SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the fiscal year ended Commission file number
December 31, 1996 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 10020
New York, New York (Zip Code)
(Address of principal executive offices)
(212) 399-8000
Registrant's telephone number, including area code
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
Common Stock New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
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 by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K (Section 229.405 of this
chapter) is not contained herein, and will not be contained, to
the best of Registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of
this Form 10-K or any amendment to this Form 10-K. ____.
PAGE
The aggregate market value of the registrant's voting stock
(exclusive of shares beneficially owned by persons referred to in
response to Item 12 hereof) was $4,248,362,576 as of March 24,
1997.
Indicate the number of shares outstanding of each of the
registrant's classes of common stock, as of the latest
practicable date.
Common Stock outstanding at March 24, 1997: 81,512,748 shares.
DOCUMENTS INCORPORATED BY REFERENCE
1. Portions of the Annual Report to Stockholders for the year
ended December 31, 1996 are incorporated by reference in
Parts I and II.
2. Portions of the Proxy Statement for the 1997 Annual Meeting
of Stockholders are incorporated by reference in Parts I and
III.
PAGE
PART I
Item 1. Business
The Interpublic Group of Companies, Inc. was incorporated in
Delaware in September 1930 under the name of McCann-Erickson
Incorporated as the successor to the advertising agency
businesses founded in 1902 by A.W. Erickson and in 1911 by
Harrison K. McCann. It has operated under the Interpublic name
since January 1961. As used in this Annual Report, the
"Registrant" or "Interpublic" refers to The Interpublic Group of
Companies, Inc. while the "Company" refers to Interpublic and its
subsidiaries.
The advertising agency business is the primary business of
the Company. This business is conducted throughout the world
through three advertising agency systems, McCann-Erickson
Worldwide, Ammirati Puris Lintas and The Lowe Group. In
addition, during 1996, the Company added a fourth agency system
through its acquisition of DraftDirect Worldwide, Inc., a company
which specializes in direct marketing. The Company also offers
advertising agency services through association arrangements with
local agencies in various parts of the world. Other activities
conducted by the Company within the area of "marketing
communications" include media buying, direct marketing, public
relations, graphic design, market research, sales promotion and
other related services.
The principal functions of an advertising agency are to plan
and create advertising programs for its clients and to place
advertising in various media such as television, cinema, radio,
magazines, newspapers, direct mail, outdoor and interactive
electronic media. The planning function involves analysis of the
market for the particular product or service, evaluation of
alternative methods of distribution and choice of the appropriate
media to reach the desired market most efficiently. The
advertising agency develops a communications strategy and then
creates an advertising program, within the limits imposed by the
client's advertising budget, and places orders for space or time
with the media that have been selected. Interpublic also carries
on a media buying business through its ownership of Western
International Media and its affiliates, as well as a separate
direct marketing business through its ownership of DraftDirect
Worldwide, Inc.
