Exhibit 99.1
The Interpublic Group Of Companies
December 9, 2002
Today's Agenda
o Who We Are
o How We're Addressing Client Needs Today
o Long-term Industry Prospects
o Our Strategic Priorities
What Business Are We In?
THE IDEA BUSINESS
o Our sole purpose is to build the demand side of our clients'
businesses and build value for their brands
o The way we make that happen is through ideas
Who Are We?
o Interpublic is a $6 billion global advertising and marketing
communications company
o We have dedicated people
o We have leading agency brands
o We have great clients
Blue-Chip Clients, Long-Term Relationships
Client
Relationship Client # of Countries Agency Networks
- ------------ ------ -------------- ---------------
1893 Unilever 58 Lowe, McCann
1893 Exxon Mobil 22 McCann
1908 BDF Beiersdorf 31 Foote Cone & Belding
1916 GM 50 McCann, Lowe
1940 Nestle 61 Lowe, McCann
1942 Coca-Cola 50 McCann, Lowe
1953 SC Johnson 90 Foote Cone & Belding
1954 Kraft 36 Foote Cone & Belding
1954 The Gillette Company 58 McCann, Lowe
1956 Nabisco 38 Foote Cone & Belding
1962 Johnson & Johnson 54 Lowe, McCann
1973 L'Oreal 77 McCann
1988 UPS 43 McCann
Great New Clients
Wendy's
Revlon
QWest
Marriott
AXA
CVS/pharmacy
Notable Fourth Quarter Wins
o Novartis - Diovan Rx & Zelnorm RX - $220M
o Bank of America - $170M
o Eli Lilly - Duloxetine - $17M
o Six Flags - $15M
o National City Bank - $30M
o Levi Strauss - $10M
o Boots - Clearasil - $15M
Source: Trade Press
Interpublic Has Three Global Agency Systems
[Slide contains graphic with the following information:]
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McCann-Erickson WorldGroup FCB Group The Partnership
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McCann-Erickson Advertising Foote, Cone & Belding Lowe
MRM Partners FCBi DraftWorldwide
Momentum Marketing Drive Zipatoni
Torre Lazur McCann R/GA
Universal McCann
FutureBrand
- ---------------------------- ---------------------- ----------------------
130 Countries 97 Countries 89 Countries
Two Marketing Services Organizations
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Advanced Marketing Interpublic Sports &
Services Entertainment Group
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NFO Octagon Sports
Golin Harris Jack Morton Events
Weber Shandwick Entertainment PR
Initiative Media
Magna Global
And Powerful Domestic Players
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Independent Agencies
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Campbell-Ewald
Deutsch
Hill Holliday
Mullen
Dailey & Associates
Bozell
The Martin Agency
Carmichael-Lynch
Gotham
Addressing Client Needs . . .
Today....Marketers require a full range of marketing communications competencies
to build their brands
Increasingly, they are looking to their agency partners to provide these
integrated solutions
Clients Continue to Demand Total Communications Solutions
Advertising & Direct Sports & Event Experiential
Client Media Marketing Public Relations Marketing Marketing
------ ----- --------- ---------------- --------- ---------
Unilever X X X X
Johnson & Johnson X X X X
Nestle X X X X
Master Card X X X
Microsoft X X X X
Glaxo Smithkline X X X X X
Gillette X X X X
General Motors X X X X X
L'Oreal X X X X
Pfizer X X X X
Meeting the Demand for Total Communications . . .
