SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended JUNE 30, 2001
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File Number: 1-6686
THE INTERPUBLIC GROUP OF COMPANIES, INC.
(Exact name of Registrant as specified in its charter)
Delaware 13-1024020
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1271 Avenue of the Americas, New York, New York 10020 10020
- ----------------------------------------------------- -----
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 399-8000
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
July 31, 2001: 375,830,709 shares.
<Page>
THE INTERPUBLIC GROUP OF COMPANIES, INC. AND ITS SUBSIDIARIES
I N D E X
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheet
June 30, 2001 (unaudited) and
December 31, 2000
Consolidated Income Statement
Three months ended June 30, 2001 And 2000 (unaudited)
Consolidated Income Statement
Six months ended June 30, 2001 And 2000 (unaudited)
Consolidated Statement of Comprehensive Income
Three months ended June 30, 2001
And 2000 (unaudited)
Consolidated Statement of Comprehensive Income
Six months ended June 30, 2001
And 2000 (unaudited)
Consolidated Statement of Cash Flows
Six months ended June 30, 2001 And 2000 (unaudited)
Notes to Consolidated Financial Statements (unaudited)
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures
about Market Risk
PART II. OTHER INFORMATION
Item 2(c) CHANGES IN SECURITIES
Item 6. EXHIBITS AND REPORTS ON FORM 8-K.
SIGNATURES
INDEX TO EXHIBITS
2
<Page>
PART I - FINANCIAL INFORMATION
ITEM 1
FINANCIAL STATEMENTS
THE INTERPUBLIC GROUP OF COMPANIES, INC. AND ITS SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(DOLLARS IN THOUSANDS EXCEPT SHARE AND PER SHARE DATA)
ASSETS
<Table>
<Caption>
JUNE 30,
2001 DECEMBER 31,
(UNAUDITED) 2000
------------ ------------
CURRENT ASSETS:
Cash and cash equivalents (includes certificates of deposit:
2001 - $98,795; 2000 - $110,919) $ 686,119 $ 844,634
Marketable securities, at cost which approximates market 53,736 39,957
Receivables (net of allowance for doubtful accounts:
2001 - $85,065; 2000 - $85,718) 5,327,742 5,735,655
Expenditures billable to clients 492,368 437,929
Prepaid expenses and other current assets 283,270 237,843
------------ ------------
Total current assets 6,843,235 7,296,018
------------ ------------
OTHER ASSETS:
Investment in unconsolidated affiliates 170,169 178,858
Deferred taxes on income 410,345 380,306
Other investments and miscellaneous assets 525,137 525,395
------------ ------------
Total other assets 1,105,651 1,084,559
------------ ------------
FIXED ASSETS, AT COST:
Land and buildings 168,536 174,079
Furniture and equipment 1,117,341 1,103,741
Leasehold improvements 465,499 427,856
------------ ------------
1,751,376 1,705,676
Less: accumulated depreciation (922,581) (879,218)
------------ ------------
Total fixed assets 828,795 826,458
------------ ------------
Intangible assets (net of accumulated amortization:
2001 - $935,826; 2000 - $861,487) 3,013,163 3,154,977
------------ ------------
TOTAL ASSETS $ 11,790,844 $ 12,362,012
============ ============
</Table>
3
<Page>
FINANCIAL STATEMENTS
THE INTERPUBLIC GROUP OF COMPANIES, INC. AND ITS SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(DOLLARS IN THOUSANDS EXCEPT SHARE AND PER SHARE DATA)
LIABILITIES AND STOCKHOLDERS' EQUITY
<Table>
<Caption>
JUNE 30,
2001 DECEMBER 31,
(UNAUDITED) 2000
----------- ------------
CURRENT LIABILITIES:
Payable to banks $ 1,324,520 $ 549,260
Accounts payable 5,083,733 5,751,335
Accrued expenses 798,642 1,111,060
Accrued income taxes 144,169 210,303
------------ ------------
Total current liabilities 7,351,064 7,621,958
------------ ------------
NONCURRENT LIABILITIES:
Long-term debt 869,414 998,687
Convertible subordinated notes 540,656 533,104
Deferred compensation and reserve for termination allowances 466,337 464,329
Accrued postretirement benefits 55,970 55,197
Other noncurrent liabilities 92,030 105,686
Minority interests in consolidated subsidiaries 103,124 100,580
------------ ------------
Total noncurrent liabilities 2,127,531 2,257,583
------------ ------------
STOCKHOLDERS' EQUITY:
Preferred Stock, no par value shares authorized: 20,000,000
shares issued: none
Common Stock, $.10 par value shares authorized: 550,000,000 shares issued:
2001 - 383,671,638;
2000 - 377,270,758 38,367 37,727
Additional paid-in capital 1,703,934 1,514,709
Retained earnings 1,484,011 1,667,499
Accumulated other comprehensive income (loss), net of tax (457,930) (411,581)
------------ ------------
2,768,382 2,808,354
Less: Treasury stock, at cost:
2001 - 8,216,847 shares;
2000 - 5,462,809 shares 329,224 194,758
Unamortized expense of restricted stock grants 126,909 131,125
------------ ------------
Total stockholders' equity 2,312,249 2,482,471
------------ ------------
Commitments and contingencies
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 11,790,844 $ 12,362,012
============ ============
</Table>
The prior period has been restated to reflect the aggregate effect of the
acquisitions accounted for as poolings of interests. See Note (a)
The accompanying notes are an integral part of these consolidated financial
statements.