PAGE
The principal advertising agency subsidiaries of Interpublic
operating within the United States directly or through
subsidiaries and the locations of their respective corporate
headquarters are:
Ammirati Puris Lintas Inc......... New York, New York
Campbell-Ewald
Company.......................... Detroit (Warren),
Michigan
Campbell Mithun Esty LLC.......... Minneapolis, Minnesota
Dailey & Associates............... Los Angeles, California
DraftDirect Worldwide, Inc........ Chicago, Illinois
Lowe & Partners Inc............... New York, New York
McCann-Erickson USA, Inc.......... New York, New York
In addition to domestic operations, the Company provides
advertising services for clients whose business is international
in scope as well as for clients whose business is restricted to a
single country or a small number of countries. It has offices in
Canada as well as in one or more cities in each of the following
countries:
EUROPE, AFRICA AND THE MIDDLE EAST
Austria Greece Namibia Slovenia
Belgium Hungary Netherlands South Africa
Bulgaria Israel Norway Spain
Cameroon Ireland Pakistan Sweden
Croatia Italy Poland Switzerland
Czech Republic Ivory Coast Portugal Tunisia
Denmark Kenya Romania Turkey
Finland Malawi Russia United Arab Emirates
France Mauritius Senegal United Kingdom
Germany Morocco Slovakia Zambia
Zimbabwe
PAGE
LATIN AMERICA AND THE CARIBBEAN
Argentina Colombia Guatemala Peru
Barbados Costa Rica Honduras Puerto Rico
Bermuda Dominican Republic Jamaica Trinidad
Brazil Ecuador Mexico Uruguay
Chile El Salvador Panama Venezuela
ASIA AND THE PACIFIC
Australia Japan People's Republic Sri Lanka
Hong Kong Malaysia of China South Korea
India Nepal Philippines Taiwan
Indonesia New Zealand Singapore Thailand
Vietnam
Operations in the foregoing countries are carried on by one
or more operating companies, at least one of which is either
wholly owned by Interpublic or a subsidiary or is a company in
which Interpublic or a subsidiary owns a 51% interest or more,
except in Malawi and Nepal, where Interpublic or a subsidiary
holds a minority interest.
The Company also offers advertising agency services in
Aruba, the Bahamas, Bahrain, Belize, Bolivia, Cambodia, Egypt,
Gabon, Ghana, Grand Cayman, Guadeloupe, Guam, Guyana, Haiti,
Reunion, Iran, Ivory Coast, Jordan, Kuwait, Lebanon, Martinique,
Myanmar, Nicaragua, Nigeria, Oman, Paraguay, Saudi Arabia,
Senegal, Surinam, Uganda, United Arab Emirates (Dubai) and Zaire
through association arrangements with local agencies operating in
those countries.
For information concerning revenues, operating profits and
identifiable assets on a geographical basis for each of the last
three years, reference is made to Note 13: Geographic Areas of
the Notes to the Consolidated Financial Statements in the
Company's Annual Report to Stockholders for the year ended
December 31, 1996, which Note is hereby incorporated by
reference.
PAGE
Developments in 1996
The Company completed a number of acquisitions within the
United States and abroad in 1996. One of the most significant
was the acquisition by the Company, effective June 25, 1996, of
100% of the outstanding stock of DraftDirect Worldwide, Inc., a
leading direct marketing firm. DraftDirect, which is
headquartered in Chicago, has offices in New York and Rochester,
as well as in Europe.
See Note 3 to the Consolidated Financial Statements
incorporated by reference in this Report on Form 10-K for
discussion of additional acquisitions.
Income from Commissions and Fees
The Company generates income from planning, creating and
placing advertising in various media. Historically, the
commission customary in the industry was 15% of the gross charge
("billings") for advertising space or time; more recently lower
commissions have been negotiated, but often with additional
incentives for better performance. For example, an incentive
component is frequently included in arrangements with clients
based on increases in a client's sales of the products or
services being advertised. Under commission arrangements, media
bill the Company at their gross rates. The Company bills these
amounts to its clients, remits the net charges to the media and
retains the balance as its commission. Some clients, however,
prefer to compensate the Company on a fee basis, under which the
Company bills its client for the net charges billed by the media
plus an agreed-upon fee. These fees usually are calculated to
reflect the Company's salary costs and out-of-pocket expenses
incurred on the client's behalf, plus proportional overhead and a
profit mark-up.
Normally, the Company, like other advertising agencies, is
primarily responsible for paying the media with respect to firm
contracts for advertising time or space. This is a problem only
if the client is unable to pay the Company because of insolvency
or bankruptcy. The Company makes serious efforts to reduce the
risk from a client's insolvency, including (1) carrying out
credit clearances, (2) requiring in some cases payment of media
in advance, or (3) agreeing with the media that the Company will
be solely liable to pay the media only after the client has paid
the Company for the media charges.
