SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------
FORM 10-Q
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(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended: September 30, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____________ to ____________
Commission File Number: 1-10551
OMNICOM GROUP INC.
(Exact name of registrant as specified in its charter)
New York 13-1514814
(State or other jurisdiction of (IRS Employer Identification Number)
incorporation or organization)
437 Madison Avenue, New York, New York 10022 -
(Address of principal executive offices) (Zip Code)
(212) 415-3600
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year,
if changed since last report)
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. 177,060,126 (as of October 31,
2000)
OMNICOM GROUP INC. AND SUBSIDIARIES
INDEX
PART I. FINANCIAL INFORMATION
Page No.
--------
Item 1. Financial Statements
Consolidated Condensed Balance Sheets -
September 30, 2000 and December 31, 1999 1
Consolidated Condensed Statements of Income -
Three Months and Nine Months Ended
September 30, 2000 and 1999 2
Consolidated Condensed Statements of Cash Flows -
Nine Months Ended September 30, 2000 and 1999 3
Notes to Consolidated Condensed Financial Statements 4
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 8
Item 3. Quantitative and Qualitative Disclosures About Market Risk 11
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 12
Signatures 13
OMNICOM GROUP INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars in Thousands)
(Unaudited)
September 30, December 31,
2000 1999
---- ----
Assets
------
Current assets:
Cash and cash equivalents ................................... $ 435,044 $ 576,427
Short-term investments at market, which approximates cost ... 48,109 17,491
Accounts receivable, less allowance for doubtful accounts
of $49,527 and $53,720 ................................... 3,506,944 3,358,304
Billable production orders in process, at cost .............. 476,948 299,209
Prepaid expenses and other current assets ................... 583,885 453,862
---------- ----------
Total Current Assets ................................. 5,050,930 4,705,293
Furniture, equipment and leasehold improvements at cost, less
accumulated depreciation and amortization of $544,496
and $522,294 ............................................. 460,227 444,722
Investments in affiliates ................................... 397,596 367,755
Intangibles, less amortization of $383,652 and $352,081 ..... 2,698,514 2,414,941
Deferred tax benefits ....................................... 115,260 120,346
Long-term investments, at market ............................ 247,113 809,675
Deferred charges and other assets ........................... 382,875 154,905
---------- ----------
Total Assets ......................................... $9,352,515 $9,017,637
========== ==========
Liabilities and Shareholders' Equity
------------------------------------
Current liabilities:
Accounts payable ............................................ $3,460,911 $4,112,777
Advance billings ............................................ 514,701 417,044
Bank loans .................................................. 320,106 130,369
Accrued taxes and other liabilities ......................... 1,418,998 1,317,732
Dividends payable ........................................... 30,867 31,141
---------- ----------
Total Current Liabilities ............................ 5,745,583 6,009,063
---------- ----------
Long-term debt .................................................. 1,440,202 263,149
Convertible subordinated debentures ............................. 448,227 448,483
Deferred compensation and other liabilities ..................... 289,147 300,746
Deferred income taxes on unrealized gains ....................... 55,743 320,176
Minority interests .............................................. 120,436 123,122
Shareholders' equity:
Common stock ................................................ 28,076 93,543
Additional paid-in capital .................................. 946,227 808,154
Retained earnings ........................................... 1,146,955 882,051
Unamortized restricted stock ................................ (127,949) (85,919)
Accumulated other comprehensive income ...................... (166,556) 285,234
Treasury stock .............................................. (573,576) (430,165)
---------- ----------
Total Shareholders' Equity ............................. 1,253,177 1,552,898
---------- ----------
Total Liabilities and Shareholders' Equity ............. $9,352,515 $9,017,637
========== ==========
The accompanying notes to consolidated condensed financial statements are an
integral part of these statements.