Interpublic is organized to deliver customized marketing communication solutions
o Through a single global or national network
o Through a collaborative approach
Clients Can Access Multiple Services from a Single Company
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FCB McCann-Erickson
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Promotion Promotion
Direct Direct
Media PR
Advertising Media
Advertising
Events
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SC Johnson Microsoft
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Campbell-Ewald Deutsch
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Promotion CRM
Direct Interactive
Custom Publg Direct
Media Advertising
Advertising
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Chevrolet Pfizer
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Or From a Collaboration Among Interpublic Companies
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Burger King Verizon Johnson & Johnson
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Octagon Hill Holliday Jack Morton
Weber Shandwick Lowe McCann
Draft Draft Future Brand
Deutsch Bozell Lowe
Campbell-Mithun Campbell-Mithun Initiative Media
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New Clients Award Business Based on
Collaborative Capability
o Bank of America
- Bozell
- Draft
- Jack Morton
- R/GA
- Weber Shandwick
o Wendy's
- McCann Erickson
- Momentum
o U.S. Postal Service
- Campbell-Ewald
- Draft
- Initiative Media
- Golin Harris
Long Term . . . Our future is SOLID
Over the Long Term, Advertising Spending
Has Outpaced Economic Growth
(1970-2003*)
[Graph depicting the annual percentage growth in U.S. advertising spending
compared to the annual percentage growth in U.S. GDP over the time period
1970-2003 (estimate). Graph shows that, over the long run, the annual percentage
growth in advertising spending generally outperforms the annual percentage
growth in GDP. Graph also shows that there is a direct relationship between the
growth rate for advertising spending and the growth rate for the overall
economy.]
* Source: Universal McCann; Bob Coen latest forecast 12/6/02
Long Term is Solid
We are confident because
o Strong Brands are an absolute requirement for superior profit margins
o Essentially there are only two functions that grow Brands: innovation
and marketing
o In a world of increasingly undifferentiated products and pricing,
marketing remains key
Highly Branded Companies Outperform Weaker Branded Companies
Brands create shareholder value
[Graph depicting the Fortune 100 Monthly Indexed Share Prices from October 1989
through January 2002 for heavily-branded, Fortune average and weaker-branded
companies. Graph shows that heavily-branded companies had higher indexed stock
prices at all times during the October 1989 through January 2002 time period
than either the Fortune average or the weaker-branded companies. The Fortune
average, in turn, always outperformed the weaker-branded companies during that
same time period.]
Source: FutureBrand Brand Valuation Study
Four Strategic Priorities
o Superior Organic Growth
- Strong go-to-market strategies
- New business as a core competence
Four Strategic Priorities
o Superior Organic Growth
- Strong go-to-market strategies
- New business as a core competence
o Return to Historical Profit Margins
- Continually align costs to revenue
- Metric to be given highest priority in 2003 incentive plans
Four Strategic Priorities
o Strong Balance Sheet
- Reduce debt
- Invest judiciously - focus the portfolio
Four Strategic Priorities
o Strong Balance Sheet
- Reduce debt
- Invest judiciously - focus the portfolio
o Rigorous Financial Discipline
- Improved corporate governance
- Real-time systems
- Never enough transparency
Financial Report
Key Account Concentration by Industry*
Consumer 41%
Auto 23%
Tech/Telecom 16%
Healthcare 6%
HBA 5%
Financial Services 4%
Other 5%
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100%
* Equal to 27% of Revenue
3Q Year-to-Date Results
(Restated; Before Non-recurring Items)
($ Millions, except per share data)
Ex
(FAS-142)
2002 2001 % Change
-------- -------- --------
Total Revenue $4,534.9 $5,056.6 (10.3%)
Operating Expense 4,100.1 4,407.6 7.0%
Operating Profit 434.8 649.0 (33.0%)
Margin % 9.6% 12.8%
Non operating Expenses 93.9 85.4 (10.0%)
Income Before Taxes 340.9 563.6 (39.5%)
Tax 139.7 204.4 31.7%
Effective Tax Rate 41.0% 42.3%
Net Equity Interest Income (Loss) (13.5) (17.0) 20.6%
-------- -------- -------
Net Income $187.7 $342.2 (46.2%)
======== ======== =======
EPS .49 .91 (46.2%)
Restatement
o 10K/A filed December 6
o Total restatement: $181.3 million
o No impact on current cash position
Strategic Priorities
o Superior Organic Growth
Organic growth is defined as the change in existing client business plus net new
business
Organic Revenue Growth
Year to Year Change (2000-2002)
[Graph depicting the year to year change in organic revenue growth: 4Q 00: 9.0%,
1Q 01: 6.0%, 2Q 01: -3.0%, 3Q 01: -8.5%, 4Q 01: -10.1%, 1Q 02: -13.8%, 2Q 02:
- -9.5%, 3Q 02: -5.2%]
Net New Business
Net New Business in the third quarter of $730 million on track for a $3.0
billion plus year
[Graph depicting Net New Business: 1Q: $745 million, 2Q: $874 million, 3Q: $730
million, Year to date: $2,349 million]
Capitalized Billings
Net New Business
Results vs. Top Tier Competitors
First Nine Months 2002
Net New Business
[Graph depicting Net New Business vs. Top Tier Competitors for the first nine
months of 2002: OMC: $3.1 billion, WPP: $1.8 billion*, PUB: $1.2 billion**, IPG:
$2.3 billion]
* WPP media wins discounted so the total is comparable to OMC, PUB and IPG.
