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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-Q
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|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1999
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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Commission File Number: 1-6686
THE INTERPUBLIC GROUP OF COMPANIES, INC.
(Exact name of Registrant as specified in its charter)
Delaware 13-1024020
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1271 Avenue of the Americas, New York, New York 10020
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 399-8000
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Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days. Yes |X| No |_|
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date. Common Stock outstanding at
April 30, 1999: 140,544,975 shares.
THE INTERPUBLIC GROUP OF COMPANIES, INC. AND ITS SUBSIDIARIES
I N D E X
Page
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheet
March 31, 1999 (unaudited) and
December 31, 1998 3-4
Consolidated Income Statement
Three months ended March 31, 1999
and 1998 (unaudited) 5
Consolidated Statement of Comprehensive Income
Three months ended March 31, 1999
and 1998 (unaudited) 6
Consolidated Statement of Cash Flows
Three months ended March 31, 1999
and 1998 (unaudited) 7
Notes to Consolidated Financial Statements (unaudited) 8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 9-11
PART II. OTHER INFORMATION
Item 2. Changes in Securities
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
INDEX TO EXHIBITS
PART I - FINANCIAL INFORMATION
Item 1
THE INTERPUBLIC GROUP OF COMPANIES, INC. AND ITS SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(Dollars in Thousands)
ASSETS
March 31, December 31,
1999 1998
(unaudited)
------------ ------------
CURRENT ASSETS:
Cash and cash equivalents (includes
certificates of deposit: 1999-$86,285;
1998-$152,064) $ 666,009 $ 808,803
Marketable securities, at cost which
approximates market 47,488 31,733
Receivables (less allowance for doubtful
accounts: 1999-$44,898; 1998-$53,093) 3,477,067 3,522,616
Expenditures billable to clients 326,521 276,610
Prepaid expenses and other current assets 165,208 137,183
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Total current assets 4,682,293 4,776,945
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OTHER ASSETS:
Investment in unconsolidated affiliates 47,099 47,561
Deferred taxes on income 80,565 97,350
Other investments and miscellaneous assets 340,099 299,967
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Total other assets 467,763 444,878
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FIXED ASSETS, at cost:
Land and buildings 92,935 95,228
Furniture and equipment 647,444 650,037
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740,379 745,265
Less: accumulated depreciation 424,211 420,864
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316,168 324,401
Unamortized leasehold improvements 115,753 115,200
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Total fixed assets 431,921 439,601
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INTANGIBLE ASSETS (net of accumulated
amortization): 1999-$519,515;
1998-$504,787 1,324,553 1,281,399
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TOTAL ASSETS $6,906,530 $6,942,823
========== ==========
THE INTERPUBLIC GROUP OF COMPANIES, INC. AND ITS SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(Dollars in Thousands Except Per Share Data)
LIABILITIES AND STOCKHOLDERS' EQUITY
March 31, December 31,
1999 1998
(unaudited)
------------ ------------
CURRENT LIABILITIES:
Payable to banks $ 416,165 $ 214,464
Accounts payable 3,479,967 3,613,699
Accrued expenses 516,240 624,517
Accrued income taxes 190,098 205,672
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Total current liabilities 4,602,470 4,658,352
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NONCURRENT LIABILITIES:
Long-term debt 341,992 298,691
Convertible subordinated notes 209,507 207,927
Deferred compensation and reserve
for termination liabilities 316,793 319,526
Accrued postretirement benefits 48,616 48,616
Other noncurrent liabilities 81,403 88,691
Minority interests in
consolidated subsidiaries 57,296 55,928
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Total noncurrent liabilities 1,055,607 1,019,379
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STOCKHOLDERS' EQUITY:
Preferred Stock, no par value
shares authorized: 20,000,000
shares issued: none
Common Stock, $.10 par value
shares authorized: 225,000,000
shares issued:
1999 - 146,858,194
1998 - 145,722,579 14,686 14,572
Additional paid-in capital 710,297 652,692
Retained earnings 1,139,452 1,116,365
Accumulated other comprehensive income (198,170) (160,476)
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1,666,265 1,623,153
Less: Treasury stock, at cost:
1999 - 6,814,714 shares
1998 - 6,187,172 shares 345,794 286,713
Unamortized expense of restricted
stock grants 72,018 71,348
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TOTAL STOCKHOLDERS' EQUITY 1,248,453 1,265,092
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COMMITMENTS AND CONTINGENCIES
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $6,906,530 $6,942,823
========== ==========
The accompanying notes are an integral part of these consolidated financial
statements.