1
OMNICOM GROUP INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Dollars in Thousands, Except Per Share Data)
(Unaudited)
Three Months Ended September 30, Nine Months Ended September 30,
2000 1999 2000 1999
---- ---- ---- ----
Commissions and fees .................... $1,452,523 $1,210,880 $4,351,783 $3,628,126
Operating expenses:
Salaries and related costs .......... 886,495 734,260 2,583,375 2,145,264
Office and general expenses ......... 383,774 329,460 1,168,750 990,636
---------- ---------- ---------- ----------
1,270,269 1,063,720 3,752,125 3,135,900
---------- ---------- ---------- ----------
Operating profit ........................ 182,254 147,160 599,658 492,226
Realized gain on sale of Razorfish shares -- -- 110,044 --
Net interest expense:
Interest and dividend income ........ (12,069) (4,685) (28,094) (21,161)
Interest paid or accrued ............ 35,568 20,591 79,007 60,111
---------- ---------- ---------- ----------
23,499 15,906 50,913 38,950
---------- ---------- ---------- ----------
Income before income taxes .............. 158,755 131,254 658,789 453,276
Income taxes ............................ 64,552 53,851 269,276 184,939
---------- ---------- ---------- ----------
Income after income taxes ............... 94,203 77,403 389,513 268,337
Equity in affiliates .................... 3,107 (202) 6,612 3,576
Minority interests ...................... (11,646) (6,916) (39,536) (28,924)
---------- ---------- ---------- ----------
Net income ........................ $ 85,664 $ 70,285 $ 356,589 $ 242,989
========== ========== ========== ==========
Net Income Per Common Share:
Net income:
Basic ............................... $0.49 $0.40 $2.04 $1.39
Diluted ............................. $0.48 $0.39 $1.95 $1.35
Dividends declared per common share ..... $0.175 $0.15 $0.525 $0.45
The accompanying notes to consolidated condensed financial statements are an
integral part of these statements.
2
OMNICOM GROUP INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
(Unaudited)
Nine Months Ended September 30,
2000 1999
---- ----
Cash flows from operating activities:
Net income ............................................................... $ 356,589 $ 242,989
Adjustments to reconcile net income to net cash
used for operating activities:
Gain on sale of Razorfish shares ......................................... (110,044) --
Depreciation and amortization of tangible assets ......................... 76,741 70,374
Amortization of intangible assets ........................................ 61,958 50,552
Minority interests ....................................................... 39,536 28,924
Earnings of affiliates less than dividends received ...................... 5,674 573
Decrease in deferred tax benefits ........................................ 13,510 10,382
Provision for losses on accounts receivable .............................. 10,864 3,070
Amortization of restricted stock ......................................... 28,318 20,165
Increase in accounts receivable .......................................... (284,385) (339,807)
Increase in billable production orders in process ........................ (189,175) (64,664)
Increase in prepaid expenses and other current assets .................... (147,712) (108,398)
Decrease in accounts payable ............................................. (501,539) (258,118)
Increase/(decrease) in other accrued liabilities ......................... 190,819 (74,101)
Increase in accrued taxes ................................................ 40,507 9,821
Increase in deferred charges and other assets ............................ (82,145) (13,771)
---------- ---------
Net cash used for operating activities ................................ (490,484) (422,009)
---------- ---------
Cash flows from investing activities:
Capital expenditures ..................................................... (109,753) (83,379)
Payments for purchases of equity interests in subsidiaries and affiliates,
net of cash acquired .................................................. (588,875) (295,794)
Proceeds from sales of equity interests in subsidiaries and affiliates ... 16,491 1,108
Payments for purchases of long-term investments and other assets ......... (178,005) (63,100)
Proceeds from sales of long-term investments and other assets ............ 166,102 83,684
---------- ---------
Net cash used for investing activities ................................ (694,040) (357,481)
---------- ---------
Cash flows from financing activities:
Net increase in short-term borrowings .................................... 327,880 252,109
Share transactions under employee stock plans ............................ 72,788 77,727
Proceeds from issuance of long-term debt obligations .................... 1,219,814 530,941
Repayments of principal of long-term debt obligations .................... (150,592) (75,035)
Dividends and loans to/from affiliates and minority shareholders ......... (110,738) (30,182)
Dividends paid ........................................................... (91,959) (77,758)
Purchase of treasury shares .............................................. (225,876) (252,786)
---------- ---------
Net cash provided by financing activities ............................. 1,041,317 425,016
---------- ---------
Effect of exchange rate changes on cash and cash equivalents ................. 1,824 1,708
---------- ---------
Net decrease in cash and cash equivalents ............................. (141,383) (352,766)
Cash and cash equivalents at beginning of period ............................. 576,427 648,781
---------- ---------
Cash and cash equivalents at end of period ................................... $ 435,044 $ 296,015
========== =========
Supplemental Disclosures:
Income taxes paid ......................................................... $ 151,121 $ 126,687
========== =========
Interest paid ............................................................. $ 86,770 $ 70,066
========== =========
The accompanying notes to consolidated condensed financial statements are an
integral part of these statements.