PAGE
The Company also receives commissions from clients for
planning and supervising work done by outside contractors in the
physical preparation of finished print advertisements and the
production of television and radio commercials and other forms of
advertising. This commission is customarily 17.65% of the
outside contractor's net charge, which is the same as 15% of the
outside contractor's total charges including commission. With
the spread of negotiated fees, the terms on which outstanding
contractors' charges are billed are subject to wide variations
and even include in some instances the elimination of commissions
entirely provided that there are adequate negotiated fees.
The Company derives income in many other ways, including the
planning and placement in media of advertising produced by
unrelated advertising agencies; the maintenance of specialized
media placement facilities; the creation and publication of
brochures, billboards, point of sale materials and direct
marketing pieces for clients; the planning and carrying out of
specialized marketing research; managing special events at which
clients' products are featured; and designing and carrying out
interactive programs for special uses.
The five clients of the Company that made the largest
contribution in 1996 to income from commissions and fees
accounted individually for 2% to 11% of such income and in the
aggregate accounted for over 29% of such income. Twenty clients
of the Company accounted for approximately 42% of such income.
Based on income from commissions and fees, the three largest
clients of the Company are General Motors Corporation, Unilever
and Nestle. General Motors Corporation first became a client of
one of the Company's agencies in 1916 in the United States.
Predecessors of several of the Lintas agencies have supplied
advertising services to Unilever since 1893. The client
relationship with Nestle began in 1940 in Argentina. While the
loss of the entire business of one of the Company's three largest
clients might have a material adverse effect upon the business of
the Company, the Company believes that it is very unlikely that
the entire business of any of these clients would be lost at the
same time, because it represents several different brands or
divisions of each of these clients in a number of geographical
markets - in each case through more than one of the Company's
agency systems.
Representation of a client rarely means that the Company
handles advertising for all brands or product lines of the client
in all geographical locations. Any client may transfer its
business from an advertising agency within the Company to a
competing agency, and a client may reduce its advertising budget
at any time. The Company's advertising agencies in many
instances have written contracts with their clients.
PAGE
As is customary in the industry, these contracts provide for
termination by either party on relatively short notice, usually
90 days but sometimes shorter or longer. In 1996, however, 37%
of income from commissions and fees was derived from clients that
had been associated with one or more of the Company's agencies or
their predecessors for 20 or more years.
Personnel
As of January 1, 1997, the Company employed approximately
21,700 persons, of whom approximately 7,500 were employed in the
United States. Because of the personal service character of the
marketing communications business, the quality of personnel is of
crucial importance to continuing success. There is keen
competition for qualified employees. Interpublic considers its
employee relations to be satisfactory.
The Company has an active program for training personnel.
The program includes meetings and seminars throughout the world.
It also involves training personnel in its offices in New York
and in its larger offices worldwide.
Competition and Other Factors
The advertising agency and other marketing communications
businesses are highly competitive. The Company's agencies and
media services must compete with other agencies, both large and
small, and also with other providers of creative or media
services which are not themselves advertising agencies, in order
to maintain existing client relationships and to obtain new
clients. Competition in the advertising agency business depends
to a large extent on the client's perception of the quality of an
agency's "creative product". An agency's ability to serve
clients, particularly large international clients, on a broad
geographic basis is also an important competitive consideration.
On the other hand, because an advertising agency's principal
asset is its people, freedom of entry into the business is almost
unlimited and quite small agencies are, on occasion, able to take
all or some portion of a client's account from a much larger
competitor.
Moreover, increasing size brings limitations to an agency's
potential for securing new business, because many clients prefer
not to be represented by an agency that represents a competitor.
Also, clients frequently wish to have different products
represented by different agencies. The fact that the Company
owns three separate worldwide agency systems and interests in
other advertising agencies gives it additional competitive
opportunities.
PAGE
The advertising business is subject to government
regulation, both domestic and foreign. There has been an
increasing tendency in the United States on the part of
advertisers to resort to the courts, industry and self-regulatory
bodies to challenge comparative advertising on the grounds that
the advertising is false and deceptive. Through the years, there
has been a continuing expansion of specific rules, prohibitions,
media restrictions, labeling disclosures and warning requirements
with respect to the advertising for certain products.