THE INTERPUBLIC GROUP OF COMPANIES, INC. AND ITS SUBSIDIARIES
CONSOLIDATED INCOME STATEMENT
THREE MONTHS ENDED MARCH 31
(Dollars in Thousands Except Per Share Data)
(unaudited)
1999 1998
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Revenue $ 908,081 $ 817,030
Other income, net 16,999 14,153
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Gross income 925,080 831,183
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Costs and expenses:
Operating expenses 830,131 752,956
Interest 13,945 12,801
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Total costs and expenses 844,076 765,757
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Income before provision for income taxes 81,004 65,426
Provision for income taxes 33,618 25,498
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Income of consolidated companies 47,386 39,928
Income applicable to minority interests (3,599) (2,840)
Equity in net income of unconsolidated
affiliates 998 651
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Net income $ 44,785 $ 37,739
=========== ===========
Weighted average shares:
Basic 136,266,930 135,187,048
Diluted 141,674,772 140,238,988
Earnings Per Share:
Basic $ .33 $ .28
Diluted $ .32 $ .27
Dividend per share - Interpublic $ .15 $ .13
The accompanying notes are an integral part of these consolidated financial
statements.
THE INTERPUBLIC GROUP OF COMPANIES, INC. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
THREE MONTHS ENDED MARCH 31
(Dollars in Thousands)
(unaudited)
1999 1998
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Net Income $ 44,785 $ 37,739
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Other Comprehensive Income, net of tax:
Foreign Currency Translation Adjustments (60,467) (14,808)
Net Unrealized Gains on Securities 22,773 4,161
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Other Comprehensive Income (37,694) (10,647)
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Comprehensive Income $ 7,091 $ 27,092
========= =========
The accompanying notes are an integral part of these consolidated financial
statements.
THE INTERPUBLIC GROUP OF COMPANIES, INC. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
THREE MONTHS ENDED MARCH 31
(Dollars in Thousands)
(unaudited)
1999 1998
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 44,785 $ 37,739
Adjustments to reconcile net income to cash
used in operating activities:
Depreciation and amortization of fixed assets 24,317 22,351
Amortization of intangible assets 14,728 12,663
Amortization of restricted stock awards 5,929 5,052
Equity in net income of unconsolidated
affiliates (998) (651)
Income applicable to minority interests 3,599 2,840
Translation losses 974 (6,271)
Net gain from sale of investments (223) -
Other (9,692) (4,096)
Changes in assets and liabilities, net of acquisitions:
Receivables (29,760) 53,288
Expenditures billable to clients (51,014) (20,259)
Prepaid expenses and other assets (31,263) (11,612)
Accounts payable and other liabilities (158,581) (278,565)
Accrued income taxes (9,447) (9,702)
Deferred income taxes (2,963) 4,831
Deferred compensation and reserve for
termination allowances 3,936 7,261
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Net cash used in operating activities (195,673) (185,131)
CASH FLOWS FROM INVESTING ACTIVITIES: --------- ---------
Acquisitions (55,286) (48,051)
Proceeds from sale of investments 1,436 607
Capital expenditures (28,468) (29,093)
Net purchases of marketable securities (18,104) (14,559)
Other investments and miscellaneous assets (5,359) (5,918)
Investments in unconsolidated affiliates 236 (612)
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Net cash used in investing activities (105,545) (97,626)
CASH FLOWS FROM FINANCING ACTIVITIES: --------- ---------
Increase in short-term borrowings 209,956 75,004
Proceeds from long-term debt 52,721 2,084
Payments of long-term debt (1,534) (390)
Treasury stock acquired (79,474) (32,917)
Issuance of common stock 26,285 9,832
Cash dividends - pooled - (118)
Cash dividends - Interpublic (20,450) (17,015)
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Net cash provided by
financing activities 187,504 36,480
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Effect of exchange rates on cash and cash
equivalents (29,080) (3,733)
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Decrease in cash and cash equivalents (142,794) (250,010)
Cash and cash equivalents at
beginning of year 808,803 738,112
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Cash and cash equivalents at end of period $ 666,009 $ 488,102
========= =========
The accompanying notes are an integral part of these consolidated financial
statements.