3
OMNICOM GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
1. The consolidated condensed interim financial statements included
herein have been prepared by the Company, without audit, pursuant to the
rules and regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations.
2. These statements reflect all adjustments, consisting of normally
recurring accruals which, in the opinion of management, are necessary for
a fair presentation of the information contained therein. Certain
reclassifications have been made to the September 30, 1999 and December
31, 1999 reported amounts to conform them with the September 30, 2000
presentation. These consolidated condensed financial statements should be
read in conjunction with the consolidated financial statements and notes
thereto included in the Company's annual report on Form 10-K for the year
ended December 31, 1999.
3. Results of operations for interim periods are not necessarily
indicative of annual results.
4. Basic earnings per share is based upon the weighted average number
of common shares outstanding during the period. Diluted earnings per share
is based on the above, plus, if dilutive, common share equivalents which
include outstanding options and restricted shares, and if dilutive,
adjusted for the assumed conversion of the Company's 2.25% and 4.25%
Convertible Subordinated Debentures (the "Debentures") and the assumed
increase in net income for the after tax interest cost of the Debentures.
In determining if the Debentures were dilutive at September 30, 2000 and
1999, the Debentures were assumed to be converted for each entire period.
For purposes of computing diluted earnings per share for the three months
ended September 30, 2000 and 1999, respectively, 177,489,000 and
178,071,000 common share equivalents were assumed to have been
outstanding; additionally, 11,542,000 and 6,936,000 shares, respectively,
were assumed to have been converted related to the Debentures and the
assumed increase in net income used in the computation was $4,452,000 and
$2,396,000, respectively. For purposes of computing diluted earnings per
share for the nine months ended September 30, 2000 and 1999, respectively,
177,898,000 and 178,532,000 common share equivalents were assumed to have
been outstanding; additionally, 11,547,000 and 11,552,000 shares,
respectively, were assumed to have been converted related to the
Debentures and the assumed increase in net income used in the computation
was $13,459,000 and $13,469,000, respectively. The number of shares used
in the computations of basic and diluted earnings per share were as
follows:
Three Months Nine Months
Ended September 30, Ended September 30,
------------------- -------------------
2000 1999 2000 1999
---- ---- ---- ----
Basic EPS 175,009,000 175,111,000 174,891,000 175,391,000
Diluted EPS 189,031,000 185,007,000 189,445,000 190,084,000
4
OMNICOM GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
5. Total comprehensive income and its components were as follows:
($ in 000's)
Three Months Ended Nine Months Ended
September 30, September 30,
------------- -------------
2000 1999 2000 1999
---- ---- ---- ----
Net income for the period $ 85,664 $70,285 $ 356,589 $242,989
Unrealized loss on Long-Term
Investments (a) (93,273) (275,915)
Reclassification to realized gain on sale
of Razorfish shares, net of income
taxes of $46,218 (63,826)
Foreign currency translation adjustment (b) (43,935) 26,885 (112,049) (6,605)
-------- ------- --------- --------
Comprehensive (loss) income for
the period $(51,544) $97,170 $ (95,201) $236,384
======== ======= ========= ========
(a) net of income tax benefit of $64,816 and $191,735 for the three and
nine-month periods ended September 30, 2000, respectively.
(b) net of income taxes of $30,530 and $18,683 for the three-month
periods ended September 30, 2000 and 1999, respectively, and $77,863
and $4,590 for the nine-month periods ended September 30, 2000 and
1999, respectively.
During the nine-month period ended September 30, 2000, the Company
sold a portion of its ownership interest in Razorfish Inc. and realized a
pre-tax gain of approximately $110 million. Included in net income for the
period is $63,826,000 related to this transaction and comprehensive income
for the period has been adjusted to reflect the reclassification of the
gain from unrealized to realized.
During the first quarter of the year 2000, certain interactive
marketing agencies, in which the Company holds an ownership interest,
filed initial public offerings of their equity securities. Accordingly,
the Company adjusted the carrying value of these holdings to reflect
market value and recorded an unrealized pre-tax gain of $284 million in
comprehensive income for the three-month period ended March 31, 2000.
During the second and third quarters of the year 2000, the market value of
the Company's investments in interactive marketing agencies, including
those discussed above, declined and the unrealized loss in value is
included in unrealized loss on Long-Term Investments in arriving at
comprehensive loss for the three and nine-month periods ended September
30, 2000. Despite the loss in the current period included in Accumulated
Comprehensive Income, due to the unrealized gains recorded in the prior
year the carrying value, which reflects market value, of these investments
is substantially greater than their historical cost at September 30, 2000.