Representatives within state governments and the federal
government as well as foreign governments continue to initiate
proposals to ban the advertising of specific products and to
impose taxes on or deny deductions for advertising which, if
successful, may have an adverse effect on advertising
expenditures.
Some countries are relaxing commercial restrictions as part
of their efforts to attract foreign investment. However, with
respect to other nations, the international operations of the
Company still remain exposed to certain risks which affect
foreign operations of all kinds, such as local legislation,
monetary devaluation, exchange control restrictions and unstable
political conditions. In addition, international advertising
agencies are still subject to ownership restrictions in certain
countries because they are considered an integral factor in the
communications process.
Statement Regarding Forward Looking Disclosure
Certain sections of this report, including "Business",
"Competition and Other Factors" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations"
contain forward looking statements concerning future events and
developments that involve risks and uncertainties, including
those associated with the effect of national and regional
economic conditions, the ability of the Company to attract new
clients and retain existing clients, the financial success of
clients of the Company, other developments of clients of the
Company, and developments from changes in the regulatory and
legal environment for advertising agencies around the world.
Item 2. Properties
Most of the advertising operations of the Company are
conducted in leased premises, and its physical property consists
primarily of leasehold improvements, furniture, fixtures and
equipment. These facilities are located in various cities in
which the Company does business throughout the world. However,
subsidiaries of the Company own office buildings in Louisville,
PAGE
Kentucky; Warren, Michigan; Frankfurt, Germany; Sao Paulo,
Brazil; Lima, Peru; and Brussels, Belgium and own office
condominiums in Buenos Aires, Argentina; Bogota, Colombia;
Manila, the Philippines; in England, subsidiaries of the Company
own office buildings in London, Manchester, Birmingham and
Stoke-on-Trent.
The Company's ownership of the office building in Frankfurt
is subject to three mortgages which became effective on or about
February 1993. These mortgages terminate at different dates,
with the last to expire in February 2003. Reference is made to
Note 15: Commitments and Contingent Liabilities - of the Notes to
the Consolidated Financial Statements in the Company's Annual
Report to Stockholders for the year ended December 31, 1996,
which Note is hereby incorporated by reference.
Item 3. Legal Proceedings
Neither the Company nor any of its subsidiaries are subject
to any pending material legal proceedings.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable.
Executive Officers of the Registrant
There follows the information disclosed in accordance with
Item 401 of Regulation S-K of the Securities and Exchange
Commission (the "Commission") as required by Item 10 of Form 10-K
with respect to executive officers of the Registrant.
Name Age Office
Philip H. Geier, Jr. (1) 62 Chairman of the Board, President
and Chief Executive Officer
Eugene P. Beard (1) 61 Vice Chairman-Finance and
Operations, Chief Financial Officer
Nicholas J. Camera 50 Vice President, Secretary and
General Counsel
John J. Dooner, Jr. (1) 48 Chairman of McCann-Erickson
Worldwide, Inc.
PAGE
C. Kent Kroeber 58 Senior Vice President-Human
Resources
Barry R. Linsky 55 Senior Vice President-Planning and
Business Development
Frank B. Lowe (1) 55 Chairman of The Lowe Group
Martin F. Puris (1) 58 Chairman, Chief Executive Officer
and Chief Creative Officer of
Ammirati Puris Lintas Worldwide
Joseph M. Studley 44 Vice President and Controller
Thomas J. Volpe 61 Senior Vice President-Financial
Operations
(1) Also a Director
There is no family relationship among any of the executive
officers.
The employment histories for the past five years of Messrs.
Geier, Beard, Dooner, Puris and Lowe are incorporated by
reference to the Proxy Statement for Interpublic's 1997 Annual
Meeting of Stockholders.