** PUB first half results of 800 Euros projected to three quarters.
All Core Disciplines Are Contributing
Each component of the Interpublic integrated offering is delivering
% of Total Net New Business Revenue
First Nine Months 2002
[Graph depicting percentage of Total Net New Business Revenue in the first nine
months of 2002: Advertising: 45%, Direct Marketing: 11%, Public Relations: 10%,
Marketing Research: 8%, Corp & Brand ID: 7%, Meeting and Events: 6%, Sales
Promotion: 5%, Media Services: 4%, Healthcare: 4%]
Strategic Priorities
o Superior Organic Growth
o Return to Historical Profit Margins
Profit Margin History
EBIT (1999 - 2002)
(Excludes Restructuring and Amortization of Goodwill)
[Graph depicting profit margin excluding restructuring and amortization of
goodwill for IPG, OMC and WPP for the time period 1999 through 2Q 02 YTD: IPG:
1999: 14.3%, 2000: 15.9%, 2001: 13.5%, 2Q 02 YTD: 11.9%; OMC: 1999: 15.5%, 2000:
15.6%, 2001: 15.5%, 2Q 02 YTD: 15.3%; WPP: 1999: 13.4%, 2000: 14.5%, 2001:
14.0%, 2Q 02 YTD: 13.0%]
Normalized Profitability
(Restated; $ Millions)
LTM 9/30/02 9/30/02 Margin (%)
- ------------------------------------------------------------------------------
Income from Operations $ 644.1 10.3%
Add Back:
Goodwill Amortization 4th QTR 2001 45.1 0.7%
Restructuring Expenses 12.1 0.2%
Incremental Severance Charges 15.2 0.2%
Incremental Professional Fees 24.3 0.4%
Octagon 19.5 0.3%
Other Unusual Items 23.4 0.4%
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Income from Operations, As Adjusted $783.7 12.5%
====== =====
Strategic Priorities
o Superior Organic Growth
o Return to Historical Profit Margins
o Strong Balance Sheet
Strong Balance Sheet
o Maximize free cash flow
o Acquire and invest judiciously
o Optimize return on invested capital
Consolidated Cash Flow Summary
(Restated; $ in Millions)
September YTD
9 months 9 months
2002 2001
-------- --------
Net income (loss) 180.5 (627.8)
Non-cash income items 307.9 872.4
Net (increase) in working capital (236.7) (752.6)
-------- --------
Cash flows from operations 251.7 (508.0)
Cash flows from investing activities (360.6) (511.7)
Cash flows from financing activities (168.6) 885.4
Exchange rate impact (42.7) (24.7)
-------- --------
Net change in cash (320.2) (159.0)
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Selected Balance Sheet Items
(Restated)
($ Millions)
September 30, June 30, March 31, December 31,
2002 2002 2002 2001
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Cash & Cash Equivalents $615.0 $537.3 $575.1 $935.2
Total Debt 2,902.4 2,976.3 2,893.9 2,933.7
Debt as % of Capital 57.2% 57.6% 60.2% 61.2%
Stockholders' Equity 2,170.2 2,191.6 1,914.2 1,857.9
Balance Sheet Issues
Near Term
- ---------
- Renegotiate Bank Agreements
- Refinance Zero-Coupon Convertible Debt
Long-Term
- ---------
- Reduce debt to capital ratio to 50%
Strategic Priorities
o Superior Organic Growth
o Return to Historical Profit Margins
o Strong Balance Sheet
o Rigorous Financial Discipline
Financial Discipline
- Improved governance
- Stronger organization
- Real-time systems
- Never enough transparency
Recent Actions
- Presiding Director named
- Chief Operating Officer search underway
- New CFO at McCann-Erickson WorldGroup
- Chief Risk Officer appointed
Outlook
Outlook
Near Term
---------
- Limited revenue visibility
- Cost reduction initiatives
- Competitive new business performance
Outlook
2003 Budget Scenario
--------------------
- Assuming flat revenue
- Operating (EBIT) margin target: 13%
- Higher interest expense
Scorecard
Interpublic's 2003 Priorities
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- Competitive organic growth
