | ) | ||||||||
Issuance of common stock-litigation settlement | 72.6 | — | — | ||||||||||
Issuance of preferred stock | — | (12.1 | ) | — | |||||||||
Preferred stock dividends | (19.8 | ) | — | — | |||||||||
Other | 4.4 | 1.7 | 1.7 | ||||||||||
Balance at end of year | 2,208.9 | 2,076.0 | 1,797.8 | ||||||||||
RETAINED EARNINGS (ACCUMULATED DEFICIT) | |||||||||||||
As previously reported | 406.3 | 858.0 | 868.3 | ||||||||||
Effect of restatement | (446.1 | ) | (358.7 | ) | (275.9 | ) | |||||||
Balance at beginning of year, as restated | (39.8 | ) | 499.3 | 592.4 | |||||||||
Net income (loss) applicable to common stockholders | (558.2 | ) | (539.1 | ) | 16.7 | ||||||||
Dividends | — | — | (109.8 | ) | |||||||||
Preferred stock dividends | 19.8 | — | — | ||||||||||
Balance at end of year | (578.2 | ) | (39.8 | ) | 499.3 | ||||||||
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Years Ended December 31, | |||||||||||||
2004 | 2003 | 2002 | |||||||||||
(Restated) | (Restated) | ||||||||||||
ACCUMULATED OTHER COMPREHENSIVE LOSS | |||||||||||||
As previously Reported | (215.1 | ) | (373.6 | ) | (447.8 | ) | |||||||
Effect of restatement | (44.0 | ) | (21.6 | ) | 12.9 | ||||||||
Balance at beginning of year | (259.1 | ) | (395.2 | ) | (434.9 | ) | |||||||
Adjustment for minimum pension liability (net of income tax (expense)/benefit of ($5.4), ($0.6) and $22.3 in 2004, 2003 and 2002, respectively) | (47.6 | ) | 4.0 | (45.1 | ) | ||||||||
Changes in market value of securities available-for-sale, net of tax | 3.4 | 10.1 | (7.4 | ) | |||||||||
Foreign currency translation adjustment | 51.5 | 122.0 | 92.2 | ||||||||||
Recognition of previously unrealized loss on securities available-for-sale, net of tax | 3.2 | — | — | ||||||||||
Net other comprehensive loss adjustments | 10.5 | 136.1 | 39.7 | ||||||||||
Balance at end of year | (248.6 | ) | (259.1 | ) | (395.2 | ) | |||||||
TREASURY STOCK | |||||||||||||
Balance at beginning of year | (11.3 | ) | (119.2 | ) | (290.2 | ) | |||||||
Restricted stock, net of forfeitures and amortization | — | — | (5.5 | ) | |||||||||
Exercise of stock options, including tax benefit | — | — | 48.3 | ||||||||||
Issuance of shares for acquisitions | (2.7 | ) | 107.9 | 128.2 | |||||||||
Balance at end of year | (14.0 | ) | (11.3 | ) | (119.2 | ) | |||||||
UNAMORTIZED DEFERRED COMPENSATION | |||||||||||||
As previously reported | (64.6 | ) | (101.1 | ) | (114.0 | ) | |||||||
Effect of Restatement | 2.1 | 2.1 | 2.1 | ||||||||||
Balance at beginning of year | (62.5 | ) | (99.0 | ) | (111.9 | ) | |||||||
Restricted stock, net of forfeitures and amortization | (3.5 | ) | 36.5 | 12.9 | |||||||||
Balance at end of year | (66.0 | ) | (62.5 | ) | (99.0 | ) | |||||||
TOTAL STOCKHOLDERS’ EQUITY | $ | 1,718.3 | $ | 2,118.8 | $ | 1,722.6 | |||||||
COMPREHENSIVE INCOME (LOSS) | |||||||||||||
Net income (loss) applicable to common stockholders | $ | (558.2 | ) | $ | (539.1 | ) | $ | 16.7 | |||||
Preferred stock dividends | 19.8 | — | — | ||||||||||
Net other comprehensive loss adjustments | 10.5 | 136.1 | 39.7 | ||||||||||
Total comprehensive income (loss) | $ | (527.9 | ) | $ | (403.0 | ) | $ | 56.4 | |||||
NUMBER OF COMMON SHARES | |||||||||||||
Balance at beginning of year | 418.4 | 389.3 | 385.8 | ||||||||||
Restricted stock, net of forfeitures and amortization | 2.7 | — | 1.1 | ||||||||||
Employee stock purchases | 0.7 | 0.9 | 0.9 | ||||||||||
Exercise of stock options, including tax benefit | 0.5 | — | 1.5 | ||||||||||
Issuance of common stock, net of fees | — | 25.8 | — | ||||||||||
Issuance of shares for acquisitions | 1.8 | 2.4 | — | ||||||||||
Issuance of common stock-litigation settlement | 0.8 | — | — | ||||||||||
Balance at end of year | 424.9 | 418.4 | 389.3 | ||||||||||
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Note 1: | Summary of Significant Accounting Policies |
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For the Years Ended December 31, | |||||||||||||
2004 | 2003 | 2002 | |||||||||||
(Restated) | (Restated) | ||||||||||||
As reported, loss from continuing operations | $ | (544.9 | ) | $ | (640.1 | ) | $ | (14.8 | ) | ||||
Add: | |||||||||||||
Stock-based employee compensation expense included in loss from continuing operations, net of tax | 26.6 | 22.7 | 28.9 | ||||||||||
Less: | |||||||||||||
Total fair value of stock-based employee compensation expense, net of tax | (55.4 | ) | (57.4 | ) | (65.4 | ) | |||||||
Pro forma loss from continuing operations | $ | (573.7 | ) | $ | (674.8 | ) | $ | (51.3 | ) | ||||
Loss per share from continuing operations | |||||||||||||
Basic loss per share | |||||||||||||
As reported | $ | (1.36 | ) | $ | (1.66 | ) | $ | (0.04 | ) | ||||
Pro forma | $ | (1.38 | ) | $ | (1.75 | ) | $ | (0.14 | ) | ||||
Diluted loss per share | |||||||||||||
As reported | $ | (1.36 | ) | $ | (1.66 | ) | $ | (0.04 | ) | ||||
Pro forma | $ | (1.38 | ) | $ | (1.75 | ) | $ | (0.14 | ) |
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2004 | 2003 | 2002 | ||||||||||
Expected option lives | 6 years | 6 years | 6 years | |||||||||
Risk free interest rate | 4.0 | % | 3.3 | % | 4.7 | % | ||||||
Expected volatility | 44.7 | % | 43.9 | % | 35.8 | % | ||||||
Dividend yield | 0.0 | % | 0.0 | % | 1.6 | % | ||||||
Weighted-average option grant price | $ | 14.19 | $ | 10.59 | $ | 26.41 | ||||||
Weighted-average fair value of options granted | $ | 6.91 | $ | 4.96 | $ | 9.76 |
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Note 2: | Restatement of Previously Issued Financial Statements |
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Impact of Adjustments | |||||||||
on Revenue | |||||||||
2003 | 2002 | ||||||||
As previously reported | $ | 5,863.4 | $ | 5,737.5 | |||||
Revenue Recognition Related to Vendor Discounts or Credits | (50.6 | ) | (40.2 | ) | |||||
Revenue Recognition related to Customer Contracts | (18.7 | ) | (8.6 | ) | |||||
Revenue Presentation | 355.6 | 358.5 | |||||||
Pre-Acquisition Earnings | — | (2.5 | ) | ||||||
Internal Investigations | (7.2 | ) | (6.1 | ) | |||||
Other Adjustments | 19.2 | 20.5 | |||||||
Total Adjustments | 298.3 | 321.6 | |||||||
As restated | $ | 6,161.7 | $ | 6,059.1 | |||||
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Impact of Adjustments on Net Income (Loss) from Continuing Operations and Earnings per Share | |||||||||||||||||||||||||
For the Year Ended December 31, 2003 | |||||||||||||||||||||||||
Net | For the Year Ended December 31, 2002 | ||||||||||||||||||||||||
Income | |||||||||||||||||||||||||
(Loss) | Basic Earnings | Diluted Earnings | Basic Earnings | Diluted Earnings | |||||||||||||||||||||
from | (Loss) per | (Loss) per | Net | (Loss) per | (Loss) per | ||||||||||||||||||||
Continuing | Share of | Share of | Income | Share of | Share of | ||||||||||||||||||||
Operations | Common Stock | Common Stock | (Loss) | Common Stock | Common Stock | ||||||||||||||||||||
As previously reported | $ | (552.9 | ) | $ | (1.43 | ) | $ | (1.43 | ) | $ | 68.0 | $ | 0.18 | $ | 0.18 | ||||||||||
Revenue Recognition Related to Vendor Discounts or Credits | (45.4 | ) | (0.12 | ) | (0.12 | ) | (32.9 | ) | (0.09 | ) | (0.09 | ) | |||||||||||||
Revenue Recognition Related to Customer Contracts | (15.8 | ) | (0.04 | ) | (0.04 | ) | (4.5 | ) | (0.01 | ) | (0.01 | ) | |||||||||||||
Future Obligations Related to Prior Acquisitions | (24.2 | ) | (0.06 | ) | (0.06 | ) | (13.8 | ) | (0.04 | ) | (0.04 | ) | |||||||||||||
Pre-Acquisition Earnings | — | — | — | (0.7 | ) | — | — | ||||||||||||||||||
Internal Investigations | (18.6 | ) | (0.05 | ) | (0.05 | ) | (14.4 | ) | (0.04 | ) | (0.04 | ) | |||||||||||||
International Compensation Arrangements | (8.8 | ) | (0.02 | ) | (0.02 | ) | (8.5 | ) | (0.02 | ) | (0.02 | ) | |||||||||||||
Accounting for Leases | (2.5 | ) | (0.01 | ) | (0.01 | ) | (0.3 | ) | — | — | |||||||||||||||
Other Adjustments | 28.1 | 0.07 | 0.07 | (7.7 | ) | (0.02 | ) | (0.02 | ) | ||||||||||||||||
Total Restatement Adjustments | (87.2 | ) | (0.23 | ) | (0.23 | ) | (82.8 | ) | (0.22 | ) | (0.22 | ) | |||||||||||||
As restated | $ | (640.1 | ) | $ | (1.66 | ) | $ | (1.66 | ) | $ | (14.8 | ) | $ | (0.04 | ) | $ | (0.04 | ) | |||||||
Weighted-average shares: | 385.5 | 385.5 | 376.1 | 376.1 |
Impact of Adjustments on Consolidated | |||||||||||||
Balance Sheet Accounts | |||||||||||||
As of December 31, 2003 | |||||||||||||
Total | Total | Stockholders’ | |||||||||||
Assets | Liabilities | Equity | |||||||||||
As previously reported | $ | 12,234.5 | $ | 9,628.6 | $ | 2,605.9 | |||||||
Revenue Recognition Related to Vendor Discounts or Credits | 36.3 | 198.5 | (162.2 | ) | |||||||||
Revenue Recognition Related to Customer Contracts | 33.7 | 122.8 | (89.1 | ) | |||||||||
Future Obligations Related to Prior Acquisitions | (2.3 | ) | 64.2 | (66.5 | ) | ||||||||
Pre-Acquisition Earnings | (33.3 | ) | (2.6 | ) | (30.7 | ) | |||||||
Internal Investigations | 9.2 | 61.5 | (52.3 | ) | |||||||||
International Compensation Arrangements | 2.8 | 29.2 | (26.4 | ) | |||||||||
Accounting for Leases | 38.8 | 67.5 | (28.7 | ) | |||||||||
Other Adjustments | 126.2 | 157.4 | (31.2 | ) | |||||||||
Total Adjustments | 211.4 | 698.5 | (487.1 | ) | |||||||||
As restated | $ | 12,445.9 | $ | 10,327.1 | $ | 2,118.8 | |||||||
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Impact of Adjustments | |||||
on Retained Earnings | |||||
As previously reported at December 31, 2001 | $ | 868.3 | |||
Revenue Recognition Related to Vendor Discounts or Credits | (68.0 | ) | |||
Revenue Recognition Related to Customer Contracts | (54.3 | ) | |||
Future Obligations Related to Prior Acquisitions | (29.2 | ) | |||
Pre-Acquisition Earnings | (34.1 | ) | |||
Internal Investigations | (15.7 | ) | |||
International Compensation Arrangements | (9.0 | ) | |||
Accounting for Leases | (23.2 | ) | |||
Other Adjustments | (42.4 | ) | |||
Total Restatement Adjustments | (275.9 | ) | |||
As restated at January 1, 2002 | $ | 592.4 | |||
Revenue Recognition |
Revenue Recognition related to Vendor Discounts or Credits: |
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Impact of | |||||||||
Revenue Recognition Related to Vendor Discounts or Credits | Restatement | ||||||||
Increase (Decrease) for the Years Ended and as of December 31, | 2003 | 2002 | |||||||
Consolidated Statement of Operations: | |||||||||
Revenue | (50.6 | ) | (40.2 | ) | |||||
Operating Loss | (53.3 | ) | (41.4 | ) | |||||
Provision for Income Taxes | (7.9 | ) | (8.5 | ) | |||||
Loss from Continuing Operations | (45.4 | ) | (32.9 | ) | |||||
Consolidated Balance Sheet: | |||||||||
Total Assets | 9.6 | ||||||||
Total Liabilities | 67.7 |
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Impact of | |||||||||
Revenue Recognition Related to Customer Contracts | Restatement | ||||||||
Increase (Decrease) for the Years Ended and as of December 31, | 2003 | 2002 | |||||||
Consolidated Statement of Operations: | |||||||||
Revenue | (18.7 | ) | (8.6 | ) | |||||
Operating Income (Loss) | (17.2 | ) | (6.7 | ) | |||||
Provision for Income Taxes | (1.4 | ) | (2.1 | ) | |||||
Income (Loss) from Continuing Operations | (15.8 | ) | (4.5 | ) | |||||
Consolidated Balance Sheet: | |||||||||
Total Assets | (3.9 | ) | |||||||
Total Liabilities | 21.6 |
Accounting for Reimbursement of Out-of-Pocket Expenses: |
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Gross versus Net Revenue Presentation: |
Impact of | |||||||||
Revenue Presentation | Restatement | ||||||||
Increase (Decrease) for the Years Ended and as of December 31, | 2003 | 2002 | |||||||
Consolidated Statement of Operations: | |||||||||
Revenue | 355.6 | 358.5 |
Accounting for Acquisitions |
Future Obligations related to Prior Acquisitions: |
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Impact of | |||||||||
Future Obligations Related to Prior Acquisitions | Restatement | ||||||||
Increase (Decrease) for the Years Ended and as of December 31, | 2003 | 2002 | |||||||
Consolidated Statement of Operations: | |||||||||
Revenue | — | — | |||||||
Operating Loss | (23.6 | ) | (13.8 | ) | |||||
Provision for Income Taxes | — | — | |||||||
Loss from Continuing Operations | (24.2 | ) | (13.8 | ) | |||||
Consolidated Balance Sheet: | |||||||||
Total Assets | 2.8 | ||||||||
Total Liabilities | 27.0 |
Pre-Acquisition Earnings: |
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Impact of | |||||||||
Pre-Acquisition Earnings | Restatement | ||||||||
Increase (Decrease) for the Years Ended and as of December 31, | 2003 | 2002 | |||||||
Consolidated Statement of Operations: | |||||||||
Revenue | — | (2.5 | ) | ||||||
Operating Income (Loss) | — | (1.2 | ) | ||||||
Provision for Income Taxes | — | (0.1 | ) | ||||||
Income (Loss) from Continuing Operations | — | (0.7 | ) | ||||||
Consolidated Balance Sheet: | |||||||||
Total Assets | (0.4 | ) | |||||||
Total Liabilities | (0.0 | ) |
Internal Investigations |
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Impact of | |||||||||
Internal Investigations | Restatement | ||||||||
Increase (Decrease) for the Years Ended and as of December 31, | 2003 | 2002 | |||||||
Consolidated Statement of Operations: | |||||||||
Revenue | (7.2 | ) | (6.1 | ) | |||||
Operating Loss | (17.3 | ) | (12.7 | ) | |||||
Provision for Income Taxes | 1.2 | 1.9 | |||||||
Loss from Continuing Operations | (18.6 | ) | (14.4 | ) | |||||
Consolidated Balance Sheet: | |||||||||
Total Assets | 12.6 | ||||||||
Total Liabilities | 33.8 |
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• | We have recorded adjustments with a cumulative impact on income for the years 2000 through 2004 of $31.8 including taxes, penalties and interest of $10.0 relating to errors we identified at our McCann agency in Turkey. These errors are attributable primarily to the retention of vendor discounts that should have been remitted to clients, the improper valuation of a previously acquired business and over-billing clients for payments to vendors. Our information to date indicates that these activities involved misconduct by local senior management. When the investigation is concluded, we will determine the appropriate personnel actions, which could include terminations of local senior management. | |
• | We have recorded adjustments with a cumulative impact on income for the years 2000 through 2004 of $14.5 relating to errors identified at our FCB agency in Turkey. These errors were attributable primarily to inappropriate charges to customers and evasion of local taxes. Our information to date indicates that these activities involved misconduct by local senior management. When the investigation is concluded, we will determine the appropriate personnel actions, which could include terminations of local senior management. | |
• | We have recorded adjustments with a cumulative impact on income for the years 2000 through 2004 of $10.8 relating to errors we identified at Media First in New York City. These errors are attributable primarily to inadequate recordkeeping but also included payment of certain employee salaries through accounts payable and without appropriate tax withholdings. The errors resulted in increased earn-out payments. Some management personnel at the agency involved in this activity have been terminated. | |
• | We have recorded adjustments with a cumulative impact on income for the years 2000 to 2004 of $10.5 relating to errors we identified at our FCB agency in Spain. These errors are attributable to the use of companies that were formed to account for the production and media volume discounts received from production suppliers on a separate set of books and records. As a result, discounts and rebates to which clients may have been entitled under local law were concealed to prevent detection in the event of a client audit. In addition compensation was paid to an agency executive’s personal service company out of these companies without proper withholding for income taxes. At the same location, we have also recorded adjustments with a cumulative impact of $4.2. These errors are attributable to the inappropriate recognition of certain discounts and benefits that should have been remitted to clients. We plan to divest our interest in FCB Spain and sign an affiliation agreement with the management there with an appropriate control structure to assure future business is properly conducted. | |
• | We have recorded adjustments with a cumulative impact on income for the years 2000 through 2004 of $12.7 relating to errors we identified at our McCann agency in Greece. These errors are attributable primarily to retention of vendor discounts in excess of the level permitted under Greek law and the purchase of prepaid media on a speculative basis without the appropriate client commitment. In addition, we identified inappropriate related-party transactions and evidence of improper gifts. The senior officer and other management personnel at the agency have been terminated and parts of the agency’s business have been divested. | |
• | We have recorded adjustments with a cumulative impact on income for the years 2000 through 2004 of approximately $7.2 relating to errors we identified at our McCann agency in the Netherlands. These errors are attributable to the recognition as revenue of certain discounts and |
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benefits that should have been returned to clients or vendors. We have terminated and/or replaced financial and operating management. | ||
• | We have recorded adjustments with a cumulative impact on income for the years 2000 through 2004 of $8.6 relating to errors identified at five McCann agencies in Azerbaijan, Ukraine, Uzbekistan, Bulgaria and Kazakhstan. These errors were attributable to failure to record and pay compensation-related taxes, value added taxes and corporate income taxes, and to inadequate record keeping. Management in these jurisdictions paid certain employees as contractors, often in cash, without accounting for the payments. In three of these countries, income and expenses were recorded by a service company located outside those jurisdictions to avoid corporate tax or value added tax. We have sold or are in the process of selling all of these entities. In the case of the Ukraine, we plan on signing an affiliation agreement with the management there with appropriate controls in place to assure our business is properly conducted. |
Review of International Compensation Arrangements |
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Impact of | |||||||||
International Compensation Arrangements | Restatement | ||||||||
Increase (Decrease) for the Years Ended and as of December 31, | 2003 | 2002 | |||||||
Consolidated Statement of Operations: | |||||||||
Revenue | — | — | |||||||
Operating Loss | (9.6 | ) | (9.4 | ) | |||||
Provision for Income Taxes | (0.7 | ) | (0.9 | ) | |||||
Loss from Continuing Operations | (8.8 | ) | (8.5 | ) | |||||
Consolidated Balance Sheet: | |||||||||
Total Assets | 0.7 | ||||||||
Total Liabilities | 9.6 |
Accounting for Lease Related Expenses |
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Impact of | |||||||||
Accounting for Leases | Restated | ||||||||
Increase (Decrease) for the Years Ended and as of December 31, | 2003 | 2002 | |||||||
Consolidated Statement of Operations: | |||||||||
Revenue | — | — | |||||||
Operating Income (Loss) | (0.6 | ) | 0.2 | ||||||
Provision for Income Taxes | 1.6 | 0.2 | |||||||
Income (Loss) from Continuing Operations | (2.5 | ) | (0.3 | ) | |||||
Consolidated Balance Sheet: | |||||||||
Total Assets | 0.5 | ||||||||
Total Liabilities | 5.9 |
Other Adjustments |
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Impact of | |||||||||
Other Adjustments | Restatement | ||||||||
Increase (Decrease) for the Years Ended and as of December 31, | 2003 | 2002 | |||||||
Consolidated Statement of Operations: | |||||||||
Revenue | 19.2 | 20.5 | |||||||
Operating Income (Loss) | 38.2 | 1.8 | |||||||
Provision for Income Taxes | (3.9 | ) | (2.1 | ) | |||||
Income (Loss) from Continuing Operations | 28.1 | (7.7 | ) | ||||||
Consolidated Balance Sheet: | |||||||||
Total Assets | 78.3 | ||||||||
Total Liabilities | 44.2 |
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Year Ended December 31, 2003 | |||||||||||||
As Previously | Effect of | As | |||||||||||
Reported | Restatement | Restated | |||||||||||
REVENUE | $ | 5,863.4 | $ | 298.3 | $ | 6,161.7 | |||||||
OPERATING EXPENSES: | |||||||||||||
Salaries and related expenses | 3,451.8 | 48.8 | 3,500.6 | ||||||||||
Office and general expenses | 1,896.9 | 328.8 | 2,225.7 | ||||||||||
Restructuring charges | 175.6 | (2.7 | ) | 172.9 | |||||||||
Long-lived asset impairment and other charges | 286.9 | 7.1 | 294.0 | ||||||||||
Total operating expenses | 5,811.2 | 382.0 | 6,193.2 | ||||||||||
OPERATING INCOME (LOSS) | 52.2 | (83.7 | ) | (31.5 | ) | ||||||||
EXPENSE AND OTHER INCOME: | |||||||||||||
Interest expense | (172.8 | ) | (34.2 | ) | (207.0 | ) | |||||||
Debt prepayment penalty | (24.8 | ) | — | (24.8 | ) | ||||||||
Interest income | 38.9 | 0.4 | 39.3 | ||||||||||
Investment impairments | (84.9 | ) | 13.4 | (71.5 | ) | ||||||||
Litigation charges | (127.6 | ) | — | (127.6 | ) | ||||||||
Other income | 50.0 | 0.3 | 50.3 | ||||||||||
Total expense and other income | (321.2 | ) | (20.1 | ) | (341.3 | ) | |||||||
Loss from continuing operations before provision for income taxes | (269.0 | ) | (103.8 | ) | (372.8 | ) | |||||||
Provision for income taxes | 254.0 | (11.3 | ) | 242.7 | |||||||||
Loss from continuing operations of consolidated companies | (523.0 | ) | (92.5 | ) | (615.5 | ) | |||||||
Income applicable to minority interests (net of tax) | (30.9 | ) | 3.9 | (27.0 | ) | ||||||||
Equity in net income of unconsolidated affiliates (net of tax) | 1.0 | 1.4 | 2.4 | ||||||||||
Loss from continuing operations | (552.9 | ) | (87.2 | ) | (640.1 | ) | |||||||
Income from discontinued operations (net of tax) | 101.2 | (0.2 | ) | 101.0 | |||||||||
LOSS APPLICABLE TO COMMON STOCKHOLDERS | $ | (451.7 | ) | $ | (87.4 | ) | $ | (539.1 | ) | ||||
Earnings (loss) per share of common stock: | |||||||||||||
Basic: | |||||||||||||
Continuing operations | $ | (1.43 | ) | $ | (0.23 | ) | $ | (1.66 | ) | ||||
Discontinued operations | 0.26 | — | 0.26 | ||||||||||
Total | $ | (1.17 | ) | $ | (0.23 | ) | $ | (1.40 | ) | ||||
Diluted: | |||||||||||||
Continuing operations | $ | (1.43 | ) | $ | (0.23 | ) | $ | (1.66 | ) | ||||
Discontinued operations | 0.26 | — | 0.26 | ||||||||||
Total | $ | (1.17 | ) | $ | (0.23 | ) | $ | (1.40 | ) | ||||
Weighted-average shares: | |||||||||||||
Basic | 385.5 | — | 385.5 | ||||||||||
Diluted | 385.5 | — | 385.5 |
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Year Ended December 31, 2002 | |||||||||||||
As Previously | Effect of | As | |||||||||||
Reported | Restatement | Restated | |||||||||||
REVENUE | $ | 5,737.5 | $ | 321.6 | $ | 6,059.1 | |||||||
OPERATING EXPENSES: | |||||||||||||
Salaries and related expenses | 3,350.0 | 46.7 | 3,396.7 | ||||||||||
Office and general expenses | 1,889.3 | 359.4 | 2,248.7 | ||||||||||
Restructuring charges | 12.1 | (4.2 | ) | 7.9 | |||||||||
Long-lived asset impairment and other charges | 127.1 | 2.9 | 130.0 | ||||||||||
Total operating expenses | 5,378.5 | 404.8 | 5,783.3 | ||||||||||
OPERATING INCOME | 359.0 | (83.2 | ) | 275.8 | |||||||||
EXPENSE AND OTHER INCOME: | |||||||||||||
Interest expense | (145.6 | ) | (13.1 | ) | (158.7 | ) | |||||||
Interest income | 29.8 | 0.8 | 30.6 | ||||||||||
Investment impairments | (39.7 | ) | (0.6 | ) | (40.3 | ) | |||||||
Other income | 7.9 | 0.4 | 8.3 | ||||||||||
Total expense and other income | (147.6 | ) | (12.5 | ) | (160.1 | ) | |||||||
Income from continuing operations before provision for income taxes | 211.4 | (95.7 | ) | 115.7 | |||||||||
Provision for income taxes | 117.9 | (11.5 | ) | 106.4 | |||||||||
Income from continuing operations of consolidated companies | 93.5 | (84.2 | ) | 9.3 | |||||||||
Income applicable to minority interests (net of tax) | (30.5 | ) | 0.5 | (30.0 | ) | ||||||||
Equity in net income of unconsolidated affiliates (net of tax) | 5.0 | 0.9 | 5.9 | ||||||||||
Net income (loss) from continuing operations | 68.0 | (82.8 | ) | (14.8 | ) | ||||||||
Income from discontinued operations (net of tax) | 31.5 | — | 31.5 | ||||||||||
NET INCOME (LOSS) APPLICABLE TO COMMON STOCKHOLDERS | $ | 99.5 | $ | (82.8 | ) | $ | 16.7 | ||||||
Earnings (loss) per share of common stock: | |||||||||||||
Basic: | |||||||||||||
Continuing operations | $ | 0.18 | $ | (0.22 | ) | $ | (0.04 | ) | |||||
Discontinued operations | 0.08 | — | 0.08 | ||||||||||
Total | $ | 0.26 | $ | (0.22 | ) | $ | 0.04 | ||||||
Diluted: | |||||||||||||
Continuing operations | $ | 0.18 | $ | (0.22 | ) | $ | (0.04 | ) | |||||
Discontinued operations | 0.08 | — | 0.08 | ||||||||||
Total | $ | 0.26 | $ | (0.22 | ) | $ | 0.04 | ||||||
Weighted-average shares: | |||||||||||||
Basic | 376.1 | — | 376.1 | ||||||||||
Diluted | 381.3 | (5.2 | ) | 376.1 |
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As of December 31, 2003 | |||||||||||||
As Previously | Effect of | As | |||||||||||
Reported | Restatement | Restated | |||||||||||
ASSETS: | |||||||||||||
Cash and cash equivalents | $ | 2,005.7 | $ | (133.8 | ) | $ | 1,871.9 | ||||||
Short-term marketable securities | — | 195.1 | 195.1 | ||||||||||
Accounts receivable, net of allowance of $134.1 | 4,632.4 | 17.9 | 4,650.3 | ||||||||||
Expenditures billable to clients | 242.1 | 61.2 | 303.3 | ||||||||||
Deferred income taxes | 201.7 | 78.0 | 279.7 | ||||||||||
Prepaid expenses and other current assets | 267.8 | (35.4 | ) | 232.4 | |||||||||
Total current assets | 7,349.7 | 183.0 | 7,532.7 | ||||||||||
Land, buildings and equipment, net | 657.1 | 40.8 | 697.9 | ||||||||||
Deferred income taxes | 344.5 | 33.8 | 378.3 | ||||||||||
Investments | 248.6 | (1.8 | ) | 246.8 | |||||||||
Goodwill | 3,310.6 | (42.7 | ) | 3,267.9 | |||||||||
Other intangible assets, net | 42.0 | 1.0 | 43.0 | ||||||||||
Other assets | 282.0 | (2.7 | ) | 279.3 | |||||||||
Total non-current assets | 4,884.8 | 28.4 | 4,913.2 | ||||||||||
TOTAL ASSETS | $ | 12,234.5 | $ | 211.4 | $ | 12,445.9 | |||||||
LIABILITIES: | |||||||||||||
Accounts payable | $ | 5,299.2 | $ | 315.5 | $ | 5,614.7 | |||||||
Accrued liabilities | 1,042.7 | 214.0 | 1,256.7 | ||||||||||
Short-term debt | 282.6 | 34.3 | 316.9 | ||||||||||
Total current liabilities | 6,624.5 | 563.8 | 7,188.3 | ||||||||||
Long-term debt | 2,191.7 | 7.0 | 2,198.7 | ||||||||||
Deferred compensation and employee benefits | 539.8 | 8.8 | 548.6 | ||||||||||
Other non-current liabilities | 202.6 | 124.1 | 326.7 | ||||||||||
Minority interests in consolidated subsidiaries | 70.0 | (5.2 | ) | 64.8 | |||||||||
Total non-current liabilities | 3,004.1 | 134.7 | 3,138.8 | ||||||||||
TOTAL LIABILITIES | 9,628.6 | 698.5 | 10,327.1 | ||||||||||
STOCKHOLDERS’ EQUITY | 2,605.9 | (487.1 | ) | 2,118.8 | |||||||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 12,234.5 | $ | 211.4 | $ | 12,445.9 | |||||||
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Note 3: | Earnings (Loss) Per Share |
For the Years Ended December 31, | ||||||||||||
2004 | 2003 | 2002 | ||||||||||
(Restated) | (Restated) | |||||||||||
Basic | ||||||||||||
Loss from continuing operations | $ | (544.9 | ) | $ | (640.1 | ) | $ | (14.8 | ) | |||
Less: preferred stock dividends | 19.8 | — | — | |||||||||
Net loss from continuing operations | (564.7 | ) | (640.1 | ) | (14.8 | ) | ||||||
Income from discontinued operations, net of taxes of $3.5, $8.5, and $22.4, respectively | 6.5 | 101.0 | 31.5 | |||||||||
Net income (loss) applicable to common stockholders | $ | (558.2 | ) | $ | (539.1 | ) | $ | 16.7 | ||||
Weighted-average number of common shares outstanding — basic | 415.3 | 385.5 | 376.1 | |||||||||
Loss per share from continuing operations | $ | (1.36 | ) | $ | (1.66 | ) | $ | (0.04 | ) | |||
Earnings per share from discontinued operations | 0.02 | 0.26 | 0.08 | |||||||||
Earnings (loss) per share — basic | $ | (1.34 | ) | $ | (1.40 | ) | $ | 0.04 | ||||
Diluted(a) | ||||||||||||
Loss from continuing operations | $ | (544.9 | ) | $ | (640.1 | ) | $ | (14.8 | ) | |||
Less: preferred stock dividends | 19.8 | — | — | |||||||||
Net loss from continuing operations | (564.7 | ) | (640.1 | ) | (14.8 | ) | ||||||
Income from discontinued operations, net of taxes of $3.5, $8.5, and $22.4, respectively | 6.5 | 101.0 | 31.5 | |||||||||
Net income (loss) applicable to common stockholders | $ | (558.2 | ) | $ | (539.1 | ) | $ | 16.7 | ||||
Weighted-average number of common shares outstanding — basic | 415.3 | 385.5 | 376.1 | |||||||||
Dilutive effect of convertible securities | — | — | — | |||||||||
Weighted-average number of common shares outstanding — diluted | 415.3 | 385.5 | 376.1 | |||||||||
Loss per share from continuing operations | $ | (1.36 | ) | $ | (1.66 | ) | $ | (0.04 | ) | |||
Earnings per share from discontinued operations | 0.02 | 0.26 | 0.08 | |||||||||
Earnings (loss) per share — diluted | $ | (1.34 | ) | $ | (1.40 | ) | $ | 0.04 | ||||
(a) | The weighted-average number of incremental shares for each of the following have been excluded from the computations of diluted earnings (loss) per share as they were anti-dilutive: |
• | exercise of employee stock options and conversion of non-vested restricted stock awards; | |
• | conversion of the 4.50%, 1.87%, and 1.80% Convertible Notes; | |
• | conversion of the Series A Mandatory Convertible Preferred Stock; |
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• | conversion of restricted stock units; | |
• | contingently issuable shares outstanding issued in settlement of the Federal Securities Class Actions as discussed in Note 19; |
• | exercise of employee stock options and the conversion of non-vested restricted stock awards; and | |
• | conversion of the 1.87% and 1.80% Convertible Notes. |
For the Years Ended December 31, | |||||||||||||
2004 | 2003 | 2002 | |||||||||||
(Restated) | (Restated) | ||||||||||||
Contingently issuable shares | 1.2 | — | — | ||||||||||
Stock options, restricted stock and restricted stock units | 4.0 | 4.1 | 5.1 | ||||||||||
Convertible Notes | 70.9 | 64.6 | 13.1 | ||||||||||
Series A Mandatory Convertible Preferred Stock | 26.3 | 0.8 | — | ||||||||||
Total | 102.4 | 69.5 | 18.2 | ||||||||||
Note 4: | Acquisitions and Dispositions |
Acquisitions |
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For the Years Ended December 31, | |||||||||||||
2004 | 2003 | 2002 | |||||||||||
(Restated) | (Restated) | ||||||||||||
Cash paid for current acquisitions | $ | 14.6 | $ | 4.0 | $ | 48.2 | |||||||
Cash paid for prior acquisitions | 161.7 | 221.2 | 240.0 | ||||||||||
Less: cash acquired | (0.9 | ) | (0.6 | ) | (11.4 | ) | |||||||
Net cash paid for acquisitions | $ | 175.4 | $ | 224.6 | $ | 276.8 | |||||||
Year of Original Acquisition | |||||||||||||||||||||||||||||
Total Paid | |||||||||||||||||||||||||||||
1998 and | During | ||||||||||||||||||||||||||||
Prior | 1999 | 2000 | 2001 | 2002 | 2003 | 2004 | |||||||||||||||||||||||
(Restated) | |||||||||||||||||||||||||||||
Cash payments for prior acquisitions | $ | 28.3 | $ | 20.7 | $ | 58.1 | $ | 11.9 | $ | 42.1 | $ | 0.6 | $ | 161.7 | |||||||||||||||
Stock issued for prior acquisitions | 4.7 | 5.3 | 13.6 | — | 0.2 | — | 23.8 | ||||||||||||||||||||||
Total consideration | $ | 33.0 | $ | 26.0 | $ | 71.7 | $ | 11.9 | $ | 42.3 | $ | 0.6 | $ | 185.5 | |||||||||||||||
Dispositions |
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For the Years Ended December 31, | |||||||||||||
2004 | 2003 | 2002 | |||||||||||
(Restated) | (Restated) | ||||||||||||
Long-lived asset impairment and other charges | $ | 3.0 | $ | 63.8 | $ | 127.1 | |||||||
Motorsports contract termination costs | 113.6 | — | — | ||||||||||
Total | $ | 116.6 | $ | 63.8 | $ | 127.1 | |||||||
For the Years Ended December 31, | |||||||||||||
2004 | 2003 | 2002 | |||||||||||
(Restated) | (Restated) | ||||||||||||
Revenue | $ | — | $ | 250.1 | $ | 466.1 | |||||||
Pre-tax income from discontinued operations | $ | — | $ | 20.4 | $ | 53.9 | |||||||
Tax expense | — | (8.5 | ) | (22.4 | ) | ||||||||
Net income | — | 11.9 | 31.5 | ||||||||||
Gain on sale, net of taxes | 6.5 | 89.1 | — | ||||||||||
Income from discontinued operations | $ | 6.5 | $ | 101.0 | $ | 31.5 | |||||||
Note 5: | Restructuring Charges |
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Lease Termination and | |||||||||||||||||||||||||||||
Other Exit Costs | Severance and Termination Costs | ||||||||||||||||||||||||||||
2003 | 2001 | 2003 | 2001 | ||||||||||||||||||||||||||
Program | Program | Total | Program | Program | Total | Total | |||||||||||||||||||||||
2004 Net (Income) Expense | |||||||||||||||||||||||||||||