4
<Page>
FINANCIAL STATEMENTS
THE INTERPUBLIC GROUP OF COMPANIES, INC. AND ITS SUBSIDIARIES
CONSOLIDATED INCOME STATEMENT
THREE MONTHS ENDED JUNE 30
(AMOUNTS IN THOUSANDS EXCEPT PER SHARE DATA)
(UNAUDITED)
<Table>
<Caption>
2001 2000
---- ----
Revenue $ 1,743,415 $ 1,821,627
----------- -----------
Salaries and related expenses 972,419 951,873
Office and general expenses 483,821 486,914
Amortization of intangible assets 42,171 31,046
Restructuring and other merger related costs 51,294 52,775
Goodwill impairment and other 221,408 --
----------- -----------
Total operating expenses 1,771,113 1,522,608
----------- -----------
Income (loss) from operations (27,698) 299,019
Interest expense (41,368) (26,212)
Other income, net 15,370 30,201
----------- -----------
Income (loss) before provision for income taxes (53,696) 303,008
Provision for income taxes 48,325 127,589
----------- -----------
Income (loss) of consolidated companies (102,021) 175,419
Income applicable to minority interests (10,543) (11,198)
Equity in net income of unconsolidated affiliates 2,406 2,140
----------- -----------
Net income (loss) $ (110,158) $ 166,361
=========== ===========
Earnings per share:
Basic $ (.30) $ .47
Diluted $ (.30) $ .45
Dividend per share $ .095 $ .095
Weighted average shares:
Basic 368,911 356,680
Diluted 368,911 380,869
</Table>
The prior period has been restated to reflect the aggregate effect of the
acquisitions accounted for as poolings of interests. See Note (a).
The accompanying notes are an integral part of these consolidated financial
statements.
5
<Page>
FINANCIAL STATEMENTS
THE INTERPUBLIC GROUP OF COMPANIES, INC. AND ITS SUBSIDIARIES
CONSOLIDATED INCOME STATEMENT
SIX MONTHS ENDED JUNE 30
(AMOUNTS IN THOUSANDS EXCEPT PER SHARE DATA)
(UNAUDITED)
<Table>
<Caption>
2001 2000
---- ----
Revenue $ 3,401,673 $ 3,406,581
----------- -----------
Salaries and related expenses 1,971,203 1,890,606
Office and general expenses 946,765 969,204
Amortization of intangible assets 84,056 64,363
Restructuring and other merger related costs 52,848 88,826
Goodwill impairment and other 221,408 --
----------- -----------
Total operating expenses 3,276,280 3,012,999
----------- -----------
Income from operations 125,393 393,582
Interest expense (78,849) (50,484)
Other income, net 36,817 48,605
Impairment of investments (160,100) --
----------- -----------
Income (loss) before provision for income taxes (76,739) 391,703
Provision for income taxes 48,744 164,665
----------- -----------
Income (loss) of consolidated companies (125,483) 227,038
Income applicable to minority interests (17,450) (15,096)
Equity in net income of unconsolidated affiliates 4,104 4,353
----------- -----------
Net income (loss) $ (138,829) $ 216,295
=========== ===========
Earnings per share:
Basic $ (.38) $ .61
Diluted $ (.38) $ .59
Dividend per share $ .19 $ .18
Weighted average shares:
Basic 367,520 356,148
Diluted 367,520 367,924
</Table>
The prior period has been restated to reflect the aggregate effect of the
acquisitions accounted for as poolings of interests. See Note (a).
The accompanying notes are an integral part of these consolidated financial
statements.
6
<Page>
FINANCIAL STATEMENTS
THE INTERPUBLIC GROUP OF COMPANIES, INC. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
THREE MONTHS ENDED JUNE 30
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<Table>
<Caption>
2001 2000
---- ----
Net Income (Loss) $(110,158) $ 166,361
--------- ---------
Other Comprehensive Income, net of tax:
Foreign Currency Translation Adjustments (11,681) (44,009)
Net Unrealized Gains (Losses) on Securities 5,281 (85,751)
--------- ---------
Other Comprehensive Income (Loss) (6,400) (129,760)
--------- ---------
Comprehensive Income (Loss) $(116,558) $ 36,601
========= =========
</Table>
The prior period has been restated to reflect the aggregate effect of the
acquisitions accounted for as poolings of interests. See Note (a).
The accompanying notes are an integral part of these consolidated financial
statements.
7
<Page>
FINANCIAL STATEMENTS
THE INTERPUBLIC GROUP OF COMPANIES, INC. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
SIX MONTHS ENDED JUNE 30
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<Table>
<Caption>
2001 2000
---- ----
Net Income (Loss) $(138,829) $ 216,295
--------- ---------
Other Comprehensive Income, net of tax:
Foreign Currency Translation Adjustments (99,031) (78,013)
Net Unrealized Gains (Losses) on Securities 52,682 (146,258)
---------
Other Comprehensive Income (Loss) (46,349) (224,271)
--------- ---------
Comprehensive Income (Loss) $(185,178) $ (7,976)
========= =========
</Table>
The prior period has been restated to reflect the aggregate effect of the
acquisitions accounted for as poolings of interests. See Note (a).
The accompanying notes are an integral part of these consolidated financial
statements.