- Operating margin at 13% or better
- Lower debt ratio
- Refunding of Zero-coupon convertible
- Resolution of Octagon MotorSports situation
Cautionary Statement
This document contains forward-looking statements. Interpublic's representatives
may also make forward-looking statements orally from time to time. Statements in
this document that are not historical facts, including statements about
Interpublic's beliefs and expectations, particularly regarding recent business
and economic trends, the impact of litigation, the integration of acquisitions
and restructuring costs, constitute forward-looking statements. These statements
are based on current plans, estimates and projections, and therefore undue
reliance should not be placed on them. Forward-looking statements speak only as
of the date they are made, and Interpublic undertakes no obligation to update
publicly any of them in light of new information or future events.
Forward-looking statements involve inherent risks and uncertainties. A number of
important factors could cause actual results to differ materially from those
contained in any forward-looking statement. Such factors include, but are not
limited to, those associated with the effects of national and regional economic
conditions, Interpublic's ability to attract new clients and retain existing
clients, the financial success of Interpublic's clients, developments from
changes in the regulatory and legal environment for advertising and marketing
and communications services companies around the world and the successful
completion and integration of acquisitions which complement and expand
Interpublic's business capabilities.
Interpublic's liquidity could be adversely affected if Interpublic is unable to
access the capital markets or to negotiate successfully further amendments to
its Revolving Credit Facilities or the Prudential Agreements by January 15,
2003. In addition, Interpublic could be adversely affected by developments in
connection with the purported class actions and derivative suits that it is
defending or the SEC informal inquiry relating to the restatement.
At any given time Interpublic may be engaged in a number of preliminary
discussions that may result in one or more substantial acquisitions. These
acquisition opportunities require confidentiality and from time to time give
rise to bidding scenarios that require quick responses by Interpublic. Although
there is uncertainty that any of these discussions will result in definitive
agreements or the completion of any transactions, the announcement of any such
transaction may lead to increased volatility in the trading price of
Interpublic's securities.
The success of recent or contemplated future acquisitions will depend on the
effective integration of newly acquired businesses into Interpublic's current
operations. Important factors for integration include realization of anticipated
synergies and cost savings and the ability to retain and attract new personnel
and clients.
In addition, Interpublic's representatives may from time to time refer to "pro
forma" financial information. Because "pro forma" financial information by its
very nature departs from traditional accounting conventions, this information
should not be viewed as a substitute for the information prepared by Interpublic
in accordance with GAAP, including the balance sheets and statements of income
and cash flow contained in Interpublic's quarterly and annual reports filed with
the SEC on Forms 10-Q and 10-K.
Investors should evaluate any statements made by Interpublic in light of these
important factors.
The Interpublic Group of Companies