IAN | $ | 40.3 | $ | (7.3 | ) | $ | 33.0 | $ | 14.1 | $ | (4.3 | ) | $ | 9.8 | $ | 42.8 | |||||||||||||
CMG | 8.1 | 4.0 | 12.1 | 5.1 | (0.7 | ) | 4.4 | 16.5 | |||||||||||||||||||||
Corporate | 3.7 | (1.0 | ) | 2.7 | 0.3 | (0.1 | ) | 0.2 | 2.9 | ||||||||||||||||||||
Total | $ | 52.1 | $ | (4.3 | ) | $ | 47.8 | $ | 19.5 | $ | (5.1 | ) | $ | 14.4 | $ | 62.2 | |||||||||||||
2003 Net (Income) Expense (Restated) | |||||||||||||||||||||||||||||
IAN | $ | 23.1 | $ | 8.8 | $ | 31.9 | $ | 106.6 | $ | (0.1 | ) | $ | 106.5 | $ | 138.4 | ||||||||||||||
CMG | 12.7 | 6.1 | 18.8 | 15.7 | — | 15.7 | 34.5 | ||||||||||||||||||||||
Motorsports | — | — | — | 0.4 | — | 0.4 | 0.4 | ||||||||||||||||||||||
Corporate | (2.2 | ) | (1.3 | ) | (3.5 | ) | 3.1 | — | 3.1 | (0.4 | ) | ||||||||||||||||||
Total | $ | 33.6 | $ | 13.6 | $ | 47.2 | $ | 125.8 | $ | (0.1 | ) | $ | 125.7 | $ | 172.9 | ||||||||||||||
2002 Net Expense (Restated) | |||||||||||||||||||||||||||||
IAN | $ | — | $ | 5.2 | $ | 5.2 | $ | — | $ | 7.9 | $ | 7.9 | $ | 13.1 | |||||||||||||||
CMG | — | 5.7 | 5.7 | — | (1.2 | ) | (1.2 | ) | 4.5 | ||||||||||||||||||||
Corporate | — | (4.3 | ) | (4.3 | ) | — | (5.4 | ) | (5.4 | ) | (9.7 | ) | |||||||||||||||||
Total | $ | — | $ | 6.6 | $ | 6.6 | $ | — | $ | 1.3 | $ | 1.3 | $ | 7.9 | |||||||||||||||
2003 Program |
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2001 Program |
Adjustments to Estimates |
2003 Program |
2001 Program |
Adjustments to Estimates |
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Liability at | Liability at | ||||||||||||||||||||||||
12/31/2003 | Charges | Payments | Adjustments(1) | Other(2) | 12/31/04 | ||||||||||||||||||||
(Restated) | |||||||||||||||||||||||||
2003 Program | |||||||||||||||||||||||||
Lease termination and other exit costs | $ | 37.7 | $ | 67.8 | $ | (32.6 | ) | $ | (15.7 | ) | $ | (6.2 | ) | $ | 51.0 | ||||||||||
Severance and termination costs | 39.0 | 26.4 | (52.4 | ) | (6.9 | ) | 1.1 | 7.2 | |||||||||||||||||
Total | $ | 76.7 | $ | 94.2 | $ | (85.0 | ) | $ | (22.6 | ) | $ | (5.1 | ) | $ | 58.2 | ||||||||||
2001 Program | |||||||||||||||||||||||||
Lease termination and other exit costs | $ | 65.6 | $ | — | $ | (28.0 | ) | $ | (4.3 | ) | $ | 3.9 | $ | 37.2 | |||||||||||
Severance and termination costs | 10.2 | — | (3.1 | ) | (5.1 | ) | (0.4 | ) | 1.6 | ||||||||||||||||
Total | $ | 75.8 | $ | — | $ | (31.1 | ) | $ | (9.4 | ) | $ | 3.5 | $ | 38.8 | |||||||||||
Liability at | Liability at | ||||||||||||||||||||||||
12/31/2002 | Charges | Payments | Adjustments(1) | Other(2) | 12/31/2003 | ||||||||||||||||||||
(Restated) | (Restated) | ||||||||||||||||||||||||
2003 Program | |||||||||||||||||||||||||
Lease termination and other exit costs | $ | — | $ | 41.6 | $ | (8.5 | ) | $ | (8.0 | ) | $ | 12.6 | $ | 37.7 | |||||||||||
Severance and termination costs | — | 133.7 | (88.3 | ) | (7.9 | ) | 1.5 | 39.0 | |||||||||||||||||
Total | $ | — | $ | 175.3 | $ | (96.8 | ) | $ | (15.9 | ) | $ | 14.1 | $ | 76.7 | |||||||||||
2001 Program | |||||||||||||||||||||||||
Lease termination and other exit costs | $ | 92.5 | $ | — | $ | (33.1 | ) | $ | 13.6 | $ | (7.4 | ) | $ | 65.6 | |||||||||||
Severance and termination costs | 15.9 | — | (10.9 | ) | (0.1 | ) | 5.3 | 10.2 | |||||||||||||||||
Total | $ | 108.4 | $ | — | $ | (44.0 | ) | $ | 13.5 | $ | (2.1 | ) | $ | 75.8 | |||||||||||
(1) | Amounts represent adjustments to management estimates, as discussed above. |
(2) | Amounts represent adjustments to the liability for changes in foreign currency exchange rates as well as liabilities that were previously maintained on the Consolidated Balance Sheet in other balance sheet accounts. |
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Note 6: | Land, Buildings and Equipment |
December 31, | ||||||||
2004 | 2003 | |||||||
(Restated) | ||||||||
Land and buildings | $ | 111.1 | $ | 105.2 | ||||
Furniture and equipment | 1,038.6 | 1,035.1 | ||||||
Leasehold improvements | 571.3 | 563.9 | ||||||
1,721.0 | 1,704.2 | |||||||
Less: accumulated depreciation | (998.1 | ) | (1,006.3 | ) | ||||
Land, buildings and equipment, net | $ | 722.9 | $ | 697.9 | ||||
Note 7: | Goodwill and Other Intangible Assets |
IAN | CMG | Total | |||||||||||
Balance as of December 31, 2002 (Restated) | $ | 2,733.7 | $ | 587.2 | $ | 3,320.9 | |||||||
Goodwill from dispositions | (140.1 | ) | — | (140.1 | ) | ||||||||
Goodwill from current acquisitions | 3.4 | — | 3.4 | ||||||||||
Goodwill from prior acquisitions | 213.8 | 48.7 | 262.5 | ||||||||||
Impairment charges | (0.4 | ) | (218.0 | ) | (218.4 | ) | |||||||
Other (primarily currency translation) | 34.9 | 4.7 | 39.6 | ||||||||||
Balance as of December 31, 2003 (Restated) | $ | 2,845.3 | $ | 422.6 | $ | 3,267.9 | |||||||
Goodwill from current acquisitions | 10.1 | — | 10.1 | ||||||||||
Goodwill from prior acquisitions | 93.8 | 56.6 | 150.4 | ||||||||||
Impairment charges | (220.2 | ) | (91.7 | ) | (311.9 | ) | |||||||
Other (primarily currency translation) | 24.5 | 0.6 | 25.1 | ||||||||||
Balance as of December 31, 2004 | $ | 2,753.5 | $ | 388.1 | $ | 3,141.6 | |||||||
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December 31, | ||||||||
2004 | 2003 | |||||||
(Restated) | ||||||||
Other intangible assets | $ | 63.4 | $ | 72.8 | ||||
Less: accumulated amortization | (25.8 | ) | (29.8 | ) | ||||
Other intangible assets, net | $ | 37.6 | $ | 43.0 | ||||
Note 8: | Long-Lived Asset Impairment and Other Charges |
For the Years Ended December 31, | |||||||||||||||||||||||||||||||||||||||||||||
2004 | 2003 | 2002 | |||||||||||||||||||||||||||||||||||||||||||
(Restated) | (Restated) | ||||||||||||||||||||||||||||||||||||||||||||
IAN | CMG | Motorsports | Total | IAN | CMG | Motorsports | Total | IAN | Motorsports | Total | |||||||||||||||||||||||||||||||||||
Goodwill impairment | $ | 220.2 | $ | 91.7 | $ | — | $ | 311.9 | $ | 0.4 | $ | 218.0 | $ | — | $ | 218.4 | $ | 2.9 | $ | 82.1 | $ | 85.0 | |||||||||||||||||||||||
Fixed asset impairment | 2.0 | 0.4 | 3.0 | 5.4 | 2.3 | — | 63.8 | 66.1 | — | 33.0 | 33.0 | ||||||||||||||||||||||||||||||||||
Other | 4.9 | — | — | 4.9 | 9.1 | 0.4 | — | 9.5 | — | 12.0 | 12.0 | ||||||||||||||||||||||||||||||||||
Total | $ | 227.1 | $ | 92.1 | $ | 3.0 | $ | 322.2 | $ | 11.8 | $ | 218.4 | $ | 63.8 | $ | 294.0 | $ | 2.9 | $ | 127.1 | $ | 130.0 | |||||||||||||||||||||||
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Note 9: | Expense and Other Income |
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For the Years Ended December 31, | |||||||||||||
2004 | 2003 | 2002 | |||||||||||
(Restated) | (Restated) | ||||||||||||
(Losses) gains on sales of businesses | $ | (18.2 | ) | $ | 0.3 | $ | (0.2 | ) | |||||
Gain on sale of Modem Media shares | 0.8 | 30.3 | — | ||||||||||
Gain on sale of TNS shares | — | 13.3 | — | ||||||||||
Gains on sales of other available-for-sale securities and miscellaneous investment income | 6.7 | 6.4 | 8.5 | ||||||||||
Total | $ | (10.7 | ) | $ | 50.3 | $ | 8.3 | ||||||
Note 10: | Provision for Income Taxes |
For the Years Ended December 31, | |||||||||||||
Continuing Operations | |||||||||||||
2004 | 2003 | 2002 | |||||||||||
(Restated) | (Restated) | ||||||||||||
Domestic | (72.4 | ) | (8.8 | ) | 335.3 | ||||||||
Foreign | (194.6 | ) | (364.0 | ) | (219.6 | ) | |||||||
Total | $ | (267.0 | ) | $ | (372.8 | ) | $ | 115.7 | |||||
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For the Years Ended December 31, | |||||||||||||
Continuing Operations | |||||||||||||
2004 | 2003 | 2002 | |||||||||||
(Restated) | (Restated) | ||||||||||||
Federal income taxes (including foreign withholding taxes): | |||||||||||||
Current | $ | 37.2 | $ | 16.2 | $ | 3.6 | |||||||
Deferred | 18.2 | 39.6 | 116.3 | ||||||||||
$ | 55.4 | $ | 55.8 | $ | 119.9 | ||||||||
State and local income taxes: | |||||||||||||
Current | $ | 12.8 | $ | 27.0 | $ | 26.1 | |||||||
Deferred | (22.6 | ) | (9.0 | ) | 2.5 | ||||||||
$ | (9.8 | ) | $ | 18.0 | $ | 28.6 | |||||||
Foreign income taxes: | |||||||||||||
Current | $ | 84.0 | $ | 141.4 | $ | 46.9 | |||||||
Deferred | 132.6 | 27.5 | (89.0 | ) | |||||||||
$ | 216.6 | $ | 168.9 | $ | (42.1 | ) | |||||||
Total | $ | 262.2 | $ | 242.7 | $ | 106.4 | |||||||
December 31, | |||||||||
2004 | 2003 | ||||||||
(Restated) | |||||||||
Postretirement/postemployment benefits | $ | 18.6 | $ | 20.9 | |||||
Deferred compensation | 234.1 | 180.9 | |||||||
Pension costs | 50.1 | 59.0 | |||||||
Basis differences in fixed assets | 14.8 | 21.9 | |||||||
Rent | 8.8 | 0.8 | |||||||
Interest | (4.5 | ) | (8.5 | ) | |||||
Accruals and reserves | 130.5 | 142.5 | |||||||
Allowance for doubtful accounts | 33.3 | 26.9 | |||||||
Basis differences in intangible assets | (5.3 | ) | 18.9 | ||||||
Investments in equity securities | 16.2 | 19.0 | |||||||
Tax loss/tax credit carry forwards | 411.6 | 296.9 | |||||||
Restructuring and other merger-related costs | 45.2 | 51.4 | |||||||
Other | 70.4 | 80.0 | |||||||
Total deferred tax assets, net | 1,023.8 | 910.6 | |||||||
Valuation allowance | (488.6 | ) | (252.6 | ) | |||||
Net deferred tax assets | $ | 535.2 | $ | 658.0 | |||||
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For the Years Ended December 31, | ||||||||||||
Continuing Operations | ||||||||||||
2004 | 2003 | 2002 | ||||||||||
US Federal statutory income tax rate | 35.0 | % | 35.0 | % | 35.0 | % | ||||||
Federal income tax provision (benefit) at statutory rate | $ | (93.5 | ) | $ | (130.5 | ) | $ | 40.5 | ||||
State and local income taxes, net of federal income tax benefit | 13.7 | 11.1 | 18.4 | |||||||||
Impact of foreign operations, including withholding taxes | 77.6 | 114.8 | 20.3 | |||||||||
Change in valuation allowance | 236.0 | 111.4 | 27.5 | |||||||||
Goodwill and other long-lived asset impairment charges | 26.3 | 103.6 | 7.2 | |||||||||
Restructuring and other merger-related costs | (1.2 | ) | 15.2 | (0.1 | ) | |||||||
Liquidation of Motorsports | (19.7 | ) | — | — | ||||||||
Other | 23.0 | 17.1 | (7.4 | ) | ||||||||
Provision (benefit) for income taxes | $ | 262.2 | $ | 242.7 | $ | 106.4 | ||||||
Effective tax rate on operations | 98.2 | % | 65.1 | % | 92.0 | % |
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Note 11: | Debt |
December 31, | ||||||||||||||||
2004 | 2003 | |||||||||||||||
Book Value | Fair Value | Book Value | Fair Value | |||||||||||||
1.80% Convertible Subordinated Notes due 2004 (less unamortized discount of $5.9) | $ | — | $ | — | $ | 244.1 | $ | 244.5 | ||||||||
1.87% Convertible Subordinated Notes due 2006 (less unamortized discount of $23.5) | — | — | 337.5 | 336.6 | ||||||||||||
7.875% Senior Unsecured Notes due 2005 | 255.0 | 257.5 | 522.1 | 535.0 | ||||||||||||
7.25% Senior Unsecured Notes due 2011 | 500.0 | 537.3 | 500.0 | 542.5 | ||||||||||||
5.40% Senior Unsecured Notes due 2009 (less unamortized discount of $0.3) | 249.7 | 252.9 | — | — | ||||||||||||
6.25% Senior Unsecured Notes due 2014 (less unamortized discount of $1.0) | 347.3 | 354.3 | — | — | ||||||||||||
4.50% Convertible Senior Notes due 2023 | 800.0 | 1,045.0 | 800.0 | 1,224.0 | ||||||||||||
Other notes payable and capitalized leases — at interest rates from 4.5% to 22.23% | 42.1 | 42.1 | ||||||||||||||
Total long-term debt | 2,194.1 | 2,445.8 | ||||||||||||||
Less: current portion | 258.1 | 247.1 | ||||||||||||||
Long-term debt, excluding current portion | $ | 1,936.0 | $ | 2,198.7 | ||||||||||||
2005 | $ | 258.1 | |||
2006 | 3.9 | ||||
2007 | 2.1 | ||||
2008 | 1.6 | ||||
2009 | 250.5 | ||||
Thereafter | 1,677.9 | ||||
Total long-term debt | $ | 2,194.1 | |||
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December 31, | |||||||||||||||||||||||||
2004 | 2003 | ||||||||||||||||||||||||
Total | Amount | Total | Total | Amount | Total | ||||||||||||||||||||
Facility | Outstanding | Available | Facility | Outstanding | Available | ||||||||||||||||||||
Committed | |||||||||||||||||||||||||
364-Day Revolving Credit Facility | $ | 250.0 | $ | — | $ | 250.0 | $ | 500.0 | $ | — | $ | 339.9 | ** | ||||||||||||
Three-Year Revolving Credit Facility | 450.0 | — | 284.6 | * | — | — | — | ||||||||||||||||||
Five-Year Revolving Credit Facility | — | — | — | 375.0 | — | 375.0 | |||||||||||||||||||
Other Facilities | 0.8 | — | 0.8 | 0.8 | — | 0.8 | |||||||||||||||||||
$ | 700.8 | $ | — | $ | 535.4 | $ | 875.8 | $ | — | $ | 715.7 | ||||||||||||||
Uncommitted | |||||||||||||||||||||||||
International | $ | 738.1 | $ | 67.8 | $ | 670.3 | $ | 744.8 | $ | 69.8 | $ | 675.0 |
* | Amount available is reduced by $165.4 of letters of credit issued under the Three-Year Revolving Credit Facility at December 31, 2004. |
** | Amount available is reduced by $160.1 of letters of credit issued under the 364-Day Revolving Credit Facility at December 31, 2003. |
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(i) debt to EBITDA ratio of not greater than 3.25 to 1; | |
(ii) minimum levels of EBITDA of not less than $750.0; and | |
(iii) interest coverage ratio of not less than 3.75 to 1 for the period of four fiscal quarters then ended. |
(i) debt to EBITDA ratio of not greater than 4.25 to 1; | |
(ii) minimum levels of EBITDA of not less than $550.0; and | |
(iii) interest coverage ratio of not less than 3.0 to 1 for the four fiscal quarters ended December 31, 2004. |
(i) debt to EBITDA ratios as of the end of the fiscal quarter ended December 31, 2004, at a ratio of not greater than 4.25 to 1, as of the end of the fiscal quarter ended March 31, 2005, at a ratio of not greater than 4.8 to 1, as of the end of the fiscal quarter ended June 30, 2005, at a ratio of not greater than 5.65 to 1, and as of the end of each fiscal quarter thereafter, at a ratio of not greater than 3.25 to 1; | |
(ii) minimum levels of EBITDA for the period of four fiscal quarters ended December 31, 2004 of not less than $550.0, for the period of four fiscal quarters ended March 31, 2005, of not less than $470.0, for the period of four fiscal quarters ended June 30, 2005, of not less than $400.0 and thereafter for each period of four fiscal quarters then ended of not less than $750.0; and | |
(iii) interest coverage ratios as of the end of the fiscal quarter ended December 31, 2004, at a ratio of not less than 3.0 to 1, as of the end of the fiscal quarter ended March 31, 2005, at a ratio of not less than 2.4 to 1, as of the end of the fiscal quarter ended June 30, 2005, at a ratio of not less than 2.0 to 1 and as of the end of each fiscal quarter thereafter, at a ratio of not less than 3.75 to 1. |
(i) an interest coverage ratio of not less than that set forth opposite the corresponding quarter in the table below: |
Fiscal Quarter Ending | Ratio | |||
September 30, 2005 | 2.15 to 1 | |||
December 31, 2005 | 1.75 to 1 | |||
March 31, 2006 | 1.85 to 1 | |||
June 30, 2006 | 1.45 to 1 | |||
September 30, 2006 | 1.75 to 1 | |||
December 31, 2006 | 2.15 to 1 | |||
March 31, 2007 | 2.50 to 1 |
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(ii) a debt to EBITDA ratio of not greater than that set forth opposite the corresponding quarter in the table below: |
Fiscal Quarter Ending | Ratio | |||
September 30, 2005 | 5.20 to 1 | |||
December 31, 2005 | 6.30 to 1 | |||
March 31, 2006 | 5.65 to 1 | |||
June 30, 2006 | 6.65 to 1 | |||
September 30, 2006 | 5.15 to 1 | |||
December 31, 2006 | 4.15 to 1 | |||
March 31, 2007 | 3.90 to 1 |
(iii) minimum levels of EBITDA for the four fiscal quarters ended of not less than that set forth opposite the corresponding quarter in the table below: |
Four Fiscal Quarters Ending | Amount | |||
September 30, 2005 | $ | 435.0 | ||
December 31, 2005 | $ | 360.0 | ||
March 31, 2006 | $ | 400.0 | ||
June 30, 2006 | $ | 340.0 | ||
September 30, 2006 | $ | 440.0 | ||
December 31, 2006 | $ | 545.0 | ||
March 31, 2007 | $ | 585.0 |
Note 12: | Convertible Preferred Stock |
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Note 13: | Incentive Plans |
2004 | 2003 | 2002 | ||||||||||||||||||||||
Weighted- | Weighted- | Weighted- | ||||||||||||||||||||||
Average | Average | Average | ||||||||||||||||||||||
Options | Exercise Price | Options | Exercise Price | Options | Exercise Price | |||||||||||||||||||
Stock options, beginning of year | 41.9 | $ | 26.60 | 42.3 | $ | 29.35 | 38.3 | $ | 28.82 | |||||||||||||||
Options granted | 2.2 | $ | 14.14 | 6.4 | $ | 10.60 | 7.8 | $ | 26.43 | |||||||||||||||
Options exercised | (0.7 | ) | $ | 10.64 | (0.1 | ) | $ | 10.49 | (2.8 | ) | $ | 14.24 | ||||||||||||
Options cancelled, forfeited and expired | (3.9 | ) | $ | 25.40 | (6.7 | ) | $ | 29.23 | (1.0 | ) | $ | 28.78 | ||||||||||||
Stock options, end of year | 39.5 | $ | 26.36 | 41.9 | $ | 26.60 | 42.3 | $ | 29.35 | |||||||||||||||
Options exercisable at year-end | 21.1 | $ | 28.94 | 20.8 | $ | 27.49 | 19.8 | $ | 25.16 | |||||||||||||||
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Options Outstanding | Options Exercisable | ||||||||||||||||||||
Number of | Weighted- | Number of | |||||||||||||||||||
Options | Average | Weighted- | Options | Weighted- | |||||||||||||||||
Outstanding at | Remaining | Average | Exercisable | Average | |||||||||||||||||
12/31/04 | Contractual Life | Exercise Price | at 12/31/04 | Exercise Price | |||||||||||||||||
Range of Exercise Prices | |||||||||||||||||||||
$ 9.64 to $14.99 | 8.9 | 7.71 | $ | 11.57 | 1.1 | $ | 12.15 | ||||||||||||||
$15.00 to $24.99 | 6.8 | 3.12 | $ | 17.85 | 5.9 | $ | 17.84 | ||||||||||||||
$25.00 to $34.99 | 13.3 | 5.43 | $ | 30.33 | 7.1 | $ | 31.03 | ||||||||||||||
$35.00 to $56.28 | 10.5 | 5.55 | $ | 39.44 | 7.0 | $ | 38.94 | ||||||||||||||
39.5 | 21.1 | ||||||||||||||||||||
Exercisable at December 31, 2004 through: | |||||||||||||||||||||
December 31, 2005 | 0.8 | $ | 11.94 | ||||||||||||||||||
December 31, 2006 | 3.0 | $ | 15.93 | ||||||||||||||||||
December 31, 2007 | 1.5 | $ | 18.93 | �� | |||||||||||||||||
December 31, 2008 | 6.3 | $ | 30.82 | ||||||||||||||||||
December 31, 2009 | 2.9 | $ | 34.61 | ||||||||||||||||||
December 31, 2010 | 3.4 | $ | 38.49 | ||||||||||||||||||
December 31, 2011 | 2.7 | $ | 33.35 | ||||||||||||||||||
December 31, 2012 | 0.4 | $ | 15.92 | ||||||||||||||||||
December 31, 2013 | 0.1 | $ | 9.64 | ||||||||||||||||||
Total | 21.1 | $ | 28.94 | ||||||||||||||||||
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Note 14: | Employee Benefits |
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Domestic Pension Plans | Foreign Pension Plans | Postretirement Benefits | |||||||||||||||||||||||||||||||||||
For the Years Ended | |||||||||||||||||||||||||||||||||||||
December 31, | 2004 | 2003 | 2002 | 2004 | 2003 | 2002 | 2004 | 2003 | 2002 | ||||||||||||||||||||||||||||
(Restated) | (Restated) | (Restated) | (Restated) | (Restated) | (Restated) | ||||||||||||||||||||||||||||||||
Service cost for benefits earned | $ | 0.7 | $ | 0.7 | $ | 0.7 | $ | 17.1 | $ | 15.6 | $ | 11.1 | $ | 0.4 | $ | 0.6 | $ | 0.7 | |||||||||||||||||||
Interest accrued on benefit obligation | 8.7 | 9.7 | 10.1 | 18.1 | 14.7 | 11.7 | 3.9 | 3.1 | 3.5 | ||||||||||||||||||||||||||||
Expected return on plan assets | (9.9 | ) | (7.3 | ) | (9.6 | ) | (11.6 | ) | (9.0 | ) | (9.8 | ) | — | — | — | ||||||||||||||||||||||
Amortization of: | |||||||||||||||||||||||||||||||||||||
Transition obligation | — | — | — | — | 1.4 | 0.5 | 0.2 | 0.2 | 0.1 | ||||||||||||||||||||||||||||
Prior service cost | (0.1 | ) | (0.2 | ) | (0.3 | ) | - | 0.1 | 0.5 | — | — | — | |||||||||||||||||||||||||
Unrecognized actuarial losses (gains) | 4.1 | 6.1 | 3.3 | 4.9 | 3.5 | 0.3 | 0.4 | (0.1 | ) | — | |||||||||||||||||||||||||||
Net periodic cost | $ | 3.5 | $ | 9.0 | $ | 4.2 | $ | 28.5 | $ | 26.3 | $ | 14.3 | $ | 4.9 | $ | 3.8 | $ | 4.3 | |||||||||||||||||||
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Domestic Pension Plans | Foreign Pension Plans | Postretirement Benefits | ||||||||||||||||||||||||||||||||||
For the Years Ended December 31, | 2004 | 2003 | 2002 | 2004 | 2003 | 2002 | 2004 | 2003 | 2002 | |||||||||||||||||||||||||||
Discount rate | 6.15% | 6.60% | 7.10% | 5.20% | 5.40% | 5.70% | 6.25% | 6.75% | 7.25% | |||||||||||||||||||||||||||
Rate of compensation increase | N/A | N/A | N/A | 3.50% | 3.10% | 3.20% | N/A | N/A | N/A | |||||||||||||||||||||||||||
Expected return on plan assets | 8.65% | 8.65% | 8.90% | 6.35% | 6.50% | 6.90% | N/A | N/A | N/A |
Domestic Pension | Postretirement | |||||||||||||||||||||||
Plans | Foreign Pension Plans | Benefits | ||||||||||||||||||||||
For the Years Ended December 31, | 2004 | 2003 | 2004 | 2003 | 2004 | 2003 | ||||||||||||||||||
(Restated) | (Restated) | (Restated) | ||||||||||||||||||||||
Change in projected benefit obligation | ||||||||||||||||||||||||
Projected benefit obligation at January 1 | $ | 154.8 | $ | 164.5 | $ | 356.6 | $ | 276.3 | $ | 62.1 | $ | 52.0 | ||||||||||||
Service cost | 0.7 | 0.7 | 17.1 | 15.6 | 0.4 | 0.6 | ||||||||||||||||||
Interest cost | 8.7 | 9.7 | 18.1 | 14.7 | 3.9 | 3.1 | ||||||||||||||||||
Benefits paid | (14.2 | ) | (14.8 | ) | (16.3 | ) | (17.4 | ) | (7.0 | ) | (6.1 | ) | ||||||||||||
Plan participant contributions | — | — | 2.7 | 2.4 | 1.3 | 1.1 | ||||||||||||||||||
Plan amendments | — | 0.4 | — | — | — | — | ||||||||||||||||||
Actuarial losses | 17.6 | 7.8 | 38.8 | 21.2 | 11.5 | 15.0 | ||||||||||||||||||
Foreign currency effect | — | — | 28.8 | 40.7 | — | — | ||||||||||||||||||
Discontinued operations — NFO | — | (13.5 | ) | — | — | — | (3.6 | ) | ||||||||||||||||
Other | — | — | 1.7 | 3.1 | — | — | ||||||||||||||||||
Projected benefit obligation at December 31 | $ | 167.6 | $ | 154.8 | $ | 447.5 | $ | 356.6 | $ | 72.2 | $ | 62.1 | ||||||||||||
Change in fair value of plan assets | ||||||||||||||||||||||||
Fair value of plan assets at January 1 | $ | 93.6 | $ | 97.9 | $ | 179.0 | $ | 136.4 | $ | — | $ | — | ||||||||||||
Actual return on plan assets | 7.7 | 15.3 | 20.7 | 23.8 | — | — | ||||||||||||||||||
Employer contributions | 32.1 | 1.8 | 15.1 | 18.5 | 5.7 | 5.0 | ||||||||||||||||||
Plan participant contributions | — | — | 2.7 | 2.4 | 1.3 | 1.1 | ||||||||||||||||||
Benefits paid | (14.2 | ) | (14.8 | ) | (16.3 | ) | (17.4 | ) | (7.0 | ) | (6.1 | ) | ||||||||||||
Foreign currency effect | — | — | 13.1 | 15.1 | — | — | ||||||||||||||||||
Discontinued operations — NFO | — | (6.6 | ) | — | — | — | — | |||||||||||||||||
Other | — | — | (0.7 | ) | 0.2 | — | — | |||||||||||||||||
Fair value of plan assets at December 31 | $ | 119.2 | $ | 93.6 | $ | 213.6 | $ | 179.0 | $ | — | $ | — | ||||||||||||
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Domestic Pension | Postretirement | |||||||||||||||||||||||
Plans | Foreign Pension Plans | Benefits | ||||||||||||||||||||||
For the Years Ended December 31, | 2004 | 2003 | 2004 | 2003 | 2004 | 2003 | ||||||||||||||||||
(Restated) | (Restated) | (Restated) | ||||||||||||||||||||||
Reconciliation of funded status to total amount recognized | ||||||||||||||||||||||||
Funded status of the plans | $ | (48.4 | ) | $ | (61.2 | ) | $ | (233.9 | ) | $ | (177.6 | ) | $ | (72.2 | ) | $ | (62.1 | ) | ||||||
Unrecognized net actuarial losses | 78.4 | 62.8 | 112.4 | 77.3 | 21.0 | 10.1 | ||||||||||||||||||
Unrecognized prior service cost | 0.3 | 0.2 | 0.4 | 0.4 | — | — | ||||||||||||||||||
Unrecognized transition cost | — | — | 3.2 | 3.3 | 1.2 | 1.4 | ||||||||||||||||||
Net asset (liability) recognized | $ | 30.3 | $ | 1.8 | $ | (117.9 | ) | $ | (96.6 | ) | $ | (50.0 | ) | $ | (50.6 | ) | ||||||||
Amounts recognized in consolidated balance sheet | ||||||||||||||||||||||||
Accrued benefit liability | $ | (43.9 | ) | $ | (57.6 | ) | $ | (201.1 | ) | $ | (150.4 | ) | $ | (50.0 | ) | $ | (50.6 | ) | ||||||
Intangible asset | 0.3 | 0.4 | 2.9 | 3.0 | — | — | ||||||||||||||||||
Currency translation adjustment | — | — | 0.7 | 5.1 | — | — | ||||||||||||||||||
Accumulated other comprehensive income | 73.9 | 59.0 | 79.6 | 45.7 | — | — | ||||||||||||||||||
Net asset (liability) recognized | $ | 30.3 | $ | 1.8 | $ | (117.9 | ) | $ | (96.6 | ) | $ | (50.0 | ) | $ | (50.6 | ) | ||||||||
Accumulated benefit obligation | $ | 163.1 | $ | 151.3 | $ | 411.2 | $ | 319.9 | ||||||||||||||||
Domestic Pension | Foreign Pension | Postretirement | ||||||||||||||||||||||
Plans | Plans | Benefits | ||||||||||||||||||||||
At December 31, | 2004 | 2003 | 2004 | 2003 | 2004 | 2003 | ||||||||||||||||||
Discount rate | 5.45% | 6.15% | 5.00% | 5.35% | 5.50% | 6.25% | ||||||||||||||||||
Rate of compensation increase | N/A | N/A | 3.55% | 3.50% | N/A | N/A | ||||||||||||||||||
Healthcare cost trend rate assumed for next year Initial rate (weighted-average) | 9.00% | 9.50% | ||||||||||||||||||||||
Year ultimate rate is reached | 2012 | 2012 | ||||||||||||||||||||||
Ultimate rate | 5.50% | 5.50% |
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Plan Assets at December 31, | ||||||||||||||||||||||||
2005 Target | ||||||||||||||||||||||||
Allocation | Domestic | Foreign | ||||||||||||||||||||||
Asset category | Domestic | Foreign | 2004 | 2003 | 2004 | 2003 | ||||||||||||||||||
Equity securities | 50% | 73% | 54% | 61% | 73% | 73% | ||||||||||||||||||
Fixed income | 25% | 21% | 21% | 14% | 18% | 18% | ||||||||||||||||||
Real estate | 10% | 4% | 6% | 10% | 4% | 4% | ||||||||||||||||||
Other | 15% | 2% | 19% | 15% | 5% | 5% | ||||||||||||||||||
Total | 100% | 100% | 100% | 100% | 100% | 100% | ||||||||||||||||||
1% Increase | 1% Decrease | ||||||||
Effect of a one percentage point change in assumed healthcare cost trend | |||||||||
-on total service and interest cost components | $ | 0.2 | $ | (0.2 | ) | ||||
-on postretirement benefit obligation | $ | 3.3 | $ | (3.2 | ) |
Contributions |
Estimated Future Payments |
Domestic | Foreign | Postretirement | |||||||||||
Years | Pension Plans | Pension Plans | Benefits | ||||||||||
2005 | $ | 15.3 | $ | 14.2 | $ | 6.2 | |||||||
2006 | $ | 11.1 | $ | 14.2 | $ | 6.2 | |||||||
2007 | $ | 10.9 | $ | 16.4 | $ | 6.3 | |||||||
2008 | $ | 10.8 | $ | 14.9 | $ | 6.3 | |||||||
2009 | $ | 10.5 | $ | 22.5 | $ | 6.4 | |||||||
2010-2014 | $ | 53.3 | $ | 92.5 | $ | 31.1 |
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Note 15: | Accumulated Other Comprehensive Loss |
December 31, | ||||||||||||
2004 | 2003 | 2002 | ||||||||||
(Restated) | (Restated) | |||||||||||
Foreign currency translation adjustment | $ | (145.8 | ) | $ | (197.3 | ) | $ | (319.3 | ) | |||
Adjustment for minimum pension liability | (112.8 | ) | (65.2 | ) | (69.2 | ) | ||||||
Unrealized holding gain (loss) on securities | 10.0 | 3.4 | (6.7 | ) | ||||||||
Accumulated other comprehensive loss, net of tax | $ | (248.6 | ) | $ | (259.1 | ) | $ | (395.2 | ) | |||
Note 16: | Derivative and Hedging Instruments |
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Note 17: | Financial Instruments |
December 31, | |||||||||||||||||
2004 | 2003 | ||||||||||||||||
Book Value | Fair Value | Book Value | Fair Value | ||||||||||||||
(Restated) | |||||||||||||||||
Investment securities: | |||||||||||||||||
— Marketable securities | $ | 420.0 | $ | 420.0 | $ | 195.1 | $ | 195.1 | |||||||||
— Cost investments | 121.6 | 121.6 | 126.7 | 126.7 | |||||||||||||
— Other investments | 47.1 | 47.1 | 120.1 | 120.1 | |||||||||||||
Long-term debt | (2,152.0 | ) | (2,447.0 | ) | (2,403.7 | ) | (2,882.6 | ) | |||||||||
Financial commitments: | |||||||||||||||||
— Other forward contracts | (4.0 | ) | (4.0 | ) | (3.1 | ) | (3.1 | ) | |||||||||
— Put option obligations | (10.1 | ) | (10.1 | ) | (9.3 | ) | (9.3 | ) |
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Note 18: | Segment Information |
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For the Years Ended December 31, | ||||||||||||
2004 | 2003 | 2002 | ||||||||||
(Restated) | (Restated) | |||||||||||
Salaries, benefits and related expenses | $ | 151.2 | $ | 129.0 | $ | 131.1 | ||||||
Professional fees | 143.4 | 49.8 | 28.5 | |||||||||
Rent and depreciation | 38.0 | 30.5 | 26.5 | |||||||||
Corporate insurance | 29.7 | 26.5 | 12.5 | |||||||||
Bank fees | 2.8 | 1.6 | 3.7 | |||||||||
Other | 11.4 | 9.4 | 17.7 | |||||||||
Expenses allocated to operating divisions | (133.3 | ) | (118.1 | ) | (117.7 | ) | ||||||
Total corporate and other | $ | 243.2 | $ | 128.6 | $ | 102.3 | ||||||
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For the Years Ended December 31, | |||||||||||||
2004 | 2003 | 2002 | |||||||||||
(Restated) | (Restated) | ||||||||||||
Revenue:(1) | |||||||||||||
IAN | $ | 5,399.2 | $ | 5,140.5 | $ | 4,994.7 | |||||||
CMG | 935.8 | 942.4 | 970.8 | ||||||||||
Motorsports | 52.0 | 78.8 | 93.6 | ||||||||||
Consolidated revenue | $ | 6,387.0 | $ | 6,161.7 | $ | 6,059.1 | |||||||
Segment operating income: | |||||||||||||
IAN | $ | 577.2 | $ | 551.9 | $ | 550.7 | |||||||
CMG | 83.7 | 55.7 | 47.5 | ||||||||||
Motorsports | (14.0 | ) | (43.6 | ) | (82.2 | ) | |||||||
Corporate and other | (243.2 | ) | (128.6 | ) | (102.3 | ) | |||||||
Total segment operating income | $ | 403.7 | $ | 435.4 | $ | 413.7 | |||||||
Reconciliation to income (loss) before taxes: | |||||||||||||
Restructuring charges | (62.2 | ) | (172.9 | ) | (7.9 | ) | |||||||
Long-lived asset impairment and other charges | (435.8 | ) | (294.0 | ) | (130.0 | ) | |||||||
Interest expense | (172.0 | ) | (207.0 | ) | (158.7 | ) | |||||||
Debt prepayment penalty | (9.8 | ) | (24.8 | ) | — | ||||||||
Interest income | 50.7 | 39.3 | 30.6 | ||||||||||
Investment impairments | (63.4 | ) | (71.5 | ) | (40.3 | ) | |||||||
Litigation charges | 32.5 | (127.6 | ) | — | |||||||||
Other income (expense) | (10.7 | ) | 50.3 | 8.3 | |||||||||
Income (loss) before income taxes | $ | (267.0 | ) | $ | (372.8 | ) | $ | 115.7 | |||||
Total assets: | |||||||||||||
IAN | $ | 9,901.0 | $ | 9,876.6 | $ | 9,137.5 | |||||||
CMG | 928.6 | 998.0 | 1,193.8 | ||||||||||
Motorsports | — | 61.1 | 176.0 | ||||||||||
Corporate and other | 1,442.7 | 1,510.2 | 1,397.7 | ||||||||||
Total assets | $ | 12,272.3 | $ | 12,445.9 | $ | 11,905.0 | |||||||
Depreciation and amortization: | |||||||||||||
IAN | $ | 146.5 | $ | 171.2 | $ | 159.2 | |||||||
CMG | 22.1 | 28.5 | 25.7 | ||||||||||
Motorsports | — | 3.7 | 8.8 | ||||||||||
Corporate and other | 16.5 | 13.1 | 13.1 | ||||||||||
Total depreciation and amortization | $ | 185.1 | $ | 216.5 | $ | 206.8 | |||||||
Capital expenditures: | |||||||||||||
IAN | $ | 133.7 | $ | 104.0 | $ | 114.7 | |||||||
CMG | 27.1 | 12.3 | 12.1 | ||||||||||
Motorsports | — | 25.7 | 36.4 | ||||||||||
Corporate and other | 33.2 | 17.6 | 8.2 | ||||||||||
Total capital expenditures | $ | 194.0 | $ | 159.6 | $ | 171.4 | |||||||
(1) | Amounts disclosed as revenue from unaffiliated customers include immaterial amounts of intersegment revenues. |
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For the Years Ended December 31, | |||||||||||||
2004 | 2003 | 2002 | |||||||||||
(Restated) | (Restated) | ||||||||||||
Long-Lived Assets: | |||||||||||||
US | $ | 2,721.7 | $ | 2,436.2 | $ | 2,495.0 | |||||||
International: | |||||||||||||
UK | 296.9 | 410.8 | 589.1 | ||||||||||
All Other Europe | 852.5 | 1,084.7 | 1,227.0 | ||||||||||
Asia Pacific | 127.7 | 184.4 | 189.6 | ||||||||||
Latin America | 139.4 | 146.0 | 192.8 | ||||||||||
Other | 223.2 | 272.8 | 202.9 | ||||||||||
Total international | 1,639.7 | 2,098.7 | 2,401.4 | ||||||||||
Total consolidated | $ | 4,361.4 | $ | 4,534.9 | $ | 4,896.4 | |||||||
Revenue: | |||||||||||||
US | $ | 3,509.2 | $ | 3,459.3 | $ | 3,478.1 | |||||||
International: | |||||||||||||
UK | 654.1 | 662.6 | 666.5 | ||||||||||
All Other Europe | 1,219.3 | 1,130.5 | 1,034.0 | ||||||||||
Asia Pacific | 474.7 | 429.4 | 397.5 | ||||||||||
Latin America | 240.8 | 233.3 | 266.1 | ||||||||||
Other | 288.9 | 246.6 | 216.9 | ||||||||||
Total international | 2,877.8 | 2,702.4 | 2,581.0 | ||||||||||
Total consolidated | $ | 6,387.0 | $ | 6,161.7 | $ | 6,059.1 | |||||||
Note 19: | Commitments and Contingencies |
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For the Years Ended December 31, | ||||||||||||
2004 | 2003 | 2002 | ||||||||||
(Restated) | (Restated) | |||||||||||
Gross rent expense | $ | 433.0 | $ | 440.2 | $ | 432.0 | ||||||
Third-party sublease rental income | (24.6 | ) | (31.6 | ) | (24.7 | ) | ||||||
Net rent expense | $ | 408.4 | $ | 408.6 | $ | 407.3 | ||||||
Sublease | |||||||||||||
Gross Rent | Rental | Net Rent | |||||||||||
Period | Expense | Income | Expense | ||||||||||
2005 | $ | 319.1 | $ | (49.2 | ) | $ | 269.9 | ||||||
2006 | 289.1 | (45.6 | ) | 243.5 | |||||||||
2007 | 252.7 | (39.8 | ) | 212.9 | |||||||||
2008 | 220.1 | (33.6 | ) | 186.5 | |||||||||
2009 | 185.9 | (30.4 | ) | 155.5 | |||||||||
2010 and thereafter | 924.1 | (95.7 | ) | 828.4 | |||||||||
Total | $ | 2,191.0 | $ | (294.3 | ) | $ | 1,896.7 | ||||||
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2005 | 2006 | 2007 | 2008 | 2009 | Thereafter | Total | |||||||||||||||||||||||
