SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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: March 31, 2001
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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
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OMNICOM GROUP INC.
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(Exact name of registrant as specified in its charter)
New York 13-1514814
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(State or other jurisdiction of (IRS Employer Identification Number)
incorporation or organization)
437 Madison Avenue, New York, New York 10022
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(Address of principal executive offices) (Zip Code)
(212) 415-3600
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(Registrant's telephone number, including area code)
Not Applicable
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(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. 185,220,561 (as of April 30,
2001)
OMNICOM GROUP INC. AND SUBSIDIARIES
INDEX
PART I. FINANCIAL INFORMATION
Page No.
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Item 1. Financial Statements
Consolidated Condensed Balance Sheets -
March 31, 2001 and December 31, 2000 1
Consolidated Condensed Statements of Income -
Three Months Ended March 31, 2001 and 2000 2
Consolidated Condensed Statements of Cash Flows -
Three Months Ended March 31, 2001 and 2000 3
Notes to Consolidated Condensed Financial Statements 4
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
Item 3. Quantitative and Qualitative Disclosures About Market Risk 12
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 13
Signatures 14
OMNICOM GROUP INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars in Thousands)
(Unaudited)
March 31, December 31,
2001 2000
---- ----
Assets
------
Current assets:
Cash and cash equivalents .................................................. $ 420,705 $ 516,817
Short-term investments at market, which approximates cost .................. 37,466 59,722
Accounts receivable, less allowance for doubtful accounts
of $64,639 and $72,745 .................................................. 3,355,318 3,857,182
Billable production orders in process, at cost ............................. 434,418 403,565
Prepaid expenses and other current assets .................................. 547,169 529,597
----------- -----------
Total Current Assets ................................................ 4,795,076 5,366,883
Furniture, equipment and leasehold improvements at cost, less
accumulated depreciation and amortization of $558,202
and $557,210 ............................................................ 482,321 483,105
Investments in affiliates .................................................. 405,630 432,664
Intangibles, less amortization of $420,134 and $410,396 .................... 2,916,547 2,948,821
Deferred tax benefits ...................................................... 108,061 136,196
Long-term investments, available-for-sale .................................. 33,915 79,554
Deferred charges and other assets .......................................... 485,679 444,276
----------- -----------
Total Assets ........................................................ $ 9,227,229 $ 9,891,499
=========== ===========
Liabilities and Shareholders' Equity
------------------------------------
Current liabilities:
Accounts payable ........................................................... $ 3,227,592 $ 4,351,039
Current portions of long-term debt ......................................... 30,697 29,307
Bank loans ................................................................. 143,788 72,813
Advance billings ........................................................... 518,958 630,502
Accrued taxes on income .................................................... 58,482 159,238
Other accrued taxes ........................................................ 165,047 167,898
Other accrued liabilities .................................................. 955,279 1,183,199
Dividends payable .......................................................... 32,246 31,056
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Total Current Liabilities ............................................. 5,132,089 6,625,052
----------- -----------
Long-term debt ................................................................. 1,053,927 1,015,419
Convertible debentures ......................................................... 1,079,895 229,968
Deferred compensation and other liabilities .................................... 297,894 296,921
Deferred income taxes on unrealized gains ...................................... 32,701 37,792
Minority interests ............................................................. 119,034 137,870
Shareholders' equity:
Common stock ............................................................... 29,115 29,115
Additional paid-in capital ................................................. 1,120,116 1,166,076
Retained earnings .......................................................... 1,322,029 1,258,568
Unamortized restricted stock ............................................... (108,072) (119,796)
Accumulated other comprehensive loss ....................................... (310,012) (232,063)
Treasury stock ............................................................. (541,487) (553,423)
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Total Shareholders' Equity ............................................ 1,511,689 1,548,477
----------- -----------
Total Liabilities and Shareholders' Equity ............................ $ 9,227,229 $ 9,891,499
=========== ===========
The accompanying notes to consolidated condensed financial statements are an
integral part of these statements.