5
OMNICOM GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
6. In June 1998, the Financial Accounting Standards Board ("FASB")
issued Statement of Financial Accounting Standards No. 133, as amended by
FASB No. 137 and 138, "Accounting for Derivative Instruments and Hedging
Activities" ("SFAS No. 133") which the Company is required to adopt
effective January 1, 2001. SFAS No. 133 cannot be applied retroactively.
SFAS No. 133 establishes accounting and reporting standards requiring that
every derivative instrument (including certain derivative instruments
embedded in other contracts) be recorded in the balance sheet as either an
asset or liability measured at its fair value. SFAS No. 133 requires that
changes in the derivative's fair value be recognized currently in earnings
unless specific hedge accounting criteria are met. Special accounting for
qualifying hedges allows a derivative's gains and losses to offset related
results on the hedged item in the income statement, and requires that a
company must formally document, designate, and assess the effectiveness of
transactions that receive hedge accounting.
The Company intends to adopt SFAS No. 133 for its fiscal year ending
December 31, 2001. The impact of SFAS No. 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 No. 133 will be material to its financial position.
Additionally, in December 1999 the Securities and Exchange
Commission (SEC) issued Staff Accounting Bulletin 101 (SAB 101), which
will become effective for the Company in the fourth quarter 2000. The
Company is substantially in compliance with the provisions of SAB 101 and
accordingly there will be no material impact on the Company's financial
statements as a result of SAB 101.
6
OMNICOM GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
7. The Company's wholly-owned and partially-owned businesses operate
within the corporate communications services operating segment. These
businesses provide a variety of communications services to clients through
several worldwide, national and regional independent agency brands. The
businesses exhibit similar economic characteristics driven from their
consistent efforts to create customer driven marketing communications and
services that build their clients' businesses. A summary of the Company's
operations by geographic area as of September 30, 2000 and 1999, and for
the three and nine-months then ended is presented below:
(Dollars in Thousands)
---------------------------------------------------------------------------------------
United United Other Other
States Kingdom Germany France Europe International Consolidated
------ ------- ------- ------ ------ ------------- ------------
Commissions and Fees
3 months Ended September 30:
2000 $775,698 $181,927 $105,458 $99,118 $124,714 $165,608 $1,452,523
1999 $608,670 $172,779 $98,359 $78,671 $125,314 $127,087 $1,210,880
Commissions and Fees
9 months Ended September 30:
2000 $2,298,438 $573,452 $312,672 $278,065 $405,132 $484,024 $4,351,783
1999 $1,832,114 $506,787 $290,795 $255,354 $381,308 $361,768 $3,628,126
Long-Lived Assets
at September 30:
2000 $245,163 $92,760 $9,126 $15,812 $34,855 $62,511 $460,227
1999 $165,721 $101,907 $11,887 $15,784 $37,320 $57,715 $390,334
8. On April 27, 2000, the Company extended its $750 million
revolving credit facility (the "Facility"). The Facility was renewed under
the same terms with an additional provision, which allows the Company to
convert all amounts outstanding under the Facility to a one-year term
loan. Additionally, on July 31, 2000 the Facility was amended and
increased to $1 billion. The Facility, which allows for the issuance of $1
billion of commercial paper, expires on April 26, 2001. In addition to the
$1 billion credit facility the Company has a $500 million 5-year revolving
credit facility available which also allows for the issuance of commercial
paper and expires on June 30, 2003 (together with the Facility, the
"Facilities").
Amounts borrowed or issued under the Facilities at September 30,
2000, which include commercial paper of $1,040.1 million and bank loans of
$200 million, were classified as long-term debt. Amounts available under
the Facilities at September 30, 2000 were $259.9 million. The Company has
additional unused, unsecured lines of credit available which, together
with the lines of credit under the Facilities, aggregated $318.8 million
at September 30, 2000.