8
<Page>
FINANCIAL STATEMENTS
THE INTERPUBLIC GROUP OF COMPANIES, INC. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
SIX MONTHS ENDED JUNE 30
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<Table>
<Caption>
2001 2000
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $(138,829) $ 216,297
Adjustments to reconcile net income to cash used in operating activities:
Depreciation and amortization of fixed assets 99,886 89,783
Amortization of intangible assets 84,056 64,363
Amortization of restricted stock awards 24,370 16,755
Provision for (benefit of) deferred income taxes (82,055) (8,890)
Equity in net income of unconsolidated affiliates (4,104) (4,353)
Income applicable to minority interests 17,450 15,096
Translation losses 1,845 677
Net gain on investments (9,645) (8,320)
Restructuring charges, non-cash 30,235 20,600
Investment impairment 160,100 --
Goodwill impairment 197,408 --
Changes in assets and liabilities, net of acquisitions:
Receivables 214,077 (353,528)
Expenditures billable to clients (61,498) (86,746)
Prepaid expenses and other assets (42,832) (60,620)
Accounts payable and accrued expenses (770,851) 97,291
Accrued income taxes (57,608) 11,090
Deferred compensation and reserve for termination allowances 11,514 22,237
--------- -----------
Net cash (used in) provided from operating activities (326,481) 31,732
--------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions, net (142,438) (360,260)
Capital expenditures (124,651) (128,391)
Proceeds from sale of assets 10,137 6,962
Net (purchases of) proceeds from marketable securities (18,015) (3,043)
Other investments and miscellaneous assets (74,755) (135,236)
Investments in unconsolidated affiliates (3,186) (10,319)
--------- -----------
Net cash used in investing activities (352,908) (630,287)
--------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in short-term borrowings 786,975 236,934
Proceeds from long-term debt 150,045 416,649
Payments of long-term debt (261,672) (225,783)
Treasury stock acquired (105,024) (120,726)
Issuance of common stock 61,314 49,355
Cash dividends - Interpublic (59,489) (51,869)
Cash dividends - pooled companies (15,169) (24,728)
--------- -----------
Net cash provided by financing activities 556,980 279,832
--------- -----------
Deconsolidation of subsidiary -- (29,143)
Effect of exchange rates on cash and cash equivalents (36,106) (29,902)
--------- -----------
Decrease in cash and cash equivalents (158,515) (377,768)
Cash and cash equivalents at beginning of year 844,634 1,147,341
--------- -----------
Cash and cash equivalents at end of period $ 686,119 $ 769,573
========= ===========
</Table>
The prior period has been restated to reflect the aggregate effect of the
acquisitions accounted for as poolings of interests. See Note (a).
The accompanying notes are an integral part of these consolidated financial
statements.
9
<Page>
THE INTERPUBLIC GROUP OF COMPANIES, INC. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(a) In the opinion of management, the consolidated balance sheet as of June
30, 2001, the consolidated income statements for the three months and six
months ended June 30, 2001 and 2000, the consolidated statements of
comprehensive income for the three months and six months ended June 30,
2001 and 2000, and the consolidated statements of cash flows for the six
months ended June 30, 2001 and 2000, contain all adjustments (which
include only normal recurring adjustments) necessary to present fairly the
financial position, results of operations and cash flows at June 30, 2001
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", "Interpublic" or the "Registrant") December 31, 2000 annual
report to stockholders, and the consolidated financial statements and
notes thereto included in the Company's Current Report on Form 8-K dated
August 10, 2001.
The Company's consolidated financial statements, including the related
notes, have been restated for the prior periods presented to include the
results of operations, financial position and cash flows of True North
Communications Inc. ("True North") (see Note (b)).
Certain prior year amounts have been reclassified to conform with current
year presentation.
(b) On June 22, 2001, the Company completed the acquisition of True North in a
stock transaction that has been accounted for under the pooling of
interests method. In connection with the acquisition, approximately 59
million shares of common stock were issued. The accompanying financial
statements have been restated to include the results of True North for all
periods presented. Revenue and net income for True North for the first
quarter ended March 31, 2001 were $356 million and $9.7 million, for the
first quarter ended March 31, 2000 were $360 million and $7.0 million and
for the six months ended June 30, 2000 were $735 million and $30.9
million, respectively.
Following the completion of the True North acquisition, the Company
initiated a series of operational initiatives focusing on i) the
integration of the True North operations and the identification of
synergies and savings, ii) the realignment of certain Interpublic
businesses, and iii) productivity initiatives to achieve higher operating
margins. As a result of the operational initiatives, the combined Company
will be organized into four global operating divisions. Three of these
divisions will provide a full complement of global marketing services and
marketing communication services: McCann-Erickson WorldGroup, an enhanced
FCB Group and a new global marketing resource called The Partnership. The
fourth division, Advanced Marketing Services Group will focus on expanding
the Company's operations in the area of specialized marketing
communications.
In connection with these initiatives, the Company has approved a
wide-ranging restructuring plan that includes severance, lease termination
and other costs. The ultimate amount of the charges expected to be
incurred in connection with the restructuring plan (including the direct
costs of the merger) are estimated to be approximately $500 million. The
majority of this amount is expected to be incurred in the third quarter of
2001 and involves reducing the workforce by approximately 3,500 personnel
and combining or closing approximately 75 offices worldwide.
(c) In the second quarter of 2001, the Company recognized $51.3 million of
restructuring and other merger related costs in connection with its
restructuring plan. Approximately $32.4 million of this amount relates to
transaction and other costs incurred in connection with the acquisition of
True North. The remaining amount relates largely to the cost of severance
actions incurred due to the expected closure of the True North corporate
office. Approximately 60 True North corporate employees have been notified
that they will be terminated.
(d) Following the completion of the True North acquisition, in connection with
the Company's initiative on realignment of certain Interpublic businesses,
the Company is evaluating the realizability of various assets. In
connection with this review, undiscounted cash flow projections were
prepared for certain investments, and the Company determined that the
goodwill attributable to certain acquisitions was in excess of its
estimates of the entities' future cashflows. As a result, a charge of
$221.4 million was recorded in the second quarter of 2001. The largest
component of the goodwill impairment (approximately $145 million) relates
to Capita Technologies, Inc., an Internet services business. The remaining
amount relates principally to several other businesses including Internet
services and healthcare consulting, and an advertising office in Asia.