OMNICOM GROUP INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Dollars in Thousands, Except Per Share Data)
(Unaudited)
Three Months Ended March 31,
----------------------------
2001 2000
---- ----
Revenue .................................... $1,601,134 $1,379,015
Operating expenses:
Salaries and related costs ............. 944,865 838,867
Office and general expenses ............ 464,985 376,461
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1,409,850 1,215,328
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Operating profit ........................... 191,284 163,687
Gain on sale of Razorfish shares ........... -- 110,044
Net interest expense ....................... 20,309 11,321
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Income before income taxes ................. 170,975 262,410
Income taxes ............................... 67,723 108,469
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Income after income taxes .................. 103,252 153,941
Equity in affiliates ....................... 410 876
Minority interests ......................... (8,382) (11,279)
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Net income ........................... $ 95,280 $ 143,538
========== ==========
Net Income Per Common Share:
Net income:
Basic .................................. $ 0.52 $ 0.82
Diluted ................................ $ 0.52 $ 0.78
Dividends declared per common share ........ $ 0.175 $ 0.175
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, Except Per Share Data)
(Unaudited)
Three Months Ended March 31,
----------------------------
2001 2000
---- ----
Cash flows from operating activities:
Net income ................................................................... $ 95,280 $ 143,538
Adjustments to reconcile net income to net cash used for operating activities:
Loss (Gain) on sale of long-term investments ................................. 3,500 (110,044)
Depreciation and amortization of tangible assets ............................. 26,670 25,339
Amortization of intangible assets ............................................ 23,236 19,832
Minority interests ........................................................... 8,382 11,279
Earnings of affiliates less than dividends received .......................... 3,274 794
Decrease in deferred tax benefits ............................................ 16,566 1,759
Tax benefit on employee stock plans .......................................... 6,738 9,655
Provisions for losses on accounts receivable ................................. 1,879 2,341
Amortization of restricted stock ............................................. 10,027 7,465
Decrease in accounts receivable .............................................. 410,080 171,051
Increase in billable production orders in process ............................ (38,135) (102,949)
Increase in prepaid expenses and other current assets ........................ (23,187) (113,490)
Decrease in accounts payable ................................................. (1,021,226) (882,291)
Decrease in other accrued liabilities ........................................ (300,187) (159,401)
(Decrease) increase in accrued taxes on income ............................... (99,907) 36,943
(Increase) decrease in advances to affiliates ................................ (17,726) 40,916
(Increase) decrease in deferred charges and other ............................ (19,054) 4,671
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Net cash used for operating activities .................................... (913,790) (892,592)
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Cash flows from investing activities:
Capital expenditures ......................................................... (34,579) (33,089)
Payments for purchases of equity interests in subsidiaries and
affiliates, net of cash acquired .......................................... (83,469) (129,065)
Proceeds from sales of equity interests in subsidiaries and affiliates ....... -- 6,017
Purchases of long-term investments and other assets .......................... -- (132,602)
Proceeds from sales of long-term investments and other assets ................ 63,247 145,628
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Net cash used for investing activities .................................... (54,801) (143,111)
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Cash flows from financing activities:
Net increase in short-term borrowings ........................................ 80,120 192,527
Share transactions under employee stock plans ................................ 21,009 7,673
Proceeds from issuance of convertible debentures and
long-term debt obligations ................................................ 913,409 934,336
Repayments of principal of long-term debt obligations ........................ (11,954) (146,019)
Dividends from and loans (to) affiliates and minority shareholders ........... (29,401) (55,112)
Dividends paid ............................................................... (30,628) (30,677)
Purchase of treasury shares .................................................. (60,149) (86,270)
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Net cash provided by financing activities ................................. 882,406 816,458
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Effect of exchange rate changes on cash and cash equivalents ...................... (9,927) (3,720)
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Net decrease in cash and cash equivalents ................................. (96,112) (222,965)
Cash and cash equivalents at beginning of period .................................. 516,817 576,427
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Cash and cash equivalents at end of period ........................................ $ 420,705 $ 353,462
=========== ===========
Supplemental Disclosures:
Income taxes paid ............................................................ $ 113,592 $ 65,622
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Interest paid ................................................................ $ 24,604 $ 18,092
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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, in all material respects, of the information contained
therein. Certain reclassifications have been made to the March 31, 2000
and December 31, 2000 reported amounts to conform them with the March 31,
2001 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, 2000.