7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Results of Operations
Third Quarter 2000 Compared to Third Quarter 1999
Consolidated worldwide revenues from commission and fee income increased
20% in the third quarter of 2000 to $1,452.5 million compared to $1,210.9
million in the third quarter of 1999. Consolidated domestic revenues increased
27.4% in the third quarter of 2000 to $775.7 million compared to $608.7 million
in the third quarter of 1999. Consolidated international revenues increased
12.4% in the third quarter of 2000 to $676.8 million compared to $602.2 million
in the third quarter of 1999. The effect of acquisitions, net of divestitures,
increased worldwide revenues by 10.0% and changes in the foreign exchange value
of the U.S. dollar decreased worldwide revenues by 7.3%. The remaining 17.3%
increase in consolidated worldwide revenues was due to the growth of existing
businesses.
Worldwide operating expenses, including net interest expense, increased
19.8% in the third quarter of 2000 to $1,293.8 million compared to $1,079.6
million in the third quarter of 1999 primarily as a result of increased salaries
and client services expenditures in support of an increased revenue base. The
effect of acquisitions, net of divestitures, increased worldwide operating
expenses by 8.8% and changes in the foreign exchange value of the U.S. dollar
decreased worldwide operating expenses by 7.0%.
Net interest expense increased in the third quarter of 2000 to $23.5
million as compared to $15.9 million in the same period in 1999. This reflected
higher average interest rates during the period and increased borrowings
primarily as a result of acquisitions and share repurchases.
Pretax profit margin improved to 10.9% in the third quarter of 2000 as
compared to 10.8% in the same period in 1999 and operating margin, which
excludes net interest expense, improved to 12.5 % in the third quarter of 2000
as compared to 12.2% in the same period in 1999.
The effective income tax rate was 40.7% in the third quarter of 2000 as
compared to 41.0% in the third quarter of 1999. This decrease is due principally
to lower effective tax rates at the Company's international subsidiaries.
Equity in affiliates increased to $3.1 million from $(.2) million in the
third quarter of 1999. This increase is primarily the result of acquisitions and
higher earnings of existing affiliates in which the Company owns less than a 50%
equity interest.
Minority interest expense increased to $11.6 million from $6.9 in the
third quarter of 1999. This increase is primarily due to acquisitions and
greater earnings by subsidiaries where minority interests exist.
8
Net income increased 21.9% to $85.7 million and diluted earnings per share
increased 23.1% to $0.48 in the third quarter of 2000 as compared to $70.3
million and $0.39 per share, respectively, in the same period in the prior year.
Nine Months 2000 Compared to Nine Months 1999
Consolidated worldwide revenues from commission and fee income increased
20.0% in the first nine months of 2000 to $4,351.8 million compared to $3,628.1
million in the first nine months of 1999. Consolidated domestic revenues
increased 25.5% in the first nine months of 2000 to $2,298.4 million compared to
$1,832.1 million in the same period in 1999. Consolidated international revenues
increased 14.3% in the first nine months of 2000 to $2,053.4 million compared to
$1,796.0 million in the same period in 1999. The effect of acquisitions, net of
divestitures, increased worldwide revenues by 8.5% and changes in the foreign
exchange value of the U.S. dollar decreased worldwide revenue by 4.8%. The
remaining 16.3% increase in consolidated worldwide revenues was due to the
growth of existing businesses.
Worldwide operating expenses, including net interest expense, increased
19.8% in the first nine months of 2000 to $3,803.0 million compared to $3,174.9
million in the first nine months of 1999 primarily as a result of increased
salaries and client services expenditures in support of an increased revenue
base. The effect of acquisitions, net of divestitures, increased worldwide
operating expenses by 8.1% and changes in the foreign exchange value of the U.S.
dollar decreased worldwide operating expenses by 4.8%.
Net interest expense increased to $50.9 million in the first nine months
of 2000 compared to $39.0 million in the same period in 1999. This increase
reflects higher interest rates and higher average borrowings as a result of both
acquisitions and share repurchases during the period.
Excluding the gain on sale of Razorfish shares, pretax profit margin
improved to 12.6% for the first nine months of 2000 as compared to 12.5% in the
same period in 1999. Operating margin, which excludes net interest expense, was
13.8% for the first nine months of 2000 as compared to 13.6% in the same period
in 1999.
The effective income tax rate was 40.9% for the first nine months of 2000
as compared to 40.8% for the same period in 1999. This increase primarily
reflects the impact of the gain on sale of Razorfish shares which resulted in a
higher marginal tax rate.
Equity in affiliates increased to $6.6 million from $3.6 million in the
nine months of 1999. This increase is primarily the result of acquisitions and
higher earnings of existing affiliates in which the Company owns less than a 50%
equity interest.