Mr. Camera joined Interpublic on May 17, 1993. He was
elected Vice President, Assistant General Counsel and Assistant
Secretary on June 1, 1994 and Vice President, General Counsel and
Secretary on December 15, 1995.
Mr. Kroeber joined Interpublic in January 1966 as Manager of
Compensation and Training. He was elected Vice President in 1970
and Senior Vice President in May 1980.
Mr. Linsky joined Interpublic In January, 1991 when he was
elected Senior Vice President-Planning and Business Development.
Prior to that time, he was Executive Vice President, Account
Management of Lowe & Partners, Inc. Mr. Linsky was elected to
that position in July, 1980, when the corporation was known as
The Marschalk Company and was a subsidiary of Interpublic.
Mr. Studley was elected as Vice President and Controller of
Interpublic effective as of April 1, 1994, formerly he was Senior
Vice President and Chief Financial Officer of E.C. Television, a
division of Interpublic, since January 1, 1990. He was a Vice
President of Lintas New York, a division of one of Interpublic's
subsidiaries, from August 1, 1987 until December 31, 1989.
Mr. Volpe joined Interpublic on March 3, 1986. He was
appointed Senior Vice President-Financial Operations on March 18,
1986. He served as Treasurer from January 1, 1987 through May
17, 1988 and the Treasurer's office continues to report to him.
He was Vice President and Treasurer of Colgate-Palmolive Company
from February 1981 to February 1986 and Assistant Corporate
Controller prior thereto.
PART II
Item 5. Market for the Registrant's Common Equity and Related
Stockholder Matters
The response to this Item is incorporated by reference to
the Registrant's Annual Report to Stockholders for the year ended
December 31, 1996. See Note 12: Results by Quarter (Unaudited),
of the Notes to the Consolidated Financial Statements and
information under the heading Transfer Agent and Registrar for
Common Stock.
Item 6. Selected Financial Data
The response to this Item is incorporated by reference to
the Registrant's Annual Report to Stockholders for the year ended
December 31, 1996 under the heading Selected Financial Data for
Five Years.
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations
The response to this Item is incorporated by reference to
the Registrant's Annual Report to Stockholders for the year ended
December 31, 1996 under the heading Management's Discussion and
Analysis of Financial Condition and Results of Operations.
Item 8. Financial Statements and Supplementary Data
The response to this Item is incorporated in part by
reference to the Registrant's Annual Report to Stockholders for
the year ended December 31, 1996 under the headings Financial
Statements and Notes to the Consolidated Financial Statements.
Reference is also made to the Financial Statement Schedules
listed under Item 14(a) of this Report on Form 10-K.
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
Not applicable.
PART III
Item 10. Directors and Executive Officers of the Registrant
The information required by this Item is incorporated by
reference to the Registrant's Proxy Statement for its 1997 Annual
Meeting of Stockholders (the "Proxy Statement"), to be filed not
later than 120 days after the end of the 1996 calendar year,
except for the description of Interpublic's Executive Officers
which appears in Part I of this Report on Form 10-K under the
heading "Executive Officers of the Registrant".
Item 11. Executive Compensation
The information required by this Item is incorporated by
reference to the Proxy Statement. Such incorporation by
reference shall not be deemed to incorporate specifically by
reference the information referred to in Item 402(a)(8) of
Regulation S-K.
Item 12. Security Ownership of Certain Beneficial Owners and
Management
The information required by this Item is incorporated by
reference to the Proxy Statement.
Item 13. Certain Relationships and Related Transactions
The information required by this Item is incorporated by
reference to the Proxy Statement. Such incorporation by
reference shall not be deemed to incorporate specifically by
reference the information referred to in Item 402(a)(8) of
Regulation S-K.
PAGE
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on
Form 8-K
(a) Listed below are all financial statements, financial
statement schedules and exhibits filed as part of this Report on
Form 10-K.
1. Financial Statements:
See the Index to Financial Statements on page F-1.
2. Financial Statement Schedules:
See the Index to Financial Statement Schedules on
page F-1.