(e) During the first quarter of 2001, the Company recorded a $160.1 million
pre-tax charge ($103.7 million net of tax) to recognize the impairment of
investments primarily in publicly traded Internet-related companies,
10
<Page>
including marchFIRST, Inc. (an Internet professional services firm), which
had filed for relief under Chapter 11 of the Federal Bankruptcy Code in
April 2001. The impairment charge adjusts the carrying value of remaining
investments to estimated market value where an "other than temporary
impairment" has occurred.
(f) On June 26, 2001 the Company entered into a syndicated revolving
multi-currency credit agreement. The credit agreement provides for a
364-day facility under which $500 million may be borrowed ("New
Facility"). The New Facility bears interest at variable rates based on
either Libor or a bank's base rate, at the Company's option. At June 30,
2001, there were no borrowings outstanding under the New Facility.
The $375 million, 364-day facility of the credit agreement between the
Company and a syndicate of lenders dated June 27, 2000 terminated on June
26, 2001.
On June 28, 2001, the Company issued $100 million of floating rate notes.
The notes mature on June 28, 2002, and bear interest at a variable rate
based on three months Libor. Interest payments will made quarterly in
arrears beginning in September 2001.
In July 2001, the Company entered into a credit agreement with a group of
lenders. The credit agreement provides for revolving borrowings of up to
$750 million which bear interest at variable rates based on Libor or a
bank's base rate, at the Company's option. The facility matures on
September 28, 2001, or earlier, in certain circumstances, including
without limitation, receipt by the Company of at least $375 million in
connection with one or more capital raising transactions. As of August 13,
2001, the Company has not drawn any amounts under this facility.
(g) 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 had an
initial adoption date of January 1, 2000. In June 1999, the FASB postponed
the adoption date by the Company of SFAS 133 until January 1, 2001. The
Company adopted the provisions of SFAS 133 effective January 1, 2001. The
adoption of SFAS 133 did not have a material impact on the Company's
financial condition or results of operations.
(h) In June 2001, the Financial Accounting Standards Board issued Statements
of Financial Accounting Standards No. 141, BUSINESS COMBINATIONS, and No.
142, GOODWILL AND OTHER INTANGIBLE ASSETS, effective for fiscal years
beginning after December 15, 2001, which requires that the purchase method
of accounting be used for all business combinations initiated after June
30, 2001. Under the new rules, goodwill and intangible assets deemed to
have indefinite lives will no longer be amortized but will be subject to
annual impairment tests in accordance with the Statements. Other
intangible assets will continue to be amortized over their useful lives.
The Company will adopt the new rules on accounting for goodwill and other
intangible assets beginning in the first quarter of 2002, however certain
provisions of these standards may also apply to any acquisitions concluded
subsequent to June 30, 2001. During 2002, the Company will perform the
first of the required impairment tests of goodwill and indefinite lived
intangible assets and has not yet determined what the effect of these
tests will be on the earnings and financial position of the Company.
(i) The Company is involved in legal and administrative proceedings of various
types. While any litigation contains an element of uncertainty, the
Company believes that the outcome of such proceedings or claims will not
have a material adverse effect on the financial position of the Company.
11
<Page>
ITEM 2
THE INTERPUBLIC GROUP OF COMPANIES, INC. AND ITS SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
As discussed in Note (a), the Company's consolidated financial statements
and other financial information for prior periods have been restated to reflect
the effect of the True North acquisition accounted for as a pooling of
interests. The following discussion relates to the combined results of the
Company after giving effect to the True North pooling.
For purposes of the following discussion, the investment impairment and
goodwill impairment and other charges in 2001, and the restructuring and other
merger related costs in 2001 and 2000 will be referred to, collectively, as
"non-recurring items". The non-recurring items are described in a subsequent
section of this discussion. All amounts discussed below are as reported unless
otherwise noted.
RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 2001 COMPARED TO THREE MONTHS ENDED JUNE 30, 2000
The Company reported a net loss of $110.2 million or $.30 diluted loss per
share for the three months ended June 30, 2001. Excluding the impact of
non-recurring items, which are discussed below, net income was $117.1 million or
$.31 diluted earnings per share, compared to $201.4 million or $.54 diluted
earnings per share for the three months ended June 30, 2000.
The following table sets forth net income and earnings per share before
and after non-recurring items:
<Table>
<Caption>
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
2001 2000
---- ----
Net income (loss) as reported $(110,158) $166,361
Earnings per share:
Basic (.30) .47
Diluted (.30) .45
Net income before non-recurring items $ 117,100 $201,400
Earnings per share:
Basic .32 .56
Diluted .31 .54
</Table>
Worldwide revenue for the three months ended June 30, 2001 decreased $78
million, or 4%, to $1.7 billion compared to the same period in 2000. Domestic
revenue decreased $78 million or 7% during the second quarter of 2001 compared
to 2000. International revenue remained flat during the second quarter of 2001
compared to 2000. International revenue would have increased 8% excluding the
effect of the strengthening of the U.S. dollar. The decrease in worldwide
revenue is a result of reduced client spending in the U.S. and the negative
impact of foreign currency translation. Organic revenue growth, exclusive of
acquisitions and currency effects, declined 3% for the second quarter of 2001
compared to the prior year quarter.
Revenue from specialized marketing and communications services, which
include market research, sales promotion, direct marketing, public relations,
sports and event marketing, healthcare marketing and e-consultancy and services,
comprised approximately 40% of the total worldwide revenue for the three months
ended June 30, 2001, compared to 37% for the prior year quarter.
Worldwide operating expenses for the second quarter 2001, excluding
non-recurring items were $1.5 billion, an increase of 1.9% over the prior year
quarter. Salaries and related expenses were $972 million or 56% of revenue for
the second quarter of 2001 as compared to $952 million or 52% of revenue for the
second quarter of 2000. Office and general expenses were $484 million for the
second quarter of 2001 compared to $487 million for the second quarter of 2000.