9
Minority interest expense increased to $39.5 million from $28.9 million in
the nine months of 1999. This increase is primarily due to acquisitions and
greater earnings by subsidiaries where minority interests exist.
Including the gain on sale of Razorfish shares, net income increased 46.8%
to $356.6 million in the first nine months of 2000 as compared to $243.0 million
in the same period in 1999. Excluding this gain, net income increased 20.5% to
$292.8 million in the first nine months of 2000 compared to the same period in
1999 and diluted earnings per share (EPS) increased 20.0% to $1.62 in the first
nine months of 2000 from $1.35 for the same period in 1999.
Capital Resources and Liquidity
Cash and cash equivalents at September 30, 2000 decreased to $435.0
million from $576.4 million at December 31, 1999. The relationship between
payables to the media and suppliers and receivables from clients, at September
30, 2000, is consistent with industry norms.
The Company maintains relationships with a number of banks worldwide,
which have extended unsecured committed lines of credit in amounts sufficient to
meet the Company's cash needs. At September 30, 2000, the Company had $1,997.8
million in such unsecured committed lines of credit of which $318.8 million was
available.
The Company has a $1 billion revolving credit facility (the "Facility"),
which allows for the issuance of $1 billion of commercial paper. The Facility
allows the Company to convert all amounts outstanding at expiration, on April
26, 2001, into a one-year term loan. In addition to the Facility the Company has
a $500 million revolving credit facility available, which also allows for the
issuance of commercial paper, and expires on June 30, 2003.
During the fourth quarter 2000, the Company increased the amount of
securities registered under shelf registration statements ("shelf filings") with
the Securities Exchange Commission (SEC) from approximately $329 million to $1
billion. The shelf filings provide for the issuance of debt or equity
securities, from time to time.
In the fourth quarter of 2000 the Company intends to call its 4 1/4%
Convertible Subordinated Debentures. The amount outstanding at September 30,
2000 was approximately $218 million. The Company expects that the entire amount
will be redeemed through the issuance of approximately 6.9 million shares of
common stock. These shares have been included in the computation of diluted EPS
for all periods presented in the accompanying financial statements.
Management believes the Company's ability to access the public capital
markets, the aggregate lines of credit available to it and cash flow from
operations provide the Company with sufficient liquidity and are adequate to
support foreseeable operating requirements.
10
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK
Market Risk
The Company's market risks consist primarily of the impact of changes in
currency exchange rates on assets and liabilities of non-U.S. operations and the
impact of changes in interest rates on debt.
The Company's 1999 Form 10-K provides a more detailed discussion of the
market risks affecting its operations. As of September 30, 2000, no material
change had occurred in the Company's market risks, as compared to the disclosure
in its Form 10-K for the year ending December 31, 1999.
FORWARD-LOOKING STATEMENTS
"Management's Discussion and Analysis of Financial Condition and Results
of Operations" and "Quantitative and Qualitative Disclosures About Market Risk"
set forth in this report contain disclosures which are forward-looking
statements. Forward-looking statements include all statements that do not relate
solely to historical or current facts, and can be identified by the use of words
such as "may," "will," "expect," "project," "estimate," "anticipate,"
"envisage," "plan" or "continue." These forward-looking statements are based
upon the Company's current plans or expectations and are subject to a number of
uncertainties and risks that could significantly affect current plans and
anticipated actions and the Company's future financial condition and results.
The uncertainties and risks include, but are not limited to, general economic
and business conditions; loss of significant customers; changes in levels of
client advertising; the impact of competition; risks relating to acquisition
activities; and the complexity of integrated computer systems. As a consequence,
current plans, anticipated actions and future financial condition and results
may differ from those expressed in any forward-looking statements made by or on
behalf of the Company.
11
OMNICOM GROUP INC. AND SUBSIDIARIES
PART II. OTHER INFORMATION
Item 6. Exhibit and Reports on Form 8-K
(a) Exhibits
Exhibit Number Description of Exhibit
- -------------- ----------------------
27. Financial Data Schedule (filed in electronic format only)
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the third quarter of 2000.
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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.
Omnicom Group Inc.
(Registrant)
------------------
Date November 14, 2000 /s/ Randall J. Weisenburger
---------------------------------
Randall J. Weisenburger
Executive Vice President
and Chief Financial Officer
(Principal Financial Officer)
Date November 14, 2000 /s/ Philip J. Angelastro
---------------------------------
Philip J. Angelastro
Controller
(Chief Accounting Officer)
13