Deferred Acquisition Payments | |||||||||||||||||||||||||||||
Cash | $ | 48.0 | $ | 5.7 | $ | 2.1 | $ | 0.9 | $ | 4.3 | $ | — | $ | 61.0 | |||||||||||||||
Stock | 12.4 | 5.4 | — | — | — | — | 17.8 | ||||||||||||||||||||||
Put Options with Consolidated Affiliates* | |||||||||||||||||||||||||||||
Cash | 30.2 | 1.8 | 9.5 | 3.4 | 3.0 | 7.3 | 55.2 | ||||||||||||||||||||||
Stock | 0.1 | 0.1 | — | — | — | — | 0.2 | ||||||||||||||||||||||
Put Options with Unconsolidated Affiliates* | |||||||||||||||||||||||||||||
Cash | 5.4 | 3.4 | 3.9 | 3.0 | 2.2 | 1.4 | 19.3 | ||||||||||||||||||||||
Stock | 0.8 | 0.9 | — | 0.9 | — | 0.3 | 2.9 | ||||||||||||||||||||||
Call Options with Consolidated Affiliates* | |||||||||||||||||||||||||||||
Cash | 4.2 | 1.1 | — | — | — | 4.8 | 10.1 | ||||||||||||||||||||||
Stock | — | 0.5 | — | — | — | — | 0.5 | ||||||||||||||||||||||
Subtotal — Cash | $ | 87.8 | $ | 12.0 | $ | 15.5 | $ | 7.3 | $ | 9.5 | $ | 13.5 | $ | 145.6 | |||||||||||||||
Subtotal — Stock | $ | 13.3 | $ | 6.9 | $ | — | $ | 0.9 | $ | — | $ | 0.3 | $ | 21.4 | |||||||||||||||
Total Contingent Acquisition Payments | $ | 101.1 | $ | 18.9 | $ | 15.5 | $ | 8.2 | $ | 9.5 | $ | 13.8 | $ | 167.0 | |||||||||||||||
Cash | $ | 34.1 | $ | 4.9 | $ | 2.1 | $ | 1.4 | $ | — | $ | 1.3 | $ | 43.8 | |||||||||||||||
Stock | $ | 1.8 | $ | 0.2 | $ | — | $ | — | $ | — | $ | — | $ | 2.0 | |||||||||||||||
Subtotal | $ | 35.9 | $ | 5.1 | $ | 2.1 | $ | 1.4 | $ | — | $ | 1.3 | $ | 45.8 | |||||||||||||||
Total Payments | $ | 137.0 | $ | 24.0 | $ | 17.6 | $ | 9.6 | $ | 9.5 | $ | 15.1 | $ | 212.8 | |||||||||||||||
* | We have entered into certain acquisitions that contain both put and call options with similar terms and conditions. In such instances, we have included the related estimated contingent acquisition obligations with Put Options. |
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Note 20: | Results by Quarter (Unaudited) |
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Three Months Ended | Three Months Ended | Three Months Ended | Three Months Ended | |||||||||||||||||||||||||||||
March 31, | June 30, | September 30, | December 31, | |||||||||||||||||||||||||||||
2004 | 2003 | 2004 | 2003 | 2004 | 2003 | 2004 | 2003 | |||||||||||||||||||||||||
(Restated) | (Restated) | (Restated) | (Restated) | (Restated) | (Restated) | (Restated) | ||||||||||||||||||||||||||
REVENUE | $ | 1,389.4 | $ | 1,310.0 | $ | 1,512.8 | $ | 1,542.8 | $ | 1,519.1 | $ | 1,452.2 | $ | 1,965.7 | $ | 1,856.7 | ||||||||||||||||
OPERATING EXPENSES: | ||||||||||||||||||||||||||||||||
Salaries and related expenses | 886.7 | 868.4 | 898.5 | 890.7 | 925.3 | 824.1 | 1,023.0 | 917.4 | ||||||||||||||||||||||||
Office and general expenses | 510.7 | 507.4 | 552.8 | 563.0 | 556.3 | 578.7 | 630.0 | 576.6 | ||||||||||||||||||||||||
Restructuring charges (reversals) | 61.6 | 0.4 | 3.9 | 94.5 | 1.1 | 47.8 | (4.4 | ) | 30.2 | |||||||||||||||||||||||
Long-lived asset impairment and other charges | 5.7 | 11.1 | 3.1 | 11.0 | 307.6 | 227.0 | 5.8 | 44.9 | ||||||||||||||||||||||||
Motorsports contract termination costs | — | — | 80.0 | — | 33.6 | — | — | — | ||||||||||||||||||||||||
Total operating expenses | 1,464.7 | 1,387.3 | 1,538.3 | 1,559.2 | 1,823.9 | 1,677.6 | 1,654.4 | 1,569.1 | ||||||||||||||||||||||||
OPERATING INCOME (LOSS) | (75.3 | ) | (77.3 | ) | (25.5 | ) | (16.4 | ) | (304.8 | ) | (225.4 | ) | 311.3 | 287.6 | ||||||||||||||||||
EXPENSE AND OTHER INCOME: | ||||||||||||||||||||||||||||||||
Interest expense | (43.9 | ) | (49.6 | ) | (42.0 | ) | (55.4 | ) | (42.7 | ) | (50.1 | ) | (43.4 | ) | (51.9 | ) | ||||||||||||||||
Debt prepayment penalty | — | — | — | — | — | (24.8 | ) | (9.8 | ) | — | ||||||||||||||||||||||
Interest income | 9.8 | 8.1 | 10.4 | 10.2 | 11.1 | 9.6 | 19.4 | 11.4 | ||||||||||||||||||||||||
Investment impairments | (3.2 | ) | (2.7 | ) | — | (9.8 | ) | (33.8 | ) | (17.0 | ) | (26.4 | ) | (42.0 | ) | |||||||||||||||||
Litigation charges | — | — | — | — | — | (127.6 | ) | 32.5 | — | |||||||||||||||||||||||
Other income (expense) | 1.3 | (0.2 | ) | 2.2 | 0.6 | (0.7 | ) | 1.4 | (13.5 | ) | 48.5 | |||||||||||||||||||||
Total expense and other income | (36.0 | ) | (44.4 | ) | (29.4 | ) | (54.4 | ) | (66.1 | ) | (208.5 | ) | (41.2 | ) | (34.0 | ) | ||||||||||||||||
Income (loss) from continuing operations before provision for income taxes | (111.3 | ) | (121.7 | ) | (54.9 | ) | (70.8 | ) | (370.9 | ) | (433.9 | ) | 270.1 | 253.6 | ||||||||||||||||||
Provision for income taxes | (29.0 | ) | (30.5 | ) | 30.6 | 4.7 | 130.0 | 20.9 | 130.6 | 247.6 | ||||||||||||||||||||||
Income (loss) from continuing operations of consolidated companies | (82.3 | ) | (91.2 | ) | (85.5 | ) | (75.5 | ) | (500.9 | ) | (454.8 | ) | 139.5 | 6.0 | ||||||||||||||||||
Income applicable to minority interests (net of tax) | (2.6 | ) | 1.5 | (4.2 | ) | (6.5 | ) | (4.4 | ) | (8.5 | ) | (10.3 | ) | (13.5 | ) | |||||||||||||||||
Equity in net income of unconsolidated affiliates (net of tax) | 1.1 | (3.2 | ) | 1.3 | 1.8 | 2.3 | (0.1 | ) | 1.1 | 3.9 | ||||||||||||||||||||||
Income (loss) from continuing operations | (83.8 | ) | (92.9 | ) | (88.4 | ) | (80.2 | ) | (503.0 | ) | (463.4 | ) | 130.3 | (3.6 | ) | |||||||||||||||||
Dividends on preferred stock | 4.8 | — | 5.0 | — | 5.0 | — | 5.0 | — | ||||||||||||||||||||||||
Net income (loss) from continuing operations | (88.6 | ) | (92.9 | ) | (93.4 | ) | (80.2 | ) | (508.0 | ) | (463.4 | ) | 125.3 | (3.6 | ) | |||||||||||||||||
Income from discontinued operations (net of tax) | — | 2.5 | — | 9.5 | 6.5 | 89.0 | — | — | ||||||||||||||||||||||||
NET INCOME (LOSS) APPLICABLE TO COMMON STOCKHOLDERS | $ | (88.6 | ) | $ | (90.4 | ) | $ | (93.4 | ) | $ | (70.7 | ) | $ | (501.5 | ) | $ | (374.4 | ) | $ | 125.3 | $ | (3.6 | ) | |||||||||
Earnings (loss) per share of common stock: | ||||||||||||||||||||||||||||||||
Basic: | ||||||||||||||||||||||||||||||||
Continuing operations | $ | (0.21 | ) | $ | (0.24 | ) | $ | (0.23 | ) | $ | (0.21 | ) | $ | (1.22 | ) | $ | (1.20 | ) | $ | 0.25 | ** | $ | (0.01 | ) | ||||||||
Discontinued operations | — | 0.01 | — | 0.02 | 0.02 | 0.23 | — | — | ||||||||||||||||||||||||
Total* | $ | (0.21 | ) | $ | (0.24 | )* | $ | (0.23 | ) | $ | (0.18 | )* | $ | (1.21 | )* | $ | (0.97 | ) | $ | 0.25 | $ | (0.01 | ) | |||||||||
Diluted: | ||||||||||||||||||||||||||||||||
Continuing operations | $ | (0.21 | ) | $ | (0.24 | ) | $ | (0.23 | ) | $ | (0.21 | ) | $ | (1.22 | ) | $ | (1.20 | ) | $ | 0.22 | ** | $ | (0.01 | ) | ||||||||
Discontinued operations | — | 0.01 | — | 0.02 | 0.02 | 0.23 | — | — | ||||||||||||||||||||||||
Total* | $ | (0.21 | ) | $ | (0.24 | )* | $ | (0.23 | ) | $ | (0.18 | )* | $ | (1.21 | )* | $ | (0.97 | ) | $ | 0.22 | $ | (0.01 | ) | |||||||||
Weighted-average shares: | ||||||||||||||||||||||||||||||||
Basic | 413.3 | 381.8 | 414.6 | 384.3 | 415.4 | 385.8 | 417.8 | 390.3 | ||||||||||||||||||||||||
Diluted | 413.3 | 381.8 | 414.6 | 384.3 | 415.4 | 385.8 | 518.9 | 390.3 |
* | Does not add due to rounding. |
** | Due to the existence of income from continuing operations, basic and diluted EPS have been calculated using the two-class method pursuant to EITF Issue 03-6 for the quarter ended December 31, 2004. This resulted in a decrease of $22.6 and $12.2 in net income (numerator) for the basic and diluted EPS calculations, respectively, for the quarter ended December 31, 2004. |
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As of March 31, | As of June 30, | As of September 30, | |||||||||||||||||||||||
2004 | 2003 | 2004 | 2003 | 2004 | 2003 | ||||||||||||||||||||
ASSETS: | |||||||||||||||||||||||||
Cash and cash equivalents | $ | 1,172.7 | $ | 1,210.2 | $ | 999.0 | $ | 760.7 | $ | 1,064.0 | $ | 736.1 | |||||||||||||
Short-term marketable securities | 295.0 | 14.6 | 532.6 | 19.6 | 398.2 | 15.5 | |||||||||||||||||||
Accounts receivable, net of allowances | 4,604.1 | 4,279.0 | 4,952.5 | 4,709.3 | 4,583.9 | 4,500.9 | |||||||||||||||||||
Expenditures billable to clients | 370.9 | 437.6 | 384.2 | 447.2 | 385.2 | 422.3 | |||||||||||||||||||
Deferred income taxes | 273.6 | 127.4 | 268.4 | 141.4 | 262.9 | 116.7 | |||||||||||||||||||
Prepaid expenses and other current assets | 211.5 | 381.1 | 201.9 | 418.5 | 194.2 | 385.0 | |||||||||||||||||||
Assets held for sale | — | 414.6 | — | 452.2 | — | — | |||||||||||||||||||
Total current assets | 6,927.8 | 6,864.5 | 7,338.6 | 6,948.9 | 6,888.4 | 6,176.5 | |||||||||||||||||||
Land, buildings and equipment, net | 682.3 | 763.4 | 669.3 | 775.3 | 673.3 | 747.9 | |||||||||||||||||||
Deferred income taxes | 439.0 | 554.8 | 453.0 | 580.4 | 350.6 | 676.3 | |||||||||||||||||||
Investments | 241.0 | 340.8 | 236.2 | 332.5 | 190.0 | 374.3 | |||||||||||||||||||
Goodwill | 3,288.8 | 3,251.7 | 3,374.1 | 3,353.3 | 3,087.0 | 3,200.6 | |||||||||||||||||||
Other intangible assets, net of amortization | 44.6 | 7.6 | 41.3 | 43.4 | 40.0 | 40.6 | |||||||||||||||||||
Other assets | 268.0 | 308.8 | 276.2 | 271.7 | 270.2 | 279.5 | |||||||||||||||||||
Total non-current assets | 4,963.7 | 5,227.1 | 5,050.1 | 5,356.6 | 4,611.1 | 5,319.2 | |||||||||||||||||||
TOTAL ASSETS | $ | 11,891.5 | $ | 12,091.6 | $ | 12,388.7 | $ | 12,305.5 | $ | 11,499.5 | $ | 11,495.7 | |||||||||||||
LIABILITIES: | |||||||||||||||||||||||||
Accounts payable | $ | 5,449.2 | $ | 5,034.1 | $ | 6,174.1 | $ | 5,702.3 | 5,728.1 | $ | 5,350.8 | ||||||||||||||
Accrued liabilities | 1,183.6 | 1,148.4 | 1,083.3 | 1,178.5 | 1,100.4 | 1,252.4 | |||||||||||||||||||
Short-term debt | 133.2 | 666.7 | 97.6 | 172.8 | 77.3 | 353.4 | |||||||||||||||||||
Liabilities held for sale | — | 121.1 | — | 149.0 | — | — | |||||||||||||||||||
Total current liabilities | 6,766.0 | 6,970.3 | 7,355.0 | 7,202.6 | 6,905.8 | 6,956.6 | |||||||||||||||||||
Long-term debt | 2,197.3 | 2,623.5 | 2,194.8 | 2,593.4 | 2,194.2 | 2,197.9 | |||||||||||||||||||
Deferred compensation and employee benefits | 518.1 | 534.5 | 506.7 | 557.4 | 517.7 | 586.2 | |||||||||||||||||||
Other non-current liabilities | 336.9 | 220.0 | 350.4 | 176.5 | 378.6 | 307.0 | |||||||||||||||||||
Minority interests in consolidated subsidiaries | 59.7 | 60.1 | 52.9 | 57.0 | 51.3 | 58.5 | |||||||||||||||||||
Total non-current liabilities | 3,112.0 | 3,438.1 | 3,104.8 | 3,384.3 | 3,141.8 | 3,149.6 | |||||||||||||||||||
TOTAL LIABILITIES | $ | 9,878.0 | $ | 10,408.4 | $ | 10,459.8 | $ | 10,586.9 | $ | 10,047.6 | $ | 10,106.2 | |||||||||||||
Commitments and contingencies (Note 19) | |||||||||||||||||||||||||
STOCKHOLDERS’ EQUITY: | |||||||||||||||||||||||||
Preferred stock, no par value, shares authorized: 20.0 | 373.7 | — | 373.7 | — | 373.7 | — | |||||||||||||||||||
shares issued and outstanding: 2004 — 7.5; 2003 — 7.5 | |||||||||||||||||||||||||
Common stock, $0.10 par value, shares authorized: 800.0 | 41.8 | 39.0 | 42.2 | 39.1 | 42.3 | 39.2 | |||||||||||||||||||
shares issued: 2004 — 424.9; 2003 — 418.4 | |||||||||||||||||||||||||
shares outstanding: 2004 — 424.5; 2003 — 418.2 | |||||||||||||||||||||||||
Additional paid-in capital | 2,065.5 | 1,766.5 | 2,119.1 | 1,743.6 | 2,116.1 | 1,753.3 | |||||||||||||||||||
Retained earnings (deficit) | (123.6 | ) | 408.9 | (212.0 | ) | 338.2 | (708.5 | ) | (36.2 | ) | |||||||||||||||
Accumulated other comprehensive loss, net of tax | (279.8 | ) | (377.9 | ) | (296.8 | ) | (309.5 | ) | (281.4 | ) | (283.9 | ) | |||||||||||||
2,077.6 | 1,836.5 | 2,026.2 | 1,811.4 | 1,542.2 | 1,472.4 | ||||||||||||||||||||
Less: | |||||||||||||||||||||||||
Treasury stock, at cost: 2004 — 0.4 shares; 2003 — 0.3 shares | (14.0 | ) | (65.0 | ) | (14.0 | ) | (11.3 | ) | (14.0 | ) | (11.3 | ) | |||||||||||||
Unamortized deferred compensation | (50.1 | ) | (88.3 | ) | (83.3 | ) | (81.5 | ) | (76.3 | ) | (71.6 | ) | |||||||||||||
TOTAL STOCKHOLDERS’ EQUITY | $ | 2,013.5 | $ | 1,683.2 | $ | 1,928.9 | $ | 1,718.6 | $ | 1,451.9 | $ | 1,389.5 | |||||||||||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 11,891.5 | $ | 12,091.6 | $ | 12,388.7 | $ | 12,305.5 | $ | 11,499.5 | $ | 11,495.7 | |||||||||||||
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Three Months Ended | Six Months Ended | Nine Months Ended | |||||||||||||||||||||||
March 31, | June 30, | September 30, | |||||||||||||||||||||||
2004 | 2003 | 2004 | 2003 | 2004 | 2003 | ||||||||||||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES FROM CONTINUING OPERATIONS: | |||||||||||||||||||||||||
Net cash used in operating activities from continuing operations | $ | (342.3 | ) | $ | (276.5 | ) | $ | (101.3 | ) | $ | (23.4 | ) | $ | (115.2 | ) | $ | (153.0 | ) | |||||||
CASH FLOWS FROM INVESTING ACTIVITIES FROM CONTINUING OPERATIONS: | |||||||||||||||||||||||||
Acquisitions, including deferred payments, net of cash acquired | (39.0 | ) | (43.5 | ) | (136.3 | ) | (130.4 | ) | (143.8 | ) | (193.3 | ) | |||||||||||||
Capital expenditures | (37.8 | ) | (29.6 | ) | (77.5 | ) | (72.1 | ) | (119.3 | ) | (94.2 | ) | |||||||||||||
Proceeds from sales of businesses and fixed assets | 17.4 | 6.9 | 29.2 | 3.9 | 28.1 | 17.4 | |||||||||||||||||||
Proceeds from sales of investments | 3.9 | 14.2 | 10.6 | 21.3 | 22.9 | 25.2 | |||||||||||||||||||
Purchases of investments | (7.2 | ) | (20.2 | ) | (10.2 | ) | (37.6 | ) | (15.9 | ) | (30.9 | ) | |||||||||||||
Maturities of short-term marketable securities | 371.0 | 11.2 | 575.8 | 28.9 | 865.0 | 39.6 | |||||||||||||||||||
Purchases of short-term marketable securities | (470.4 | ) | (5.7 | ) | (912.9 | ) | (27.8 | ) | (1,067.5 | ) | (34.3 | ) | |||||||||||||
Proceeds from the sale of discontinued operations, net of cash sold | — | — | — | — | 10.0 | 376.7 | |||||||||||||||||||
Net cash provided by investing activities from continuing operations | (162.1 | ) | (66.7 | ) | (521.3 | ) | (213.8 | ) | (420.5 | ) | 106.2 | ||||||||||||||
CASH FLOWS FROM FINANCING ACTIVITIES FROM CONTINUING OPERATIONS: | |||||||||||||||||||||||||
Increase (decrease) in short-term bank borrowings | 60.4 | (181.9 | ) | 23.4 | (186.5 | ) | 3.1 | (238.7 | ) | ||||||||||||||||
Payments of long-term debt | (244.4 | ) | (0.7 | ) | (244.7 | ) | (581.4 | ) | (245.1 | ) | (741.3 | ) | |||||||||||||
Proceeds from long-term debt | 0.5 | 800.7 | 0.5 | 800.9 | 1.0 | 800.8 | |||||||||||||||||||
Debt issuance costs | — | (22.6 | ) | (2.3 | ) | (26.9 | ) | (2.3 | ) | (27.5 | ) | ||||||||||||||
Preferred stock issuance costs | (0.8 | ) | — | — | — | — | — | ||||||||||||||||||
Preferred stock dividends | (4.8 | ) | — | (9.8 | ) | — | (14.8 | ) | — | ||||||||||||||||
Issuance of common stock | (2.3 | ) | 2.9 | 0.1 | 8.0 | 0.7 | 3.1 | ||||||||||||||||||
Distributions to minority interests | (2.7 | ) | (0.2 | ) | (10.9 | ) | (7.4 | ) | (17.3 | ) | (12.5 | ) | |||||||||||||
Contributions from unconsolidated affiliates | 4.9 | 1.0 | 6.1 | 0.5 | 6.8 | 0.5 | |||||||||||||||||||
Net cash (used in) provided by financing activities from continuing operations | (189.2 | ) | 599.2 | (237.6 | ) | 7.2 | (267.9 | ) | (215.6 | ) | |||||||||||||||
Effect of exchange rates on cash and cash equivalents | (5.6 | ) | 13.9 | (12.7 | ) | 50.9 | (4.3 | ) | 58.7 | ||||||||||||||||
Net cash (used in) provided by discontinued operations | — | (12.9 | ) | — | (13.4 | ) | — | (13.4 | ) | ||||||||||||||||
Increase (decrease) in cash and cash equivalents | (699.2 | ) | 257.0 | (872.9 | ) | (192.5 | ) | (807.9 | ) | (217.1 | ) | ||||||||||||||
Cash and cash equivalents at beginning of year | 1,871.9 | 953.2 | 1,871.9 | 953.2 | 1,871.9 | 953.2 | |||||||||||||||||||
Cash and cash equivalents at end of period | $ | 1,172.7 | $ | 1,210.2 | $ | 999.0 | $ | 760.7 | $ | 1,064.0 | $ | 736.1 | |||||||||||||
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Three Months Ended March 31, 2004 | |||||||||||||
As Previously | Effect of | As | |||||||||||
Reported | Restatement | Restated | |||||||||||
(Unaudited) | |||||||||||||
REVENUE | $ | 1,395.1 | $ | (5.7 | ) | $ | 1,389.4 | ||||||
OPERATING EXPENSES: | |||||||||||||
Salaries and related expenses | 874.0 | 12.7 | 886.7 | ||||||||||
Office and general expenses | 463.3 | 47.4 | 510.7 | ||||||||||
Restructuring charges | 62.6 | (1.0 | ) | 61.6 | |||||||||
Long-lived asset impairment and other charges | 5.6 | 0.1 | 5.7 | ||||||||||
Total operating expenses | 1,405.5 | 59.2 | 1,464.7 | ||||||||||
OPERATING INCOME (LOSS) | (10.4 | ) | (64.9 | ) | (75.3 | ) | |||||||
EXPENSE AND OTHER INCOME: | |||||||||||||
Interest expense | (39.1 | ) | (4.8 | ) | (43.9 | ) | |||||||
Interest income | 9.7 | 0.1 | 9.8 | ||||||||||
Investment impairments | (3.2 | ) | — | (3.2 | ) | ||||||||
Other income (expense) | 1.1 | 0.2 | 1.3 | ||||||||||
Total expense and other income | (31.5 | ) | (4.5 | ) | (36.0 | ) | |||||||
Loss before provision for income taxes | (41.9 | ) | (69.4 | ) | (111.3 | ) | |||||||
Provision for income taxes | (26.8 | ) | (2.2 | ) | (29.0 | ) | |||||||
Loss of consolidated companies | (15.1 | ) | (67.2 | ) | (82.3 | ) | |||||||
Income applicable to minority interests (net of tax) | (2.4 | ) | (0.2 | ) | (2.6 | ) | |||||||
Equity in net income of unconsolidated affiliates (net of tax) | 0.6 | 0.5 | 1.1 | ||||||||||
Loss | (16.9 | ) | (66.9 | ) | (83.8 | ) | |||||||
Dividends on preferred stock | 4.8 | — | 4.8 | ||||||||||
Net Loss | (21.7 | ) | (66.9 | ) | (88.6 | ) | |||||||
NET LOSS APPLICABLE TO COMMON STOCKHOLDERS | $ | (21.7 | ) | $ | (66.9 | ) | $ | (88.6 | ) | ||||
Loss per share of common stock: | |||||||||||||
Basic | $ | (0.05 | ) | $ | (0.16 | ) | $ | (0.21 | ) | ||||
Diluted | $ | (0.05 | ) | $ | (0.16 | ) | $ | (0.21 | ) | ||||
Weighted-average shares: | |||||||||||||
Basic | 413.3 | 413.3 | |||||||||||
Diluted | 413.3 | 413.3 |
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Three Months Ended June 30, 2004 | |||||||||||||
As Previously | Effect of | As | |||||||||||
Reported | Restatement | Restated | |||||||||||
(Unaudited) | |||||||||||||
REVENUE | $ | 1,544.1 | $ | (31.3 | ) | $ | 1,512.8 | ||||||
OPERATING EXPENSES: | |||||||||||||
Salaries and related expenses | 893.8 | 4.7 | 898.5 | ||||||||||
Office and general expenses | 506.8 | 46.0 | 552.8 | ||||||||||
Restructuring charges | 2.0 | 1.9 | 3.9 | ||||||||||
Long-lived asset impairment and other charges | 3.0 | 0.1 | 3.1 | ||||||||||
Motorsports contract termination costs | 80.0 | — | 80.0 | ||||||||||
Total operating expenses | 1,485.6 | 52.7 | 1,538.3 | ||||||||||
OPERATING INCOME (LOSS) | 58.5 | (84.0 | ) | (25.5 | ) | ||||||||
EXPENSE AND OTHER INCOME: | |||||||||||||
Interest expense | (38.4 | ) | (3.6 | ) | (42.0 | ) | |||||||
Interest income | 10.4 | — | 10.4 | ||||||||||
Other income (expense) | 2.3 | (0.1 | ) | 2.2 | |||||||||
Total expense and other income | (25.7 | ) | (3.7 | ) | (29.4 | ) | |||||||
Income (loss) from continuing operations before provision for income taxes | 32.8 | (87.7 | ) | (54.9 | ) | ||||||||
Provision for income taxes | 33.4 | (2.8 | ) | 30.6 | |||||||||
Loss of consolidated companies | (0.6 | ) | (84.9 | ) | (85.5 | ) | |||||||
Income applicable to minority interests | (5.6 | ) | 1.4 | (4.2 | ) | ||||||||
Equity in net income of unconsolidated affiliates | 0.8 | 0.5 | 1.3 | ||||||||||
Loss | (5.4 | ) | (83.0 | ) | (88.4 | ) | |||||||
Dividends on preferred stock | 5.0 | — | 5.0 | ||||||||||
Net Loss | (10.4 | ) | (83.0 | ) | (93.4 | ) | |||||||
NET LOSS APPLICABLE TO COMMON STOCKHOLDERS | $ | (10.4 | ) | $ | (83.0 | ) | $ | (93.4 | ) | ||||
Loss per share of common stock: | |||||||||||||
Basic | $ | (0.03 | ) | $ | (0.20 | ) | $ | (0.23 | ) | ||||
Diluted | $ | (0.03 | ) | $ | (0.20 | ) | $ | (0.23 | ) | ||||
Weighted-average shares: | |||||||||||||
Basic | 414.6 | 414.6 | |||||||||||
Diluted | 414.6 | 414.6 |
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Three Months Ended September 30, 2004 | |||||||||||||
As Previously | Effect of | As | |||||||||||
Reported | Restatement | Restated | |||||||||||
(Unaudited) | |||||||||||||
REVENUE | $ | 1,508.8 | $ | 10.3 | $ | 1,519.1 | |||||||
OPERATING EXPENSES: | |||||||||||||
Salaries and related expenses | 924.8 | 0.5 | 925.3 | ||||||||||
Office and general expenses | 519.5 | 36.8 | 556.3 | ||||||||||
Restructuring charges | 1.0 | 0.1 | 1.1 | ||||||||||
Long-lived asset impairment and other charges | 450.1 | (142.5 | ) | 307.6 | |||||||||
Motorsports contract termination costs | 33.6 | — | 33.6 | ||||||||||
Total operating expenses | 1,929.0 | (105.1 | ) | 1,823.9 | |||||||||
OPERATING INCOME (LOSS) | (420.2 | ) | 115.4 | (304.8 | ) | ||||||||
EXPENSE AND OTHER INCOME: | |||||||||||||
Interest expense | (39.8 | ) | (2.9 | ) | (42.7 | ) | |||||||
Interest income | 11.1 | — | 11.1 | ||||||||||
Investment impairments | (33.8 | ) | — | (33.8 | ) | ||||||||
Other income (expense) | (0.7 | ) | — | (0.7 | ) | ||||||||
Total expense and other income | (63.2 | ) | (2.9 | ) | (66.1 | ) | |||||||
Loss from continuing operations before provision for income taxes | (483.4 | ) | 112.5 | (370.9 | ) | ||||||||
Provision for income taxes | 98.6 | 31.4 | 130.0 | ||||||||||
Loss from continuing operations of consolidated companies | (582.0 | ) | 81.1 | (500.9 | ) | ||||||||
Income applicable to minority interests | (5.1 | ) | 0.7 | (4.4 | ) | ||||||||
Equity in net income of unconsolidated affiliates | 2.2 | 0.1 | 2.3 | ||||||||||
Loss from continuing operations | (584.9 | ) | 81.9 | (503.0 | ) | ||||||||
Dividends on preferred stock | 5.0 | — | 5.0 | ||||||||||
Net loss from continuing operations | (589.9 | ) | 81.9 | (508.0 | ) | ||||||||
Income from discontinued operations (net of tax) | 6.5 | — | 6.5 | ||||||||||
NET LOSS APPLICABLE TO COMMON STOCKHOLDERS | $ | (583.4 | ) | $ | 81.9 | $ | (501.5 | ) | |||||
Earnings (loss) per share of common stock: | |||||||||||||
Basic: | |||||||||||||
Continuing operations | $ | (1.42 | ) | $ | 0.20 | $ | (1.22 | ) | |||||
Discontinued operations | 0.02 | — | 0.02 | ||||||||||
Total* | $ | (1.40 | ) | $ | 0.19 | $ | (1.21 | ) | |||||
Diluted: | |||||||||||||
Continuing operations | $ | (1.42 | ) | $ | 0.20 | $ | (1.22 | ) | |||||
Discontinued operations | 0.02 | — | 0.02 | ||||||||||
Total* | $ | (1.40 | ) | $ | 0.19 | $ | (1.21 | ) | |||||
Weighted-average shares: | |||||||||||||
Basic | 415.4 | 415.4 | |||||||||||
Diluted | 415.4 | 415.4 |
* | Does not add due to rounding. |
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Three Months Ended March 31, 2003 | |||||||||||||
As Previously | Effect of | As | |||||||||||
Reported | Restatement | Restated | |||||||||||
(Unaudited) | |||||||||||||
REVENUE | $ | 1,315.7 | $ | (5.7 | ) | $ | 1,310.0 | ||||||
OPERATING EXPENSES: | |||||||||||||
Salaries and related expenses | 854.7 | 13.7 | 868.4 | ||||||||||
Office and general expenses | 429.1 | 78.3 | 507.4 | ||||||||||
Restructuring charges | — | 0.4 | 0.4 | ||||||||||
Long-lived asset impairment and other charges | 11.1 | — | 11.1 | ||||||||||
Total operating expenses | 1,294.9 | 92.4 | 1,387.3 | ||||||||||
OPERATING INCOME (LOSS) | 20.8 | (98.1 | ) | (77.3 | ) | ||||||||
EXPENSE AND OTHER INCOME: | |||||||||||||
Interest expense | (38.8 | ) | (10.8 | ) | (49.6 | ) | |||||||
Interest income | 7.9 | 0.2 | 8.1 | ||||||||||
Investment impairments | (2.7 | ) | — | (2.7 | ) | ||||||||
Litigation charges | — | — | — | ||||||||||
Other income (expense) | (0.2 | ) | — | (0.2 | ) | ||||||||
Total expense and other income | (33.8 | ) | (10.6 | ) | (44.4 | ) | |||||||
Loss from continuing operations before provision for income taxes | (13.0 | ) | (108.7 | ) | (121.7 | ) | |||||||
Provision for income taxes | (5.6 | ) | (24.9 | ) | (30.5 | ) | |||||||
Loss from continuing operations of consolidated companies | (7.4 | ) | (83.8 | ) | (91.2 | ) | |||||||
Income applicable to minority interests | (0.6 | ) | 2.1 | 1.5 | |||||||||
Equity in net income of unconsolidated affiliates | (3.2 | ) | — | (3.2 | ) | ||||||||
Net loss from continuing operations | (11.2 | ) | (81.7 | ) | (92.9 | ) | |||||||
Income from discontinued operations (net of tax) | 2.6 | (0.1 | ) | 2.5 | |||||||||
NET LOSS APPLICABLE TO COMMON STOCKHOLDERS | $ | (8.6 | ) | $ | (81.8 | ) | $ | (90.4 | ) | ||||
Earnings (loss) per share of common stock: | |||||||||||||
Basic: | |||||||||||||
Continuing operations | $ | (0.03 | ) | $ | (0.21 | ) | $ | (0.24 | ) | ||||
Discontinued operations | 0.01 | — | 0.01 | ||||||||||
Total* | $ | (0.02 | ) | $ | (0.22 | ) | $ | (0.24 | ) | ||||
Diluted: | |||||||||||||
Continuing operations | $ | (0.03 | ) | $ | (0.21 | ) | $ | (0.24 | ) | ||||
Discontinued operations | 0.01 | — | 0.01 | ||||||||||
Total* | $ | (0.02 | ) | $ | (0.22 | ) | $ | (0.24 | ) | ||||
Weighted-average shares: | |||||||||||||
Basic | 381.8 | — | 381.8 | ||||||||||
Diluted | 381.8 | — | 381.8 |
* | Does not add due to rounding. |
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Three Months Ended June 30, 2003 | |||||||||||||
As Previously | Effect of | As | |||||||||||
Reported | Restatement | Restated | |||||||||||
(Unaudited) | |||||||||||||
REVENUE | $ | 1,499.4 | $ | 43.4 | $ | 1,542.8 | |||||||
OPERATING EXPENSES: | |||||||||||||
Salaries and related expenses | 878.4 | 12.3 | 890.7 | ||||||||||
Office and general expenses | 463.7 | 99.3 | 563.0 | ||||||||||
Restructuring charges | 94.4 | 0.1 | 94.5 | ||||||||||
Long-lived asset impairment and other charges | 11.0 | — | 11.0 | ||||||||||
Total operating expenses | 1,447.5 | 111.7 | 1,559.2 | ||||||||||
OPERATING INCOME (LOSS) | 51.9 | (68.3 | ) | (16.4 | ) | ||||||||
EXPENSE AND OTHER INCOME: | |||||||||||||
Interest expense | (46.1 | ) | (9.3 | ) | (55.4 | ) | |||||||
Interest income | 10.2 | — | 10.2 | ||||||||||
Investment impairments | (9.8 | ) | — | (9.8 | ) | ||||||||
Other income (expense) | 0.3 | 0.3 | 0.6 | ||||||||||
Total expense and other income | (45.4 | ) | (9.0 | ) | (54.4 | ) | |||||||
Income (loss) from continuing operations before provision for income taxes | 6.5 | (77.3 | ) | (70.8 | ) | ||||||||
Provision for income taxes | 22.4 | (17.7 | ) | 4.7 | |||||||||
Loss from continuing operations of consolidated companies | (15.9 | ) | (59.6 | ) | (75.5 | ) | |||||||
Income applicable to minority interests | (8.4 | ) | 1.9 | (6.5 | ) | ||||||||
Equity in net income of unconsolidated affiliates | 1.3 | 0.5 | 1.8 | ||||||||||
Net loss from continuing operations | (23.0 | ) | (57.2 | ) | (80.2 | ) | |||||||
Income from discontinued operations (net of tax) | 9.5 | — | 9.5 | ||||||||||
NET LOSS APPLICABLE TO COMMON STOCKHOLDERS | $ | (13.5 | ) | $ | (57.2 | ) | $ | (70.7 | ) | ||||
Earnings (loss) per share of common stock: | |||||||||||||
Basic: | |||||||||||||
Continuing operations | $ | (0.06 | ) | $ | (0.15 | ) | $ | (0.21 | ) | ||||
Discontinued operations | 0.02 | — | 0.02 | ||||||||||
Total* | $ | (0.04 | ) | $ | (0.14 | ) | $ | (0.18 | ) | ||||
Diluted: | |||||||||||||
Continuing operations | $ | (0.06 | ) | $ | (0.15 | ) | $ | (0.21 | ) | ||||
Discontinued operations | 0.02 | — | 0.02 | ||||||||||
Total* | $ | (0.04 | ) | $ | (0.14 | ) | $ | (0.18 | ) | ||||
Weighted-average shares: | |||||||||||||
Basic | 384.3 | 384.3 | |||||||||||
Diluted | 384.3 | 384.3 |
* | Does not add due to rounding. |
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Three Months Ended September 30, 2003 | |||||||||||||
As Previously | Effect of | As | |||||||||||
Reported | Restatement | Restated | |||||||||||
(Unaudited) | |||||||||||||
REVENUE | $ | 1,418.9 | $ | 33.3 | $ | 1,452.2 | |||||||
OPERATING EXPENSES: | |||||||||||||
Salaries and related expenses | 810.9 | 13.2 | 824.1 | ||||||||||
Office and general expenses | 508.4 | 70.3 | 578.7 | ||||||||||
Restructuring charges | 48.0 | (0.2 | ) | 47.8 | |||||||||
Long-lived asset impairment and other charges | 222.7 | 4.3 | 227.0 | ||||||||||
Total operating expenses | 1,590.0 | 87.6 | 1,677.6 | ||||||||||
OPERATING INCOME (LOSS) | (171.1 | ) | (54.3 | ) | (225.4 | ) | |||||||
EXPENSE AND OTHER INCOME: | |||||||||||||
Interest expense | (43.5 | ) | (6.6 | ) | (50.1 | ) | |||||||
Debt prepayment penalty | (24.8 | ) | — | (24.8 | ) | ||||||||
Interest income | 9.5 | 0.1 | 9.6 | ||||||||||
Investment impairments | (29.7 | ) | 12.7 | (17.0 | ) | ||||||||
Litigation charges | (127.6 | ) | — | (127.6 | ) | ||||||||
Other income (expense) | 1.2 | 0.2 | 1.4 | ||||||||||
Total expense and other income | (214.9 | ) | 6.4 | (208.5 | ) | ||||||||
Loss from continuing operations before provision for income taxes | (386.0 | ) | (47.9 | ) | (433.9 | ) | |||||||
Provision for income taxes | 19.5 | 1.4 | 20.9 | ||||||||||
Loss from continuing operations of consolidated companies | (405.5 | ) | (49.3 | ) | (454.8 | ) | |||||||
Income applicable to minority interests | (10.4 | ) | 1.9 | (8.5 | ) | ||||||||
Equity in net income of unconsolidated affiliates | (0.3 | ) | 0.2 | (0.1 | ) | ||||||||
Net loss from continuing operations | (416.2 | ) | (47.2 | ) | (463.4 | ) | |||||||
Income from discontinued operations (net of tax) | 89.1 | (0.1 | ) | 89.0 | |||||||||
NET LOSS APPLICABLE TO COMMON STOCKHOLDERS | $ | (327.1 | ) | $ | (47.3 | ) | $ | (374.4 | ) | ||||
Earnings (loss) per share of common stock: | |||||||||||||
Basic: | |||||||||||||
Continuing operations | $ | (1.08 | ) | $ | (0.12 | ) | $ | (1.20 | ) | ||||
Discontinued operations | 0.23 | — | 0.23 | ||||||||||
Total | $ | (0.85 | ) | $ | (0.12 | ) | $ | (0.97 | ) | ||||
Diluted: | |||||||||||||
Continuing operations | $ | (1.08 | ) | $ | (0.12 | ) | $ | (1.20 | ) | ||||
Discontinued operations | 0.23 | — | 0.23 | ||||||||||
Total | $ | (0.85 | ) | $ | (0.12 | ) | $ | (0.97 | ) | ||||
Weighted-average shares: | |||||||||||||
Basic | 385.8 | 385.8 | |||||||||||
Diluted | 385.8 | 385.8 |
185
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Three Months Ended December 31, 2003 | |||||||||||||
As Previously | Effect of | ||||||||||||
Reported | Restatement | As Restated | |||||||||||
(Unaudited) | |||||||||||||
REVENUE | $ | 1,629.4 | $ | 227.3 | $ | 1,856.7 | |||||||
OPERATING EXPENSES: | |||||||||||||
Salaries and related expenses | 907.8 | 9.6 | 917.4 | ||||||||||
Office and general expenses | 495.7 | 80.9 | 576.6 | ||||||||||
Restructuring charges | 33.2 | (3.0 | ) | 30.2 | |||||||||
Long-lived asset impairment and other charges | 42.1 | 2.8 | 44.9 | ||||||||||
Total operating expenses | 1,478.8 | 90.3 | 1,569.1 | ||||||||||
OPERATING INCOME (LOSS) | 150.6 | 137.0 | 287.6 | ||||||||||
EXPENSE AND OTHER INCOME: | |||||||||||||
Interest expense | (44.4 | ) | (7.5 | ) | (51.9 | ) | |||||||
Interest income | 11.3 | 0.1 | 11.4 | ||||||||||
Investment impairments | (42.7 | ) | 0.7 | (42.0 | ) | ||||||||
Other income (expense) | 48.7 | (0.2 | ) | 48.5 | |||||||||
Total expense and other income | (27.1 | ) | (6.9 | ) | (34.0 | ) | |||||||
Income before provision for income taxes | 123.5 | 130.1 | 253.6 | ||||||||||
Provision for income taxes | 217.7 | 29.9 | 247.6 | ||||||||||
Income (loss) of consolidated companies | (94.2 | ) | 100.2 | 6.0 | |||||||||
Income applicable to minority interests | (11.5 | ) | (2.0 | ) | (13.5 | ) | |||||||
Equity in net income of unconsolidated affiliates | 3.2 | 0.7 | 3.9 | ||||||||||
Net income (loss) | (102.5 | ) | 98.9 | (3.6 | ) | ||||||||
NET INCOME (LOSS) APPLICABLE TO COMMON STOCKHOLDERS | $ | (102.5 | ) | $ | 98.9 | $ | (3.6 | ) | |||||
Earnings (loss) per share of common stock: | |||||||||||||
Basic: | |||||||||||||
Continuing operations | $ | (0.26 | ) | $ | 0.25 | $ | (0.01 | ) | |||||
Discontinued operations | — | — | — | ||||||||||
Total | $ | (0.26 | ) | $ | 0.25 | $ | (0.01 | ) | |||||
Diluted: | |||||||||||||
Continuing operations | $ | (0.26 | ) | $ | 0.25 | $ | (0.01 | ) | |||||
Discontinued operations | — | — | — | ||||||||||
Total | $ | (0.26 | ) | $ | 0.25 | $ | (0.01 | ) | |||||
Weighted-average shares: | |||||||||||||
Basic | 390.3 | 390.3 | |||||||||||
Diluted | 390.3 | 390.3 |
186
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As of March 31, 2004 | |||||||||||||
As Previously | Effect of | As | |||||||||||
Reported | Restatement | Restated | |||||||||||
(Unaudited) | |||||||||||||
ASSETS: | |||||||||||||
Cash and cash equivalents | $ | 1,395.3 | $ | (222.6 | ) | $ | 1,172.7 | ||||||
Short-term marketable securities | — | 295.0 | 295.0 | ||||||||||
Accounts receivable, less allowance of $133.9 | 4,584.3 | 19.8 | 4,604.1 | ||||||||||
Expenditures billable to clients | 316.8 | 54.1 | 370.9 | ||||||||||
Deferred income taxes | 201.1 | 72.5 | 273.6 | ||||||||||
Prepaid expenses and other current assets | 249.7 | (38.2 | ) | 211.5 | |||||||||
Total current assets | 6,747.2 | 180.6 | 6,927.8 | ||||||||||
Land, buildings and equipment, net | 656.3 | 26.0 | 682.3 | ||||||||||
Deferred income taxes | 397.2 | 41.8 | 439.0 | ||||||||||
Investments | 240.3 | 0.7 | 241.0 | ||||||||||
Goodwill | 3,345.4 | (56.6 | ) | 3,288.8 | |||||||||