The unfavorable operating expense variance relative to revenue reflects the fact
that the Company's costs in the quarter were not reduced as quickly and deeply
as needed in response to this revenue decline.
Income from operations, excluding non-recurring items, was $245 million
for the second quarter of 2001, compared to $352 million for the second quarter
of 2000, a decrease of 30%. Exclusive of acquisitions, currency effects and
12
<Page>
amortization of intangible assets, income from operations decreased 29% for the
second quarter of 2001 compared to the second quarter of 2000. Operating income
was negatively impacted by the slowdown in client spending. The Company's cost
cutting measures are continuing. The majority of the total planned staffing
terminations for 2001 have now occurred. The benefit of the savings is expected
to accelerate in the third quarter and further increase in the fourth quarter.
Interest expense was $41 million for the second quarter of 2001, compared
to $26 million for the prior year quarter. The increase is primarily a result of
higher debt levels.
Other income, net, which consists of interest income, investment income
and net gains from equity investments decreased 49% to $15 million for the
second quarter of 2001 compared to $30 million for the second quarter of 2000.
The decrease reflects the reduced amount of gains from the sale of equity
investments from the prior year quarter.
The effective tax rate, excluding non-recurring charges, for the second
quarter of 2001 was 42.8% compared to 40.8% in 2000. The difference between the
effective and statutory rates is primarily due to state and local taxes and
nondeductible goodwill amortization expense.
SIX MONTHS ENDED JUNE 30, 2001 COMPARED TO SIX MONTHS ENDED JUNE 30, 2000
The Company reported a net loss of $138.8 million or $.38 diluted loss per
share for the six months ended June 30, 2001. Excluding the impact of
non-recurring items, which are discussed below, net income was $193.6 million or
$.51 diluted earnings per share, compared to $272.1 million or $.74 diluted
earnings per share for the six months ended June 30, 2000.
The following table sets forth net income and earnings per share before
and after non-recurring items:
<Table>
<Caption>
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
2001 2000
---- ----
Net income (loss) as reported $(138,829) $216,295
Earnings per share:
Basic (.38) .61
Diluted (.38) .59
Net income before non-recurring items $ 193,642 $272,066
Earnings per share:
Basic .53 .76
Diluted .51 .74
</Table>
Worldwide revenue for the six months ended June 30, 2001 remained
relatively flat at $3.4 billion compared to the same period in 2000. Domestic
revenue decreased $59 million or 2.9% during the first six months of 2001
compared to 2000. International revenue increased $54 million or 3.9% during the
first six months of 2001 compared to 2000. International revenue would have
increased 13% excluding the effect of the strengthening of the U.S. dollar. The
increase in international revenue, despite the negative impact of foreign
currency translation, was offset by reduced client spending in the U.S.
Organic revenue growth, exclusive of acquisitions and currency effects,
was 1% for the first six months of 2001 compared to the first six months of
2000.
Revenue from specialized marketing and communications services, which
include market research, sales promotion, direct marketing, public relations,
sports and event marketing, healthcare marketing and e-consultancy and services,
comprised approximately 40% of the total worldwide revenue for the six months
ended June 30, 2001, compared to 38% for the first six months of 2000.
Worldwide operating expenses for the first six months 2001, excluding
non-recurring items were $3.0 billion, an increase of 2.7% over the prior year.
Salaries and related expenses were $2.0 billion or 58% of revenue for the first
six months of 2001 as compared to $1.9 billion or 55.5% of revenue for the first
six months of 2000. Office and general expenses were $947 million for the first
six months of 2001 compared to $969 million for the prior year.
Income from operations, excluding non-recurring items, was $400 million
for the first six months of 2001, compared to $482 million for the first six
months of 2000, a decrease of 17%. Exclusive of acquisitions, currency effects
and amortization of intangible assets, income from operations decreased 16% for
the first six months of 2001 compared to the first six months of 2000.
13
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Interest expense was $79 million for the first six months of 2001,
compared to $50 million for the prior year period. The increase is primarily a
result of higher debt levels.
Other income net was $37 million for the first six months of 2001 compared
$49 million for the first six months of 2000.
The effective tax rate, excluding non-recurring charges, was 42.1%, for
the first six months of 2001 compared to 41.1% for the first six months of 2000.
The difference between the effective and statutory rates is primarily due to
state and local taxes and nondeductible goodwill expense.
NON-RECURRING ITEMS
On June 22, 2001, the Company completed the acquisition of True North
Communications Inc. ("True North") in a stock transaction that has been
accounted for under the pooling of interests method. In connection with the
acquisition, approximately 59 million shares of common stock were issued. The
accompanying financial statements have been restated to include the results of
True North for all periods presented.
Following the completion of the True North acquisition, the Company
initiated a series of operational initiatives focusing on i) the integration of
the True North operations and the identification of synergies and savings, ii)
the realignment of certain Interpublic businesses, and iii) productivity
initiatives to achieve higher operating margins. As a result of the operational
initiatives, the combined Company will be organized into four global operating
divisions. Three of these divisions will provide a full complement of global
marketing services and marketing communication services; McCann-Erickson
WorldGroup, an enhanced FCB Group and a new global marketing resource called The
Partnership. The fourth division, Advanced Marketing Services Group will focus
on expanding the Company's operations in the area of specialized marketing
communications.
In connection with these initiatives, the Company has approved a
wide-ranging restructuring plan that includes severance, lease termination and
other costs. The ultimate amount of the charges expected to be incurred in
connection with the restructuring plan (including the direct costs of the
merger) are estimated to be approximately $500 million. The majority of this
amount is expected to be incurred in the third quarter of 2001 and involves
reducing the workforce by approximately 3,500 personnel and combining or closing
approximately 75 offices worldwide.