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 Convertible
Subordinated Debentures (the "Debentures") and the assumed increase in net
income for the after tax interest cost of the Debentures. In December
2000, the 4 1/4% Convertible Subordinated Debentures were called for
redemption and subsequently converted by holders into shares of common
stock. The additional shares are included in shares outstanding at March
31, 2001. In determining if the Debentures were dilutive at March 31, 2001
and 2000, the Debentures were assumed to have been converted for the
entire quarter. For purposes of computing diluted earnings per share for
the three months ended March 31, 2001 and 2000, respectively, 183,809,000
and 177,484,000 common share equivalents were assumed to have been
outstanding. Additionally, 4,614,000 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 $2,088,000 and
$4,441,000, respectively. The number of shares used in the computations of
basic and diluted earnings per share were as follows:
Three Months
Ended March 31,
---------------------------
2001 2000
---- ----
Basic EPS 181,842,000 174,669,000
Diluted EPS 188,423,000 189,036,000
4
OMNICOM GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Continued)
5. Total comprehensive income and its components were as follows:
Three Months Ended
March 31,
($ in 000's)
-------------------
2001 2000
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Net income for the period ............................ $ 95,280 $143,538
Unrealized loss on long-term investments,
net of income taxes of $6,314 and $8,910 in
2001 and 2000, respectively .......................... (9,471) (12,910)
Reclassification to realized gain on sale of
Razorfish shares, net of income taxes of $46,218 ..... -- (63,826)
Reclassification to realized loss on sale of certain
marketable securities, net of income tax benefit
of $1,400 ............................................ 2,100 --
Foreign currency translation adjustment, net of
income taxes of $47,052 and $18,596
in 2001 and 2000, respectively ....................... (70,578) (26,761)
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Comprehensive income for the period .................. $ 17,331 $ 40,041
======== ========
During the three months ended March 31, 2001, the Company sold its
minority interests in several public companies that it held as
investments. The Company realized a pre-tax loss of $3,500,000 related to
this transaction and comprehensive income for the period has been adjusted
to reflect the reclassification of this loss from unrealized to realized.
During the three months ended March 31, 2001, the market value of
the Company's investments in certain public marketing and corporate
communication companies declined. Accordingly, the Company adjusted the
carrying value of these investments to reflect the market value as of
March 31, 2001 and recorded an unrealized pre-tax loss of $15,785,000 in
comprehensive income.
During the three months ended March 31, 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.
5
OMNICOM GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Continued)
In May 2001, the Company contributed to a new holding company the
equity of an entity that held its investments in several public and
private companies which had been classified as long term investments. The
investments were primarily companies in the e-services industry. The
Company received 8.5% cumulative preferred stock for its contribution. The
common stock of the new holding company is owned by a private equity fund.
No gain or loss was recognized in the transaction.
6. In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 133, "Accounting for
Derivative Instruments and Hedging Activities" ("SFAS No. 133") (as
amended by SFAS 138), which the Company adopted effective January 1, 2001.
SFAS No. 133 requires 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.
Derivatives that are not cash flow hedges must be adjusted to fair value
through income. If the derivative is a hedge, depending on the nature of
the hedge, changes in the fair value of derivatives will either be offset
against the change in fair value of the hedged assets, liabilities or firm
commitments through earnings or recognized in other comprehensive income
until the hedged item is recognized in earnings. The ineffective portion
of a derivative's change in fair value will be immediately recognized in
earnings.