THE INTERPUBLIC GROUP OF COMPANIES, INC. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Consolidated Financial Statements
(a) In the opinion of management, the consolidated balance sheet as of
March 31, 1999, the consolidated income statements for the three
months ended March 31, 1999 and 1998, the consolidated statement of
comprehensive income for the three months ended March 31, 1999 and
1998, and the consolidated statement of cash flows for the three
months ended March 31, 1999 and 1998, contain all adjustments (which
include only normal recurring adjustments) necessary to present fairly
the financial position, results of operations and cash flows at March
31, 1999 and for all periods presented. Certain information and
footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles
have been omitted. It is suggested that these consolidated financial
statements be read in conjunction with the consolidated financial
statements and notes thereto included in The Interpublic Group of
Companies, Inc.'s (the "Company") December 31, 1998 annual report to
stockholders.
(b) Statement of Financial Accounting Standards (SFAS) No. 95 "Statement
of Cash Flows" requires disclosures of specific cash payments and
noncash investing and financing activities. The Company considers all
highly liquid investments with a maturity of three months or less to
be cash equivalents. Income tax cash payments were approximately $36.3
million and $49.5 million in the first three months of 1999 and 1998,
respectively. Interest payments during the first three months of 1999
and 1998 were approximately $5.6 million and $9.3 million,
respectively.
(c) In June 1998, the Financial Accounting Standards Board (the "FASB")
issued Statement of Financial Accounting Standards No. 133,
"Accounting for Derivative Instruments and Hedging Activities" (SFAS
133), which the Company is required to adopt effective January 1,
2000. SFAS 133 will require the Company to record all derivatives on
the balance sheet at fair value. Changes in derivative fair values
will either be recognized in earnings as offsets to the changes in
fair value of related hedged assets, liabilities and firm commitments
or, for forecasted transactions, deferred and later recognized in
earnings. The impact of SFAS 133 on the Company's financial statements
will depend on a variety of factors, including future interpretative
guidance from the FASB, the future level of forecasted and actual
foreign currency transactions, the extent of the Company's hedging
activities, the types of hedging instruments used and the
effectiveness of such instruments. However, the Company does not
believe the effect of adopting SFAS 133 will be material to its
financial condition.
Item 2
THE INTERPUBLIC GROUP OF COMPANIES, INC. AND ITS SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
Working capital at March 31, 1999 was $79.8 million, a decrease of $38.8 million
from December 31, 1998. The ratio of current assets to current liabilities was
slightly above 1 to 1 at March 31, 1999.
Historically, cash flow from operations has been the primary source of working
capital and management believes that it will continue to be so in the future.
The principal use of the Company's working capital is to provide for the
operating needs of its advertising agencies, which include payments for space or
time purchased from various media on behalf of its clients. The Company's
practice is to bill and collect from its clients in sufficient time to pay the
amounts due media. Other uses of working capital include the payment of cash
dividends, acquisitions, capital expenditures and the reduction of long-term
debt. In addition, during the first three months of 1999, the Company acquired
1,061,659 shares of its own stock for approximately $79.5 million for the
purpose of fulfilling the Company's obligations under its various compensation
plans.
RESULTS OF OPERATIONS
Three Months Ended March 31, 1999 Compared to Three Months Ended March 31, 1998
Total revenue for the three months ended March 31, 1999 increased $91.1 million,
or 11.1%, to $908.1 million compared to the same period in 1998. Domestic
revenue increased $51.7 million or 11.8% from 1998 levels. Foreign revenue
increased $39.4 million or 10.4% during the first quarter of 1999 compared to
1998. Other income, net, increased by $2.8 million during the first quarter of
1999 compared to the same period in 1998.