In the second quarter of 2001, the Company recognized $51.3 million of
restructuring and other merger related costs in connection with its
restructuring plan. Approximately $32.4 million of this amount relates to
transaction and other costs incurred in connection with the acquisition of True
North. The remaining amount relates largely to the cost of severance actions
incurred due to the expected closure of the True North corporate office.
Approximately 60 True North corporate employees have been notified that they
will be terminated.
Following the completion of the True North acquisition, in connection with
the Company's initiative on realignment of certain Interpublic businesses, the
Company is evaluating the realizability of various assets. In connection with
this review, undiscounted cash flow projections were prepared for certain
investments, and the Company determined that the goodwill attributable to
certain acquisitions was in excess of its estimates of the entities' future
cashflows. As a result, a charge of $221.4 million was recorded in the second
quarter of 2001. The largest component of the goodwill impairment (approximately
$145 million) relates to Capita Technologies, Inc., an Internet services
business. The remaining amount relates principally to several other businesses
including Internet services and healthcare consulting, and an advertising office
in Asia.
During the first quarter of 2001, the Company recorded a $160.1 million
pre-tax charge ($103.7 million net of tax) to recognize the impairment of
investments primarily in publicly traded companies, including marchFIRST, Inc.
(an Internet professional services firm), which had filed for relief under
Chapter 11 of the Federal Bankruptcy Code in April 2001. The impairment charge
adjusts the carrying value of remaining investments to estimated market value
where an "other than temporary" impairment has occurred.
During the second quarter of 2000, the Company recognized pre-tax
restructuring costs of $52.8 million ($35.0 million net of tax) associated with
the restructuring of Lowe Lintas & Partners Worldwide ("Lowe Lintas") and
transaction costs related to the acquisition of NFO. The Lowe Lintas
restructuring was completed by the third quarter of 2000.
LIQUIDITY AND CAPITAL RESOURCES
The ratio of current assets to current liabilities was .93 to 1 at June
30, 2001. Working capital at June 30, 2001 was negative $508 million, a decrease
of $182 million from December 31, 2000. Total debt at June 30, 2001 was $2.7
billion, an increase of $654 million from December 31, 2000. Cash flow from
operations and availability under existing credit
14
<Page>
facilities will be the Company's primary source of working capital.
Net cash used in operating activities was $326 million for the first six
months of 2001 and net cash provided from operating activities was $32 million
for the first six months of 2000. 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. Other uses of working capital include
the payment of cash dividends, acquisitions and capital expenditures. In
addition, during the first six months of 2001, the Company acquired 2.1 million
shares of its own stock for the purpose of fulfilling the Company's obligations
under its various compensation plans.
On June 26, 2001 the Company entered into a syndicated revolving multi-currency
credit agreement. The credit agreement provides for a 364-day facility under
which $500 million may be borrowed ("New Facility"). The New Facility bears
interest at variable rates based on either Libor or a bank's base rate, at the
Company's option. At June 30, 2001, there were no borrowings outstanding under
the New Facility.
The $375 million, 364-day facility of the credit agreement between the Company
and a syndicate of lenders dated June 27, 2000 terminated on June 26, 2001.
On June 28, 2001, the Company issued $100 million of floating rate notes. The
notes mature on June 28, 2002, and bear interest at a variable rate based on
three months Libor. Interest payments will made quarterly in arrears beginning
in September 2001.
In July 2001, the Company entered into a credit agreement with a group of
lenders. The credit agreement provides for revolving borrowings of up to $750
million which bear interest at variable rates based on Libor or a bank's base
rate, at the Company's option. The facility matures on September 28, 2001, or
earlier, in certain circumstances, including without limitation, receipt by the
Company of at least $375 million in connection with one or more capital raising
transactions. As of August 13, 2001, the Company has not drawn any amounts under
this facility.
OUTLOOK
Interpublic has indicated that its ability to predict revenue levels in 2001 is
poor. Based on current conditions, however, the Company is forecasting flat
revenue in the second half of 2001 and restated earnings per share (exclusive of
one-time charges) of $1.05-$1.15 for the year. The impact of revenue growth is
such that a 1% change in expected annualized revenue in 2001 would generate
approximately 3 cents change in earnings per share for the year.
OTHER MATTERS
BUSINESS COMBINATIONS, GOODWILL AND OTHER INTANGIBLE ASSETS
In June 2001, the Financial Accounting Standards Board issued Statements of
Financial Accounting Standards No. 141, BUSINESS COMBINATIONS, and No. 142,
GOODWILL AND OTHER INTANGIBLE ASSETS, effective for fiscal years beginning after
December 15, 2001 which requires that the purchase method of accounting be used
for all business combination initiated after June 30, 2001. Under the new rules,
goodwill and intangible assets deemed to have indefinite lives will no longer be
amortized but will be subject to annual impairment tests in accordance with the
Statements. Other intangible assets will continue to be amortized over their
useful lives.
The Company will adopt the new rules on accounting for goodwill and other
intangible assets beginning in the first quarter of 2002, however certain
provisions of these standards may also apply to any acquisitions concluded
subsequent to June 30, 2001. During 2002, the Company will perform the first of
the required impairment tests of goodwill and indefinite lived intangible assets
and has not yet determined what the effect of these tests will be on the
earnings and financial position of the Company.
CAUTIONARY STATEMENT
This document contains forward-looking statements. Representatives of
Interpublic may also make forward-looking statements orally from time to time.
Statements that are not historical fact, including statements about
Interpublic's beliefs and expectations, 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.