Other intangible assets, net of amortization | 42.0 | 2.6 | 44.6 | ||||||||||
Other assets | 272.1 | (4.1 | ) | 268.0 | |||||||||
Total non-current assets | 4,953.3 | 10.4 | 4,963.7 | ||||||||||
TOTAL ASSETS | $ | 11,700.5 | $ | 191.0 | $ | 11,891.5 | |||||||
LIABILITIES: | |||||||||||||
Accounts payable | $ | 5,050.4 | $ | 398.8 | $ | 5,449.2 | |||||||
Accrued liabilities | 990.3 | 193.3 | 1,183.6 | ||||||||||
Short-term debt | 98.2 | 35.0 | 133.2 | ||||||||||
Total current liabilities | 6,138.9 | 627.1 | 6,766.0 | ||||||||||
Long-term debt | 2,190.6 | 6.7 | 2,197.3 | ||||||||||
Deferred compensation and employee benefits | 512.6 | 5.5 | 518.1 | ||||||||||
Other non-current liabilities | 226.8 | 110.1 | 336.9 | ||||||||||
Minority interests in consolidated subsidiaries | 64.5 | (4.8 | ) | 59.7 | |||||||||
Total non-current liabilities | 2,994.5 | 117.5 | 3,112.0 | ||||||||||
TOTAL LIABILITIES | $ | 9,133.4 | $ | 744.6 | $ | 9,878.0 | |||||||
Commitments and contingencies (Note 19) | |||||||||||||
STOCKHOLDERS’ EQUITY: | |||||||||||||
Preferred stock, no par value, shares authorized: 20.0 shares issued and outstanding: 2004 — 7.5 | 373.7 | — | 373.7 | ||||||||||
Common stock, $0.10 par value, shares authorized: 800.0 shares issued: 2004 — 418.3 shares outstanding: 2004 — 417.9 | 41.8 | — | 41.8 | ||||||||||
Additional paid-in capital | 2,069.5 | (4.0 | ) | 2,065.5 | |||||||||
Retained earnings (deficit) | 384.6 | (508.2 | ) | (123.6 | ) | ||||||||
Accumulated other comprehensive loss, net of tax | (236.3 | ) | (43.5 | ) | (279.8 | ) | |||||||
2,633.3 | (555.7 | ) | 2,077.6 | ||||||||||
Less: | |||||||||||||
Treasury stock, at cost: 2004 — 0.4 shares | (14.0 | ) | — | (14.0 | ) | ||||||||
Unamortized deferred compensation | (52.2 | ) | 2.1 | (50.1 | ) | ||||||||
TOTAL STOCKHOLDERS’ EQUITY | $ | 2,567.1 | $ | (553.6 | ) | $ | 2,013.5 | ||||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 11,700.5 | $ | 191.0 | $ | 11,891.5 | |||||||
187
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As of June 30, 2004 | |||||||||||||
As Previously | Effect of | As | |||||||||||
Reported | Restatement | Restated | |||||||||||
(Unaudited) | |||||||||||||
ASSETS: | |||||||||||||
Cash and cash equivalents | $ | 1,434.3 | $ | (435.3 | ) | $ | 999.0 | ||||||
Short-term marketable securities | — | 532.6 | 532.6 | ||||||||||
Accounts receivable, net of allowance of $133.2 | 4,937.7 | 14.8 | 4,952.5 | ||||||||||
Expenditures billable to clients | 330.9 | 53.3 | 384.2 | ||||||||||
Deferred income taxes | 201.4 | 67.0 | 268.4 | ||||||||||
Prepaid expenses and other current assets | 223.0 | (21.1 | ) | 201.9 | |||||||||
Total current assets | 7,127.3 | 211.3 | 7,338.6 | ||||||||||
Land, buildings and equipment, net | 643.0 | 26.3 | 669.3 | ||||||||||
Deferred income taxes | 404.1 | 48.9 | 453.0 | ||||||||||
Investments | 235.0 | 1.2 | 236.2 | ||||||||||
Goodwill | 3,428.9 | (54.8 | ) | 3,374.1 | |||||||||
Other intangible assets, net of amortization | 38.9 | 2.4 | 41.3 | ||||||||||
Other assets | 279.0 | (2.8 | ) | 276.2 | |||||||||
Total non-current assets | 5,028.9 | 21.2 | 5,050.1 | ||||||||||
TOTAL ASSETS | $ | 12,156.2 | $ | 232.5 | $ | 12,388.7 | |||||||
LIABILITIES: | |||||||||||||
Accounts payable | $ | 5,724.4 | $ | 449.7 | $ | 6,174.1 | |||||||
Accrued liabilities | 838.5 | 244.8 | 1,083.3 | ||||||||||
Short-term debt | 34.8 | 62.8 | 97.6 | ||||||||||
Total current liabilities | 6,597.7 | 757.3 | 7,355.0 | ||||||||||
Long-term debt | 2,189.3 | 5.5 | 2,194.8 | ||||||||||
Deferred compensation and employee benefits | 501.4 | 5.3 | 506.7 | ||||||||||
Other non-current liabilities | 249.1 | 101.3 | 350.4 | ||||||||||
Minority interests in consolidated subsidiaries | 56.3 | (3.4 | ) | 52.9 | |||||||||
Total non-current liabilities | 2,996.1 | 108.7 | 3,104.8 | ||||||||||
TOTAL LIABILITIES | $ | 9,593.8 | $ | 866.0 | $ | 10,459.8 | |||||||
Commitments and contingencies (Note 19) | |||||||||||||
STOCKHOLDERS’ EQUITY: | |||||||||||||
Preferred stock, no par value, shares authorized: 20.0 shares issued and outstanding: 2004 — 7.5 | 373.7 | — | 373.7 | ||||||||||
Common stock, $0.10 par value, shares authorized: 800.0 shares issued: 2004 — 422.4 shares outstanding: 2004 — 422.0 | 42.2 | — | 42.2 | ||||||||||
Additional paid-in capital | 2,129.1 | (10.0 | ) | 2,119.1 | |||||||||
Retained earnings (deficit) | 374.2 | (586.2 | ) | (212.0 | ) | ||||||||
Accumulated other comprehensive loss, net of tax | (257.4 | ) | (39.4 | ) | (296.8 | ) | |||||||
2,661.8 | (635.6 | ) | 2,026.2 | ||||||||||
Less: | |||||||||||||
Treasury stock, at cost: 2004 — 0.4 shares | (14.0 | ) | — | (14.0 | ) | ||||||||
Unamortized deferred compensation | (85.4 | ) | 2.1 | (83.3 | ) | ||||||||
TOTAL STOCKHOLDERS’ EQUITY | $ | 2,562.4 | $ | (633.5 | ) | $ | 1,928.9 | ||||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 12,156.2 | $ | 232.5 | $ | 12,388.7 | |||||||
188
Table of Contents
As of September 30, 2004 | |||||||||||||
As Previously | Effect of | As | |||||||||||
Reported | Restatement | Restated | |||||||||||
(Unaudited) | |||||||||||||
ASSETS: | |||||||||||||
Cash and cash equivalents | $ | 1,438.5 | $ | (374.5 | ) | $ | 1,064.0 | ||||||
Short-term marketable securities | — | 398.2 | 398.2 | ||||||||||
Accounts receivable, net of allowance of $143.4 | 4,578.7 | 5.2 | 4,583.9 | ||||||||||
Expenditures billable to clients | 315.2 | 70.0 | 385.2 | ||||||||||
Deferred income taxes | 201.4 | 61.5 | 262.9 | ||||||||||
Prepaid expenses and other current assets | 203.4 | (9.2 | ) | 194.2 | |||||||||
Total current assets | 6,737.2 | 151.2 | 6,888.4 | ||||||||||
Land, buildings and equipment, net | 646.3 | 27.0 | 673.3 | ||||||||||
Deferred income taxes | 325.7 | 24.9 | 350.6 | ||||||||||
Investments | 183.8 | 6.2 | 190.0 | ||||||||||
Goodwill | 2,998.7 | 88.3 | 3,087.0 | ||||||||||
Other intangible assets, net of amortization | 37.6 | 2.4 | 40.0 | ||||||||||
Other assets | 273.0 | (2.8 | ) | 270.2 | |||||||||
Total non-current assets | 4,465.1 | 146.0 | 4,611.1 | ||||||||||
TOTAL ASSETS | $ | 11,202.3 | $ | 297.2 | $ | 11,499.5 | |||||||
LIABILITIES: | |||||||||||||
Accounts payable | $ | 5,247.3 | $ | 480.8 | $ | 5,728.1 | |||||||
Accrued liabilities | 849.4 | 251.0 | 1,100.4 | ||||||||||
Short-term debt | 74.5 | 2.8 | 77.3 | ||||||||||
Total current liabilities | 6,171.2 | 734.6 | 6,905.8 | ||||||||||
Long-term debt | 2,188.9 | 5.3 | 2,194.2 | ||||||||||
Deferred compensation and employee benefits | 512.8 | 4.9 | 517.7 | ||||||||||
Other non-current liabilities | 272.2 | 106.4 | 378.6 | ||||||||||
Minority interests in consolidated subsidiaries | 55.4 | (4.1 | ) | 51.3 | |||||||||
Total non-current liabilities | 3,029.3 | 112.5 | 3,141.8 | ||||||||||
TOTAL LIABILITIES | $ | 9,200.5 | $ | 847.1 | $ | 10,047.6 | |||||||
Commitments and contingencies (Note 19) | |||||||||||||
STOCKHOLDERS’ EQUITY: | |||||||||||||
Preferred stock, no par value, shares authorized: 20.0 shares issued and outstanding: 2004 — 7.5 | 373.7 | — | 373.7 | ||||||||||
Common stock, $0.10 par value, shares authorized: 800.0 shares issued: 2004 — 422.8 shares outstanding: 2004 — 422.4 | 42.3 | — | 42.3 | ||||||||||
Additional paid-in capital | 2,131.0 | (14.9 | ) | 2,116.1 | |||||||||
Retained earnings (deficit) | (209.2 | ) | (499.3 | ) | (708.5 | ) | |||||||
Accumulated other comprehensive loss, net of tax | (243.6 | ) | (37.8 | ) | (281.4 | ) | |||||||
2,094.2 | (552.0 | ) | 1,542.2 | ||||||||||
Less: | |||||||||||||
Treasury stock, at cost: 2004 — 0.4 shares | (14.0 | ) | — | (14.0 | ) | ||||||||
Unamortized deferred compensation | (78.4 | ) | 2.1 | (76.3 | ) | ||||||||
TOTAL STOCKHOLDERS’ EQUITY | $ | 2,001.8 | $ | (549.9 | ) | $ | 1,451.9 | ||||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 11,202.3 | $ | 297.2 | $ | 11,499.5 | |||||||
189
Table of Contents
Goodwill Impairments |
190
Table of Contents
191
Table of Contents
As of March 31, 2003 | |||||||||||||
As Previously | Effect of | As | |||||||||||
Reported | Restatement | Restated | |||||||||||
(Unaudited) | |||||||||||||
ASSETS: | |||||||||||||
Cash and cash equivalents | $ | 1,188.2 | $ | 22.0 | $ | 1,210.2 | |||||||
Short-term marketable securities | — | 14.6 | 14.6 | ||||||||||
Accounts receivable, net of allowance of $142.5 | 4,254.1 | 24.9 | 4,279.0 | ||||||||||
Expenditures billable to clients | 390.4 | 47.2 | 437.6 | ||||||||||
Deferred income taxes | 58.4 | 69.0 | 127.4 | ||||||||||
Prepaid expenses and other current assets | 413.6 | (32.5 | ) | 381.1 | |||||||||
Assets held for sale | 414.6 | — | 414.6 | ||||||||||
Total current assets | 6,719.3 | 145.2 | 6,864.5 | ||||||||||
Land, buildings and equipment, net | 727.5 | 35.9 | 763.4 | ||||||||||
Deferred income taxes | 508.5 | 46.3 | 554.8 | ||||||||||
Investments | 388.8 | (48.0 | ) | 340.8 | |||||||||
Goodwill | 3,300.6 | (48.9 | ) | 3,251.7 | |||||||||
Other intangible assets, net of amortization | 6.5 | 1.1 | 7.6 | ||||||||||
Other assets | 311.9 | (3.1 | ) | 308.8 | |||||||||
Total non-current assets | 5,243.8 | (16.7 | ) | 5,227.1 | |||||||||
TOTAL ASSETS | $ | 11,963.1 | $ | 128.5 | $ | 12,091.6 | |||||||
LIABILITIES: | |||||||||||||
Accounts payable | $ | 4,677.4 | $ | 356.7 | $ | 5,034.1 | |||||||
Accrued liabilities | 1,020.8 | 127.6 | 1,148.4 | ||||||||||
Short-term debt | 662.6 | 4.1 | 666.7 | ||||||||||
Liabilities held for sale | 121.1 | — | 121.1 | ||||||||||
Total current liabilities | 6,481.9 | 488.4 | 6,970.3 | ||||||||||
Long-term debt | 2,618.0 | 5.5 | 2,623.5 | ||||||||||
Deferred compensation and employee benefits | 525.6 | 8.9 | 534.5 | ||||||||||
Other non-current liabilities | 121.6 | 98.4 | 220.0 | ||||||||||
Minority interests in consolidated subsidiaries | 64.5 | (4.4 | ) | 60.1 | |||||||||
Total non-current liabilities | 3,329.7 | 108.4 | 3,438.1 | ||||||||||
TOTAL LIABILITIES | $ | 9,811.6 | $ | 596.8 | $ | 10,408.4 | |||||||
Commitments and contingencies (Note 19) | |||||||||||||
STOCKHOLDERS’ EQUITY: | |||||||||||||
Common stock, $0.10 par value, shares authorized: 550.0 shares issued: 2003 — 389.6 shares outstanding: 2003 — 388.0 | 39.0 | — | 39.0 | ||||||||||
Additional paid-in capital | 1,765.7 | 0.8 | 1,766.5 | ||||||||||
Retained earnings (deficit) | 849.4 | (440.5 | ) | 408.9 | |||||||||
Accumulated other comprehensive loss, net of tax | (347.2 | ) | (30.7 | ) | (377.9 | ) | |||||||
2,306.9 | (470.4 | ) | 1,836.5 | ||||||||||
Less: | |||||||||||||
Treasury stock, at cost: 2003 — 1.6 shares | (65.0 | ) | — | (65.0 | ) | ||||||||
Unamortized deferred compensation | (90.4 | ) | 2.1 | (88.3 | ) | ||||||||
TOTAL STOCKHOLDERS’ EQUITY | $ | 2,151.5 | $ | (468.3 | ) | $ | 1,683.2 | ||||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 11,963.1 | $ | 128.5 | $ | 12,091.6 | |||||||
192
Table of Contents
As of June 30, 2003 | ||||||||||||||
As Previously | Effect of | As | ||||||||||||
Reported | Restatement | Restated | ||||||||||||
(Unaudited) | ||||||||||||||
ASSETS: | ||||||||||||||
Cash and cash equivalents | $ | 700.1 | $ | 60.6 | $ | 760.7 | ||||||||
Short-term marketable securities | — | 19.6 | 19.6 | |||||||||||
Accounts receivable, net of allowance of $157.9 | 4,681.4 | 27.9 | 4,709.3 | |||||||||||
Expenditures billable to clients | 414.8 | 32.4 | 447.2 | |||||||||||
Deferred income taxes | 69.4 | 72.0 | 141.4 | |||||||||||
Prepaid expenses and other current assets | 452.5 | (34.0 | ) | 418.5 | ||||||||||
Assets held for sale | 452.2 | — | 452.2 | |||||||||||
Total current assets | 6,770.4 | 178.5 | 6,948.9 | |||||||||||
Land, buildings and equipment, net | 740.0 | 35.3 | 775.3 | |||||||||||
Deferred income taxes | 516.3 | 64.1 | 580.4 | |||||||||||
Investments | 352.2 | (19.7 | ) | 332.5 | ||||||||||
Goodwill | 3,399.3 | (46.0 | ) | 3,353.3 | ||||||||||
Other intangible assets, net of amortization | 43.6 | (0.2 | ) | 43.4 | ||||||||||
Other assets | 274.9 | (3.2 | ) | 271.7 | ||||||||||
Total non-current assets | 5,326.3 | 30.3 | 5,356.6 | |||||||||||
TOTAL ASSETS | $ | 12,096.7 | $ | 208.8 | $ | 12,305.5 | ||||||||
LIABILITIES: | ||||||||||||||
Accounts payable | $ | 5,282.7 | $ | 419.6 | $ | 5,702.3 | ||||||||
Accrued liabilities | 1,036.6 | 141.9 | 1,178.5 | |||||||||||
Short-term debt | 129.5 | 43.3 | 172.8 | |||||||||||
Liabilities held for sale | 149.0 | — | 149.0 | |||||||||||
Total current liabilities | 6,597.8 | 604.8 | 7,202.6 | |||||||||||
Long-term debt | 2,587.1 | 6.3 | 2,593.4 | |||||||||||
Deferred compensation and employee benefits | 547.4 | 10.0 | 557.4 | |||||||||||
Other non-current liabilities | 75.9 | 100.6 | 176.5 | |||||||||||
Minority interests in consolidated subsidiaries | 63.0 | (6.0 | ) | 57.0 | ||||||||||
Total non-current liabilities | 3,273.4 | 110.9 | 3,384.3 | |||||||||||
TOTAL LIABILITIES | $ | 9,871.2 | $ | 715.7 | $ | 10,586.9 | ||||||||
Commitments and contingencies (Note 19) | ||||||||||||||
STOCKHOLDERS’ EQUITY: | ||||||||||||||
Common stock, $0.10 par value, shares authorized: 800.0 | ||||||||||||||
shares issued: 2003 — 391.1 | — | — | — | |||||||||||
shares outstanding: 2003 — 391.0 | 39.1 | — | 39.1 | |||||||||||
Additional paid-in capital | 1,742.9 | 0.7 | 1,743.6 | |||||||||||
Retained earnings (deficit) | 835.9 | (497.7 | ) | 338.2 | ||||||||||
Accumulated other comprehensive loss, net of tax | (297.5 | ) | (12.0 | ) | (309.5 | ) | ||||||||
2,320.4 | (509.0 | ) | 1,811.4 | |||||||||||
Less: | ||||||||||||||
Treasury stock, at cost: 2003 — 0.1 shares | (11.3 | ) | — | (11.3 | ) | |||||||||
Unamortized deferred compensation | (83.6 | ) | 2.1 | (81.5 | ) | |||||||||
TOTAL STOCKHOLDERS’ EQUITY | $ | 2,225.5 | $ | (506.9 | ) | $ | 1,718.6 | |||||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 12,096.7 | $ | 208.8 | $ | 12,305.5 | ||||||||
193
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As of September 30, 2003 | |||||||||||||
As Previously | Effect of | As | |||||||||||
Reported | Restatement | Restated | |||||||||||
(Unaudited) | |||||||||||||
ASSETS: | |||||||||||||
Cash and cash equivalents | $ | 695.5 | $ | 40.6 | $ | 736.1 | |||||||
Short-term marketable securities | — | 15.5 | 15.5 | ||||||||||
Accounts receivable, net of allowance of $163.6 | 4,474.9 | 26.0 | 4,500.9 | ||||||||||
Expenditures billable to clients | 389.1 | 33.2 | 422.3 | ||||||||||
Deferred income taxes | 41.7 | 75.0 | 116.7 | ||||||||||
Prepaid expenses and other current assets | 411.9 | (26.9 | ) | 385.0 | |||||||||
Total current assets | 6,013.1 | 163.4 | 6,176.5 | ||||||||||
Land, buildings and equipment, net | 713.8 | 34.1 | 747.9 | ||||||||||
Deferred income taxes | 610.5 | 65.8 | 676.3 | ||||||||||
Investments | 371.0 | 3.3 | 374.3 | ||||||||||
Goodwill | 3,241.1 | (40.5 | ) | 3,200.6 | |||||||||
Other intangible assets, net of amortization | 40.1 | 0.5 | 40.6 | ||||||||||
Other assets | 282.5 | (3.0 | ) | 279.5 | |||||||||
Total non-current assets | 5,259.0 | 60.2 | $ | 5,319.2 | |||||||||
TOTAL ASSETS | $ | 11,272.1 | $ | 223.6 | $ | 11,495.7 | |||||||
LIABILITIES: | |||||||||||||
Accounts payable | $ | 4,889.0 | $ | 461.8 | $ | 5,350.8 | |||||||
Accrued liabilities | 1,092.1 | 160.3 | 1,252.4 | ||||||||||
Short-term debt | 326.9 | 26.5 | 353.4 | ||||||||||
Total current liabilities | 6,308.0 | 648.6 | 6,956.6 | ||||||||||
Long-term debt | 2,191.0 | 6.9 | 2,197.9 | ||||||||||
Deferred compensation and employee benefits | 576.8 | 9.4 | 586.2 | ||||||||||
Other non-current liabilities | 190.5 | 116.5 | 307.0 | ||||||||||
Minority interests in consolidated subsidiaries | 64.7 | (6.2 | ) | 58.5 | |||||||||
Total non-current liabilities | 3,023.0 | 126.6 | 3,149.6 | ||||||||||
TOTAL LIABILITIES | $ | 9,331.0 | $ | 775.2 | $ | 10,106.2 | |||||||
Commitments and contingencies (Note 19) | |||||||||||||
STOCKHOLDERS’ EQUITY: | |||||||||||||
Common stock, $0.10 par value, shares authorized: 800.0 | |||||||||||||
shares issued: 2003 — 392.0 | |||||||||||||
shares outstanding: 2003 — 391.7 | 39.2 | — | 39.2 | ||||||||||
Additional paid-in capital | 1,752.6 | 0.7 | 1,753.3 | ||||||||||
Retained earnings (deficit) | 508.8 | (545.0 | ) | (36.2 | ) | ||||||||
Accumulated other comprehensive loss, net of tax | (274.5 | ) | (9.4 | ) | (283.9 | ) | |||||||
2,026.1 | (553.7 | ) | 1,472.4 | ||||||||||
Less: | |||||||||||||
Treasury stock, at cost: 2003 — 0.3 shares | (11.3 | ) | — | (11.3 | ) | ||||||||
Unamortized deferred compensation | (73.7 | ) | 2.1 | (71.6 | ) | ||||||||
TOTAL STOCKHOLDERS’ EQUITY | $ | 1,941.1 | $ | (551.6 | ) | $ | 1,389.5 | ||||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 11,272.1 | $ | 223.6 | $ | 11,495.7 | |||||||
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Three Months Ended March 31, 2004 | |||||||||||||
As Previously | Effect of | As | |||||||||||
Reported | Restatement | Restated | |||||||||||
(Unaudited) | |||||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||||||||
Net cash used in operating activities | $ | (347.1 | ) | $ | 4.8 | $ | (342.3 | ) | |||||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||||||||
Acquisitions, including deferred payments, net of cash acquired | (39.0 | ) | — | (39.0 | ) | ||||||||
Capital expenditures | (37.8 | ) | — | (37.8 | ) | ||||||||
Proceeds from sales of businesses and fixed assets | 17.1 | 0.3 | 17.4 | ||||||||||
Proceeds from sales of investments | 3.9 | — | 3.9 | ||||||||||
Purchases of investments | (7.2 | ) | — | (7.2 | ) | ||||||||
Maturities of short-term marketable securities | 13.0 | 358.0 | 371.0 | ||||||||||
Purchases of short-term marketable securities | (14.8 | ) | (455.6 | ) | (470.4 | ) | |||||||
Proceeds from the sale of discontinued operations, net of cash sold | — | — | — | ||||||||||
Net cash used in investing activities | (64.8 | ) | (97.3 | ) | (162.1 | ) | |||||||
CASH FLOWS FROM FINANCING ACTIVITIES FROM CONTINUING OPERATIONS: | |||||||||||||
Increase (decrease) in short-term bank borrowings | 59.8 | 0.6 | 60.4 | ||||||||||
Payments of long-term debt | (244.4 | ) | — | (244.4 | ) | ||||||||
Proceeds from long-term debt | 0.5 | — | 0.5 | ||||||||||
Preferred stock issuance costs | (0.8 | ) | — | (0.8 | ) | ||||||||
Preferred stock dividends | (4.8 | ) | — | (4.8 | ) | ||||||||
Common stock transaction | (2.3 | ) | — | (2.3 | ) | ||||||||
Distributions to minority interests | (2.7 | ) | — | (2.7 | ) | ||||||||
Contributions from unconsolidated affiliates | 4.9 | — | 4.9 | ||||||||||
Net cash used in financing activities from continuing operations | (189.8 | ) | 0.6 | (189.2 | ) | ||||||||
Effect of exchange rates on cash and cash equivalents | (8.7 | ) | 3.1 | (5.6 | ) | ||||||||
Decrease in cash and cash equivalents | (610.4 | ) | (88.8 | ) | (699.2 | ) | |||||||
Cash and cash equivalents at beginning of year | 2,005.7 | (133.8 | ) | 1,871.9 | |||||||||
Cash and cash equivalents at end of period | $ | 1,395.3 | $ | (222.6 | ) | $ | 1,172.7 | ||||||
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Six Months Ended June 30, 2004 | |||||||||||||
As Previously | Effect of | As | |||||||||||
Reported | Restatement | Restated | |||||||||||
(Unaudited) | |||||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||||||||
Net cash used in operating activities | $ | (116.8 | ) | $ | 15.5 | $ | (101.3 | ) | |||||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||||||||
Acquisitions, including deferred payments, net of cash acquired | (136.3 | ) | — | (136.3 | ) | ||||||||
Capital expenditures | (77.5 | ) | — | (77.5 | ) | ||||||||
Proceeds from sales of businesses and fixed assets | 28.9 | 0.3 | 29.2 | ||||||||||
Proceeds from sales of investments | 10.6 | — | 10.6 | ||||||||||
Purchases of investments | (10.3 | ) | 0.1 | (10.2 | ) | ||||||||
Maturities of short-term marketable securities | 43.2 | 532.6 | 575.8 | ||||||||||
Purchases of short-term marketable securities | (35.4 | ) | (877.5 | ) | (912.9 | ) | |||||||
Net cash used in investing activities | (176.8 | ) | (344.5 | ) | (521.3 | ) | |||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||||||||
Increase (decrease) in short-term bank borrowings | (5.1 | ) | 28.5 | 23.4 | |||||||||
Payments of long-term debt | (244.7 | ) | — | (244.7 | ) | ||||||||
Proceeds from long-term debt | 0.5 | — | 0.5 | ||||||||||
Debt issuance costs | (2.3 | ) | — | (2.3 | ) | ||||||||
Preferred stock dividends | (9.8 | ) | — | (9.8 | ) | ||||||||
Issuance of common stock | 0.9 | (0.8 | ) | 0.1 | |||||||||
Distributions to minority interests | (10.9 | ) | — | (10.9 | ) | ||||||||
Contributions from unconsolidated affiliates | 6.1 | — | 6.1 | ||||||||||
Net cash (used in) financing activities | (265.3 | ) | 27.7 | (237.6 | ) | ||||||||
Effect of exchange rates on cash and cash equivalents | (12.5 | ) | (0.2 | ) | (12.7 | ) | |||||||
Decrease in cash and cash equivalents | (571.4 | ) | (301.5 | ) | (872.9 | ) | |||||||
Cash and cash equivalents at beginning of year | 2,005.7 | (133.8 | ) | 1,871.9 | |||||||||
Cash and cash equivalents at end of period | $ | 1,434.3 | $ | (435.3 | ) | $ | 999.0 | ||||||
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Nine Months Ended September 30, 2004 | |||||||||||||
As Previously | Effect of | As | |||||||||||
Reported | Restatement | Restated | |||||||||||
(Unaudited) | |||||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||||||||
Net cash used in by operating activities | $ | (126.3 | ) | 11.1 | (115.2 | ) | |||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||||||||
Acquisitions, including deferred payments, net of cash acquired | (143.8 | ) | — | (143.8 | ) | ||||||||
Capital expenditures | (119.3 | ) | — | (119.3 | ) | ||||||||
Proceeds from sales of businesses and fixed assets | 28.2 | (0.1 | ) | 28.1 | |||||||||
Proceeds from sales of investments | 22.9 | — | 22.9 | ||||||||||
Purchases of investments | (15.8 | ) | (0.1 | ) | (15.9 | ) | |||||||
Maturities of short-term marketable securities | 56.8 | 808.2 | 865.0 | ||||||||||
Purchases of short-term marketable securities | (39.9 | ) | (1,027.6 | ) | (1,067.5 | ) | |||||||
Proceeds from the sale of discontinued operations, net of cash sold | 10.0 | — | 10.0 | ||||||||||
Net cash used in investing activities | (200.9 | ) | (219.6 | ) | (420.5 | ) | |||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||||||||
Increase (decrease) in short-term bank borrowings | 34.5 | (31.4 | ) | 3.1 | |||||||||
Payments of long-term debt | (245.1 | ) | — | (245.1 | ) | ||||||||
Proceeds from long-term debt | 1.0 | — | 1.0 | ||||||||||
Debt issuance costs | (2.3 | ) | — | (2.3 | ) | ||||||||
Preferred stock dividends | (14.8 | ) | — | (14.8 | ) | ||||||||
Issuance of common stock | 1.5 | (0.8 | ) | 0.7 | |||||||||
Distributions to minority interests | (17.3 | ) | — | (17.3 | ) | ||||||||
Contributions from unconsolidated affiliates | 6.8 | — | 6.8 | ||||||||||
Net cash (used in) financing activities from continuing operations | (235.7 | ) | (32.2 | ) | (267.9 | ) | |||||||
Effect of exchange rates on cash and cash equivalents | (4.3 | ) | — | (4.3 | ) | ||||||||
Decrease in cash and cash equivalents | (567.2 | ) | (240.7 | ) | (807.9 | ) | |||||||
Cash and cash equivalents at beginning of year | 2,005.7 | (133.8 | ) | 1,871.9 | |||||||||
Cash and cash equivalents at end of period | $ | 1,438.5 | $ | (374.5 | ) | $ | 1,064.0 | ||||||
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Three Months Ended March 31, 2003 | |||||||||||||
As Previously | Effect of | As | |||||||||||
Reported | Restatement | Restated | |||||||||||
(Unaudited) | |||||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES FROM CONTINUING OPERATIONS: | |||||||||||||
Net cash used in operating activities from continuing operations | $ | (278.1 | ) | $ | 1.6 | $ | (276.5 | ) | |||||
CASH FLOWS FROM INVESTING ACTIVITIES FROM CONTINUING OPERATIONS: | |||||||||||||
Acquisitions, including deferred payments, net of cash acquired | (52.9 | ) | 9.4 | (43.5 | ) | ||||||||
Capital expenditures | (29.6 | ) | — | (29.6 | ) | ||||||||
Proceeds from sales of businesses and fixed assets | 6.9 | — | 6.9 | ||||||||||
Proceeds from sales of investments | 14.2 | — | 14.2 | ||||||||||
Purchases of investments | (17.0 | ) | (3.2 | ) | (20.2 | ) | |||||||
Maturities of short-term marketable securities | 11.2 | — | 11.2 | ||||||||||
Purchases of short-term marketable securities | (18.7 | ) | 13.0 | (5.7 | ) | ||||||||
Net cash used in investing activities from continuing operations | (85.9 | ) | 19.2 | (66.7 | ) | ||||||||
CASH FLOWS FROM FINANCING ACTIVITIES FROM CONTINUING OPERATIONS: | |||||||||||||
Decrease in short-term bank borrowings | (164.3 | ) | (17.6 | ) | (181.9 | ) | |||||||
Payments of long-term debt | (0.7 | ) | — | (0.7 | ) | ||||||||
Proceeds from long-term debt | 800.7 | 800.7 | |||||||||||
Debt issuance costs and consent fees | (22.6 | ) | — | (22.6 | ) | ||||||||
Issuance of common stock | 2.9 | — | 2.9 | ||||||||||
Distributions to minority interests | (0.2 | ) | — | (0.2 | ) | ||||||||
Contributions from unconsolidated affiliates | 1.0 | — | 1.0 | ||||||||||
Net cash provided by financing activities from continuing operations | 616.8 | (17.6 | ) | 599.2 | |||||||||
Effect of exchange rates on cash and cash equivalents | 15.3 | (1.4 | ) | 13.9 | |||||||||
Net cash used in discontinued operations | (12.9 | ) | — | (12.9 | ) | ||||||||
Increase in cash and cash equivalents | 255.2 | 1.8 | 257.0 | ||||||||||
Cash and cash equivalents at beginning of year | 933.0 | 20.2 | 953.2 | ||||||||||
Cash and cash equivalents at end of period | $ | 1,188.2 | $ | 22.0 | $ | 1,210.2 | |||||||
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Six Months Ended June 30, 2003 | |||||||||||||
As Previously | Effect of | As | |||||||||||
Reported | Restatement | Restated | |||||||||||
(Unaudited) | |||||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES FROM CONTINUING OPERATIONS: | |||||||||||||
Net cash used in operating activities from continuing operations | $ | (19.8 | ) | $ | (3.6 | ) | $ | (23.4 | ) | ||||
CASH FLOWS FROM INVESTING ACTIVITIES FROM CONTINUING OPERATIONS: | |||||||||||||
�� | Acquisitions, including deferred payments, net of cash acquired | (141.3 | ) | 10.9 | (130.4 | ) | |||||||
Capital expenditures | (72.1 | ) | (72.1 | ) | |||||||||
Proceeds from sales of businesses and fixed assets | 3.9 | 3.9 | |||||||||||
Proceeds from sales of investments | 21.3 | 21.3 | |||||||||||
Purchases of investments | (37.6 | ) | (37.6 | ) | |||||||||
Maturities of short-term marketable securities | 17.2 | 11.7 | 28.9 | ||||||||||
Purchases of short-term marketable securities | (27.8 | ) | — | (27.8 | ) | ||||||||
Net cash used in investing activities from continuing operations | (236.4 | ) | 22.6 | (213.8 | ) | ||||||||
CASH FLOWS FROM FINANCING ACTIVITIES FROM CONTINUING OPERATIONS: | |||||||||||||
Decrease in short-term bank borrowings | (209.1 | ) | 22.6 | (186.5 | ) | ||||||||
Payments of long-term debt | (581.4 | ) | — | (581.4 | ) | ||||||||
Proceeds from long-term debt | 800.9 | — | 800.9 | ||||||||||
Proceeds from termination of interest rate swaps | — | — | — | ||||||||||
Debt issuance costs | (26.9 | ) | — | (26.9 | ) | ||||||||
Issuance of common stock | 8.0 | — | 8.0 | ||||||||||
Distributions to minority interests | (7.4 | ) | — | (7.4 | ) | ||||||||
Contributions from unconsolidated affiliates | 0.5 | — | 0.5 | ||||||||||
Net cash (used in) provided by financing activities from continuing operations | (15.4 | ) | 22.6 | 7.2 | |||||||||
Effect of exchange rates on cash and cash equivalents | 52.1 | (1.2 | ) | 50.9 | |||||||||
Net cash used in discontinued operations | (13.4 | ) | — | (13.4 | ) | ||||||||
Decrease in cash and cash equivalents | (232.9 | ) | 40.4 | (192.5 | ) | ||||||||
Cash and cash equivalents at beginning of year | 933.0 | 20.2 | 953.2 | ||||||||||
Cash and cash equivalents at end of period | $ | 700.1 | $ | 60.6 | $ | 760.7 | |||||||
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Nine Months Ended September 30, 2003 | |||||||||||||
As Previously | Effect of | As | |||||||||||
Reported | Restatement | Restated | |||||||||||
(Unaudited) | |||||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES FROM CONTINUING OPERATIONS: | |||||||||||||
Net cash used in operating activities from continuing operations | $ | (154.0 | ) | $ | 1.0 | $ | (153.0 | ) | |||||
CASH FLOWS FROM INVESTING ACTIVITIES FROM CONTINUING OPERATIONS: | |||||||||||||
Acquisitions, including deferred payments, net of cash acquired | (194.0 | ) | 0.7 | (193.3 | ) | ||||||||
Capital expenditures | (94.2 | ) | — | (94.2 | ) | ||||||||
Proceeds from sales of businesses and fixed assets | 17.4 | — | 17.4 | ||||||||||
Proceeds from sales of investments | 25.2 | — | 25.2 | ||||||||||
Purchases of investments | (30.9 | ) | — | (30.9 | ) | ||||||||
Maturities of short-term marketable securities | 26.3 | 13.3 | 39.6 | ||||||||||
Purchases of short-term marketable securities | (34.3 | ) | — | (34.3 | ) | ||||||||
Proceeds from the sale of discontinued operations, net of cash sold | 376.7 | — | 376.7 | ||||||||||
Net cash provided by investing activities from continuing operations | 92.2 | 14.0 | 106.2 | ||||||||||
CASH FLOWS FROM FINANCING ACTIVITIES FROM CONTINUING OPERATIONS: | |||||||||||||
Decrease in short-term bank borrowings | (243.4 | ) | 4.7 | (238.7 | ) | ||||||||
Payments of long-term debt | (743.4 | ) | 2.1 | (741.3 | ) | ||||||||
Proceeds from long-term debt | 800.8 | — | 800.8 | ||||||||||
Debt issuance costs | (27.5 | ) | — | (27.5 | ) | ||||||||
Issuance of common stock | 3.1 | — | 3.1 | ||||||||||
Distributions to minority interests | (12.5 | ) | — | (12.5 | ) | ||||||||
Contributions from unconsolidated affiliates | 0.5 | — | 0.5 | ||||||||||
Net cash (used in) financing activities from continuing operations | (222.4 | ) | 6.8 | (215.6 | ) | ||||||||
Effect of exchange rates on cash and cash equivalents | 60.1 | (1.4 | ) | 58.7 | |||||||||
Net cash (used in) discontinued operations | (13.4 | ) | — | (13.4 | ) | ||||||||
Decrease in cash and cash equivalents | (237.5 | ) | 20.4 | (217.1 | ) | ||||||||
Cash and cash equivalents at beginning of year | 933.0 | 20.2 | 953.2 | ||||||||||
Cash and cash equivalents at end of period | $ | 695.5 | $ | 40.6 | $ | 736.1 | |||||||
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Impact of Adjustments on Revenue | |||||||||||||||||||||||||||||
3/31/2004 | 6/30/2004 | 9/30/2004 | 3/31/2003 | 6/30/2003 | 9/30/2003 | 12/31/2003 | |||||||||||||||||||||||
As previously reported | $ | 1,395.1 | $ | 1,544.1 | $ | 1,508.8 | $ | 1,315.7 | $ | 1,499.4 | $ | 1,418.9 | $ | 1,629.4 | |||||||||||||||
Revenue Recognition Related to Vendor Discounts or Credits | (7.2 | ) | (11.6 | ) | (8.7 | ) | (0.1 | ) | (3.5 | ) | (4.5 | ) | (42.5 | ) | |||||||||||||||
Revenue Recognition related to Customer Contracts | (48.6 | ) | (71.4 | ) | (27.9 | ) | (96.5 | ) | (61.6 | ) | (45.2 | ) | 184.6 | ||||||||||||||||
Accounting for Out-of-Pocket Expenses | — | — | — | — | — | — | — | ||||||||||||||||||||||
Gross versus Net Revenue Presentation | 47.9 | 51.5 | 38.6 | 84.7 | 104.2 | 80.4 | 86.3 | ||||||||||||||||||||||
Internal Investigations | (1.9 | ) | (3.3 | ) | 0.2 | (0.8 | ) | (0.8 | ) | (1.1 | ) | (4.5 | ) | ||||||||||||||||
Other Adjustments | 4.1 | 3.5 | 8.1 | 7.0 | 5.1 | 3.7 | 3.4 | ||||||||||||||||||||||
Total Adjustments | (5.7 | ) | (31.3 | ) | 10.3 | (5.7 | ) | 43.4 | 33.3 | 227.3 | |||||||||||||||||||
As restated | $ | 1,389.4 | $ | 1,512.8 | $ | 1,519.1 | $ | 1,310.0 | $ | 1,542.8 | $ | 1,452.2 | $ | 1,856.7 | |||||||||||||||
Impact of Adjustments on Net Income (Loss) from Continuing Operations and Earnings per Share | |||||||||||||||||||||||||
For the Quarter Ended March 31, 2004 | For the Quarter Ended March 31, 2003 | ||||||||||||||||||||||||
Basic Earnings | Basic Earnings | ||||||||||||||||||||||||
(Loss) Per | Diluted Earnings | (Loss) Per | Diluted Earnings | ||||||||||||||||||||||
Share of | (Loss) Per | Share of | (Loss) Per | ||||||||||||||||||||||
Net Income | Common | Share of | Net Income | Common | Share of | ||||||||||||||||||||
(Loss) | Stock | Common Stock | (Loss) | Stock | Common Stock | ||||||||||||||||||||
As previously reported | $ | (21.7 | ) | $ | (0.05 | ) | $ | (0.05 | ) | $ | (11.2 | ) | $ | (0.03 | ) | $ | (0.03 | ) | |||||||
Revenue Recognition Related to Vendor Discounts or Credits | (6.9 | ) | (0.02 | ) | (0.02 | ) | 19.1 | 0.05 | 0.05 | ||||||||||||||||
Revenue Recognition Related to Customer Contracts | (47.6 | ) | (0.12 | ) | (0.12 | ) | (96.2 | ) | (0.25 | ) | (0.25 | ) | |||||||||||||
Future Obligations Related to Prior Acquisitions | (3.1 | ) | (0.01 | ) | (0.01 | ) | (3.3 | ) | (0.01 | ) | (0.01 | ) | |||||||||||||
Internal Investigations | (4.2 | ) | (0.01 | ) | (0.01 | ) | (5.4 | ) | (0.01 | ) | (0.01 | ) | |||||||||||||
International Compensation Arrangements | (2.4 | ) | (0.01 | ) | (0.01 | ) | (0.7 | ) | — | — | |||||||||||||||