The Company recorded a $2.9 million after tax charge ($4.9 million
pre-tax) for the cumulative effect of adopting, effective January 1, 2001,
SFAS No. 133. The charge resulted from the Company's accounting for a
hedge of its Yen net investments. The Company utilized a cross currency
contract (the "Contract") to hedge its Yen net investment. Consistent with
the Company's policy with respect to derivative instruments and hedging
activities and in accordance with SFAS No. 133, when the spot rate is
declared as the underlying hedge of a net investment, any ineffectiveness
is recorded in operating income or expense. During the first quarter of
2001, the Company terminated the portion of the Contract which gave rise
to the ineffectiveness and recorded an additional after tax charge of
$300,000 ($500,000 pre-tax). As a result of the termination of part of the
Contract, no measurable ineffectiveness will result for the remaining
term.
The Company also uses forward contracts to hedge its foreign
currency intercompany receivables and payables. The term of these forward
contracts, on average, is typically 30 days. These contracts are marked to
market through earnings and the changes in market value are offset by the
changes in the spot value of the foreign currency receivable or payable.
This accounting is similar to the accounting applied prior to adopting
SFAS 133, as amended. The changes in value are included in operating
income or expense and were not material.
7. The Company's wholly and partially owned businesses operate within the
marketing and 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
6
OMNICOM GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Continued)
from their consistent efforts to create customer driven marketing and
corporate communications and services that build their clients'
businesses.
A summary of the Company's operations by geographic area as of March
31, 2001 and 2000, and for the three months then ended is presented below:
(Dollars in Thousands)
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United United Other Other
States Kingdom Germany France Europe International Consolidated
------ ------- ------- ------ ------ ------------- ------------
2001
Revenue $896,597 $195,655 $108,972 $97,230 $143,833 $158,848 $1,601,135
Long-Lived Assets 250,990 97,368 10,124 15,483 35,925 72,431 482,321
2000
Revenue $717,378 $188,902 $100,677 $89,037 $130,688 $152,333 $1,379,015
Long-Lived Assets 225,809 102,393 10,259 16,599 34,447 59,066 448,573
8. On April 26, 2001, the Company extended its 364-day revolving credit
facility. The facility was renewed under substantially the same terms as
had previously been in effect, including a provision which allows the
Company to convert all amounts outstanding at expiration on April 25,
2002, into a one-year term loan. The Company also has a $500 million
5-year revolving credit facility, which expires on June 30, 2003. Both
facilities allow for the issuance of commercial paper, and on a combined
basis, the Company can issue $1.0 billion in commercial paper.
Amounts outstanding under the revolving credit facilities at March
31, 2001 include loans of $300.0 million, and $559.0 million of commercial
paper, both classified as long-term debt.
The Company also had short-term bank loans of $143.8 at March 31,
2001, primarily comprised of bank overdrafts of international
subsidiaries, which are treated as unsecured loans pursuant to bank
agreements.
At March 31, 2001, the Company had committed unsecured credit lines
aggregating $1,843.0 million. The unused portion of credit lines was
$840.2 at March 31, 2001.
9. In February 2001, the Company completed the issuance of $850 million of
aggregate principal amount of Liquid Yield Option Notes (LYONs) due
February 7, 2031. The net proceeds from the LYONs offering were $830.2
million. The LYONs are unsecured, unsubordinated zero-coupon securities
that may be converted into common shares, subject to specified conditions
relating to the price of our common shares. The initial conversion price
is $110.01 per share subject to antidilutive adjustments.
The Company may be required to redeem the LYONs after February 7,
2002 with cash or common stock or a combination of both, at the Company's
election. Additionally, the Company has the option of redeeming the LYONs
after February 7, 2006 for cash.