Operating expenses increased $77.2 million or 10.2% during the three months
ended March 31, 1999 compared to the same period in 1998. Interest expense
increased 8.9% as compared to the same period in 1998.
Pretax income increased $15.6 million or 23.8% during the three months ended
March 31, 1999 compared to the same period in 1998.
Net losses from exchange and translation of foreign currencies for the three
months ended March 31, 1999 were approximately $.9 million versus $.8 million
for the same period in 1998.
The effective tax rate for the three months ended March 31, 1999 was 41.5%, as
compared to 39.0% in 1998.
The difference between the effective and statutory rates is primarily due to
foreign losses with no tax benefit, losses from translation of foreign
currencies which provided no tax benefit, state and local taxes, foreign
withholding taxes on dividends and nondeductible goodwill expense.
Year 2000 Issue
The Year 2000 (or "Y2K") Issue refers to the problem caused by computer programs
that have been written to reflect two-digit years, with the century being
assumed as "19". This practice was widely accepted by the applications
development community in the 1960's through the early 1980's, with many of these
programs remaining in use today. As a result, programs that are date sensitive
may recognize the year "00" as 1900, rather than the year 2000. This may cause
programs to fail or cause them to incorrectly report and accumulate data.
The Company and its operating subsidiaries are in the final phases of executing
a Year 2000 readiness program with the goal of having all "mission critical"
systems functioning properly prior to January 1, 2000. Many of the subsidiaries
in the Company's larger markets are dependent upon third party systems
providers, while subsidiaries in the secondary markets rely primarily on
off-the-shelf applications or home-grown applications. Considerable progress has
been made with third party systems providers in larger markets with respect to
remediating their Year 2000 issues. Although the secondary markets present a
greater challenge, they typically involve smaller offices that are less
dependent upon automated solutions.
In 1997, the Company established a Y2K Project Management Office and shortly
thereafter created a Y2K Task Force, comprised of representatives from the
operating companies. Through the Y2K Task Force, the Company in conjunction with
outside consultants, is working to address the impact of the Year 2000 Issue on
the Company. The Company has inventoried and assessed date sensitive computer
software applications, and approximately 35% of systems were identified as
requiring some degree of remediation. In addition, the Company has reviewed all
of its hardware believed to contain embedded chips, including personal
computers, file servers, mid-range and mainframe computers, telephone switches
and routers. The Company has also investigated its security systems, life safety
systems, HVAC systems and elevators in the majority of its facilities. As part
of this effort, the Company has identified those systems and applications that
are deemed "mission critical", which are being handled on a priority basis and
has developed a detailed project and remediation plan that includes system
testing schedules and contingency planning. To date the Company has completed
approximately 90% of its remediation and compliance testing for "mission
critical" applications, with the remaining 10% scheduled for completion by June
30, 1999. The Company's Board of Directors, through the Audit Committee, has
been monitoring the progress of this project. Project progress reports are given
to the Audit Committee at each regularly scheduled Audit Committee meeting.
The Company estimates that the modification and testing of its hardware and
software will cost approximately $22 million, of which 60% has been spent to
date. These costs are being expensed. In addition, the Company has accelerated
the implementation of a number of business process re-engineering projects over
the past few years that have provided both Year 2000 readiness and increased
functionality of certain systems. The Company estimates that the hardware and
software costs incurred in connection with these projects are approximately $60
million, which are being capitalized. Included in the above-mentioned Y2K costs
are internal costs incurred for the Y2K project which are primarily payroll
related costs for the information systems groups. A substantial portion of these
estimated costs relates to systems and applications that were anticipated and
budgeted. All of the above amounts have been updated to include companies
acquired during the first quarter of 1999.