3. Exhibits:
(Numbers used are the numbers assigned in Item 601 of
Regulation S-K and the EDGAR Filer Manual. An additional copy of
this exhibit index immediately precedes the exhibits filed with
this Report on Form 10-K and the exhibits transmitted to the
Commission as part of the electronic filing of the Report.)
Exhibit No. Description
3 (i) The Restated Certificate of Incorporation of the
Registrant, as amended is incorporated by reference to
its Report on Form 10-Q for the quarter ended June 30,
1995. See Commission file number 1-6686.
(ii) The By-Laws of the Registrant, amended as of February
19, 1991, are incorporated by reference to its Report
on Form 10-K for the year ended December 31, 1990. See
Commission file number 1-6686.
4 Instruments Defining the Rights of Security Holders.
(i) Indenture, dated as of April 1, 1992, between
Interpublic and Morgan Guaranty Trust Company of New
York is not included as an Exhibit to this Report but
will be furnished to the Commission upon its request.
PAGE
(ii) The Preferred Share Purchase Rights Plan as adopted on
July 18, 1989 is incorporated by reference to
Registrant's Registration Statement on Form 8-A dated
August 1, 1989 (No. 00017904) and, as amended, by
reference to Registrant's Registration Statement on
Form 8 dated October 3, 1989 (No. 00106686).
10 Material Contracts.
(a) Underwriting Agreement, dated March 30, 1992, by and
between Interpublic and Goldman Sachs International
Limited is incorporated by reference to Registrant's
Report on Form 10-K for the year ended December 31,
1992. See Commission file number 1-6686.
(b) Employment, Consultancy and other Compensatory
Arrangements with Management.
Employment and Consultancy Agreements and any
amendments or supplements thereto and other
compensatory arrangements filed with the Registrant's
Reports on Form 10-K for the years ended December 31,
1980 through December 31, 1995 inclusive, or filed with
the Registrant's Reports on Form 10-Q for the periods
ended March 31, 1996, June 30, 1996 and September 30,
1996 are incorporated by reference in this Report on
Form 10-K. See Commission file number 1-6686. Listed
below are agreements or amendments to agreements
between the Registrant and its executive officers which
remain in effect on and after the date hereof or were
executed during the year ended December 31, 1996 and
thereafter, unless previously submitted, which are
filed as exhibits to this Report on Form
10-K.
(i) Eugene P. Beard
Supplemental Agreement, dated as of March 12, 1997
to an Employment Agreement dated as of July 1,
1995.
(ii) Barry R. Linsky
(a) Supplemental Agreement, dated as of August
15, 1992 to an Employment Agreement dated as
of January 1, 1991.
(b) Early Termination Agreement with respect to
Restrictions Relating to Restricted Shares,
dated as of December 15, 1992.
(c) Executive Special Benefit Agreement, dated as
of March 1, 1993.
(d) Supplemental Agreement, dated as of January
1, 1995 to an Employment Agreement dated as
of January 1, 1991.
(e) Supplemental Agreement, dated as of January
1, 1996 to an Employment agreement dated
January 1, 1991.
(f) Supplemental Agreement dated as of August 1,
1996 to an Employment Agreement dated as of
January 1, 1991.
(iii) Martin Puris
Executive Special Benefit Agreement, dated as of
April 1, 1996.
(c) Executive Compensation Plans.
(i) Trust Agreement, dated as of June 1, 1990 between
The Interpublic Group of Companies, Inc., Lintas
Campbell-Ewald Company, McCann-Erickson USA, Inc.,
McCann-Erickson Marketing, Inc., Lintas, Inc. and
Chemical Bank, as Trustee, is incorporated by
reference to Registrant's Annual Report on Form
10-K for the year ended December 31, 1990. See
Commission file number 1-6686.
(ii) The Stock Option Plan (1988) and the Achievement
Stock Award Plan of the Registrant are
incorporated by reference to Appendices C and D of
the Prospectus dated May 4, 1989 forming part of
its Registration Statement on Form S-8 (No.