Interpublic cautions that 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 effect of national and regional economic conditions, the ability of
Interpublic to attract new clients and retain existing clients, the financial
success of the clients of Interpublic, developments from changes in the
regulatory and legal environment for advertising companies around the world, and
the successful completion and integration of acquisitions which complement and
expand Interpublic's business capabilities.
Another important factor is Interpublic's acquisition strategy. One of
Interpublic's business strategies is to acquire businesses that complement and
expand its current business capabilities. Accordingly, Interpublic is usually
engaged in evaluating potential acquisition candidates. Interpublic is currently
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
15
<Page>
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 the shares of Interpublic.
Moreover, the success of recent or contemplated future acquisitions will
depend on the effective integration of newly acquired businesses into
Interpublic's current activities. Important factors for integration include
realization of anticipated synergies and the ability to retain and attract new
personnel and clients.
Investors should evaluate any statements in light of these important
factors.
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 is
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 has not had, and is not expected to have, a material
effect on the Company's financial condition or results of operations.
16
<Page>
ITEM 3
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company's financial market risk arises from fluctuations in interest
rates and foreign currencies. Most of the Company's debt obligations are at
fixed interest rates. A 10% change in market interest rates would not have a
material effect on the Company's pre-tax earnings, cash flows or fair value. At
June 30, 2001, the Company had an insignificant amount of foreign currency
derivative financial instruments in place. The Company does not hold any
financial instrument for trading purposes.
PART II - OTHER INFORMATION
ITEM 2(c). CHANGES IN SECURITIES
(1) On April 1, 2001, the Registrant issued 6,082 shares of its Common
Stock, par value $.10 per share (the "Interpublic Stock"), and on March 30, 2001
paid $628,000, to the former shareholders of a company acquired in the third
quarter of 1998. This represented a deferred payment of the purchase price. The
shares of Interpublic Stock were valued at $209,000 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 of 1933, as
amended (the "Securities Act"), based on the sophistication of the acquired
company's former stockholders.
(2) On April 2, 2001 the Registrant issued 194,068 of Interpublic Stock,
and paid $2,169,000 to the former shareholders of a company which was acquired
in the second quarter of 1998. This represented a deferred payment of the
purchase price. The shares of Interpublic Stock were valued at $6,507,095 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.
(3) On April 5, 2001, the Registrant issued 20,146 shares of Interpublic
Stock and paid $230,000 to the former shareholders of a company which was
acquired in the fourth quarter of 2000. This represented a deferred payment of
the purchase price. The shares of Interpublic Stock were valued at $690,000 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.
(4) On April 10, 2001, the Registrant issued 16,935 shares of Interpublic
Stock and on May 3, 2001 paid $1,448,174 in cash to the former shareholders of a
company which was acquired in the fourth quarter of 1999. This represented a
deferred payment of the purchase price. The shares of Interpublic Stock were
valued at $596,959 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 April 11, 2001, the Registrant issued 28,194 shares of Interpublic
Stock to a former shareholder of a company that was acquired in the fourth
quarter of 1998. This represented a deferred payment of the purchase price. The
shares of Interpublic Stock had a market value of $1,167,000 as of 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 shareholder.
(6) On April 11, 2001, a subsidiary of the Registrant paid $18,505,350 in
cash and the Registrant issued 234,278 shares of Interpublic Stock to a member
of a limited liability company. This payment represented (i) a deferred payment
of the purchase price with respect to 80% of the interests in the company, which
was acquired by the Registrant's subsidiary in the third quarter of 1999, and
(ii) payment for the remaining 20% of the interests in the company. The shares
of Interpublic Stock had a market value of $7,931,722 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
17
<Page>
sophistication of the member.
(7) On April 12, 2001, the Registrant issued 8,376 shares of Interpublic
Stock and on April 26, 2001 paid $1,176,133 in cash to the former shareholders
of a company which was acquired in the third quarter of 1999. This represented a
deferred payment of the purchase price. The shares of Interpublic Stock were
valued at $297,180 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 April 16, 2001, the Registrant issued 3,837 shares of Interpublic
Stock and paid $820,000 in cash to the former shareholder of a company which was
acquired in the first quarter of 1998. This represented a deferred payment of
the purchase price. The shares of Interpublic Stock were valued at $132,081 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 stockholder.
(9) On April 17, 2001, the Registrant acquired 100% of the stock of a
company in partial consideration for which the Registrant issued 24,380 shares
of Interpublic Stock to the shareholders of the company. The shares of
Interpublic Stock had a market value of $830,606 as of 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.
(10) On June 12, 2001 the Board of Directors of the Registrant authorized
the issuance effective March 31, 2001 (the "Effective Date") of 4,841 shares of
Interpublic Stock to the former shareholders of a company which was acquired in
the fourth quarter of 1999. This represented a deferred payment of the purchase
price. The shares of Interpublic Stock were valued at $174,653 on the Effective
Date.
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 June 12, 2001 the Board of Directors of the Registrant authorized
the issuance effective March 30, 2001 (the "Effective Date"), of 25,905 shares
of Interpublic Stock to the former shareholders of a company which was acquired
in the fourth quarter of 1998. This represented a deferred payment of the
purchase price. The shares of Interpublic Stock were valued at $934,716 on the
Effective Date.
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.
(12) On June 12, 2001 the Board of Directors of the Registrant authorized
the issuance effective March 31, 2001 (the "Effective Date") of 28,768 shares of
Interpublic Stock to be issued to the former shareholders of a company which was
acquired in the first quarter of 2000. The Registrant also paid the former
shareholders an aggregate of $1,000,000. This represented a deferred payment of
the purchase price. The shares of Interpublic Stock were valued at $1,000,000 on
the Effective Date.
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.
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<Page>
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
(a) This item is answered in respect of the Annual Meeting
of Stockholders held on May 14, 2001 (the "Annual
Meeting").