The Company is also in the process of developing contingency plans for affected
areas of its operations. The Y2K Project Management Office has drafted a
Contingency Plan Guideline. This guideline requires the development of
contingency plans for applications, vendors, facilities, business partners and
clients. The contingency plans are being developed to cover those elements of
the business that have been deemed "mission critical" and extend beyond software
applications. The contingency plans will include procedures for workforce
mobilization, crisis management, facilities management, disaster recovery and
damage control, and are scheduled for completion by June 30, 1999. The Company
nevertheless recognizes that contingency plans may need to be adjusted
thereafter and therefore considers them working documents.
The Company is assessing the Year 2000 readiness of material third parties by
asking all critical vendors, business partners and facility managers to provide
letters of compliance. In addition to having sent out over 70,000 vendor
compliance letters, the Company is conducting detailed tests and face to face
Y2K working sessions with those identified as key vendors with respect to
"mission critical" systems. Furthermore, the Company is working with the
American Association of Advertising Agencies and other trade associations to
form Year 2000 working groups that are addressing the issues on an industry
level.
The Company's efforts to address the Year 2000 Issue are designed to avoid any
material adverse effect on its operations or financial condition.
Notwithstanding these efforts, however, there is no assurance that the Company
will not encounter difficulties due to the Year 2000 Issue. The "most reasonably
likely worst case scenario" would be a significant limitation on the Company's
ability to continue to provide business services for an undetermined duration.
The Company also recognizes that it is dependent upon infrastructure services
and third parties, including suppliers, broadcasters, utility providers and
business partners, whose failure may also significantly impact its ability to
provide business services.
Cautionary Statement
Statements by the Company in this document and in other contexts concerning its
Year 2000 compliance efforts that are not historical fact are forward-looking
statements as defined in the Private Securities Litigation Reform Act of 1995.
These forward-looking statements are subject to certain risks and uncertainties
that could cause actual results to differ materially from those anticipated in
the forward-looking statements, including, but not limited to, the following:
(i) uncertainties relating to the ability of the Company to identify and address
Year 2000 issues successfully and in a timely manner and at costs that are
reasonably in line with the Company's estimates; and (ii) the ability of the
Company's vendors, suppliers, other service providers and customers to identify
and address successfully their own Year 2000 issues in a timely manner.
Conversion to the Euro
On January 1, 1999, certain member countries of the European Union established
fixed conversion rates between their existing currencies and the European
Union's common currency (the "Euro"). The Company conducts business in member
countries. The transition period for the introduction of the Euro will be
between January 1, 1999, and June 30, 2002. The Company is addressing the issues
involved with the introduction of the Euro. The major important issues facing
the Company include: converting information technology systems; reassessing
currency risk; negotiating and amending contracts; and processing tax and
accounting records.
Based upon progress to date the Company believes that use of the Euro will not
have a significant impact on the manner in which it conducts its business
affairs and processes its business and accounting records. Accordingly,
conversion to the Euro is not expected to have a material effect on the
Company's financial condition or results of operations.
PART II - OTHER INFORMATION
Item 2. CHANGES IN SECURITIES
(c) RECENT SALES OF UNREGISTERED SECURITIES
(1) On january 4, 1999, a subsidiary of the registrant acquired
substantially all of the assets and assumed substantially all the
liabilities of two affiliated companies in consideration for which the
registrant paid $8,321,000 in cash and issued a total of 123,435 shares of
the registrant's common stock par value $.10 Per share ("interpublic
stock") to the security holders of the affiliated companies. The shares of
interpublic stock had a market value of $8,321,000 on the date of issuance.
The shares of Interpublic Stock were issued by the Registrant without
registration in reliance on Section 4(2) of the Securities Act of 1933, as
amended (the "Securities Act").
(2) On January 4, 1999, the Registrant issued a total of 30,843 shares
of Interpublic Stock to shareholders of a foreign company as an installment
payment of purchase price for 40% of the capital stock of the foreign
company. The Interpublic Stock issued had a market value of $2,129,000 on
the date of issuance.
The shares of Interpublic Stock were issued by the Registrant without
registration in an "offshore transaction" and solely to "non-U.S. persons"
in reliance on Rule 903(b)(3) of Regulation S under the Securities Act.