33-28143).
(iii) The Management Incentive Compensation Plan of the
Registrant is incorporated by reference to the
Registrant's Report on Form 10-Q for the quarter
ended June 30, 1995. See Commission file number
1-6686.
(iv) The 1986 Stock Incentive Plan of the Registrant is
incorporated by reference to Registrant's Annual
Report on Form 10-K for the year ended December
31, 1993. See Commission file number 1-6686.
PAGE
(v) The 1986 United Kingdom Stock Option Plan of the
Registrant is incorporated by reference to
Registrant's Annual Report on Form 10-K for the
year ended December 31, 1992. See Commission file
number 1-6686.
(vi) The Employee Stock Purchase Plan (1985) of the
Registrant, as amended, is incorporated by
reference to Registrant's Annual Report on Form
10-K for the year ended December 31, 1993. See
Commission file number 1-6686.
(vii) The Long-Term Performance Incentive Plan of the
Registrant is incorporated by reference to
Appendix A of the Prospectus dated December 12,
1988 forming part of its Registration Statement on
Form S-8 (No. 33-25555).
(viii) Resolution of the Board of Directors adopted on
February 16, 1993, amending the Long-Term
Performance Incentive Plan is incorporated by
reference to Registrant's Annual Report on Form
10-K for the year ended December 31, 1992. See
Commission file number 1-6686.
(ix) Resolution of the Board of Directors adopted on
May 16, 1989 amending the Long-Term Performance
Incentive Plan is incorporated by reference to
Registrant's Report on Form 10-K for the year
ended December 31, 1989. See Commission file
number 1-6686.
(x) The 1996 Stock Incentive Plan of the Registrant is
incorporated by reference to the Registrant's
Report on Form 10-Q for the quarter ended June 30,
1996. See Commission file number 1-6686.
(d) Loan Agreements.
(i) Letter, dated September 20, 1996, extending the
term of a certain Credit Agreement dated December
1, 1994 by and between Interpublic and The Fuji
Bank, Limited.
(ii) Credit Agreement, dated as of October 21, 1996
between Interpublic and Wachovia Bank of Georgia,
N.A.
PAGE
(iii) Note dated October 21, 1996 between Interpublic
and Wachovia Bank of Georgia, N.A. pursuant to the
Credit Agreement dated and effective as of October
21, 1996.
(iv) Note Purchase Agreement, dated as of October 31,
1996 between Interpublic and The Prudential
Capital Group, a division of The Prudential
Insurance Company of America.
(v) Note dated October 31, 1996 between Interpublic
and Prudential Insurance Company of America,
pursuant to the Note Purchase Agreement dated and
effective as of October 31, 1996.
(vi) Other Loan and Guaranty Agreements filed with the
Registrant's Annual Report on Form 10-K for the
years ended December 31, 1988 and December 31,
1986 are incorporated by reference in this Report
on Form 10-K. Other Credit Agreements, amendments
to various Credit Agreements, Supplemental
Agreements, Termination Agreements, Loan
Agreements, a Note Purchase Agreement, dated
August 20, 1991, Guarantee, dated December 17,
1991, Notification dated March 14, 1991 by
Registrant and Intercreditor Agreements filed with
the Registrant's Report on Form 10-K for the years
ended December 31, 1989 through December 31, 1995,
inclusive and filed with Registrant's Reports on
Form 10-Q for the periods ended March 31, 1996,
June 30, 1996 and September 30, 1996 are
incorporated by reference into this Report on Form
10-K. See Commission file number 1-6686.
(e) Leases.
Material leases of premises are incorporated by
reference to the Registrant's Annual Report on Form
10-K for the years ended December 31, 1980 and December
31, 1988. See Commission file number 1-6686.
(f) Acquisition Agreement for Purchase of Real Estate.
(i) Acquisition Agreement (in German) between
Treuhandelsgesellschaft Aktiengesellschaft & Co.