(b) No response is required to Paragraph (b) because (i)
proxies for the meeting were solicited pursuant to
Regulation 14A under the Securities Exchange Act of
1934, as amended; (ii) there was no solicitation in
opposition to Management's nominees as listed in the
proxy statement; and (iii) all such nominees were
elected.
(c) At the Annual Meeting, the following number of shares
were cast with respect to each matter voted upon:
-- Proposal to approve Management's nominees for director
as follows:
<Table>
<Caption>
BROKER
NOMINEE FOR WITHHELD NONVOTES
- ------- --- -------- --------
Frank J. Borelli 258,277,070 2,890,899 0
Reginald K. Brack 258,275,967 2,892,002 0
Jill M. Considine 258,275,646 2,892,323 0
John J. Dooner, Jr. 258,274,383 2,893,586 0
Richard A. Goldstein 258,255,052 2,912,917 0
James R. Heekin III 258,298,444 2,869,525 0
Frank B. Lowe 204,716,816 56,451,153 0
Sean F. Orr 258,291,821 2,876,148 0
J. Phillip Samper 258,268,001 2,899,968 0
</Table>
-- Proposal to approve confirmation of independent
accountants.
<Table>
<Caption>
BROKER
FOR AGAINST ABSTAIN NONVOTES
- --- ------- ------- --------
258,601,605 1,296,723 1,269,641 0
</Table>
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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) EXHIBITS
EXHIBIT NO. DESCRIPTION
- ----------- -----------
4 Indenture, dated as of June 28, 2001 between The Interpublic
Group of Companies, Inc. ("Interpublic") and The Bank of New
York. Pursuant to Sections 601(b)(4)(iii) and (v) of
Regulation S-K, the Indenture is not being filed by the
Registrant in this Report. The Registrant hereby agrees to
furnish a copy of the Indenture to the Securities and
Exchange Commission upon request.
10(a) 364-Day Credit Agreement, dated as of June 26, 2001 among
Interpublic, the Initial Lenders named therein, Citibank,
N.A. as Administrative Agent and Salomon Smith Barney Inc.
as Lead Arranger and Book Manager.
10(b) Amendment No. 1, dated June 26, 2001, to a 5-Year Credit
Agreement among Interpublic, the Initial Lenders named
therein, Citibank, N.A. as Administrative Agent and Salomon
Smith Barney Inc., as Lead Arranger and Book Manager.
10(c) Deferred Compensation Agreement, dated as of June 1, 2001
between Interpublic and Richard A. Goldstein.
10(d) True North Communications Inc. Stock Option Plan,
incorporated herein by reference to Exhibit 4.3 of Post -
Effective Amendment No.1 on Form S-8 To Registration
Statement on Form S-4 (Registration No. 333-59254).
10(e) Bozell, Jacobs, Kenyon & Eckhardt, Inc. Stock Option Plan,
incorporated herein by reference to Exhibit 4.5 of
Post-Effective Amendment No. 1 on Form S-8 To Registrant
Statement on Form S-4 (Registration No. 333-59254).
11 Statement re: Computation of Per Share Earnings.
(a) REPORTS ON FORM 8-K.
The following Reports on Form 8-K were filed during the quarter
ended June 30, 2001:
(1) Report dated April 26, 2001. Item 5 Other Events and Exhibit
99 Press Release.
(2) Report, dated May 9, 2001. Item 5 Other Events.
(3) Report dated May 18, 2001. Item 5 Other Events and Exhibit
99.1 Press Release.
(4) Report, dated June 14, 2001, Item 5 Other Events.
(5) Report, dated June 22, 2001, Item 5 Other Events and Exhibit
99.1 Press Release.
20
<Page>
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: August 13, 2001 BY /S/ JOHN J. DOONER, JR.
-------------------------------------
JOHN J. DOONER, JR
Chairman of the Board, President
and Chief Executive Officer
Date: August 13, 2001 BY /S/ DAVID WEATHERSEED
-------------------------------------
DAVID WEATHERSEED
Vice President and Controller
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<Page>
INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION
- ----------- -----------
4 Indenture, dated as of June 28, 2001 between The Interpublic
Group of Companies, Inc. ("Interpublic") and The Bank of New
York. Pursuant to Sections 601(b)(4)(iii) and (v) of
Regulation S-K, the Indenture is not being filed by the
Registrant in this Report. The Registrant hereby agrees to
furnish a copy of the Indenture to the Securities and
Exchange Commission upon request.
10(a) 364-Day Credit Agreement, dated as of June 26, 2001 among
Interpublic, the Initial Lenders named therein, Citibank,
N.A. as Administrative Agent and Salomon Smith Barney Inc.
as Lead Arranger and Book Manager.
10(b) Amendment No. 1, dated July 26, 2001, to a 5-Year Credit
Agreement among Interpublic, the Initial Lenders named
therein, Citibank, N.A. as Administrative Agent and Salomon
Smith Barney Inc., as Lead Arranger and Book Manager.
10(c) Deferred Compensation Agreement, dated as of June 1, 2001
between Interpublic and Richard A. Goldstein.
10(d) True North Communications Inc. Stock Option Plan,
incorporated herein by reference to Exhibit 4.3 of Post -
Effective Amendment No.1 on Form S-8 To Registration
Statement on Form S-4 (Registration No. 333-59254).
10(e) Bozell, Jacobs, Kenyon & Eckhardt, Inc. Stock Option Plan,
incorporated herein by reference to Exhibit 4.5 of
Post-Effective Amendment No. 1 on Form S-8 To Registrant
Statement on Form S-4 (Registration No. 333-59254).
11 Statement re: Computation of Per Share Earnings.
22