(3) On January 11, 1999, a subsidiary of the Registrant acquired all
of the issued and outstanding shares of a company in consideration for
which the Registrant paid $500,000 in cash and issued 9,477 shares of
Interpublic Stock to the shareholder of the company. The shares of
Interpublic Stock had a market value of $750,000 on the date of issuance.
The shares of Interpublic Stock were issued by the Registrant without
registration in reliance on Regulation S under the Securities Act.
(4) On January 13, 1999, the Registrant paid $544,000 and issued a
total of 16,618 shares of Interpublic Stock to shareholders of a foreign
company as an installment payment of purchase price for 75% of the capital
stock of the foreign company. The Interpublic Stock issued had a market
value of $1,282,000 on the date of issuance.
The shares of Interpublic Stock were issued by the Registrant without
registration in an "offshore transaction" and solely to "non-U.S. persons"
in reliance on Rule 903(b)(3) of Regulation S under the Securities Act.
(5) On January 15, 1999 the Registrant paid $2,535,000 and issued a
total of 33,150 shares to shareholders of a company as an installment of
purchase price for the acquisition of the assets and assumption of the
liabilities of the company by a subsidiary of the Registrant. The
Interpublic Stock issued had a market value of $2,578,000 on the date of
issuance.
The shares of Interpublic Stock were issued by the Registrant without
registration in reliance on Rule 506 of Regulation D under the Securities
Act based on the accredited investor status or sophistication of the
shareholders.
(6) On January 21, 1999, the Registrant acquired a company in
consideration for which it issued a total of 52,500 shares of Interpublic
Stock to the acquired company's shareholders. The shares of Interpublic
Stock had a market value of $4,000,000 on the date of issuance.
The shares of Interpublic Stock were issued by the Registrant without
registration in reliance on Rule 506 of Regulation D under the Securities
Act, based on the accredited investor status or sophistication of the
shareholders of the acquired company.
(7) On February 23, 1999, the Registrant acquired 75% of the capital
stock of each of two companies and 60% of the capital stock of each of two
other companies all of which are affiliated in consideration for which the
Registrant paid a total of $2,519,000 in cash and issued 14,101 shares of
Interpublic Stock to the stockholders of the affiliated companies. The
Interpublic Stock was valued at $1,097,000 on the date of issuance.
The shares of Interpublic Stock were issued by the Registrant without
registration in an "offshore transaction" and solely to "non-U.S. persons"
in reliance on Rule 903(b)(3) of Regulation S under the Securities Act.
(8) On February 24, 1999, a subsidiary of the Registrant acquired 49%
of each of two companies in consideration for which the Registrant paid
$9,100,000 and issued a total 64,788 shares of its common stock to the
acquired company's shareholder. The shares of Interpublic stock had a
market value of $4,900,000 on the date of issuance.
The shares of Interpublic Stock were issued by the Registrant without
registration in an "off-shore transaction" and solely to "non-U.S. persons"
in reliance on Rule 903(b)(3) of Regulation S under the Securities Act.
(9) On February 28, 1999, the Registrant acquired a company in
consideration for which it issued a total of 91,017 shares of Interpublic
Stock to the acquired company's former shareholder. The shares of
Interpublic Stock had a market value of $6,981,500 on the date of issuance.
The shares of Interpublic Stock were issued by the Registrant without
registration in reliance on Rule 506 of Regulation D, based on the
accredited investor status or sophistication of the former shareholder of
the acquired company.
(10) On March 4, 1999, a subsidiary of the Registrant acquired 19.56%
of the capital stock of a company in consideration for which the Registrant
paid $535,000 in cash and issued 3,885 shares of Interpublic Stock to the
minority shareholders of the company. The shares of Interpublic Stock were
valued at $291,000 on the date of issuance.
The shares of Interpublic Stock were issued by the Registrant without
registration in an "offshore transaction" and solely to "non-U.S. persons"
in reliance on Rule 903(b)(3) of Regulation S under the Securities Act.
(11) On March 5, 1999, a subsidiary of the Registrant, acquired a
company in consideration for which the Registrant paid $6,000,000 and
issued a total of 39,526 shares of its common stock to the acquired
company's former shareholders. The shares of Interpublic stock had a market
value of $3,000,000 on the date of issuance.