7
OMNICOM GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Continued)
Furthermore, after February 7, 2006, the Company may be obligated to
pay contingent cash interest equal to the amount of dividends it pays to
common shareholders during the relevant period, if the Company's stock
price reaches specified thresholds.
8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITIONS AND RESULTS OF OPERATIONS
Results of Operations
First Quarter 2001 Compared to First Quarter 2000
Consolidated worldwide revenue increased 16.1% in the first quarter of
2001 to $1,601.1 million compared to $1,379.0 million in the first quarter of
2000. Consolidated domestic revenue increased 25.0% in the first quarter of 2001
to $896.6 million compared to $717.4 million in the first quarter of 2000.
Consolidated international revenue increased 6.5% in the first quarter of 2001
to $704.5 million compared to $661.6 million in the first quarter of 2000. The
effect of acquisitions, net of divestitures, increased worldwide revenue by 6.6%
and changes in the foreign exchange value of the U.S. dollar decreased worldwide
revenue by 4.3%. The remaining 13.8% increase in consolidated worldwide revenue
was due to the growth of existing businesses, including net new business wins.
Worldwide operating expenses, including net interest expense, increased
16.6% in the first quarter of 2001 compared to the first quarter of 2000. The
effect of acquisitions, net of divestitures, increased worldwide operating
expenses by 6.9% and changes in the foreign exchange value of the U.S. dollar
decreased worldwide operating expenses by 4.3%. The remaining increase of 14.0%
reflects normal salary increases and growth in client services expenditures to
support the increased revenue base and the cumulative effect of adopting SFAS
133.
Net interest expense increased in the first quarter of 2001 to $20.3
million as compared to $11.3 million in the same period in 2000. This increase
reflects increased debt levels used primarily to fund acquisitions and share
repurchases, offset by reductions in interest expense resulting from the
conversion of our 4.25% Convertible Subordinated Debenture at the end of last
year and lower overall interest rates.
The operating margin, which excludes net interest expense, was 11.9% in
the first quarter of 2001 as compared to 11.9% in the same period in 2000.
Excluding the gain on sale of Razorfish shares, pretax profit margin was 10.7%
in the first quarter of 2001 as compared to 11.0% in the same period in 2000.
The effective income tax rate was 39.6% in the first quarter of 2001 as
compared to 41.3% in the first quarter of 2000. This decrease is due to
continued efforts to reduce our effective tax rate and to the impact of the gain
on sale of Razorfish shares last year, which resulted in a higher marginal tax
rate for the first quarter of 2000.
The decrease in equity in affiliates is the result of the acquisition of
additional ownership interests in certain affiliates that resulted in their
consolidation in the March 31, 2001 financial statements and lower profits
earned by certain companies in which we own less than a 50% equity interest.
9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITIONS AND RESULTS OF OPERATIONS (Continued)
The decrease in minority interest expense is primarily due to the
acquisition of additional ownership interests and lower earnings by companies
where minority interests exist.
Excluding the gain on sale of Razorfish shares, net income increased 19.6%
to $95.3 million and diluted earnings per share increased 15.6% to $0.52 in the
first quarter of 2001. Including this gain, net income decreased 33.6% to $95.3
million in the first quarter of 2001 as compared to $143.5 million in the same
period in 2000 and diluted earnings per share decreased 33.3% to $0.52 in the
current quarter compared to $0.78 in the prior year period.
Capital Resources and Liquidity
Cash and cash equivalents at March 31, 2001 decreased to $420.7 million
from $516.8 million at December 31, 2000. The relationship between payables to
the media and suppliers and receivables from clients, at March 31, 2001, is
consistent with industry norms.
On April 26, 2001, we renewed our 364-day revolving credit facility. The
facility, which supports the issuance of commercial paper, was renewed under
substantially the same terms as previously existed, including a provision that
allows us to convert all amounts outstanding at expiration on April 25, 2002,
into a one-year term loan. Together with our $500 million revolving credit
facility, we can issue $1.0 billion in commercial paper.