Accounting for Leases | 1.4 | — | — | (9.1 | ) | (0.02 | ) | (0.02 | ) | ||||||||||||||||
Other Adjustments | (4.1 | ) | (0.01 | ) | (0.01 | ) | 13.9 | 0.04 | 0.04 | ||||||||||||||||
Total Restatement Adjustments* | (66.9 | ) | (0.16 | ) | (0.16 | ) | (81.7 | ) | (0.21 | ) | (0.21 | ) | |||||||||||||
As restated | $ | (88.6 | ) | $ | (0.21 | ) | $ | (0.21 | ) | $ | (92.9 | ) | $ | (0.24 | ) | $ | (0.24 | ) | |||||||
Weighted-average shares: | 413.3 | 413.3 | 381.8 | 381.8 |
* | Earnings (loss) per share does not add due to rounding. |
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Impact of Adjustments on Net Income (Loss) from Continuing Operations and Earnings per Share | |||||||||||||||||||||||||
For the Quarter Ended June 30, 2004 | For the Quarter Ended June 30, 2003 | ||||||||||||||||||||||||
Basic Earnings | Basic Earnings | ||||||||||||||||||||||||
(Loss) Per | Diluted Earnings | (Loss) Per | Diluted Earnings | ||||||||||||||||||||||
Share of | (Loss) Per | Share of | (Loss) Per | ||||||||||||||||||||||
Net Income | Common | Share of | Net Income | Common | Share of | ||||||||||||||||||||
(Loss) | Stock | Common Stock | (Loss) | Stock | Common Stock | ||||||||||||||||||||
As previously reported | $ | (10.4 | ) | $ | (0.03 | ) | $ | (0.03 | ) | $ | (23.0 | ) | $ | (0.06 | ) | $ | (0.06 | ) | |||||||
Revenue Recognition Related to Vendor Discounts or Credits | (11.2 | ) | (0.03 | ) | (0.03 | ) | 9.1 | 0.02 | 0.02 | ||||||||||||||||
Revenue Recognition Related to Customer Contracts | (69.8 | ) | (0.17 | ) | (0.17 | ) | (58.7 | ) | (0.15 | ) | (0.15 | ) | |||||||||||||
Future Obligations Related to Prior Acquisitions | 0.7 | — | — | (3.3 | ) | (0.01 | ) | (0.01 | ) | ||||||||||||||||
Pre-Acquisition Earnings | — | — | — | — | — | — | |||||||||||||||||||
Internal Investigations | (5.6 | ) | (0.01 | ) | (0.01 | ) | (4.6 | ) | (0.01 | ) | (0.01 | ) | |||||||||||||
International Compensation Arrangements | (2.5 | ) | (0.01 | ) | (0.01 | ) | (1.1 | ) | — | — | |||||||||||||||
Accounting for Leases | 0.8 | — | — | (7.1 | ) | (0.02 | ) | (0.02 | ) | ||||||||||||||||
Other Adjustments | 4.6 | 0.01 | 0.01 | 8.5 | 0.02 | 0.02 | |||||||||||||||||||
Total Restatement Adjustments* | (83.0 | ) | (0.20 | ) | (0.20 | ) | (57.2 | ) | (0.15 | ) | (0.15 | ) | |||||||||||||
As restated | $ | (93.4 | ) | $ | (0.23 | ) | $ | (0.23 | ) | $ | (80.2 | ) | $ | (0.21 | ) | $ | (0.21 | ) | |||||||
Weighted-average shares: | 414.6 | 414.6 | 384.3 | 384.3 |
Impact of Adjustments on Net Income (Loss) from Continuing Operations and Earnings per Share | |||||||||||||||||||||||||
For the Quarter Ended September 30, 2004 | For the Quarter Ended September 30, 2003 | ||||||||||||||||||||||||
Basic Earnings | Basic Earnings | ||||||||||||||||||||||||
(Loss) Per | Diluted Earnings | (Loss) Per | Diluted Earnings | ||||||||||||||||||||||
Share of | (Loss) Per | Share of | (Loss) Per | ||||||||||||||||||||||
Net Income | Common | Share of | Net Income | Common | Share of | ||||||||||||||||||||
(Loss) | Stock | Common Stock | (Loss) | Stock | Common Stock | ||||||||||||||||||||
As previously reported | $ | (589.9 | ) | $ | (1.42 | ) | $ | (1.42 | ) | $ | (416.2 | ) | $ | (1.08 | ) | $ | (1.08 | ) | |||||||
Revenue Recognition Related to Vendor Discounts or Credits | (16.9 | ) | (0.04 | ) | (0.04 | ) | (4.2 | ) | (0.01 | ) | (0.01 | ) | |||||||||||||
Revenue Recognition Related to Customer Contracts | (38.2 | ) | (0.09 | ) | (0.09 | ) | (40.7 | ) | (0.11 | ) | (0.11 | ) | |||||||||||||
Future Obligations Related to Prior Acquisitions | (0.6 | ) | — | — | (15.1 | ) | (0.04 | ) | (0.04 | ) | |||||||||||||||
Pre-Acquisition Earnings | — | — | — | — | — | — | |||||||||||||||||||
Internal Investigations | 2.5 | 0.01 | 0.01 | (2.7 | ) | (0.01 | ) | (0.01 | ) | ||||||||||||||||
International Compensation Arrangements | (2.0 | ) | — | — | (2.4 | ) | (0.01 | ) | (0.01 | ) | |||||||||||||||
Accounting for Leases | (4.0 | ) | (0.01 | ) | (0.01 | ) | 2.7 | 0.01 | 0.01 | ||||||||||||||||
Other Adjustments | (4.1 | ) | (0.01 | ) | (0.01 | ) | 15.2 | 0.04 | 0.04 | ||||||||||||||||
Goodwill and Investment Impairment | 145.2 | 0.35 | 0.35 | — | — | — | |||||||||||||||||||
Total Restatement Adjustments* | 81.9 | 0.20 | 0.20 | (47.2 | ) | (0.12 | ) | (0.12 | ) | ||||||||||||||||
As restated | $ | (508.0 | ) | $ | (1.22 | ) | $ | (1.22 | ) | $ | (463.4 | ) | $ | (1.20 | ) | $ | (1.20 | ) | |||||||
Weighted-average shares: | 415.4 | 415.4 | 385.8 | 385.8 |
* | Earnings (loss) per share does not add due to rounding. |
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Impact of Adjustments on Net Income (Loss) from | |||||||||||||
Continuing Operations and Earnings per Share | |||||||||||||
For the Quarter Ended December 31, 2003 | |||||||||||||
Basic Earnings | Diluted Earnings | ||||||||||||
Net Income | (Loss) Per Share of | (Loss) Per Share of | |||||||||||
(Loss) | Common Stock | Common Stock | |||||||||||
As previously reported | $ | (102.5 | ) | $ | (0.26 | ) | $ | (0.26 | ) | ||||
Revenue Recognition Related to Vendor Discounts or Credits | (69.5 | ) | (0.18 | ) | (0.18 | ) | |||||||
Revenue Recognition Related to Customer Contracts | 179.7 | 0.46 | 0.46 | ||||||||||
Future Obligations Related to Prior Acquisitions | (2.4 | ) | (0.01 | ) | (0.01 | ) | |||||||
Internal Investigations | (5.8 | ) | (0.01 | ) | (0.01 | ) | |||||||
International Compensation Arrangements | (4.6 | ) | (0.01 | ) | (0.01 | ) | |||||||
Accounting for Leases | 11.0 | 0.03 | 0.03 | ||||||||||
Other Adjustments | (9.5 | ) | (0.02 | ) | (0.02 | ) | |||||||
Total Restatement Adjustments* | 98.9 | 0.25 | 0.25 | ||||||||||
As restated | $ | (3.6 | ) | (0.01 | ) | (0.01 | ) | ||||||
Weighted-average shares: | 390.3 | 390.3 |
Impact of Adjustments on Consolidated Balance Sheet Accounts | |||||||||||||||||||||||||
As of March 31, 2004 | As of March 31, 2003 | ||||||||||||||||||||||||
Total | Stockholders’ | Total | Stockholders’ | ||||||||||||||||||||||
Total Assets | Liabilities | Equity | Total Assets | Liabilities | Equity | ||||||||||||||||||||
As previously reported | $ | 11,700.5 | $ | 9,133.4 | $ | 2,567.1 | $ | 11,963.1 | $ | 9,811.6 | $ | 2,151.5 | |||||||||||||
Revenue Recognition Related to Vendor Discounts or Credits | 36.6 | 207.2 | (170.6 | ) | 45.8 | 131.2 | (85.4 | ) | |||||||||||||||||
Revenue Recognition Related to Customer Contracts | 35.6 | 172.1 | (136.5 | ) | 35.7 | 196.5 | (160.8 | ) | |||||||||||||||||
Future Obligations Related to Prior Acquisitions | (2.4 | ) | 67.1 | (69.5 | ) | (5.0 | ) | 40.4 | (45.4 | ) | |||||||||||||||
Pre-Acquisition Earnings | (33.2 | ) | (2.5 | ) | (30.7 | ) | (33.0 | ) | (2.6 | ) | (30.4 | ) | |||||||||||||
Internal Investigations | — | 56.1 | (56.1 | ) | (6.4 | ) | 30.4 | (36.8 | ) | ||||||||||||||||
International Compensation Arrangements | 2.8 | 31.6 | (28.8 | ) | 3.8 | 22.0 | (18.2 | ) | |||||||||||||||||
Accounting for Leases | 37.2 | 64.8 | (27.6 | ) | 44.2 | 76.9 | (32.7 | ) | |||||||||||||||||
Other Adjustments | 114.4 | 148.2 | (33.8 | ) | 43.4 | 102.0 | (58.6 | ) | |||||||||||||||||
Total Adjustments | 191.0 | 744.6 | (553.6 | ) | 128.5 | 596.8 | (468.3 | ) | |||||||||||||||||
As restated | $ | 11,891.5 | $ | 9,878.0 | $ | 2,013.5 | $ | 12,091.6 | $ | 10,408.4 | $ | 1,683.2 | |||||||||||||
* | Earnings (loss) per share does not add due to rounding. |
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Impacts of Adjustments on Consolidated Balance Sheet Accounts | |||||||||||||||||||||||||
As of June 30, 2004 | As of June 30, 2003 | ||||||||||||||||||||||||
Total | Stockholders’ | Total | Stockholders’ | ||||||||||||||||||||||
Total Assets | Liabilities | Equity | Total Assets | Liabilities | Equity | ||||||||||||||||||||
As previously reported | $ | 12,156.2 | $ | 9,593.8 | $ | 2,562.4 | $ | 12,096.7 | $ | 9,871.2 | $ | 2,225.5 | |||||||||||||
Revenue Recognition Related to Vendor Discounts or Credits | 37.6 | 217.6 | (180.0 | ) | 58.9 | 139.4 | (80.5 | ) | |||||||||||||||||
Revenue Recognition Related to Customer Contracts | 33.9 | 238.6 | (204.7 | ) | 34.6 | 258.3 | (223.7 | ) | |||||||||||||||||
Future Obligations Related to Prior Acquisitions | (1.0 | ) | 68.6 | (69.6 | ) | (5.0 | ) | 43.9 | (48.9 | ) | |||||||||||||||
Pre-Acquisition Earnings | (33.2 | ) | (2.6 | ) | (30.6 | ) | (33.1 | ) | (2.6 | ) | (30.5 | ) | |||||||||||||
Internal Investigations | 3.5 | 64.4 | (60.9 | ) | (8.4 | ) | 33.7 | (42.1 | ) | ||||||||||||||||
International Compensation Arrangements | 2.7 | 34.1 | (31.4 | ) | 5.1 | 24.4 | (19.3 | ) | |||||||||||||||||
Accounting for Leases | 38.3 | 64.8 | (26.5 | ) | 40.5 | 81.1 | (40.6 | ) | |||||||||||||||||
Other Adjustments | 150.7 | 180.5 | (29.8 | ) | 116.2 | 137.5 | (21.3 | ) | |||||||||||||||||
Goodwill and Investment Impairment | — | — | — | — | — | — | |||||||||||||||||||
Total Adjustments | 232.5 | 866.0 | (633.5 | ) | 208.8 | 715.7 | (506.9 | ) | |||||||||||||||||
As restated | $ | 12,388.7 | $ | 10,459.8 | $ | 1,928.9 | $ | 12,305.5 | $ | 10,586.9 | $ | 1,718.6 | |||||||||||||
Impacts of Adjustments on Consolidated Balance Sheet Accounts | |||||||||||||||||||||||||
As of September 30, 2004 | As of September 30, 2003 | ||||||||||||||||||||||||
Total | Stockholders’ | Total | Stockholders’ | ||||||||||||||||||||||
Total Assets | Liabilities | Equity | Total Assets | Liabilities | Equity | ||||||||||||||||||||
As previously reported | $ | 11,202.3 | $ | 9,200.5 | $ | 2,001.8 | $ | 11,272.1 | $ | 9,331.0 | $ | 1,941.1 | |||||||||||||
Revenue Recognition Related to Vendor Discounts or Credits | 30.7 | 228.4 | (197.7 | ) | 59.2 | 144.4 | (85.2 | ) | |||||||||||||||||
Revenue Recognition Related to Customer Contracts | 20.0 | 264.8 | (244.8 | ) | 32.4 | 299.5 | (267.1 | ) | |||||||||||||||||
Future Obligations Related to Prior Acquisitions | (1.4 | ) | 68.8 | (70.2 | ) | (2.3 | ) | 61.7 | (64.0 | ) | |||||||||||||||
Pre-Acquisition Earnings | (33.3 | ) | (2.6 | ) | (30.7 | ) | (33.1 | ) | (2.6 | ) | (30.5 | ) | |||||||||||||
Internal Investigations | 10.2 | 69.2 | (59.0 | ) | (5.3 | ) | 39.7 | (45.0 | ) | ||||||||||||||||
International Compensation Arrangements | 3.2 | 36.6 | (33.4 | ) | 5.1 | 26.8 | (21.7 | ) | |||||||||||||||||
Accounting for Leases | 31.3 | 62.0 | (30.7 | ) | 39.2 | 77.5 | (38.3 | ) | |||||||||||||||||
Other Adjustments | 91.3 | 119.9 | (28.6 | ) | 128.4 | 128.2 | 0.2 | ||||||||||||||||||
Goodwill and Investment Impairment | 145.2 | — | 145.2 | — | — | — | |||||||||||||||||||
Total Adjustments | 297.2 | 847.1 | (549.9 | ) | 223.6 | 775.2 | (551.6 | ) | |||||||||||||||||
As restated | $ | 11,499.5 | $ | 10,047.6 | $ | 1,451.9 | $ | 11,495.7 | $ | 10,106.2 | $ | 1,389.5 | |||||||||||||
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Column A | Column B | Column C | Column D | Column E | Column F | ||||||||||||||||
Additions/(Deductions) | |||||||||||||||||||||
Balance at | Charged to | Charged | Balance | ||||||||||||||||||
Beginning | Costs & | to Other | at End | ||||||||||||||||||
Description | of Period | Expenses | Accounts | Deductions | of Period | ||||||||||||||||
(Amounts in millions) | |||||||||||||||||||||
Allowance for Doubtful Accounts — deducted from Accounts Receivable in the Consolidated Balance Sheet: | |||||||||||||||||||||
2004 | $ | 134.1 | $ | 36.7 | $ | — | (1) | $ | (3.0 | )(4) | $ | 136.1 | |||||||||
$ | (0.8 | )(2) | $ | (45.6 | )(5) | ||||||||||||||||
$ | 6.8 | (3) | $ | 7.9 | (6) | ||||||||||||||||
2003 (Restated) | $ | 138.3 | $ | 32.6 | $ | 8.5 | (1) | $ | (2.3 | )(4) | $ | 134.1 | |||||||||
$ | (2.1 | )(2) | $ | (34.0 | )(5) | ||||||||||||||||
$ | (6.9 | )(6) | |||||||||||||||||||
2002 (Restated) | $ | 89.0 | $ | 74.7 | $ | 0.1 | (1) | $ | (45.4 | )(5) | $ | 138.3 | |||||||||
$ | 1.8 | (2) | $ | 0.9 | (6) | ||||||||||||||||
$ | 17.2 | (3) |
(1) | Allowance for doubtful accounts of acquired and newly consolidated companies. |
(2) | Miscellaneous. |
(3) | Reclassifications. |
(4) | Dispositions. |
(5) | Principally amounts written off. |
(6) | Foreign currency translation adjustment. |
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Column A | Column B | Column C | Column D | Column E | Column F | ||||||||||||||||
Additions | |||||||||||||||||||||
Balance at | Charged to | Charged | Balance | ||||||||||||||||||
Beginning | Costs & | to Other | at End | ||||||||||||||||||
Description | of Period | Expenses | Accounts | Deductions | of Period | ||||||||||||||||
(Amounts in millions) | |||||||||||||||||||||
Valuation Allowance — deducted from Deferred Income Taxes on the Consolidated Balance Sheet: | |||||||||||||||||||||
2004 | $ | 252.6 | $ | 236.0 | $ | — | $ | — | $ | 488.6 | |||||||||||
2003 (Restated) | $ | 123.9 | $ | 111.4 | $ | 17.3 | (1) | $ | — | $ | 252.6 | ||||||||||
2002 (Restated) | $ | 96.4 | $ | 27.5 | $ | — | $ | — | $ | 123.9 |
(1) | Included in discontinued operations related to NFO. |
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Item 9. | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure |
Item 9A. | Controls and Procedures |
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Item 10. | Directors and Executive Officers of Interpublic |
Chairman of the Executive Committee. |
Presiding Director. Member of the Executive Committee. |
Chairman of the Compensation Committee. Member of the Audit, Executive and Corporate Governance Committees. |
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Chairman of the Corporate Governance Committee. Member of the Audit and Finance Committees. |
Member of the Finance Committee. |
Chairman of the Finance and Audit Committees. Member of the Corporate Governance Committee. |
Member of the Audit, Compensation and Finance Committees. |
Member of the Audit, Compensation and Corporate Governance Committees. |
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Member of the Audit and Corporate Governance Committees. |
Name | Age | Office | ||||
Michael I. Roth(1) | 59 | Chairman of the Board and Chief Executive Officer | ||||
David A. Bell(1) | 62 | Co-Chairman | ||||
Nicholas J. Camera | 58 | Senior Vice President, General Counsel and Secretary | ||||
Albert S. Conte | 55 | Senior Vice President, Taxes and General Tax Counsel | ||||
Nicholas S. Cyprus | 52 | Senior Vice President, Controller and Chief Accounting Officer | ||||
Thomas A. Dowling | 54 | Senior Vice President, Chief Risk Officer | ||||
Stephen Gatfield | 47 | Executive Vice President, Global Operations and Innovation | ||||
Philippe Krakowsky | 43 | Senior Vice President, Director of Corporate Communications | ||||
Frank Mergenthaler | 44 | Executive Vice President and Chief Financial Officer | ||||
Timothy A. Sompolski | 53 | Executive Vice President, Chief Human Resources Officer |
(1) | Also a Director |
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Name | Audit | |
Richard A. Goldstein | Chair | |
Reginald K. Brack | Member | |
Jill M. Considine | Member | |
H. John Greeniaus | Member | |
J. Phillip Samper | Member | |
David M. Thomas | Member |
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• | Alignment with shareholders: Compensation should align the interests of executives and shareholders through the use of equity-based compensation and performance-based awards. | |
• | Performance-based: Compensation should emphasize pay-for-performance by placing a significant portion of total compensation “at risk,” the payout of which is tied to the financial performance of Interpublic and the achievement of other critical objectives. | |
• | Market-based: Total compensation levels should be competitive with those at other advertising and marketing service companies, and within other relevant executive labor markets as appropriate. |
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• | An increase in Mr. Roth’s annual base salary from $950,000 to $1,100,000, effective January 19, 2005. | |
• | A grant of options (the “Options”) to purchase 450,000 shares of Interpublic Common Stock at an exercise price of $13.645 per share, based on the average of the high and low market prices of Interpublic Common Stock on the February 14, 2005 grant date. The Options will vest and become exercisable in three equal annual installments of 150,000 on the second, third and fourth anniversaries of the grant date, subject to Mr. Roth’s continued employment with Interpublic through the applicable vesting date, and will vest automatically on a change of control of Interpublic in accordance with the terms of the 2004 PIP. On any termination of Mr. Roth’s employment with Interpublic, any unvested Options will be forfeited. | |
• | A grant of 450,000 performance based restricted shares (the “Restricted Shares”) under the 2004 PIP. At grant, the Restricted Shares had an aggregate value of $6,120,000 and a risk-adjusted value of $4,500,000 . The Restricted Shares will only vest if certain performance conditions are met (subject to accelerated vesting of a portion of the Restricted Shares on a change of control of Interpublic, as described below). In particular: | |
• | 150,000 of the Restricted Shares will vest on the second anniversary of the grant date, subject to Mr. Roth’s continued employment with Interpublic through such date, if: (1) Interpublic attains cumulative constant dollar revenue reflecting average annual growth of 4.5% or better in 2005-2006; (2) in 2006, Interpublic’s growth equals or exceeds 5%; and (3) Interpublic’s average operating margins during 2005 and 2006 are at 10.5% or higher. In the event these performance targets are not achieved, these restricted shares are forfeited. | |
• | 300,000 of the Restricted Shares will vest on the fifth anniversary of the grant date, subject to Mr. Roth’s continued employment with Interpublic through such date, if: (1) Interpublic’s average constant-dollar revenue growth for the 2007-2009 period is 6.3% or higher; (2) during 2009, constant dollar revenue growth is at least 7%; (3) Interpublic’s average operating margins during the period from 2007-2009 are at 14.7% or higher; (4) cumulative constant dollar revenue during the period from 2005-2010 is $35.6 billion or greater; and (5) cumulative operating income during the period from 2005-2010 is $4.7 billion or greater. In the event these performance targets are not achieved, these restricted shares are forfeited. |
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Respectfully submitted, | |
Reginald K. Brack, Chair | |
H. John Geeniaus | |
J. Phillip Samper |
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Item 11. | Executive Compensation |
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Annual Compensation | Long Term Compensation | ||||||||||||||||||||||||||||||
Awards | Payouts | ||||||||||||||||||||||||||||||
Securities | All Other | ||||||||||||||||||||||||||||||
Name and Principal | Fiscal | Other Annual | Restricted Stock | Underlying | LTIP | Compen- | |||||||||||||||||||||||||
Position | Year | Salary(2)(3) | Bonus(4) | Compensation(5) | Awards(6) | Options(7) | Payouts(8) | sation(9) | |||||||||||||||||||||||
David A. Bell(1) | 2004 | $ | 1,000,000 | — | $ | 66,381 | $ | 1,750,000 | 248,933 | — | $ | 9,565 | |||||||||||||||||||
President and Chief | 2003 | $ | 1,000,000 | $1,300,000 | $ | 75,658 | — | 200,000 | — | $ | 13,745 | ||||||||||||||||||||
Executive Officer, Director of Interpublic | 2002 | $ | 1,000,000 | — | — | $ | 294,750 | 55,000 | — | $ | 212,472 | ||||||||||||||||||||
Michael I. Roth(1) | 2004 | $ | 446,212 | — | — | $ | 1,049,996 | 161,974 | — | $ | 100,129 | ||||||||||||||||||||
Executive Chairman, | 2003 | — | — | — | — | — | — | — | |||||||||||||||||||||||
Director of Interpublic | 2002 | — | — | — | — | — | — | — | |||||||||||||||||||||||
Christopher J. Coughlin(1) | 2004 | $ | 800,000 | — | — | $ | 750,000 | 106,685 | — | $ | 6,679 | ||||||||||||||||||||
Executive Vice President, | 2003 | $ | 433,333 | $900,000 | — | — | 200,000 | — | $ | 3,120 | |||||||||||||||||||||
Chief Operating Officer, | 2002 | — | — | — | — | — | — | — | |||||||||||||||||||||||
Chief Financial Officer and Director | |||||||||||||||||||||||||||||||
Nicholas Cyprus | 2004 | $ | 272,727 | $2,005,000 | — | $ | 1,249,997 | 118,797 | — | $ | 83,026 | ||||||||||||||||||||
Senior Vice President, | 2003 | — | — | — | — | — | — | — | |||||||||||||||||||||||
Chief Accounting Officer | 2002 | — | — | — | — | — | — | — | |||||||||||||||||||||||
John J. Dooner, Jr.(1) | 2004 | $ | 1,250,000 | $1,000,000 | $ | 97,683 | $ | 375,000 | 53,342 | — | $ | 78,020 | |||||||||||||||||||
Chairman and CEO of | 2003 | $ | 1,250,000 | $750,000 | $ | 73,029 | — | 176,709 | — | $ | 82,904 | ||||||||||||||||||||
McCann-Erickson WorldGroup, Director of Interpublic | 2002 | $ | 1,250,000 | — | $ | 80,046 | $ | 2,947,500 | 375,000 | 2,480,000 | $ | 9,927 | |||||||||||||||||||
Stephen J. Gatfield | 2004 | $ | 605,303 | $1,327,500 | $ | 56,183 | $ | 317,400 | 30,000 | — | $ | 255 | |||||||||||||||||||
Executive Vice President, | 2003 | — | — | — | — | — | — | — | |||||||||||||||||||||||
Global Operations and Innovation | 2002 | — | — | — | — | — | — | — |
(1) | On January 19, 2005, Michael Roth succeeded David Bell as Chief Executive Officer. |
On January 19, 2005, Mr. Bell was appointed co-Chairman. | |
Mr. Roth became Executive Chairman on July 13, 2004 and his compensation is reported from and after that date. | |
On May 24, 2004, Mr. Cyprus was hired as Senior Vice President, Controller and Chief Accounting Officer and his compensation is reported from and after that date. | |
On June 16, 2003, Mr. Coughlin was hired as Executive Vice President, Chief Financial Officer and Chief Operating Officer and his compensation is reported from and after that date. | |
On April 1, 2004, Mr. Gatfield was hired as Executive Vice President, Global Operations and Innovation and his compensation is reported from and after that date. |
(2) | The salaries of executive officers continuing to serve in the same position are generally reviewed every two years. |
(3) | Does not include annual salary in the amount of $150,000 that Mr. Bell has elected to forgo in 2004 in consideration for the receipt of a Special Deferred Benefit Agreement which is more fully described in Item 11. “Executive Compensation — Special Deferred Benefit Agreements” of this Annual Report. |
Does not include annual salary in the amount of $100,000 that Mr. Coughlin has elected to forgo in 2004 in consideration for the receipt of a Special Deferred Benefit Agreement which is more fully described in Item 11. “Executive Compensation — Special Deferred Benefit Agreements” of this Annual Report. | |
Does not include annual salary in the amount of $112,500 that Mr. Bell has elected to forgo in 2003 in consideration for the receipt of a Special Deferred Benefit Agreement which is more fully described in Item 11. Executive Compensation — Special Deferred Benefit Agreements of this Annual Report. |
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Does not include annual salary in the amount of $54,167 that Mr. Coughlin has elected to forgo in 2003 in consideration for receipt of a Special Deferred Benefit Agreement which is more fully described in Item 11. Executive Compensation — Special Deferred Benefit Agreements of this Annual Report. |
(4) | The bonus shown for Mr. Cyprus in 2004 includes a cash sign-on bonus of $1,830,000 that we paid to him shortly after he was hired. Fifty percent of the bonus shown for Mr. Dooner was paid in April 2005 and the balance will be paid when the 2004 year-end financial statements for McCann-Erickson WorldGroup have been reported in final form and assessed. The bonus shown for Mr. Gatfield in 2004 includes a cash sign-on bonus of $750,000 that we paid to him shortly after he was hired. The bonus shown for Mr. Bell in 2003 includes a cash sign-on bonus of $100,000 that was paid to him shortly after he assumed the position of Chairman, CEO and President. The bonus in 2003 for Mr. Coughlin includes a sign-on bonus consisting of unrestricted shares of Interpublic Common Stock with a fair market value of $400,000 on June 16, 2003, his date of hire. |
(5) | In accordance with SEC rules, information is shown in this column only if as to any named executive officer the aggregate value of perquisites and other personal benefits received during the year exceeds the lesser of (i) $50,000 and (ii) 10% of the named executive officer’s total salary and bonus for that year. SEC rules further require that if the value of perquisites and other personal benefits are required to be reported for any year, the type and amount of any perquisite or other personal benefit that exceeds 25% of total perquisites and other personal benefits must be described. |
Other Annual Compensation for 2004 includes $31,278 in premiums for medical/dental coverage paid on behalf of Mr. Bell; $31,278 in premiums for medical/dental coverage paid on behalf of Mr. Dooner; and $25,000 in club dues and $22,156 in premiums for medical/dental coverage paid on behalf of Mr. Gatfield. | |
Other Annual Compensation for 2003 includes $28,755 in premiums for medical/dental coverage and $26,885 in respect of club dues paid on behalf of Mr. Bell (including a one-time club initiation fee); and $28,755 in premiums for medical/dental coverage and $19,108 in club dues paid on behalf of Mr. Dooner. | |
Other Annual Compensation for 2002 includes $28,272 in premiums for medical/dental coverage and $22,887 of club dues paid on behalf of Mr. Dooner. |
(6) | The aggregate number and value of shares of restricted stock held by the named executive officers at December 31, 2004 (based on the closing price of the Common Stock on December 31, 2004) are as follows: Mr. Bell — 209,466 shares ($2,806,844); Mr. Roth — 87,187 shares ($1,168,305); Mr. Coughlin — 53,342 shares ($714,783); Mr. Cyprus — 87,351 ($1,170,503); Mr. Dooner — 476,671 shares ($6,387,391); Mr. Gatfield — 20,000 ($268,000). Mr. Bell and Mr. Dooner have announced publicly that they will not sell any of their shares of restricted stock when the transfer restrictions are released until the shares of our Common Stock reach a price of $20.00 per share. |
The shares of restricted stock shown in the table as awarded to each named executive officer generally have at least a three-year vesting period, subject to the discretion of the Compensation Committee to release the restrictions not earlier than one year after the grant date, except for the following grants: | |
Mr. Cyprus received an award of 69,881 shares of restricted stock on May 24, 2004, 23,060 shares of which vested on May 24, 2005 and another 23,060 shares of which will vest on May 24, 2006. The balance will vest on May 24, 2007. | |
Mr. Gatfield received an award of 20,000 shares of restricted stock on April 15, 2004, all of which shares of which vested on April 15, 2005. | |
Dividends on restricted stock are paid on the same basis as ordinary dividends on the Common Stock. No ordinary dividends were paid on the Common Stock during 2004. |
(7) | During 2003, Mr. Bell voluntarily agreed to the cancellation of 131,100 of the 256,100 shares of our Common Stock underlying stock options that he received in 2001. He relinquished these option |
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awards with the express intent of permitting the underlying shares to be issued to our other employees under the 2002 Performance Incentive Plan. |
During 2003, Mr. Dooner voluntarily cancelled option awards with respect to 248,000 shares and 252,000 shares of Common Stock that were granted to him on March 24, 2000 and December 15, 2000, respectively. These awards are not required to be reported in this annual report but were reported in previous years. Mr. Dooner relinquished these grants with the express intent of permitting the underlying shares to be issued to employees of one of our subsidiaries under the 2002 Performance Incentive Plan. | |
In addition to Messrs. Dooner and Bell, several executives of our subsidiaries also voluntarily cancelled options with the express intent of permitting the underlying shares to be issued to our other employees under the 2002 Performance Incentive Plan. Options to purchase a total of 1,350,348 shares were cancelled (including those awards described above for Messrs. Bell and Dooner). |
(8) | Payouts under the Long-Term Performance Incentive Plan (“LTPIP”) prior to 2002 were made at the end of four-year performance periods. In 2002, the original 1999-2002 performance period was shortened to three years in order to institute a new performance plan. Payouts received in 2002 were calculated based on the value of the 1999-2001 performance period at the end of 2001 after giving effect to our restructuring costs taken in 2001. |
(9) | All Other Compensation for 2004 consisted of: (i) the following amounts paid to the named executive officers: matching contributions under the Interpublic Savings Plan — Mr. Bell — $9,225; Mr. Coughlin — $6,150; Mr. Cyprus — $2,750; and Mr. Dooner — $9,225; (ii) premiums paid on group life insurance — Mr. Bell — $5,465; Mr. Roth — $129; Mr. Coughlin — $529; Mr. Cyprus — $276; Mr. Dooner — $1,032; and Mr. Gatfield — $255; (iii) supplemental compensation plan payout — Mr. Dooner — $17,763; (iv) annual contributions paid under the Interpublic Capital Accumulation Plan — Mr. Roth — $100,000; and Mr. Cyprus — $80,000 and (v) premiums paid by Interpublic on a life insurance policy for Mr. Dooner — $50,000. |
Number of Securities | % of Total Options | Grant Date | ||||||||||||||||||
Underlying Options | Granted to Employees | Exercise Price | Expiration | Present Value | ||||||||||||||||
Name | Granted(1) | in Fiscal Year | ($/Sh) | Date | ($)(8) | |||||||||||||||
David A. Bell | 248,933 | (2) | 11.31 | % | $ | 14.06 | 05/18/14 | $ | 1,720,127 | |||||||||||
Michael I. Roth | 161,974 | (3) | 7.36 | % | $ | 12.96 | 07/16/14 | $ | 1,015,577 | |||||||||||
Christopher J. Coughlin | 106,685 | (4) | 4.85 | % | $ | 14.06 | 05/18/14 | $ | 737,193 | |||||||||||
Nicholas Cyprus | 118,797 | (5) | 5.40 | % | $ | 14.31 | 05/24/14 | $ | 835,143 | |||||||||||
John J. Dooner, Jr. | 53,342 | (6) | 2.42 | % | $ | 14.06 | 05/18/14 | $ | 368,593 | |||||||||||
Stephen J. Gatfield | 30,000 | (7) | 1.36 | % | $ | 15.87 | 04/15/14 | $ | 230,100 |
(1) | All options have a ten-year term and have an exercise price equal to 100% of the fair market value of the Common Stock on the date of grant. |
(2) | Mr. Bell was granted a stock option award covering 248,933 shares of Common Stock on May 18, 2004. The option becomes exercisable as to (i) 82,147 shares of Common Stock on May 18, 2006, (ii) 82,147 shares of Common Stock on May 18, 2007 and (iii) 84,639 shares of Common Stock on May 18, 2008. |
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(3) | Mr. Roth was granted a stock option award covering 161,974 shares of Common Stock on June 16, 2004. The option becomes exercisable as to (i) 53,451 shares of Common Stock on July 16, 2006, (ii) 53,451 shares of Common Stock on July 16, 2007 and (iii) 55,072 shares of Common Stock on July 16, 2008. |
(4) | Mr. Coughlin was granted a stock option award covering 106,685 shares of Common Stock on May 18, 2004. The option becomes exercisable as to (i) 35,206 shares of Common Stock on May 18, 2006, (ii) 35,206 shares of Common Stock on May 18, 2007, and (iii) 36,273 shares of Common Stock on May 18, 2008. |
(5) | Mr. Cyprus was granted a stock option award covering 83,857 shares of Common Stock on May 24, 2004. The option becomes exercisable as to (i) 27,672 shares of Common Stock on May 24, 2005, (ii) 27,672 shares of Common Stock on May 24, 2006, and (iii) 28,513 shares of Common Stock on May 24, 2007. Mr. Cyprus received another stock option award covering 34,940 shares of Common Stock on May 24, 2004. The option becomes exercisable as to (i) 11,530 shares of Common Stock on May 24, 2006, (ii) 11,530 shares of Common Stock on May 24, 2007, and (iii) 11,880 shares of Common Stock on May 24, 2008. |
(6) | Mr. Dooner was granted a stock option award covering 53,342 shares of Common Stock on May 18, 2004. The option becomes exercisable as to (i) 17,602 shares of Common Stock on May 18, 2006, (ii) 17,602 shares of Common Stock on May 18, 2007 and (iii) 18,138 shares of Common Stock on May 18, 2008. |
(7) | Mr. Gatfield was granted a stock option award covering 30,000 shares of Common Stock on April 15, 2004. The option becomes exercisable as to (i) 9,900 shares of Common Stock on April 15, 2006, (ii) 9,900 shares of Common Stock on April 15, 2007, and (iii) 10,200 shares of Common Stock on April 15, 2008. |