The shares of Interpublic Stock were issued by the Registrant without
registration in reliance on Section 4(2) under the Securities Act, based on
the sophistication of the acquired company's former stockholders.
(12) On March 31, 1999, a subsidiary of the Registrant, acquired 49%
of a company in consideration for which the Registrant paid $3,500,000 and
issued a total of 20,000 shares of Interpublic Stock to the acquired
company's shareholders. The shares of Interpublic Stock had a market value
of $1,500,000 the date of issuance.
The shares of Interpublic Stock were issued by the Registrant without
registration in reliance on Section 4(2) under the Securities Act, based on
the sophistication of the acquired company's former stockholders.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) EXHIBITS
Exhibit 10(a) Note Purchase Agreement, dated January 21, 1999
between The Interpublic Group of Companies, Inc.
("Registrant") and The Prudential Insurance Company
of America.
Exhibit 10(b) Note, dated January 21, 1999 of the Registrant in the
principal amount of $20,000,000.
Exhibit 10(c) Note, dated January 21, 1999 of the Registrant in the
principal amount of $5,000,000.
Exhibit 10(d) Supplemental Agreement made as of January 21, 1999 to
an Employment Agreement made as of July 1, 1995
between Registrant and Eugene P. Beard.
Exhibit 10(e) Supplemental Agreement made as of January 1, 1999 to
an Employment Agreement made as of January 1, 1994
between the Registrant and John J. Dooner, Jr.
Exhibit 10(f) Supplemental Agreement made as of March 24, 1999 to
an Employment Agreement made as of August 11, 1994
among Registrant, Ammirati Puris Lintas Inc. and
Martin F. Puris.
Exhibit 10(g) Term Loan Agreement between Registrant and Wachovia
Bank, N.A., dated January 27, 1999.
Exhibit 10(h) Note of the Registrant, dated January 27, 1999 in the
Principal Amount of $25,000,000.
Exhibit 11 Computation of Earnings Per Share.
Exhibit 27 Financial Data Schedule.
(b) REPORTS ON FORM 8-K
No reports on Form 8-K were filed on behalf of the Registrant
for the quarter ended March 31, 1999.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
THE INTERPUBLIC GROUP OF COMPANIES, INC.
(Registrant)
Date: May 14, 1999 BY /S/ PHILIP H. GEIER, JR.
Philip H. Geier, Jr.
Chairman of the Board
President and Chief Executive
Officer
Date: May 14, 1999 BY /S/ EUGENE P. BEARD
Eugene P. Beard
Vice Chairman -
Finance and Operations
INDEX TO EXHIBITS
Exhibit No. Description
- ----------- -----------
Exhibit 10(a) Note Purchase Agreement, dated January 21, 1999 between The
Interpublic Group of Companies, Inc. ("Registrant") and The
Prudential Insurance Company of America.
Exhibit 10(b) Note, dated January 21, 1999 of the Registrant in the
principal amount of $20,000,000.
Exhibit 10(c) Note, dated January 21, 1999 of the Registrant in the
principal amount of $5,000,000.
Exhibit 10(d) Supplemental Agreement made as of January 21, 1999 to an
Employment Agreement made as of July 1, 1995 between
Registrant and Eugene P. Beard.
Exhibit 10(e) Supplemental Agreement made as of January 1, 1999 to an
Employment Agreement made as of January 1, 1994 between the
Registrant and John J. Dooner, Jr.
Exhibit 10(f) Supplemental Agreement made as of March 24, 1999 to an
Employment Agreement made as of August 11, 1994 among
Registrant, Ammirati Puris Lintas Inc. and Martin F. Puris.
Exhibit 10(g) Term Loan Agreement between Registrant and Wachovia
Bank, N.A., dated January 27, 1999.
Exhibit 10(h) Note of the Registrant, dated January 27, 1999 in the
Principal Amount of $25,000,000.
Exhibit 11 Computation of Earnings Per Share.
Exhibit 27 Financial Data Schedule.