We also maintain relationships with a number of banks worldwide. At March
31, 2001, we had $1,843.0 million in such unsecured committed lines of credit,
of which $840.2 million was available.
In February 2001, we completed the issuance of $850 million aggregate
principal amount of Liquid Yield Option Notes ("LYONs") due February 7, 2031.
The net proceeds from the LYONs offering were $830.2 million. The LYONs are
unsecured, unsubordinated zero-coupon securities that may be converted into our
common shares, subject to specified conditions relating to the price of our
common shares. The initial conversion price is $110.01 per share subject to
antidilutive adjustment. We may be required to redeem the LYONs after February
7, 2002 with cash or common stock or a combination of both, at our election.
Additionally, we have the option of redeeming the LYONs after February 7, 2006
for cash. Furthermore, we may be obligated to pay contingent cash interest after
February 7, 2006 equal to the amount of dividends we pay to common shareholders
during specified six-month periods, if our stock price reaches specified
thresholds.
Management believes the aggregate lines of credit available and cash flow
from operations provide us with sufficient liquidity and are adequate to support
foreseeable operating requirements.
10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITIONS AND RESULTS OF OPERATIONS (Continued)
Long-Term Investments
We have investments available-for-sale, which are comprised of certain
minority interests in public marketing and corporate communication companies
that specialize in digital media and other interactive services. The market
value of the public companies are subject to a high degree of market volatility.
This volatility is reflected in unrealized gains and losses recorded in
shareholders' equity as accumulated other comprehensive income.
During the quarter ended March 31, 2001, we sold our minority interests in
certain public companies that we held as investments.
In May 2001, we contributed to a new holding company the equity of an
entity that held our investments in several public and private companies which
had been classified as long term investments. The investments were primarily
companies in the e-services industry. We received 8.5% cumulative preferred
stock for its contribution. The common stock of the new holding company is owned
by a private equity fund. No gain or loss was recognized in the transaction.
Management continually monitors the value of these investments to
determine whether an other than temporary impairment has occurred. As of the
quarter ended March 31, 2001, the carrying value of these investments
approximated their fair value.
11
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK
Market Risk
Our market risks primarily consist 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.
Our 2000 Form 10-K provides a more detailed discussion of the market risks
affecting our operations. As of March 31, 2001, no material change had occurred
in our market risks, as compared to the disclosure in our Form 10-K for the year
ending December 31, 2000.
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 within the meaning of the federal securities laws. Forward-looking
statements include all statements that do no 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 our current plans or
expectations and are subject to a number of uncertainties and risks that could
significantly affect current plans and anticipated actions and our future
financial condition and results. The uncertainties and risks include, but are
not limited to, changes in general economic conditions, competitive factors,
client communication requirements, the hiring and retention of human resources
and other factors. In addition, our international operations are subject to the
risk of currency fluctuations, exchange controls and similar risks discussed in
Item 3 above. 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 us or on our behalf.
12
PART II. OTHER INFORMATION
Item 6. Exhibit and Reports on Form 8-K
(a) Exhibits
Exhibit Number Description of Exhibit
- -------------- ----------------------
10.1 364-Day Credit Agreement, dated as of April 30,
1999, amended and restated April 26, 2001, among
Omnicom Finance Inc., Omnicom Finance PLC, Omnicom
Capital Inc., the financial institutions party
thereto, Citibank, N.A., as Administrative Agent,
The Bank of Nova Scotia, as Documentation Agent,
The Chase Manhattan Bank, Fleet National Bank and
San Paolo IMI SPA as Syndication Agents.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the first quarter of 2001.
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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)
------------------
May 14, 2001 /s/ Randall J. Weisenburger
---------------------------------
Randall J. Weisenburger
Executive Vice President
and Chief Financial Officer
(Principal Financial Officer)
May 14, 2001 /s/ Philip J. Angelastro
---------------------------------
Philip J. Angelastro
Controller
(Chief Accounting Officer)
14