(8) | The grant date present value of each of the stock option awards to the named executive officers is calculated using the Black Scholes Option Pricing Model and assumes the options are held for six years. The option awarded to Mr. Gatfield on April 15, 2004 includes the following assumptions: volatility of 44.58%, dividend yield of 0% and risk-free rate of return of 3.89%. The options awarded to the named executive officers on May 18, 2004 include the following assumptions: volatility of 44.68%, dividend yield of 0% and risk-free rate of return of 4.32%. The options awarded to Mr. Cyprus on May 24, 2004 includes the following assumptions: volatility of 44.68%, dividend yield of 0% and risk-free rate of return of 4.31%. The option awarded to Mr. Roth on July 16, 2004 includes the following assumptions: volatility of 44.52%, dividend yield of 0% and risk-free rate of return of 3.93%. |
Number of Shares of | ||||||||||||||||||||||
Common Stock Underlying | Value of Unexercised | |||||||||||||||||||||
Unexercised Options At | In-the-Money Options at | |||||||||||||||||||||
December 31, 2004 (#) | December 31, 2004 ($)(1) | |||||||||||||||||||||
Shares Acquired | Value | |||||||||||||||||||||
Name | on Exercise (#) | Realized ($) | Exercisable | Unexercisable | Exercisable | Unexercisable | ||||||||||||||||
David A. Bell | None | 0 | 218,078 | 570,683 | 0 | 752,000 | ||||||||||||||||
Michael I. Roth | None | 0 | 0 | 165,974 | 0 | 70,459 | ||||||||||||||||
Christopher J. Coughlin | None | 0 | 50,000 | 0 | 0 | 0 | ||||||||||||||||
Nicholas Cyprus | None | 0 | 0 | 118,797 | 0 | 0 | ||||||||||||||||
John J. Dooner, Jr. | None | 0 | 668,840 | 719,451 | 448,214 | 664,426 | ||||||||||||||||
Stephen J. Gatfield | None | 0 | 0 | 30,000 | 0 | 0 |
(1) | Calculated based on the closing price of $13.400 for the Common Stock on December 31, 2004. |
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Name | Salary | Termination Date | ||||||
David A. Bell | $ | 1,000,000 | None* | |||||
Michael I. Roth | 1,100,000 | None* | ||||||
Christopher J. Coughlin | 800,000 | ** | ||||||
Nicholas Cyprus | 483,400 | None* | ||||||
John J. Dooner, Jr. | 1,250,000 | None* | ||||||
Stephen J. Gatfield | 850,000 | None* |
* | The executive’s employment has no termination date. We may terminate the executive’s employment in the manner described in the summary of the executive’s employment agreement below. |
** | Mr. Coughlin’s Employment Agreement has been terminated. See Item 11. Executive Compensation — Employment Contracts Termination of Employment and Change-In-Control Arrangements-Termination and Change In Control Agreements-Christopher Coughlin Separation Agreement. |
David Bell Employment Agreement |
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Michael Roth Employment Agreement |
Nicholas Cyprus Employment Agreement |
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John Dooner Employment Agreement |
Stephen Gatfield Employment Agreement |
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Bell Deferred Compensation Arrangement |
Special Deferred Benefit Agreements |
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Christopher Coughlin Separation Agreement |
Executive Severance Agreements |
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1999 | 2000 | 2001 | 2002 | 2003 | 2004 | |||||||||||||||||||
Interpublic | 100.0 | 74.46 | 52.27 | 25.36 | 28.09 | 24.13 | ||||||||||||||||||
S&P 500 | 100.0 | 90.89 | 80.09 | 62.39 | 80.29 | 89.02 | ||||||||||||||||||
Peer Group(2) | 100.0 | 80.11 | 69.67 | 46.01 | 59.32 | 59.43 |
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Item 12. | Security Ownership of Certain Beneficial Owners and Management |
Number of Securities | ||||||||||||
Number of Shares of | Remaining Available for | |||||||||||
Common Stock to | Weighted- | Future Issuance Under | ||||||||||
be Issued Upon | Average Exercise | Equity Compensation | ||||||||||
Exercise of | Price of | Plans (Excluding | ||||||||||
Outstanding | Outstanding | Securities Reflected | ||||||||||
Stock Options | Stock Options | in Column (a)) | ||||||||||
Plan Category | (a) | (b) | (c)(1) | |||||||||
Equity Compensation Plans Approved by Security Holders | 38,646,208 | $ | 26.36 | 26,529,906 | ||||||||
Equity Compensation Plans Not Approved by Security Holders(2) | 840,075 | $ | 27.53 | 0 |
(1) | Includes 11,681,753 shares of our common stock available for issuance under the Employee Stock Purchase Program (1995) (the “Stock Purchase Program”) as of December 31, 2004. The Stock Purchase Program expired by its terms on June 30, 2005, and consequently, these shares are no longer available for issuance. |
(2) | Consists of special stock option grants awarded to certain True North executives following our acquisition of True North (“True North Options”). The True North Options were granted on August 23, 2001 at the fair market value of our common stock on the date of the grant. The terms and conditions of these stock option awards are governed by our 1997 Performance Incentive Plan which provides that stock options are exercisable as determined by the Compensation Committee of the Board of Directors. Generally, options become exercisable between two and five years after the date of the grant and expire ten years from the grant date. The True North Options vested approximately 40% and 30% on August 23, 2004 and August 23, 2005, respectively, and will vest approximately 30% on August 23, 2006. |
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Amount and Nature of | ||||||||
Name and Address | Beneficial Ownership of | Percent of | ||||||
of Beneficial Owner | Common Stock(1) | Class | ||||||
AMVESCAP PLC | 23,115,284 | 5.47 | % | |||||
11 Devonshire Square London EC2M 4YR England | ||||||||
AXA Financial, Inc. | 42,312,272 | 10.0 | % | |||||
1290 Avenue of the Americas New York, NY | ||||||||
Capital Research and Management Company | 28,658,220 | 6.71 | % | |||||
333 South Hope Street Los Angeles, CA 90071 | ||||||||
Capital Group International Inc | 22,275,090 | 5.30 | % | |||||
11100 Santa Monica Boulevard Los Angeles, CA 90025 | ||||||||
Pacific Financial Research, Inc | 25,501,405 | 6.00 | % | |||||
9601 Wilshire Boulevard Suite 800 Beverly Hills, CA 90210 | ||||||||
Barclays Global Investors NA | 22,668,039 | 5.25 | % | |||||
45 Fremont Street San Francisco, CA 94105 |
(1) | The rules of the SEC deem a person to be the beneficial owner of a security (for purposes of proxy statement disclosure) if that person has or shares either or both voting or dispositive power with respect to such security. Additionally, a security is deemed to be beneficially owned by a person who has the right to acquire beneficial ownership thereof within 60 days, for example, through the conversion of notes. |
(2) | Calculated based on the number of shares of Common Stock outstanding on August 31, 2005. |
(3) | This disclosure is based on information supplied by AMVESCAP PLC and a number of its subsidiaries in a Schedule 13G filed with the SEC on February 15, 2005, in which AMVESCAP PLC and such subsidiaries report that collectively they have sole voting power with respect to 23,115,284 shares of Common Stock and sole dispositive power with respect to 23,115,284 shares of Common Stock. |
(4) | This disclosure is based on information supplied by AXA Financial, Inc., primarily through Alliance Capital Management L.P., as well as a number of other affiliates, in a Schedule 13G filed with the SEC on March 10, 2005, in which AXA Financial, Inc. and such affiliates report that collectively they have sole voting power with respect to 21,198,110 shares of Common Stock and sole dispositive power with respect to 42,278,457 shares of Common Stock. |
(5) | This disclosure is based on information supplied by Capital Research and Management Company (“Capital”) in an amended Schedule 13G filed with the SEC on February 14, 2005, in which Capital |
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reported that it is an investment adviser that has sole dispositive power with respect to 28,658,220 shares of Common Stock including 2,664,220 shares issuable upon the conversion of 877,600 shares of the Series A Preferred Stock. |
(6) | This disclosure is based on information supplied by Capital Group International Inc. (“CGI”) in an amended Schedule 13G filed with the SEC on February 14, 2005, in which CGI reported that it is a holding company of a group of investment management companies that in the aggregate have sole voting power with respect to 18,708,850 shares of Common Stock and sole dispositive power with respect to 22,275,090 shares of Common Stock, including 563,140 shares issuable upon the conversion of 185,500 shares of Series A Preferred Stock. |
(7) | This disclosure is based on information supplied by Pacific Financial Research, Inc. (“Pacific”) in an amended Schedule 13G filed with the SEC on February 11, 2005, in which Pacific reported that it is an investment adviser that has sole voting power with respect to 23,853,205 shares of Common Stock and sole dispositive power with respect to 25,501,405 shares of Common Stock. |
(8) | This disclosure is based on information supplied by Barclays Bank PLC and a number of its affiliates in a Schedule 13G filed with the SEC on February 14, 2005, in which Barclays Bank PLC and such affiliates report that collectively they have sole voting power with respect to 20,890,747 shares of Common Stock and sole dispositive power with respect to 22,668,039 shares of Common Stock. |
The following table sets forth information concerning the direct and indirect beneficial ownership of our Common Stock as of August 31, 2005 by each director, each nominee for election as a director, each executive officer named in the Summary Compensation Table, and all our directors and executive officers as a group: |
Options | ||||||||||||
Name of | Common Stock | Exercisable | ||||||||||
Beneficial Owner(1)(2) | Ownership(2)(3)(4)(5) | Within 60 Days | Total | |||||||||
David A. Bell | 646,836 | 333,578 | 980,414 | |||||||||
Frank J. Borelli | 17,700 | 14,436 | 32,136 | |||||||||
Reginald K. Brack | 25,700 | 12,510 | 38,210 | |||||||||
Jill M. Considine | 16,200 | 12,510 | 28,710 | |||||||||
Christopher J. Coughlin | 0 | 0 | 0 | |||||||||
Nick Cyprus | 89,268 | 27,672 | 116,940 | |||||||||
John J. Dooner, Jr. | 1,027,770 | 826,913 | 1,854,683 | |||||||||
Stephen J. Gatfield | 27,479 | 0 | 27,479 | |||||||||
Richard A. Goldstein | 14,231 | 4,000 | 18,231 | |||||||||
H. John Greeniaus | 45,220 | 2,000 | 47,220 | |||||||||
Michael I. Roth | 625,990 | 2,000 | 627,990 | |||||||||
J. Phillip Samper | 25,720 | 14,436 | 40,156 | |||||||||
David M. Thomas | 2,400 | 0 | 2,400 | |||||||||
All directors and executive officers as a group | 2,564,514 | 1,250,055 | 3,814,569 |
(1) | On January 19, 2005, Michael Roth succeeded David Bell as Chief Executive Officer. |
(2) | Effective December 31, 2004, Mr. Coughlin resigned his position as Chief Financial Officer. |
(3) | The rules of the SEC deem a person to be the beneficial owner of a security (for purposes of proxy statement disclosure) if that person has or shares either or both voting or dispositive power with respect to such security. Additionally, a security is deemed to be beneficially owned by a person who has the right to acquire beneficial ownership thereof within 60 days, for example through the exercise of a stock option. Common Stock ownership set forth in this table includes unvested shares of restricted stock awarded under any of the 2004 Performance Incentive Plan, 2002 Performance Incentive Plan, the 1997 Performance Incentive Plan, the Interpublic Outside Directors’ Stock Incentive Plan and the Interpublic Non-Management Directors’ Stock Incentive Plan due to the right |
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of the persons identified to exercise voting power with respect to the shares. Except as otherwise indicated, each person has sole voting and sole dispositive power over the shares indicated as beneficially owned. | |
(4) | No individual identified in the table has beneficial ownership of more than 1% of the outstanding shares of Common Stock. The directors and executive officers as a group do not beneficially own more than 1% of the outstanding shares. |
(5) | Includes for Mr. Bell 8,047 shares owned by a family trust and for Mr. Goldstein 800 shares owned by his spouse. |
(6) | No executive officer or director is a beneficial owner of any shares of the Series A Preferred Stock. |
Item 13. | Certain Relationships and Related Transactions |
Item 14. | Principal Accountant Fees and Services |
Fee Category | 2004 | % of Total | 2003 | % of Total | ||||||||||||
Audit Fees | $ | 81,210,000 | 88 | % | $ | 26,540,000 | 67 | % | ||||||||
Audit Related Fees | 3,692,100 | 4 | % | 3,909,000 | 10 | % | ||||||||||
Tax Fees | 7,768,000 | 8 | % | 8,918,900 | 23 | % | ||||||||||
All Other Fees | — | — | ||||||||||||||
Total Fees | $ | 92,670,100 | 100 | % | $ | 39,367,900 | 100 | % |
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Item 15. | Exhibits and Financial Statement Schedules |
1. | Financial Statements: |
2. | Financial Statement Schedules: |
3. Exhibits: |
Exhibit No. | Description | |
3(i) | Restated Certificate of Incorporation of the Registrant, as amended through May 29, 2003, is incorporated by reference to Exhibit 3(i) to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2003 filed with the Securities and Exchange Commission (the “SEC”) on November 14, 2003. | |
3(ii) | By-Laws of the Registrant, as amended and restated through January 18, 2005, are incorporated by reference to Exhibit 3.2 to the Registrant’s Current Report on Form 8-K filed with the SEC on January 21, 2005. | |
3(iii) | Certificate of Designations of 53/8% Series A Senior Mandatory Convertible Preferred Stock of the Registrant, as filed with the Delaware Secretary of State on December 17, 2003 is incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on December 19, 2003. | |
4(iii)(A) | Certificate of Designations of 53/8% Series A Senior Mandatory Convertible Preferred Stock of the Registrant, as filed with the Delaware Secretary of State on December 17, 2003, is incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on December 19, 2003. | |
4(iii)(B) | Senior Debt Indenture, dated as of October 20, 2000 (the “2000 Indenture”), between the Registrant and The Bank of New York, as trustee, is incorporated by reference to Exhibit 99.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on October 24, 2000. |
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Exhibit No. | Description | |
4(iii)(C) | First Supplemental Indenture, dated as of August 22, 2001, to the 2000 Indenture, with respect to the 7.25% Senior Unsecured Notes due 2011 is incorporated by reference to Exhibit 4.2 to the Registrant’s Registration Statement on Form S-4 filed with the SEC on December 4, 2001. | |
4(iii)(D) | Second Supplemental Indenture, dated as of December 14, 2001, to the 2000 Indenture, with respect to the Zero-Coupon Convertible Senior Notes due 2021 is incorporated by reference to Exhibit 4.1 to the Registrant’s Registration Statement on Form S-3 filed with the SEC on April 5, 2002. | |
4(iii)(E) | Third Supplemental Indenture, dated as of March 13, 2003, to the 2000 Indenture, with respect to the 4.50% Convertible Senior Notes due 2023 is incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on March 18, 2003. | |
4(iii)(F) | Fifth Supplemental Indenture, dated as of March 28, 2005, to the 2000 Indenture, as modified by the First Supplemental Indenture, dated as of August 22, 2001, with respect to the 7.25% Senior Unsecured Notes due 2011 is incorporated by reference to Exhibit 4.2 to the Registrant’s Current Report on Form 8-K filed with the SEC on April 1, 2005. | |
4(iii)(G) | Sixth Supplemental Indenture, dated as of March 30, 2005, to the 2000 Indenture, as modified by the Third Supplemental Indenture, dated as of March 13, 2003, with respect to the 4.50% Convertible Senior Notes due 2023 is incorporated by reference to Exhibit 4.3 to the Registrant’s Current Report on Form 8-K filed with the SEC on April 1, 2005. | |
4(iii)(H) | Seventh Supplemental Indenture, dated as of August 11, 2005, to the 2000 Indenture, as modified by the Third Supplemental Indenture, dated as of March 13, 2003, and the Sixth Supplemental Indenture, dated as of March 30, 2005, with respect to the 4.50% Senior Convertible Notes due 2023 is incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on August 15, 2005. | |
4(iii)(I) | Senior Debt Indenture entered into between the Registrant and Suntrust Bank, as Trustee, dated as of November 12, 2004 (the “2004 Indenture”), is incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on November 15, 2004. | |
4(iii)(J) | First Supplemental Indenture, dated as of November 18, 2004, to the 2004 Indenture, with respect to the 5.40% Notes Due 2009 is incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on November 19, 2004. | |
4(iii)(K) | Second Supplemental Indenture, dated as of November 18, 2004, to the 2004 Indenture, with respect to the 6.25% Notes Due 2014 is incorporated by reference to Exhibit 4.2 to the Registrant’s Current Report on Form 8-K filed with the SEC on November 19, 2004. | |
4(iii)(L) | Third Supplemental Indenture, dated as of March 28, 2005, to the 2004 Indenture, as modified by the Second Supplemental Indenture, dated as of November 18, 2004, with respect to the 6.25% Senior Unsecured Notes due 2014 is incorporated by reference to Exhibit 4.4 to the Registrant’s Current Report on Form 8-K filed with the SEC on April 1, 2005. | |
4(iii)(M) | Fourth Supplemental Indenture, dated as of March 29, 2005, to the 2004 Indenture, as modified by the First Supplemental Indenture, dated as of November 18, 2004, with respect to the 5.40% Senior Unsecured Notes due 2009 is incorporated by reference to Exhibit 4.5 to the Registrant’s Current Report on Form 8-K filed with the SEC on April 1, 2005. | |
4(iii)(N) | Fifth Supplemental Indenture, dated as of July 25, 2005, to the 2004 Indenture, with respect to the Floating Rate Notes due 2008 is incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on July 26, 2005. |
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Exhibit No. | Description | |
10(i)(A) | 3-Year Credit Agreement, dated as of May 10, 2004, among the Registrant, the Initial Lenders, Initial Issuing Banks and Swing Line Bank, Named Therein and Citibank, N.A., as Administrative Agent is incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K, filed with the SEC on May 12, 2004. | |
10(i)(B) | Amendment No. 1, dated as of September 29, 2004, to the 3-Year Agreement, dated as of May 10, 2004, among the Registrant, the Initial Lenders Named Therein, and Citibank, N.A., as Administrative Agent is incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K, filed with the SEC on November 5, 2004. | |
10(i)(C) | Amendment No. 2, dated as of March 31, 2005 to the 3-Year Agreement, dated as of May 10, 2004, among the Registrant, the Initial Lenders Named Therein, and Citibank, N.A., as amended by Amendment No. 2, dated as of September 29, 2004 is incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K, filed with the SEC on April 5, 2005. | |
10(i)(D) | Letter agreement, dated as of March 31, 2005, between the Registrant and the lenders party to the 3-Year Credit Agreement, waiving breaches of the 3-Year Credit Agreement is incorporated by reference to Exhibit 10.4 to the Registrant’s Current Report on Form 8-K, filed with the SEC on April 5, 2005. | |
10(i)(E) | Amendment No. 3, dated as of June 22, 2005 to the 3-Year Agreement, dated as of May 10, 2004, among the Registrant, the Initial Lenders Named Therein, and Citibank, N.A., as amended by Amendment No. 1, dated as of September 29, 2004 and Amendment No. 2, dated as of March 31, 2005 is incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K, filed with the SEC on June 28, 2005. | |
10(i)(F) | Letter agreement, dated as of June 22, 2005, between the Registrant and the lenders party to the 3-Year Credit Agreement, waiving breaches of the 3-Year Credit Agreement is incorporated by reference to Exhibit 10.4 to the Registrant’s Current Report on Form 8-K, filed with the SEC on June 28, 2005. | |
10(i)(G) | Amended and Restated 3-year Credit Agreement, dated as of May 10, 2004, amended and restated as of September 27, 2005, among the Registrant, the Initial Lenders Named Therein, and Citibank, N.A., as Administrative Agent.* | |
10(i)(H) | 364-Day Credit Agreement, dated as of May 10, 2004, among the Registrant, the Initial Lenders Named therein and Citibank, N.A., as Administrative Agent is incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed with the SEC on May 12, 2004. | |
10(i)(I) | Amendment No. 1, dated as of September 29, 2004, to the 364-Day Credit Agreement, dated as of May 10, 2004, among the Registrant, the Initial Lenders Named Therein, and Citibank, N.A., as Administrative Agent is incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed with the SEC on November 5, 2004. | |
10(i)(J) | Amendment No. 2, dated as of March 31, 2005, to the 364-Day Credit Agreement, dated as of May 10, 2004, among the Registrant, the Initial Lenders Named Therein, and Citibank, N.A., as Administrative Agent, as amended by Amendment No 1., dated as of September 29, 2004 is incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed with the SEC on April 5, 2005. | |
10(i)(K) | Letter agreement, dated as of March 31, 2005, between the Registrant and the lenders party to the 364-Day Credit Agreement, waiving breaches of the 364-Day Credit Agreement is incorporated by reference to Exhibit 10.3 to the Registrant’s Current Report on Form 8-K, filed with the SEC on April 5, 2005. |
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Exhibit No. | Description | |
10(i)(L) | Amendment No. 3, dated as of June 22, 2005, to the 364-Day Credit Agreement, dated as of May 10, 2004, among the Registrant, the Initial Lenders Named Therein, and Citibank, N.A., as Administrative Agent, as amended by Amendment No. 1, dated as of September 29, 2004 and Amendment No. 2, dated as of March 31, 2005 is incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed with the SEC on June 28, 2005. | |
10(i)(M) | Letter agreement, dated as of June 22, 2005, between the Registrant and the lenders party to the 364-Day Credit Agreement, waiving breaches of the 364-Day Credit Agreement is incorporated by reference to Exhibit 10.3 to the Registrant’s Current Report on Form 8-K, filed with the SEC on June 28, 2005. | |
(i) Michael Roth | ||
10(iii)(A)(1) | Employment Agreement, made as of July 13, 2004, by and between the Registrant and Michael I. Roth, is incorporated by reference to Exhibit 10(iii)(A)(9) to the Registrant’s Report on Form 10-Q for the quarter ended June 30, 2004. | |
10(iii)(A)(2) | Executive Severance Agreement, dated July 13, 2004 and executed as of July 27, 2004, by and between the Registrant and Michael I. Roth, is incorporated by reference to Exhibit 10(iii)(A)(10) to the Registrant’s Report on Form 10-Q for the quarter ended June 30, 2004. | |
10(iii)(A)(3) | Supplemental Employment Agreement, dated as of January 19, 2005, between the Registrant and Michael I. Roth, is incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K, filed with the SEC on January 21, 2005. | |
10(iii)(A)(4) | Supplemental Employment Agreement, dated as of February 14, 2005, between the Registrant and Michael I. Roth, is incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K, filed with the SEC on February 17, 2005. | |
(ii) David A. Bell | ||
10(iii)(A)(5) | David A. Bell Employment Agreement, dated as of January 1, 2000, between True North Communications Inc. and David A. Bell is incorporated by reference to Exhibit 10(b)(iii)(a) to the Registrant’s Report on Form 10-K for the year ended December 31, 2001. | |
10(iii)(A)(6) | Employment Agreement Amendment, dated as of March 1, 2001, to an Employment Agreement, dated as of January 1, 2000, between True North Communications Inc. and David A. Bell is incorporated by reference to Exhibit 10(b)(iii)(b) to the Registrant’s Report on Form 10-K for the year ended December 31, 2001. | |
10(iii)(A)(7) | Employment Agreement Amendment, dated as of June 1, 2001, and signed as of October 1, 2002, between True North Communications Inc. and David A. Bell to an Employment Agreement, dated as of January 1, 2000, as amended, is incorporated by reference to Exhibit 10(b)(i)(a) to the Registrant’s Report on Form 10-K for the year ended December 31, 2002. | |
10(iii)(A)(8) | Supplemental Agreement, made as of February 28, 2003, to an Employment Agreement, made as of January 1, 2000, between the Registrant and David A. Bell, is incorporated by reference to Exhibit 10(iii)(A)(i) to the Registrant’s Report on Form 10-Q for the quarter ended March 31, 2003. | |
10(iii)(A)(9) | Executive Special Benefit Agreement, made as of April 1, 2003, by and between the Registrant and David A. Bell, is incorporated by reference to Exhibit 10(iii)(A)(i)(a) to the Registrant’s Report on Form 10-Q for the quarter ended June 30, 2003. | |
10(iii)(A)(10) | Memorandum dated May 1, 2003, from David A. Bell, providing for Cancellation of Certain Stock Options, is incorporated by reference to Exhibit 10(iii)(A)(I)(b) to the Registrant’s Report on Form 10-Q for the quarter ended June 30, 2003. | |
10(iii)(A)(11) | Employment Agreement, dated as of January 18, 2005, between the Registrant and David A. Bell, is incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed with the SEC on January 21, 2005. |
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Exhibit No. | Description | |
(iii) Nicholas J. Camera | ||
10(iii)(A)(12) | Executive Special Benefit Agreement, dated as of January 1, 1995, between the Registrant and Nicholas J. Camera, is incorporated by reference to Exhibit 10(b)(v)(c) to the Registrant’s Report on Form 10-K for the year ended December 31, 2002. | |
10(iii)(A)(13) | Executive Severance Agreement, dated as of January 1, 1998, between the Registrant and Nicholas J. Camera, is incorporated by reference to Exhibit 10(b)(vi)(a) to the Registrant’s Report on Form 10-K for the year ended December 31, 2001. | |
10(iii)(A)(14) | Employment Agreement, dated as of November 14, 2002, between the Registrant and Nicholas J. Camera, is incorporated by reference to Exhibit 10(b)(v)(a) to the Registrant’s Report on Form 10-K for the year ended December 31, 2002. | |
10(iii)(A)(15) | 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 the Registrant and Nicholas J. Camera, is incorporated by reference to Exhibit 10(iii)(A)(iii)(a) to the Registrant’s Report on Form 10-Q for the quarter ended June 30, 2003. | |
10(iii)(A)(16) | Supplemental Agreement, made as of June 16, 2003, to an Executive Severance Agreement, made as of January 1, 1998, by and between the Registrant and Nicholas J. Camera, is incorporated by reference to Exhibit 10(iii)(A)(iii)(b) to the Registrant’s Report on Form 10-Q for the quarter ended June 30, 2003. | |
(iv) Albert Conte | ||
10(iii)(A)(17) | Employment Agreement, dated as of February 21, 2000, between the Registrant and Albert Conte, is incorporated by reference to Exhibit 10(b)(vii)(a) to the Registrant’s Report on Form 10-K for the year ended December 31, 2001. | |
10(iii)(A)(18) | Supplemental Agreement, made as of June 15, 2004, to an Employment Agreement, made as of February 21, 2000, by and between the Registrant and Albert Conte, is incorporated by reference to Exhibit 10(iii)(A)(3) to the Registrant’s Report on Form 10-Q for the quarter ended June 30, 2004. | |
10(iii)(A)(19) | The Interpublic Capital Accumulation Plan Participation Agreement, effective June 15, 2004, by and between the Registrant and Albert Conte, is incorporated by reference to Exhibit 10(iii)(A)(4) to the Registrant’s Report on Form 10-Q for the quarter ended June 30, 2004. | |
10(iii)(A)(20) | Executive Special Benefit Agreement, made as of January 1, 2002 and executed as of June 26, 2004, by and between the Registrant and Albert Conte, is incorporated by reference to Exhibit 10(iii)(A)(5) to the Registrant’s Report on Form 10-Q for the quarter ended June 30, 2004. | |
(v) Nicholas S. Cyprus | ||
10(iii)(A)(21) | Employment Agreement, made as of May 2004, by and between the Registrant and Nicholas S. Cyprus, is incorporated by reference to Exhibit 10(iii)(A)(6) to the Registrant’s Report on Form 10-Q for the quarter ended June 30, 2004. | |
10(iii)(A)(22) | Executive Severance Agreement, made as of May 24, 2004, by and between the Registrant and Nicholas S. Cyprus, is incorporated by reference to Exhibit 10(iii)(A)(7) to the Registrant’s Report on Form 10-Q for the quarter ended June 30, 2004. | |
10(iii)(A)(23) | The Interpublic Capital Accumulation Plan Participation Agreement, effective May 15, 2004, by and between the Registrant and Nicholas S. Cyprus, is incorporated by reference to Exhibit 10(iii)(A)(8) to the Registrant’s Report on Form 10-Q for the quarter ended June 30, 2004. |
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Exhibit No. | Description | |
(vi) Thomas Dowling | ||
10(iii)(A)(24) | Employment Agreement, dated as of November 1999, between the Registrant and Thomas Dowling, is incorporated by reference to Exhibit 10(b)(iii)(A)(1) to the Registrant’s Report on Form 10-Q for the quarter ended March 31, 2002. | |
10(iii)(A)(25) | Executive Special Benefit Agreement, dated as of February 1, 2000, between the Registrant and Thomas Dowling, is incorporated by reference to Exhibit 10(b)(viii)(a) to the Registrant’s Report on Form 10-K for the year ended December 31, 2001. | |
10(iii)(A)(26) | Executive Special Benefit Agreement, dated as of February 1, 2001, between the Registrant and Thomas Dowling, is incorporated by reference to Exhibit 10(b)(viii)(b) to the Registrant’s Report on Form 10-K for the year ended December 31, 2001. | |
10(iii)(A)(27) | Supplemental Agreement, dated as of October 1, 2002, to an Employment Agreement, dated as of November 1999, between the Registrant and Thomas Dowling, is incorporated by reference to Exhibit 10(b)(vii)(b) to the Registrant’s Report on Form 10-K for the year ended December 31, 2002. | |
10(iii)(A)(28) | Supplemental Agreement, dated as of November 14, 2002, to an Employment Agreement, dated as of November 1999, between the Registrant and Thomas Dowling, is incorporated by reference to Exhibit 10(b)(vii)(a) to the Registrant’s Report on Form 10-K for the year ended December 31, 2002. | |
10(iii)(A)(29) | Executive Severance Agreement, dated November 14, 2002, between the Registrant and Thomas Dowling, is incorporated by reference to Exhibit 10(iii)(A)(vii) to the Registrant’s Report on Form 10-Q for the quarter ended March 31, 2003. | |
(vii) Steven Gatfield | ||
10(iii)(A)(30) | Employment Agreement, made as of February 2, 2004, by and between the Registrant and Steve Gatfield, is incorporated by reference to Exhibit 10(iii)(A)(1) to the Registrant’s Report on Form 10-Q for the quarter ended March 31, 2004. | |
10(iii)(A)(31) | Participation Agreement under The Interpublic Senior Executive Retirement Income Plan, dated as of January 30, 2004, between the Registrant and Steve Gatfield, is incorporated by reference to Exhibit 10(iii)(A)(2) to the Registrant’s Report on Form 10-Q for the quarter ended March 31, 2004. | |
10(iii)(A)(32) | Executive Severance Agreement, made as of April 1, 2004, by and between the Registrant and Steve Gatfield, is incorporated by reference to Exhibit 10(iii)(A)(3) to the Registrant’s Report on Form 10-Q for the quarter ended March 31, 2004. | |
(viii) Philippe Krakowsky | ||
10(iii)(A)(33) | Employment Agreement, dated as of January 28, 2002, between the Registrant and Philippe Krakowsky, is incorporated by reference to Exhibit 10(iii)(A)(2) to the Registrant’s Report on Form 10-Q for the quarter ended March 31, 2002. | |
10(iii)(A)(34) | Executive Special Benefit Agreement, dated as of February 1, 2002, and signed as of July 1, 2002, between the Registrant and Philippe Krakowsky, is incorporated by reference to Exhibit 10(iii)(A)(v) to the Registrant’s Report on Form 10-Q for the quarter ended September 30, 2002. | |
10(iii)(A)(35) | Special Deferred Compensation Agreement, dated as of April 1, 2002, and signed as of July 1, 2002, between the Registrant and Philippe Krakowsky, is incorporated by reference to Exhibit 10(iii)(A)(iv) to the Registrant’s Report on Form 10-Q for the quarter ended September 30, 2002. | |
10(iii)(A)(36) | Executive Severance Agreement, dated September 13, 2002, between the Registrant and Philippe Krakowsky, is incorporated by reference to Exhibit 10(iii)(A)(vi) to the Registrant’s Report on Form 10-Q for the quarter ended September 30, 2002. |
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Exhibit No. | Description | |
10(iii)(A)(37) | Executive Special Benefit Agreement, dated September 30, 2002, between the Registrant and Philippe Krakowsky, is incorporated by reference to Exhibit 10(iii)(A)(vi) to the Registrant’s Report on Form 10-Q for the quarter ended September 30, 2002. | |
10(iii)(A)(38) | Supplemental Agreement, made as of April 8, 2003, to an Employment Agreement, made as of January 28, 2002, by and between the Registrant and Philippe Krakowsky, is incorporated by reference to Exhibit 10(iii)(A)(viii)(a) to the Registrant’s Report on Form 10-Q for the quarter ended June 30, 2003. | |
10(iii)(A)(39) | Supplemental Agreement, made as of June 16, 2003, to an Executive Severance Agreement, made as of November 14, 2002, by and between the Registrant and Philippe Krakowsky, is incorporated by reference to Exhibit 10(iii)(A)(viii)(b) to the Registrant’s Report on Form 10-Q for the quarter ended June 30, 2003. | |
(ix) Robert J. Thompson | ||
10(iii)(A)(40) | Employment Agreement, dated as of October 1, 2003, between the Registrant and Robert J. Thompson, is incorporated by reference to Exhibit 10(b)(vii)(a) to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2003. | |
10(iii)(A)(41) | Capital Accumulation Plan Participation Agreement, entered into as of November 12, 2003, between the Registrant and Robert J. Thompson, is incorporated by reference to Exhibit 10(b)(vii)(b) to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2003. | |
(x) Frank Mergenthaler | ||
10(iii)(A)(42) | Employment Agreement, made as of July 13, 2005, between the Registrant and Frank Mergenthaler is incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed with the SEC on July 19, 2005. | |
10(iii)(A)(43) | Executive Severance Agreement, made as of July 13, 2005, between the Registrant and Frank Mergenthaler is incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed with the SEC on July 19, 2005. | |
(xi) Timothy A. Sompolski | ||
10(iii)(A)(44) | Employment Agreement, made as of July 6, 2004, by and between the Registrant and Timothy Sompolski, is incorporated by reference to Exhibit 10(iii)(A)(11) to the Registrant’s Report on Form 10-Q for the quarter ended March 31, 2004. | |
10(iii)(A)(45) | Executive Severance Agreement, made as of July 6, 2004, by and between the Registrant and Timothy Sompolski, is incorporated by reference to Exhibit 10(iii)(A)(12) to the Registrant’s Report on Form 10-Q for the quarter ended March 31, 2004. | |
10(iii)(A)(46) | The Interpublic Capital Accumulation Plan Participation Agreement, effective July 6, 2004, by and between the Registrant and Timothy Sompolski, is incorporated by reference to Exhibit 10(iii)(A)(13) to the Registrant’s Report on Form 10-Q for the quarter ended June 30, 2004. | |
(xii) John J. Dooner, Jr. | ||
10(iii)(A)(47) | Executive Special Benefit Agreement, dated as of July 1, 1986, between the Registrant and John J. Dooner, Jr., is incorporated by reference to Exhibit 10(e) to the Registrant’s Report on Form 10-K for the year ended December 31, 1995. | |
10(iii)(A)(48) | Executive Severance Agreement, dated as of August 10, 1987, between the Registrant and John J. Dooner, Jr., is incorporated by reference to Exhibit 10(h) to the Registrant’s Report on Form 10-K for the year ended December 31, 1995. | |
10(iii)(A)(49) | Supplemental Agreement, dated as of May 23, 1990, to an Executive Special Benefit Agreement, dated as of July 1, 1986, between the Registrant and John J. Dooner, Jr., is incorporated by reference to Exhibit 10(l) to the Registrant’s Report on Form 10-K for the year ended December 31, 1995. |
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Exhibit No. | Description | |
10(iii)(A)(50) | Executive Special Benefit Agreement, dated as of, July 1, 1992, between the Registrant and John J. Dooner, Jr., is incorporated by reference to Exhibit 10(q) to the Registrant’s Report on Form 10-K for the year ended December 31, 1995. | |
10(iii)(A)(51) | Supplemental Agreement, dated as of August 10, 1992, to an Executive Severance Agreement, dated as of August 10, 1987, between the Registrant and John J. Dooner, Jr., is incorporated by reference to Exhibit 10(p) to the Registrant’s Report on Form 10-K for the year ended December 31, 1995. | |
10(iii)(A)(52) | Employment Agreement, dated as of January 1, 1994, between the Registrant and John J. Dooner, Jr., is incorporated by reference to Exhibit 10(r) to the Registrant’s Report on Form 10-K for the year ended December 31, 1995. | |
10(iii)(A)(53) | Executive Special Benefit Agreement, dated as of June 1, 1994, between the Registrant and John J. Dooner, Jr., is incorporated by reference to Exhibit 10(s) to the Registrant’s Report on Form 10-K for the year ended December 31, 1995. | |
10(iii)(A)(54) | Supplemental Agreement, dated as of July 1, 1995, to an Employment Agreement between the Registrant and John J. Dooner, Jr., dated as of January 1, 1994, is incorporated by reference to Exhibit 10(B) to the Registrant’s Report on Form 10-Q for the quarter ended September 30, 1995. | |
10(iii)(A)(55) | Supplemental Agreement, dated as of July 1, 1995, to an Employment Agreement, dated as of January 1, 1994, between the Registrant and John J. Dooner, Jr., is incorporated by reference to Exhibit 10(t) to the Registrant’s Report on Form 10-K for the year ended December 31, 1995. | |
10(iii)(A)(56) | Supplemental Agreement, dated as of September 1, 1997, to an Employment Agreement between the Registrant and John J. Dooner, Jr., is incorporated by reference to Exhibit 10(k) to the Registrant’s Report on Form 10-Q for the quarter ended September 30, 1997. | |
10(iii)(A)(57) | Executive Severance Agreement, dated January 1, 1998, between the Registrant and John J. Dooner, Jr., is incorporated by reference to Exhibit 10(b) to the Registrant’s Report on Form 10-Q for the quarter ended March 31, 1998. | |
10(iii)(A)(58) | Supplemental Agreement, dated as of January 1, 1999, to an Employment Agreement dated as of January 1, 1994, between the Registrant and John J. Dooner, Jr., is incorporated by reference to Exhibit 10(e) to the Registrant’s Report on Form 10-Q for the quarter ended March 31, 1999. | |
10(iii)(A)(59) | Supplemental Agreement, dated as of April 1, 2000, to an Employment Agreement between the Registrant and John J. Dooner, Jr., is incorporated by reference to Exhibit 10(b) to the Registrant’s Report on Form 10-Q for the quarter ended March 31, 2000. | |
10(iii)(A)(60) | Executive Special Benefit Agreement, dated as of May 20, 2002, between the Registrant and John J. Dooner, Jr., signed as of November 11, 2002, is incorporated by reference to Exhibit 10(b)(xv)(c) to the Registrant’s Report on Form 10-K for the year ended December 31, 2002. | |
10(iii)(A)(61) | Supplemental Agreement, dated as of November 7, 2002, to an Employment Agreement between the Registrant and John J. Dooner, Jr., is incorporated by reference to Exhibit 10(b)(xv)(a) to the Registrant’s Report on Form 10-K for the year ended December 31, 2002. | |
10(iii)(A)(62) | Supplemental Agreement, dated as of November 7, 2002, to an Executive Special Benefit Agreement between the Registrant and John J. Dooner, Jr., is incorporated by reference to Exhibit 10(b)(xv)(b) to the Registrant’s Report on Form 10-K for the year ended December 31, 2002. | |
10(iii)(A)(63) | 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 the Registrant and John J. Dooner, Jr., is incorporated by reference to Exhibit 10(iii)(A)(iv)(b) to the Registrant’s Report on Form 10-Q for the quarter ended June 30, 2003. |
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Exhibit No. | Description | |
10(iii)(A)(64) | Supplemental Agreement, made as of March 31, 2003, to an Employment Agreement made as of January 1, 1994, as amended between the Registrant and John J. Dooner, Jr., is incorporated by reference to Exhibit 10(iii)(A)(v) to the Registrant’s Report on Form 10-Q for the quarter ended March 31, 2003. | |
10(iii)(A)(65) | 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 the Registrant and John J. Dooner, Jr., is incorporated by reference to Exhibit 10(iii)(A)(iv)(a) to the Registrant’s Report on Form 10-Q for the quarter ended June 30, 2003. | |
10(iii)(A)(66) | Letter Agreement, dated May 8, 2003, between the Registrant and John J. Dooner, Jr., providing for cancellation of certain Stock Options, is incorporated by reference to Exhibit 10(iii)(A)(iv)(c) to the Registrant’s Report on Form 10-Q for the quarter ended June 30, 2003. | |
10(iii)(A)(67) | Supplemental Agreement dated as of November 12, 2003, to an Employment Agreement between the Registrant and John J. Dooner, Jr., is incorporated by reference to Exhibit 10(b)(viii)(u) to the Registrant’s Report on Form 10-K for the year ended December 31, 2003. | |
(xiii) Jill Considine | ||
10(iii)(A)(68) | Deferred Compensation Agreement, dated as of April 1, 2002, between the Registrant and Jill Considine, is incorporated by reference to Exhibit 10(c) to the Registrant’s Report on Form 10-Q for the quarter ended June 30, 2002. | |
(xiv) Richard A. Goldstein | ||
10(iii)(A)(69) | Richard A Goldstein Deferred Compensation Agreement, dated as of June 1, 2001, between the Registrant and Richard A. Goldstein, is incorporated by reference to Exhibit 10(c) to Registrant’s Report on Form 10-Q for the quarter ended June 30, 2001. | |
(xv) Christopher J. Coughlin | ||
10(iii)(A)(70) | Employment Agreement, made as of May 6, 2003, by and between the Registrant and Christopher J. Coughlin, is incorporated by reference to Exhibit 10(iii)(A)(ii) to the Registrant’s Report on Form 10-Q for the quarter ended March 31, 2003. | |
10(iii)(A)(71) | Executive Special Benefit Agreement, made as of June 16, 2003, by and between the Registrant and Christopher J. Coughlin, is incorporated by reference to Exhibit 10(iii)(A)(iii) to the Registrant’s Report on Form 10-Q for the quarter ended March 31, 2003. | |
10(iii)(A)(72) | Executive Severance Agreement, made as of June 16, 2003, by and between the Registrant and Christopher J. Coughlin, is incorporated by reference to Exhibit 10(iii)(A)(iv) to the Registrant’s Report on Form 10-Q for the quarter ended March 31, 2003. | |
10(iii)(A)(73) | Confidential Separation Agreement and General Release, between the Registrant and Christopher J. Coughlin is incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed with the SEC on January 6, 2005. | |
(xvi) Brian Brooks | ||
10(iii)(A)(74) | Executive Severance Agreement, dated November 8, 2002, between the Registrant and Brian Brooks, is incorporated by reference to Exhibit 10(iii)(A)(ix) to the Registrant’s Report on Form 10-Q for the quarter ended March 31, 2003. | |
10(iii)(A)(75) | Employment Agreement, dated as of November 18, 2002, between the Registrant and Brian Brooks, is incorporated by reference to Exhibit 10(b)(viii)(a) to the Registrant’s Report on Form 10-K for the year ended December 31, 2002. | |
10(iii)(A)(76) | Supplemental Agreement, made as of April 7, 2003, to an Employment Agreement, dated as of November 18, 2002, between the Registrant and Brian Brooks, is incorporated by reference to Exhibit 10(iii)(A)(ii)(a) to the Registrant’s Report on Form 10-Q for the quarter ended June 30, 2003. |
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Exhibit No. | Description | |
10(iii)(A)(77) | Supplemental Agreement, made as of May 20, 2003, to an Employment Agreement, dated as of November 18, 2002, between the Registrant and Brian Brooks, is incorporated by reference to Exhibit 10(iii)(A)(ii)(b) to the Registrant’s Report on Form 10-Q for the quarter ended June 30, 2003. | |
10(iii)(A)(78) | Supplemental Agreement, made as of June 16, 2003, to an Executive Severance Agreement, dated as of November 14, 2002, between the Registrant and Brian Brooks, is incorporated by reference to Exhibit 10(iii)(A)(ii)(c) to the Registrant’s Report on Form 10-Q for the quarter ended June 30, 2003. | |
10(iii)(A)(79) | Senior Executive Retirement Income Plan Participation Agreement, effective as of November 10, 2003, between the Registrant and Brian Brooks, is incorporated by reference to Exhibit 10(b)(xi)(g) to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2003. | |
10(iii)(A)(80) | Supplemental Agreement, made as of November 10, 2003, to an Employment Agreement, dated as of November 18, 2002, between the Registrant and Brian Brooks, is incorporated by reference to Exhibit 10(b)(xi)(h) to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2003. | |
10(iii)(A)(81) | Confidential Separation Agreement and General Release, between the Registrant and Brian Brooks, is incorporated by reference to Exhibit 10(b)(xi)(i) to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2003. | |
10(iii)(A)(82) | Supplemental Agreement, made as of January 31, 2005, to a Confidential Agreement and General Release, made as of February 27, 2004, by and between the Registrant and Brian J. Brooks.* | |
(xvii) Gunnar Wilmot | ||
10(iii)(A)(83) | Executive Special Benefit Agreement, dated as of January 1, 1990, between the Registrant and Gunnar Wilmot, is incorporated by reference to Exhibit 10(b)(x)(d) to the Registrant’s Report on Form 10-K for the year ended December 31, 2001. | |
10(iii)(A)(84) | Supplemental Agreement, dated as of May 23, 1990, to an Executive Special Benefit Agreement, dated as of January 1, 1990, between the Registrant and Gunnar Wilmot, is incorporated by reference to Exhibit 10(b)(x)(c) to the Registrant’s Report on Form 10-K for the year ended December 31, 2001. | |
10(iii)(A)(85) | Executive Special Benefit Agreement, dated as of October 1, 1996, between the Registrant and Gunnar Wilmot, is incorporated by reference to Exhibit 10(b)(x)(b) to the Registrant’s Report on Form 10-K for the year ended December 31, 2001. | |
10(iii)(A)(86) | Executive Special Benefit Agreement, dated as of April 1, 1999, between the Registrant and Gunnar Wilmot, is incorporated by reference to Exhibit 10(b)(x)(a) to the Registrant’s Report on Form 10-K for the year ended December 31, 2001. | |
10(iii)(A)(87) | Executive Special Benefit Agreement, dated as of January 1, 2002, between the Registrant and Gunnar Wilmot, is incorporated by reference to Exhibit 10(b)(x)(a) to the Registrant’s Report on Form 10-K for the year ended December 31, 2002. | |
10(iii)(A)(88) | Letter Agreement, dated June 27, 2003, between the Registrant and Gunnar Wilmot providing for the Cancellation of Certain Stock Options is incorporated by reference to Exhibit 10(iii)(A)(xi) to the Registrant’s Report on Form 10-Q for the quarter ended June 30, 2003. | |
10(iii)(A)(89) | Executive Special Benefit Agreement, dated as of May 16, 2003, and signed as of November 6, 2003, between the Registrant and Gunnar Wilmot, is incorporated by reference to Exhibit 10(b)(xiii)(g) to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2003. | |
10(iii)(A)(90) | Trust Agreement, dated as of June 1, 1990, between the Registrant, Lintas Campbell-Ewald Company, McCann-Erickson USA, Inc., McCann-Erickson Marketing, Inc., Lintas, Inc. and Chemical Bank, as Trustee, is incorporated by reference to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 1990. |
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Exhibit No. | Description | |
10(iii)(A)(91) | The Stock Option Plan (1988) and the Achievement Stock Award Plan of the Registrant are incorporated by reference to Appendices C and D of the Prospectus, dated May 4, 1989, forming part of its Registration Statement on Form S-8 (No. 33-28143). | |
10(iii)(A)(92) | The Management Incentive Compensation Plan of the Registrant is incorporated by reference to the Registrant’s Report on Form 10-Q for the quarter ended June 30, 1995. | |
10(iii)(A)(93) | The 1986 Stock Incentive Plan of the Registrant is incorporated by reference to Registrant’s Annual Report on Form 10-K for the year ended December 31, 1993. | |
10(iii)(A)(94) | The 1986 United Kingdom Stock Option Plan of the Registrant is incorporated by reference to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 1992. | |
10(iii)(A)(95) | The Employee Stock Purchase Plan (1985) of the Registrant, as amended, is incorporated by reference to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 1993. | |
10(iii)(A)(96) | The Long-Term Performance Incentive Plan of the Registrant is incorporated by reference to Appendix A of the Prospectus dated December 12, 1988 forming part of its Registration Statement on Form S-8 (No. 33-25555). | |
10(iii)(A)(97) | Resolution of the Board of Directors adopted on February 16, 1993, amending the Long-Term Performance Incentive Plan is incorporated by reference to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 1992. | |
10(iii)(A)(98) | Resolution of the Board of Directors adopted on May 16, 1989 amending the Long-Term Performance Incentive Plan is incorporated by reference to the Registrant’s Report on Form 10-K for the year ended December 31, 1989. | |
10(iii)(A)(99) | The 1996 Stock Incentive Plan of the Registrant is incorporated by reference to the Registrant’s Report on Form 10-Q for the quarter ended June 30, 1996. | |
10(iii)(A)(100) | The 1997 Performance Incentive Plan of the Registrant is incorporated by reference to the Registrant’s Report on Form 10-Q for the quarter ended June 30, 1997. | |
10(iii)(A)(101) | True North Communications Inc. Stock Option Plan is incorporated by reference to Exhibit 4.5 of Post-Effective Amendment No. 1 on Form S-8 to Registration Statement on Form S-4 (Registration No. 333-59254). | |
10(iii)(A)(102) | Bozell, Jacobs, Kenyon & Eckhardt, Inc. Stock Option Plan is incorporated by reference to Exhibit 4.5 of Post-Effective Amendment No. 1 on Form S-8 to Registration Statement on Form S-4 (Registration No. 333-59254). | |
10(iii)(A)(103) | True North Communications Inc. Deferred Compensation Plan is incorporated by reference to Exhibit (c)(xiv) of the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2002. | |
10(iii)(A)(104) | Resolution of the Board of Directors of True North Communications Inc. adopted on March 1, 2002 amending the Deferred Compensation Plan is incorporated by reference to Exhibit (c)(xv) of the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2002. | |
10(iii)(A)(105) | The 2002 Performance Incentive Plan of the Registrant is incorporated by reference to Appendix A to the Registrant’s Proxy Statement on Schedule 14A, filed April 17, 2002. | |
10(iii)(A)(106) | The Interpublic Senior Executive Retirement Income Plan is incorporated by reference to the Registrant’s Report on Form 10-Q for the quarter ended September 30, 2003. | |
10(iii)(A)(107) | The Interpublic Capital Accumulation Plan is incorporated by reference to the Registrant’s Report on Form 10-Q for the quarter ended September 30, 2003. | |
10(iii)(A)(108) | The Interpublic Outside Directors Stock Incentive Plan of Interpublic, as amended through August 1, 2003, is incorporated by reference to the Registrant’s Report on Form 10-Q for the quarter ended September 30, 2003. |
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Exhibit No. | Description | |
10(iii)(A)(109) | 2004 Performance Incentive Plan of the Registrant is incorporated by reference to Appendix B to the Registrant’s Proxy Statement on Schedule 14A, filed with the SEC on April 23, 2004. | |
10(iii)(A)(110) | The Interpublic Non-Management Directors’ Stock Incentive Plan is incorporated by reference to Appendix C to the Registrant’s Proxy Statement on Schedule 14A, filed with the SEC on April 23, 2004. | |
10(iii)(A)(111) | The Interpublic Senior Executive Retirement Income Plan — Form of Participation Agreement is incorporated by reference to Exhibit 10.7 of the Registrant’s Current Report on Form 8-K, filed with the SEC on October 27, 2004. | |
10(iii)(A)(112) | The Interpublic Capital Accumulation Plan — Form of Participation Agreement is incorporated by reference to Exhibit 10.8 of the Registrant’s Current Report on Form 8-K, filed with the SEC on October 27, 2004. | |
10(iii)(A)(113) | The Interpublic Group of Companies, Inc. 2004 Performance Incentive Plan (the “PIP”) — Form of Instrument of Restricted Stock is incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K, filed with the SEC on October 27, 2004. | |
10(iii)(A)(114) | PIP — Form of Instrument of Restricted Stock Units is incorporated by reference to Exhibit 10.3 to the Registrant’s Current Report on Form 8-K, filed with the SEC on October 27, 2004. | |
10(iii)(A)(115) | PIP — Form of Option Certificate is incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed with the SEC on October 27, 2004. | |
10(iii)(A)(116) | Interpublic’s Non-Management Directors’ Stock Incentive Plan (the “Non-Management Directors’ Plan”) — Form of Instrument of Restricted Shares is incorporated by reference to Exhibit 10.5 to the Registrant’s Current Report on Form 8-K filed with the SEC on October 27, 2004. | |
10(iii)(A)(117) | The Non-Management Directors’ Plan — Form of Instrument of Restricted Share Units is incorporated by reference to Exhibit 10.6 of the Registrant’s Current Report on Form 8-K, filed with the SEC on October 27, 2004. | |
10(iii)(A)(118) | The Non-Management Directors’ Plan — Form of Plan Option Certificate is incorporated by reference to Exhibit 10.4 of the Registrant’s Current Report on Form 8-K, filed with the SEC on October 27, 2004. | |
(21) | Subsidiaries of the Registrant.* | |
(24) | Power of Attorney to sign Form 10-K and resolution of Board of Directors re Power of Attorney.* | |
(31.1) | Certification dated as of October 17, 2005 and executed by Michael I. Roth, under Section 302 of the Sarbanes-Oxley Act of 2002 (“S-OX”).** | |
(31.2) | Certification dated as of October 17, 2005 and executed by Frank Mergenthaler, under Section 302 of S-OX.** | |
(32) | Certification dated as of October 17, 2005 and executed by Michael I. Roth and Frank Mergenthaler, furnished pursuant to Section 906 of S-OX.** |
* | Previously filed with the Company’s Annual Report on Form 10-K for the year ended December 31, 2004, filed September 30, 2005. |
** | Filed herewith. |
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THE INTERPUBLIC GROUP OF COMPANIES, INC. | |
(Registrant) |
By: | /s/ Michael I. Roth* |
Michael I. Roth | |
Chairman of the Board | |
and Chief Executive Officer |
Name | Title | Date | ||||
/s/ Michael I. Roth* | Chairman of the Board, and Chief Executive Officer (Principal Executive Officer) | October 17, 2005 | ||||
/s/ Frank Mergenthaler* | Executive Vice President, Chief Financial Officer (Principal Financial Officer) | October 17, 2005 | ||||
/s/ David A. Bell* | Director | October 17, 2005 | ||||
/s/ Frank J. Borelli* | Director | October 17, 2005 | ||||
/s/ Reginald K. Brack* | Director | October 17, 2005 | ||||
/s/ Jill M. Considine* | Director | October 17, 2005 | ||||
/s/ John J. Dooner, Jr.* | Director | October 17, 2005 | ||||
/s/ Richard A. Goldstein* | Director | October 17, 2005 | ||||
/s/ H. John Greeniaus* | Director | October 17, 2005 |
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Name | Title | Date | ||||
/s/ J. Phillip Samper* | Director | October 17, 2005 | ||||
/s/ David M. Thomas* | Director | October 17, 2005 | ||||
/s/ Nicholas S. Cyprus* | Senior Vice President and Controller (Principal Accounting Officer) | October 17, 2005 | ||||
*by | /s/ Nicholas J. Camera | Attorney-in-Fact | October 17, 2005 |
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Exhibit No. | Description | |
3(i) | Restated Certificate of Incorporation of the Registrant, as amended through May 29, 2003, is incorporated by reference to Exhibit 3(i) to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2003 filed with the Securities and Exchange Commission (the “SEC”) on November 14, 2003. | |
3(ii) | By-Laws of the Registrant, as amended and restated through January 18, 2005, are incorporated by reference to Exhibit 3.2 to the Registrant’s Current Report on Form 8-K filed with the SEC on January 21, 2005. | |
3(iii) | Certificate of Designations of 53/8% Series A Senior Mandatory Convertible Preferred Stock of the Registrant, as filed with the Delaware Secretary of State on December 17, 2003 is incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on December 19, 2003. | |
4(iii)(A) | Certificate of Designations of 53/8% Series A Senior Mandatory Convertible Preferred Stock of the Registrant, as filed with the Delaware Secretary of State on December 17, 2003, is incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on December 19, 2003. | |
4(iii)(B) | Senior Debt Indenture, dated as of October 20, 2000 (the “2000 Indenture”), between the Registrant and The Bank of New York, as trustee, is incorporated by reference to Exhibit 99.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on October 24, 2000. | |
4(iii)(C) | First Supplemental Indenture, dated as of August 22, 2001, to the 2000 Indenture, with respect to the 7.25% Senior Unsecured Notes due 2011 is incorporated by reference to Exhibit 4.2 to the Registrant’s Registration Statement on Form S-4 filed with the SEC on December 4, 2001. | |
4(iii)(D) | Second Supplemental Indenture, dated as of December 14, 2001, to the 2000 Indenture, with respect to the Zero-Coupon Convertible Senior Notes due 2021 is incorporated by reference to Exhibit 4.1 to the Registrant’s Registration Statement on Form S-3 filed with the SEC on April 5, 2002. | |
4(iii)(E) | Third Supplemental Indenture, dated as of March 13, 2003, to the 2000 Indenture, with respect to the 4.50% Convertible Senior Notes due 2023 is incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on March 18, 2003. | |
4(iii)(F) | Fifth Supplemental Indenture, dated as of March 28, 2005, to the 2000 Indenture, as modified by the First Supplemental Indenture, dated as of August 22, 2001, with respect to the 7.25% Senior Unsecured Notes due 2011 is incorporated by reference to Exhibit 4.2 to the Registrant’s Current Report on Form 8-K filed with the SEC on April 1, 2005. | |
4(iii)(G) | Sixth Supplemental Indenture, dated as of March 30, 2005, to the 2000 Indenture, as modified by the Third Supplemental Indenture, dated as of March 13, 2003, with respect to the 4.50% Convertible Senior Notes due 2023 is incorporated by reference to Exhibit 4.3 to the Registrant’s Current Report on Form 8-K filed with the SEC on April 1, 2005. | |
4(iii)(H) | Seventh Supplemental Indenture, dated as of August 11, 2005, to the 2000 Indenture, as modified by the Third Supplemental Indenture, dated as of March 13, 2003, and the Sixth Supplemental Indenture, dated as of March 30, 2005, with respect to the 4.50% Senior Convertible Notes due 2023 is incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on August 15, 2005. | |
4(iii)(I) | Senior Debt Indenture entered into between the Registrant and Suntrust Bank, as Trustee, dated as of November 12, 2004 (the “2004 Indenture”), is incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on November 15, 2004. |
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Exhibit No. | Description | |
4(iii)(J) | First Supplemental Indenture, dated as of November 18, 2004, to the 2004 Indenture, with respect to the 5.40% Notes Due 2009 is incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on November 19, 2004. | |
4(iii)(K) | Second Supplemental Indenture, dated as of November 18, 2004, to the 2004 Indenture, with respect to the 6.25% Notes Due 2014 is incorporated by reference to Exhibit 4.2 to the Registrant’s Current Report on Form 8-K filed with the SEC on November 19, 2004. | |
4(iii)(L) | Third Supplemental Indenture, dated as of March 28, 2005, to the 2004 Indenture, as modified by the Second Supplemental Indenture, dated as of November 18, 2004, with respect to the 6.25% Senior Unsecured Notes due 2014 is incorporated by reference to Exhibit 4.4 to the Registrant’s Current Report on Form 8-K filed with the SEC on April 1, 2005. | |
4(iii)(M) | Fourth Supplemental Indenture, dated as of March 29, 2005, to the 2004 Indenture, as modified by the First Supplemental Indenture, dated as of November 18, 2004, with respect to the 5.40% Senior Unsecured Notes due 2009 is incorporated by reference to Exhibit 4.5 to the Registrant’s Current Report on Form 8-K filed with the SEC on April 1, 2005. | |
4(iii)(N) | Fifth Supplemental Indenture, dated as of July 25, 2005, to the 2004 Indenture, with respect to the Floating Rate Notes due 2008 is incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on July 26, 2005. | |
10(i)(A) | 3-Year Credit Agreement, dated as of May 10, 2004, among the Registrant, the Initial Lenders, Initial Issuing Banks and Swing Line Bank, Named Therein and Citibank, N.A., as Administrative Agent is incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K, filed with the SEC on May 12, 2004. | |
10(i)(B) | Amendment No. 1, dated as of September 29, 2004, to the 3-Year Agreement, dated as of May 10, 2004, among the Registrant, the Initial Lenders Named Therein, and Citibank, N.A., as Administrative Agent is incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K, filed with the SEC on November 5, 2004. | |
10(i)(C) | Amendment No. 2, dated as of March 31, 2005 to the 3-Year Agreement, dated as of May 10, 2004, among the Registrant, the Initial Lenders Named Therein, and Citibank, N.A., as amended by Amendment No. 2, dated as of September 29, 2004 is incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K, filed with the SEC on April 5, 2005. | |
10(i)(D) | Letter agreement, dated as of March 31, 2005, between the Registrant and the lenders party to the 3-Year Credit Agreement, waiving breaches of the 3-Year Credit Agreement is incorporated by reference to Exhibit 10.4 to the Registrant’s Current Report on Form 8-K, filed with the SEC on April 5, 2005. | |
10(i)(E) | Amendment No. 3, dated as of June 22, 2005 to the 3-Year Agreement, dated as of May 10, 2004, among the Registrant, the Initial Lenders Named Therein, and Citibank, N.A., as amended by Amendment No. 1, dated as of September 29, 2004 and Amendment No. 2, dated as of March 31, 2005 is incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K, filed with the SEC on June 28, 2005. | |
10(i)(F) | Letter agreement, dated as of June 22, 2005, between the Registrant and the lenders party to the 3-Year Credit Agreement, waiving breaches of the 3-Year Credit Agreement is incorporated by reference to Exhibit 10.4 to the Registrant’s Current Report on Form 8-K, filed with the SEC on June 28, 2005. | |
10(i)(G) | Amended and Restated 3-year Credit Agreement, dated as of May 10, 2004, amended and restated as of September 27, 2005, among the Registrant, the Initial Lenders Named Therein, and Citibank, N.A., as Administrative Agent.* |
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Exhibit No. | Description | |
10(i)(H) | 364-Day Credit Agreement, dated as of May 10, 2004, among the Registrant, the Initial Lenders Named therein and Citibank, N.A., as Administrative Agent is incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed with the SEC on May 12, 2004. | |
10(i)(I) | Amendment No. 1, dated as of September 29, 2004, to the 364-Day Credit Agreement, dated as of May 10, 2004, among the Registrant, the Initial Lenders Named Therein, and Citibank, N.A., as Administrative Agent is incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed with the SEC on November 5, 2004. | |
10(i)(J) | Amendment No. 2, dated as of March 31, 2005, to the 364-Day Credit Agreement, dated as of May 10, 2004, among the Registrant, the Initial Lenders Named Therein, and Citibank, N.A., as Administrative Agent, as amended by Amendment No 1., dated as of September 29, 2004 is incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed with the SEC on April 5, 2005. | |
10(i)(K) | Letter agreement, dated as of March 31, 2005, between the Registrant and the lenders party to the 364-Day Credit Agreement, waiving breaches of the 364-Day Credit Agreement is incorporated by reference to Exhibit 10.3 to the Registrant’s Current Report on Form 8-K, filed with the SEC on April 5, 2005. | |
10(i)(L) | Amendment No. 3, dated as of June 22, 2005, to the 364-Day Credit Agreement, dated as of May 10, 2004, among the Registrant, the Initial Lenders Named Therein, and Citibank, N.A., as Administrative Agent, as amended by Amendment No. 1, dated as of September 29, 2004 and Amendment No. 2, dated as of March 31, 2005 is incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed with the SEC on June 28, 2005. | |
10(i)(M) | Letter agreement, dated as of June 22, 2005, between the Registrant and the lenders party to the 364-Day Credit Agreement, waiving breaches of the 364-Day Credit Agreement is incorporated by reference to Exhibit 10.3 to the Registrant’s Current Report on Form 8-K, filed with the SEC on June 28, 2005. | |
(i) Michael Roth | ||
10(iii)(A)(1) | Employment Agreement, made as of July 13, 2004, by and between the Registrant and Michael I. Roth, is incorporated by reference to Exhibit 10(iii)(A)(9) to the Registrant’s Report on Form 10-Q for the quarter ended June 30, 2004. | |
10(iii)(A)(2) | Executive Severance Agreement, dated July 13, 2004 and executed as of July 27, 2004, by and between the Registrant and Michael I. Roth, is incorporated by reference to Exhibit 10(iii)(A)(10) to the Registrant’s Report on Form 10-Q for the quarter ended June 30, 2004. | |
10(iii)(A)(3) | Supplemental Employment Agreement, dated as of January 19, 2005, between the Registrant and Michael I. Roth, is incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K, filed with the SEC on January 21, 2005. | |
10(iii)(A)(4) | Supplemental Employment Agreement, dated as of February 14, 2005, between the Registrant and Michael I. Roth, is incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K, filed with the SEC on February 17, 2005. | |
(ii) David A. Bell | ||
10(iii)(A)(5) | David A. Bell Employment Agreement, dated as of January 1, 2000, between True North Communications Inc. and David A. Bell is incorporated by reference to Exhibit 10(b)(iii)(a) to the Registrant’s Report on Form 10-K for the year ended December 31, 2001. | |
10(iii)(A)(6) | Employment Agreement Amendment, dated as of March 1, 2001, to an Employment Agreement, dated as of January 1, 2000, between True North Communications Inc. and David A. Bell is incorporated by reference to Exhibit 10(b)(iii)(b) to the Registrant’s Report on Form 10-K for the year ended December 31, 2001. |
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Exhibit No. | Description | |
10(iii)(A)(7) | Employment Agreement Amendment, dated as of June 1, 2001, and signed as of October 1, 2002, between True North Communications Inc. and David A. Bell to an Employment Agreement, dated as of January 1, 2000, as amended, is incorporated by reference to Exhibit 10(b)(i)(a) to the Registrant’s Report on Form 10-K for the year ended December 31, 2002. | |
10(iii)(A)(8) | Supplemental Agreement, made as of February 28, 2003, to an Employment Agreement, made as of January 1, 2000, between the Registrant and David A. Bell, is incorporated by reference to Exhibit 10(iii)(A)(i) to the Registrant’s Report on Form 10-Q for the quarter ended March 31, 2003. | |
10(iii)(A)(9) | Executive Special Benefit Agreement, made as of April 1, 2003, by and between the Registrant and David A. Bell, is incorporated by reference to Exhibit 10(iii)(A)(i)(a) to the Registrant’s Report on Form 10-Q for the quarter ended June 30, 2003. | |
10(iii)(A)(10) | Memorandum dated May 1, 2003, from David A. Bell, providing for Cancellation of Certain Stock Options, is incorporated by reference to Exhibit 10(iii)(A)(I)(b) to the Registrant’s Report on Form 10-Q for the quarter ended June 30, 2003. | |
10(iii)(A)(11) | Employment Agreement, dated as of January 18, 2005, between the Registrant and David A. Bell, is incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed with the SEC on January 21, 2005. | |
(iii) Nicholas J. Camera | ||
10(iii)(A)(12) | Executive Special Benefit Agreement, dated as of January 1, 1995, between the Registrant and Nicholas J. Camera, is incorporated by reference to Exhibit 10(b)(v)(c) to the Registrant’s Report on Form 10-K for the year ended December 31, 2002. | |
10(iii)(A)(13) | Executive Severance Agreement, dated as of January 1, 1998, between the Registrant and Nicholas J. Camera, is incorporated by reference to Exhibit 10(b)(vi)(a) to the Registrant’s Report on Form 10-K for the year ended December 31, 2001. | |
10(iii)(A)(14) | Employment Agreement, dated as of November 14, 2002, between the Registrant and Nicholas J. Camera, is incorporated by reference to Exhibit 10(b)(v)(a) to the Registrant’s Report on Form 10-K for the year ended December 31, 2002. | |
10(iii)(A)(15) | 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 the Registrant and Nicholas J. Camera, is incorporated by reference to Exhibit 10(iii)(A)(iii)(a) to the Registrant’s Report on Form 10-Q for the quarter ended June 30, 2003. | |
10(iii)(A)(16) | Supplemental Agreement, made as of June 16, 2003, to an Executive Severance Agreement, made as of January 1, 1998, by and between the Registrant and Nicholas J. Camera, is incorporated by reference to Exhibit 10(iii)(A)(iii)(b) to the Registrant’s Report on Form 10-Q for the quarter ended June 30, 2003. | |
(iv) Albert Conte | ||
10(iii)(A)(17) | Employment Agreement, dated as of February 21, 2000, between the Registrant and Albert Conte, is incorporated by reference to Exhibit 10(b)(vii)(a) to the Registrant’s Report on Form 10-K for the year ended December 31, 2001. | |
10(iii)(A)(18) | Supplemental Agreement, made as of June 15, 2004, to an Employment Agreement, made as of February 21, 2000, by and between the Registrant and Albert Conte, is incorporated by reference to Exhibit 10(iii)(A)(3) to the Registrant’s Report on Form 10-Q for the quarter ended June 30, 2004. | |
10(iii)(A)(19) | The Interpublic Capital Accumulation Plan Participation Agreement, effective June 15, 2004, by and between the Registrant and Albert Conte, is incorporated by reference to Exhibit 10(iii)(A)(4) to the Registrant’s Report on Form 10-Q for the quarter ended June 30, 2004. |
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Exhibit No. | Description | |
10(iii)(A)(20) | Executive Special Benefit Agreement, made as of January 1, 2002 and executed as of June 26, 2004, by and between the Registrant and Albert Conte, is incorporated by reference to Exhibit 10(iii)(A)(5) to the Registrant’s Report on Form 10-Q for the quarter ended June 30, 2004. | |
(v) Nicholas S. Cyprus | ||
10(iii)(A)(21) | Employment Agreement, made as of May 2004, by and between the Registrant and Nicholas S. Cyprus, is incorporated by reference to Exhibit 10(iii)(A)(6) to the Registrant’s Report on Form 10-Q for the quarter ended June 30, 2004. | |
10(iii)(A)(22) | Executive Severance Agreement, made as of May 24, 2004, by and between the Registrant and Nicholas S. Cyprus, is incorporated by reference to Exhibit 10(iii)(A)(7) to the Registrant’s Report on Form 10-Q for the quarter ended June 30, 2004. | |
10(iii)(A)(23) | The Interpublic Capital Accumulation Plan Participation Agreement, effective May 15, 2004, by and between the Registrant and Nicholas S. Cyprus, is incorporated by reference to Exhibit 10(iii)(A)(8) to the Registrant’s Report on Form 10-Q for the quarter ended June 30, 2004. | |
(vi) Thomas Dowling | ||
10(iii)(A)(24) | Employment Agreement, dated as of November 1999, between the Registrant and Thomas Dowling, is incorporated by reference to Exhibit 10(b)(iii)(A)(1) to the Registrant’s Report on Form 10-Q for the quarter ended March 31, 2002. | |
10(iii)(A)(25) | Executive Special Benefit Agreement, dated as of February 1, 2000, between the Registrant and Thomas Dowling, is incorporated by reference to Exhibit 10(b)(viii)(a) to the Registrant’s Report on Form 10-K for the year ended December 31, 2001. | |
10(iii)(A)(26) | Executive Special Benefit Agreement, dated as of February 1, 2001, between the Registrant and Thomas Dowling, is incorporated by reference to Exhibit 10(b)(viii)(b) to the Registrant’s Report on Form 10-K for the year ended December 31, 2001. | |
10(iii)(A)(27) | Supplemental Agreement, dated as of October 1, 2002, to an Employment Agreement, dated as of November 1999, between the Registrant and Thomas Dowling, is incorporated by reference to Exhibit 10(b)(vii)(b) to the Registrant’s Report on Form 10-K for the year ended December 31, 2002. | |
10(iii)(A)(28) | Supplemental Agreement, dated as of November 14, 2002, to an Employment Agreement, dated as of November 1999, between the Registrant and Thomas Dowling, is incorporated by reference to Exhibit 10(b)(vii)(a) to the Registrant’s Report on Form 10-K for the year ended December 31, 2002. | |
10(iii)(A)(29) | Executive Severance Agreement, dated November 14, 2002, between the Registrant and Thomas Dowling, is incorporated by reference to Exhibit 10(iii)(A)(vii) to the Registrant’s Report on Form 10-Q for the quarter ended March 31, 2003. | |
(vii) Steven Gatfield | ||
10(iii)(A)(30) | Employment Agreement, made as of February 2, 2004, by and between the Registrant and Steve Gatfield, is incorporated by reference to Exhibit 10(iii)(A)(1) to the Registrant’s Report on Form 10-Q for the quarter ended March 31, 2004. | |
10(iii)(A)(31) | Participation Agreement under The Interpublic Senior Executive Retirement Income Plan, dated as of January 30, 2004, between the Registrant and Steve Gatfield, is incorporated by reference to Exhibit 10(iii)(A)(2) to the Registrant’s Report on Form 10-Q for the quarter ended March 31, 2004. | |
10(iii)(A)(32) | Executive Severance Agreement, made as of April 1, 2004, by and between the Registrant and Steve Gatfield, is incorporated by reference to Exhibit 10(iii)(A)(3) to the Registrant’s Report on Form 10-Q for the quarter ended March 31, 2004. |
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Exhibit No. | Description | |
(viii) Philippe Krakowsky | ||
10(iii)(A)(33) | Employment Agreement, dated as of January 28, 2002, between the Registrant and Philippe Krakowsky, is incorporated by reference to Exhibit 10(iii)(A)(2) to the Registrant’s Report on Form 10-Q for the quarter ended March 31, 2002. | |
10(iii)(A)(34) | Executive Special Benefit Agreement, dated as of February 1, 2002, and signed as of July 1, 2002, between the Registrant and Philippe Krakowsky, is incorporated by reference to Exhibit 10(iii)(A)(v) to the Registrant’s Report on Form 10-Q for the quarter ended September 30, 2002. | |
10(iii)(A)(35) | Special Deferred Compensation Agreement, dated as of April 1, 2002, and signed as of July 1, 2002, between the Registrant and Philippe Krakowsky, is incorporated by reference to Exhibit 10(iii)(A)(iv) to the Registrant’s Report on Form 10-Q for the quarter ended September 30, 2002. | |
10(iii)(A)(36) | Executive Severance Agreement, dated September 13, 2002, between the Registrant and Philippe Krakowsky, is incorporated by reference to Exhibit 10(iii)(A)(vi) to the Registrant’s Report on Form 10-Q for the quarter ended September 30, 2002. | |
10(iii)(A)(37) | Executive Special Benefit Agreement, dated September 30, 2002, between the Registrant and Philippe Krakowsky, is incorporated by reference to Exhibit 10(iii)(A)(vi) to the Registrant’s Report on Form 10-Q for the quarter ended September 30, 2002. | |
10(iii)(A)(38) | Supplemental Agreement, made as of April 8, 2003, to an Employment Agreement, made as of January 28, 2002, by and between the Registrant and Philippe Krakowsky, is incorporated by reference to Exhibit 10(iii)(A)(viii)(a) to the Registrant’s Report on Form 10-Q for the quarter ended June 30, 2003. | |
10(iii)(A)(39) | Supplemental Agreement, made as of June 16, 2003, to an Executive Severance Agreement, made as of November 14, 2002, by and between the Registrant and Philippe Krakowsky, is incorporated by reference to Exhibit 10(iii)(A)(viii)(b) to the Registrant’s Report on Form 10-Q for the quarter ended June 30, 2003. | |
(ix) Robert J. Thompson | ||
10(iii)(A)(40) | Employment Agreement, dated as of October 1, 2003, between the Registrant and Robert J. Thompson, is incorporated by reference to Exhibit 10(b)(vii)(a) to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2003. | |
10(iii)(A)(41) | Capital Accumulation Plan Participation Agreement, entered into as of November 12, 2003, between the Registrant and Robert J. Thompson, is incorporated by reference to Exhibit 10(b)(vii)(b) to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2003. | |
(x) Frank Mergenthaler | ||
10(iii)(A)(42) | Employment Agreement, made as of July 13, 2005, between the Registrant and Frank Mergenthaler is incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed with the SEC on July 19, 2005. | |
10(iii)(A)(43) | Executive Severance Agreement, made as of July 13, 2005, between the Registrant and Frank Mergenthaler is incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed with the SEC on July 19, 2005. | |
(xi) Timothy A. Sompolski | ||
10(iii)(A)(44) | Employment Agreement, made as of July 6, 2004, by and between the Registrant and Timothy Sompolski, is incorporated by reference to Exhibit 10(iii)(A)(11) to the Registrant’s Report on Form 10-Q for the quarter ended March 31, 2004. | |
10(iii)(A)(45) | Executive Severance Agreement, made as of July 6, 2004, by and between the Registrant and Timothy Sompolski, is incorporated by reference to Exhibit 10(iii)(A)(12) to the Registrant’s Report on Form 10-Q for the quarter ended March 31, 2004. |
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Exhibit No. | Description | |
10(iii)(A)(46) | The Interpublic Capital Accumulation Plan Participation Agreement, effective July 6, 2004, by and between the Registrant and Timothy Sompolski, is incorporated by reference to Exhibit 10(iii)(A)(13) to the Registrant’s Report on Form 10-Q for the quarter ended June 30, 2004. | |
(xii) John J. Dooner, Jr. | ||
10(iii)(A)(47) | Executive Special Benefit Agreement, dated as of July 1, 1986, between the Registrant and John J. Dooner, Jr., is incorporated by reference to Exhibit 10(e) to the Registrant’s Report on Form 10-K for the year ended December 31, 1995. | |
10(iii)(A)(48) | Executive Severance Agreement, dated as of August 10, 1987, between the Registrant and John J. Dooner, Jr., is incorporated by reference to Exhibit 10(h) to the Registrant’s Report on Form 10-K for the year ended December 31, 1995. | |
10(iii)(A)(49) | Supplemental Agreement, dated as of May 23, 1990, to an Executive Special Benefit Agreement, dated as of July 1, 1986, between the Registrant and John J. Dooner, Jr., is incorporated by reference to Exhibit 10(l) to the Registrant’s Report on Form 10-K for the year ended December 31, 1995. | |
10(iii)(A)(50) | Executive Special Benefit Agreement, dated as of, July 1, 1992, between the Registrant and John J. Dooner, Jr., is incorporated by reference to Exhibit 10(q) to the Registrant’s Report on Form 10-K for the year ended December 31, 1995. | |
10(iii)(A)(51) | Supplemental Agreement, dated as of August 10, 1992, to an Executive Severance Agreement, dated as of August 10, 1987, between the Registrant and John J. Dooner, Jr., is incorporated by reference to Exhibit 10(p) to the Registrant’s Report on Form 10-K for the year ended December 31, 1995. | |
10(iii)(A)(52) | Employment Agreement, dated as of January 1, 1994, between the Registrant and John J. Dooner, Jr., is incorporated by reference to Exhibit 10(r) to the Registrant’s Report on Form 10-K for the year ended December 31, 1995. | |
10(iii)(A)(53) | Executive Special Benefit Agreement, dated as of June 1, 1994, between the Registrant and John J. Dooner, Jr., is incorporated by reference to Exhibit 10(s) to the Registrant’s Report on Form 10-K for the year ended December 31, 1995. | |
10(iii)(A)(54) | Supplemental Agreement, dated as of July 1, 1995, to an Employment Agreement between the Registrant and John J. Dooner, Jr., dated as of January 1, 1994, is incorporated by reference to Exhibit 10(B) to the Registrant’s Report on Form 10-Q for the quarter ended September 30, 1995. | |
10(iii)(A)(55) | Supplemental Agreement, dated as of July 1, 1995, to an Employment Agreement, dated as of January 1, 1994, between the Registrant and John J. Dooner, Jr., is incorporated by reference to Exhibit 10(t) to the Registrant’s Report on Form 10-K for the year ended December 31, 1995. | |
10(iii)(A)(56) | Supplemental Agreement, dated as of September 1, 1997, to an Employment Agreement between the Registrant and John J. Dooner, Jr., is incorporated by reference to Exhibit 10(k) to the Registrant’s Report on Form 10-Q for the quarter ended September 30, 1997. | |
10(iii)(A)(57) | Executive Severance Agreement, dated January 1, 1998, between the Registrant and John J. Dooner, Jr., is incorporated by reference to Exhibit 10(b) to the Registrant’s Report on Form 10-Q for the quarter ended March 31, 1998. | |
10(iii)(A)(58) | Supplemental Agreement, dated as of January 1, 1999, to an Employment Agreement dated as of January 1, 1994, between the Registrant and John J. Dooner, Jr., is incorporated by reference to Exhibit 10(e) to the Registrant’s Report on Form 10-Q for the quarter ended March 31, 1999. | |
10(iii)(A)(59) | Supplemental Agreement, dated as of April 1, 2000, to an Employment Agreement between the Registrant and John J. Dooner, Jr., is incorporated by reference to Exhibit 10(b) to the Registrant’s Report on Form 10-Q for the quarter ended March 31, 2000. |
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Exhibit No. | Description | |
10(iii)(A)(60) | Executive Special Benefit Agreement, dated as of May 20, 2002, between the Registrant and John J. Dooner, Jr., signed as of November 11, 2002, is incorporated by reference to Exhibit 10(b)(xv)(c) to the Registrant’s Report on Form 10-K for the year ended December 31, 2002. | |
10(iii)(A)(61) | Supplemental Agreement, dated as of November 7, 2002, to an Employment Agreement between the Registrant and John J. Dooner, Jr., is incorporated by reference to Exhibit 10(b)(xv)(a) to the Registrant’s Report on Form 10-K for the year ended December 31, 2002. | |
10(iii)(A)(62) | Supplemental Agreement, dated as of November 7, 2002, to an Executive Special Benefit Agreement between the Registrant and John J. Dooner, Jr., is incorporated by reference to Exhibit 10(b)(xv)(b) to the Registrant’s Report on Form 10-K for the year ended December 31, 2002. | |
10(iii)(A)(63) | 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 the Registrant and John J. Dooner, Jr., is incorporated by reference to Exhibit 10(iii)(A)(iv)(b) to the Registrant’s Report on Form 10-Q for the quarter ended June 30, 2003. | |
10(iii)(A)(64) | Supplemental Agreement, made as of March 31, 2003, to an Employment Agreement made as of January 1, 1994, as amended between the Registrant and John J. Dooner, Jr., is incorporated by reference to Exhibit 10(iii)(A)(v) to the Registrant’s Report on Form 10-Q for the quarter ended March 31, 2003. | |
10(iii)(A)(65) | 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 the Registrant and John J. Dooner, Jr., is incorporated by reference to Exhibit 10(iii)(A)(iv)(a) to the Registrant’s Report on Form 10-Q for the quarter ended June 30, 2003. | |
10(iii)(A)(66) | Letter Agreement, dated May 8, 2003, between the Registrant and John J. Dooner, Jr., providing for cancellation of certain Stock Options, is incorporated by reference to Exhibit 10(iii)(A)(iv)(c) to the Registrant’s Report on Form 10-Q for the quarter ended June 30, 2003. | |
10(iii)(A)(67) | Supplemental Agreement dated as of November 12, 2003, to an Employment Agreement between the Registrant and John J. Dooner, Jr., is incorporated by reference to Exhibit 10(b)(viii)(u) to the Registrant’s Report on Form 10-K for the year ended December 31, 2003. | |
(xiii) Jill Considine | ||
10(iii)(A)(68) | Deferred Compensation Agreement, dated as of April 1, 2002, between the Registrant and Jill Considine, is incorporated by reference to Exhibit 10(c) to the Registrant’s Report on Form 10-Q for the quarter ended June 30, 2002. | |
(xiv) Richard A. Goldstein | ||
10(iii)(A)(69) | Richard A Goldstein Deferred Compensation Agreement, dated as of June 1, 2001, between the Registrant and Richard A. Goldstein, is incorporated by reference to Exhibit 10(c) to Registrant’s Report on Form 10-Q for the quarter ended June 30, 2001. | |
(xv) Christopher J. Coughlin | ||
10(iii)(A)(70) | Employment Agreement, made as of May 6, 2003, by and between the Registrant and Christopher J. Coughlin, is incorporated by reference to Exhibit 10(iii)(A)(ii) to the Registrant’s Report on Form 10-Q for the quarter ended March 31, 2003. | |
10(iii)(A)(71) | Executive Special Benefit Agreement, made as of June 16, 2003, by and between the Registrant and Christopher J. Coughlin, is incorporated by reference to Exhibit 10(iii)(A)(iii) to the Registrant’s Report on Form 10-Q for the quarter ended March 31, 2003. |
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Exhibit No. | Description | |
10(iii)(A)(72) | Executive Severance Agreement, made as of June 16, 2003, by and between the Registrant and Christopher J. Coughlin, is incorporated by reference to Exhibit 10(iii)(A)(iv) to the Registrant’s Report on Form 10-Q for the quarter ended March 31, 2003. | |
10(iii)(A)(73) | Confidential Separation Agreement and General Release, between the Registrant and Christopher J. Coughlin is incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed with the SEC on January 6, 2005. | |
(xvi) Brian Brooks | ||
10(iii)(A)(74) | Executive Severance Agreement, dated November 8, 2002, between the Registrant and Brian Brooks, is incorporated by reference to Exhibit 10(iii)(A)(ix) to the Registrant’s Report on Form 10-Q for the quarter ended March 31, 2003. | |
10(iii)(A)(75) | Employment Agreement, dated as of November 18, 2002, between the Registrant and Brian Brooks, is incorporated by reference to Exhibit 10(b)(viii)(a) to the Registrant’s Report on Form 10-K for the year ended December 31, 2002. | |
10(iii)(A)(76) | Supplemental Agreement, made as of April 7, 2003, to an Employment Agreement, dated as of November 18, 2002, between the Registrant and Brian Brooks, is incorporated by reference to Exhibit 10(iii)(A)(ii)(a) to the Registrant’s Report on Form 10-Q for the quarter ended June 30, 2003. | |
10(iii)(A)(77) | Supplemental Agreement, made as of May 20, 2003, to an Employment Agreement, dated as of November 18, 2002, between the Registrant and Brian Brooks, is incorporated by reference to Exhibit 10(iii)(A)(ii)(b) to the Registrant’s Report on Form 10-Q for the quarter ended June 30, 2003. | |
10(iii)(A)(78) | Supplemental Agreement, made as of June 16, 2003, to an Executive Severance Agreement, dated as of November 14, 2002, between the Registrant and Brian Brooks, is incorporated by reference to Exhibit 10(iii)(A)(ii)(c) to the Registrant’s Report on Form 10-Q for the quarter ended June 30, 2003. | |
10(iii)(A)(79) | Senior Executive Retirement Income Plan Participation Agreement, effective as of November 10, 2003, between the Registrant and Brian Brooks, is incorporated by reference to Exhibit 10(b)(xi)(g) to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2003. | |
10(iii)(A)(80) | Supplemental Agreement, made as of November 10, 2003, to an Employment Agreement, dated as of November 18, 2002, between the Registrant and Brian Brooks, is incorporated by reference to Exhibit 10(b)(xi)(h) to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2003. | |
10(iii)(A)(81) | Confidential Separation Agreement and General Release, between the Registrant and Brian Brooks, is incorporated by reference to Exhibit 10(b)(xi)(i) to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2003. | |
10(iii)(A)(82) | Supplemental Agreement, made as of January 31, 2005, to a Confidential Agreement and General Release, made as of February 27, 2004, by and between the Registrant and Brian J. Brooks.* | |
(xvii) Gunnar Wilmot | ||
10(iii)(A)(83) | Executive Special Benefit Agreement, dated as of January 1, 1990, between the Registrant and Gunnar Wilmot, is incorporated by reference to Exhibit 10(b)(x)(d) to the Registrant’s Report on Form 10-K for the year ended December 31, 2001. | |
10(iii)(A)(84) | Supplemental Agreement, dated as of May 23, 1990, to an Executive Special Benefit Agreement, dated as of January 1, 1990, between the Registrant and Gunnar Wilmot, is incorporated by reference to Exhibit 10(b)(x)(c) to the Registrant’s Report on Form 10-K for the year ended December 31, 2001. | |
10(iii)(A)(85) | Executive Special Benefit Agreement, dated as of October 1, 1996, between the Registrant and Gunnar Wilmot, is incorporated by reference to Exhibit 10(b)(x)(b) to the Registrant’s Report on Form 10-K for the year ended December 31, 2001. |
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Exhibit No. | Description | |
10(iii)(A)(86) | Executive Special Benefit Agreement, dated as of April 1, 1999, between the Registrant and Gunnar Wilmot, is incorporated by reference to Exhibit 10(b)(x)(a) to the Registrant’s Report on Form 10-K for the year ended December 31, 2001. | |
10(iii)(A)(87) | Executive Special Benefit Agreement, dated as of January 1, 2002, between the Registrant and Gunnar Wilmot, is incorporated by reference to Exhibit 10(b)(x)(a) to the Registrant’s Report on Form 10-K for the year ended December 31, 2002. | |
10(iii)(A)(88) | Letter Agreement, dated June 27, 2003, between the Registrant and Gunnar Wilmot providing for the Cancellation of Certain Stock Options is incorporated by reference to Exhibit 10(iii)(A)(xi) to the Registrant’s Report on Form 10-Q for the quarter ended June 30, 2003. | |
10(iii)(A)(89) | Executive Special Benefit Agreement, dated as of May 16, 2003, and signed as of November 6, 2003, between the Registrant and Gunnar Wilmot, is incorporated by reference to Exhibit 10(b)(xiii)(g) to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2003. | |
10(iii)(A)(90) | Trust Agreement, dated as of June 1, 1990, between the Registrant, Lintas Campbell-Ewald Company, McCann-Erickson USA, Inc., McCann-Erickson Marketing, Inc., Lintas, Inc. and Chemical Bank, as Trustee, is incorporated by reference to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 1990. | |
10(iii)(A)(91) | The Stock Option Plan (1988) and the Achievement Stock Award Plan of the Registrant are incorporated by reference to Appendices C and D of the Prospectus, dated May 4, 1989, forming part of its Registration Statement on Form S-8 (No. 33-28143). | |
10(iii)(A)(92) | The Management Incentive Compensation Plan of the Registrant is incorporated by reference to the Registrant’s Report on Form 10-Q for the quarter ended June 30, 1995. | |
10(iii)(A)(93) | The 1986 Stock Incentive Plan of the Registrant is incorporated by reference to Registrant’s Annual Report on Form 10-K for the year ended December 31, 1993. | |
10(iii)(A)(94) | The 1986 United Kingdom Stock Option Plan of the Registrant is incorporated by reference to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 1992. | |
10(iii)(A)(95) | The Employee Stock Purchase Plan (1985) of the Registrant, as amended, is incorporated by reference to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 1993. | |
10(iii)(A)(96) | The Long-Term Performance Incentive Plan of the Registrant is incorporated by reference to Appendix A of the Prospectus dated December 12, 1988 forming part of its Registration Statement on Form S-8 (No. 33-25555). | |
10(iii)(A)(97) | Resolution of the Board of Directors adopted on February 16, 1993, amending the Long-Term Performance Incentive Plan is incorporated by reference to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 1992. | |
10(iii)(A)(98) | Resolution of the Board of Directors adopted on May 16, 1989 amending the Long-Term Performance Incentive Plan is incorporated by reference to the Registrant’s Report on Form 10-K for the year ended December 31, 1989. | |
10(iii)(A)(99) | The 1996 Stock Incentive Plan of the Registrant is incorporated by reference to the Registrant’s Report on Form 10-Q for the quarter ended June 30, 1996. | |
10(iii)(A)(100) | The 1997 Performance Incentive Plan of the Registrant is incorporated by reference to the Registrant’s Report on Form 10-Q for the quarter ended June 30, 1997. | |
10(iii)(A)(101) | True North Communications Inc. Stock Option Plan is incorporated by reference to Exhibit 4.5 of Post-Effective Amendment No. 1 on Form S-8 to Registration Statement on Form S-4 (Registration No. 333-59254). | |
10(iii)(A)(102) | Bozell, Jacobs, Kenyon & Eckhardt, Inc. Stock Option Plan is incorporated by reference to Exhibit 4.5 of Post-Effective Amendment No. 1 on Form S-8 to Registration Statement on Form S-4 (Registration No. 333-59254). |
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Exhibit No. | Description | |
10(iii)(A)(103) | True North Communications Inc. Deferred Compensation Plan is incorporated by reference to Exhibit (c)(xiv) of the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2002. | |
10(iii)(A)(104) | Resolution of the Board of Directors of True North Communications Inc. adopted on March 1, 2002 amending the Deferred Compensation Plan is incorporated by reference to Exhibit (c)(xv) of the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2002. | |
10(iii)(A)(105) | The 2002 Performance Incentive Plan of the Registrant is incorporated by reference to Appendix A to the Registrant’s Proxy Statement on Schedule 14A, filed April 17, 2002. | |
10(iii)(A)(106) | The Interpublic Senior Executive Retirement Income Plan is incorporated by reference to the Registrant’s Report on Form 10-Q for the quarter ended September 30, 2003. | |
10(iii)(A)(107) | The Interpublic Capital Accumulation Plan is incorporated by reference to the Registrant’s Report on Form 10-Q for the quarter ended September 30, 2003. | |
10(iii)(A)(108) | The Interpublic Outside Directors Stock Incentive Plan of Interpublic, as amended through August 1, 2003, is incorporated by reference to the Registrant’s Report on Form 10-Q for the quarter ended September 30, 2003. | |
10(iii)(A)(109) | 2004 Performance Incentive Plan of the Registrant is incorporated by reference to Appendix B to the Registrant’s Proxy Statement on Schedule 14A, filed with the SEC on April 23, 2004. | |
10(iii)(A)(110) | The Interpublic Non-Management Directors’ Stock Incentive Plan is incorporated by reference to Appendix C to the Registrant’s Proxy Statement on Schedule 14A, filed with the SEC on April 23, 2004. | |
10(iii)(A)(111) | The Interpublic Senior Executive Retirement Income Plan — Form of Participation Agreement is incorporated by reference to Exhibit 10.7 of the Registrant’s Current Report on Form 8-K, filed with the SEC on October 27, 2004. | |
10(iii)(A)(112) | The Interpublic Capital Accumulation Plan — Form of Participation Agreement is incorporated by reference to Exhibit 10.8 of the Registrant’s Current Report on Form 8-K, filed with the SEC on October 27, 2004. | |
10(iii)(A)(113) | The Interpublic Group of Companies, Inc. 2004 Performance Incentive Plan (the “PIP”) — Form of Instrument of Restricted Stock is incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K, filed with the SEC on October 27, 2004. | |
10(iii)(A)(114) | PIP — Form of Instrument of Restricted Stock Units is incorporated by reference to Exhibit 10.3 to the Registrant’s Current Report on Form 8-K, filed with the SEC on October 27, 2004. | |
10(iii)(A)(115) | PIP — Form of Option Certificate is incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed with the SEC on October 27, 2004. | |
10(iii)(A)(116) | Interpublic’s Non-Management Directors’ Stock Incentive Plan (the “Non-Management Directors’ Plan”) — Form of Instrument of Restricted Shares is incorporated by reference to Exhibit 10.5 to the Registrant’s Current Report on Form 8-K filed with the SEC on October 27, 2004. | |
10(iii)(A)(117) | The Non-Management Directors’ Plan — Form of Instrument of Restricted Share Units is incorporated by reference to Exhibit 10.6 of the Registrant’s Current Report on Form 8-K, filed with the SEC on October 27, 2004. | |
10(iii)(A)(118) | The Non-Management Directors’ Plan — Form of Plan Option Certificate is incorporated by reference to Exhibit 10.4 of the Registrant’s Current Report on Form 8-K, filed with the SEC on October 27, 2004. | |
(21) | Subsidiaries of the Registrant.* | |
(24) | Power of Attorney to sign Form 10-K and resolution of Board of Directors re Power of Attorney.* |
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Exhibit No. | Description | |
(31.1) | Certification dated as of October 17, 2005 and executed by Michael I. Roth, under Section 302 of the Sarbanes-Oxley Act of 2002 (“S-OX”).** | |
(31.2) | Certification dated as of October 17, 2005 and executed by Frank Mergenthaler, under Section 302 of S-OX.** | |
(32) | Certification dated as of October 17, 2005 and executed by Michael I. Roth and Frank Mergenthaler, furnished pursuant to Section 906 of S-OX.** |
* | Previously filed with the Company’s Annual Report on Form 10-K for the year ended December 31, 2004, filed September 30, 2005. |
** | Filed herewith. |
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