Grundbesitz OHG and McCann-Erickson Deutschland
GmbH & Co. Management Property KG
("McCann-Erickson Deutschland") and the English
translation of the Acquisition Agreement are
incorporated by reference to Registrant's Annual
Report on Form 10-K for the year ended December
31, 1992. See Commission file number 1-6686.
(g) Mortgage Agreements and Encumbrances.
(i) Summaries In German and English of Mortgage
Agreements between McCann-Erickson Deutschland and
Frankfurter Hypothekenbank Aktiengesellschaft
("Frankfurter Hypothekenbank"), Mortgage
Agreement, dated January 22, 1993, between
McCann-Erickson Deutschland and Frankfurter
Hypothekenbank, Mortgage Agreement, dated January
22, 1993, between McCann-Erickson Deutschland and
Hypothekenbank are incorporated by reference to
Registrant's Annual Report on Form 10-K for the
year ended December 31, 1993. See Commission file
number 1-6686. Summaries In German and English of
Mortgage Agreement, between McCann-Erickson
Deutschland and Frankfurter Sparkasse and Mortgage
Agreement, dated January 7, 1993, between
McCann-Erickson Deutschland and Frankfurter
Sparkasse are incorporated by reference to
Registrant's Annual Report on Form 10-K for the
year ended December 31, 1992. See Commission file
number 1-6686.
(ii) Summaries In German and English of Documents
Creating Encumbrances In Favor of Frankfurter
Hypothekenbank and Frankfurter Sparkasse In
Connection With the Aforementioned Mortgage
Agreements, Encumbrance, dated January 15, 1993,
In Favor Of Frankfurter Hypothekenbank, and
Encumbrance, dated January 15, 1993, In Favor of
Frankfurter Sparkasse are incorporated by
reference to Registrant's Annual Report on Form
10-K for the year ended December 31, 1992. See
Commission file number 1-6686.
(iii) Loan Agreement (in English and German), dated
January 29, 1993 between Lintas Deutschland GmbH
and McCann-Erickson Deutschland is incorporated by
reference to Registrant's Annual Report on Form
10-K for the year ended December 31, 1992. See
Commission file number 1-6686.
11 Computation of Earnings Per Share.
PAGE
13 This Exhibit includes: (a) those portions of the Annual
Report to Stockholders for the year ended December 31, 1996
which are included therein under the following headings:
Financial Highlights; Management's Discussion and Analysis
of Financial Condition and Results Of Operations;
Consolidated Balance Sheet; Consolidated Statement of
Income; Consolidated Statement of Cash Flows; Consolidated
Statement of Stockholders' Equity; Notes to Consolidated
Financial Statements (the aforementioned consolidated
financial statements together with the Notes to Consolidated
Financial Statements hereinafter shall be referred to as the
"Consolidated Financial Statements"); Report of Independent
Accountants; Selected Financial Data For Five Years; Report
of Management; and Stockholders' Information; and (b)
Appendix to Exhibit 13.
21 Subsidiaries of the Registrant.
23 Consent of Independent Accountants.
24 Power of Attorney to sign Form 10-K and resolution of Board
of Directors re Power of Attorney.
27 Financial Data Schedules
99 No reports on Form 8-K were filed during the quarter ended
December 31, 1996.
PAGE
SIGNATURES
Pursuant to the requirements of Section 13 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)
March 20, 1997 BY: Philip H. Geier, Jr.
Philip H. Geier, Jr.,
Chairman of the Board,
President and Chief
Executive Officer
Pursuant to the requirements of the Securities Exchange Act
of 1934, this Report has been signed below by the following
persons on behalf of the Registrant and in the capacities and on
the dates indicated.
Name Title Date
Philip H. Geier, Jr. Chairman of the Board, March 20, 1997
Philip H. Geier, Jr. President and Chief Executive
Officer (Principal Executive
Officer) and Director
Eugene P. Beard Vice Chairman March 20, 1997
Eugene P. Beard -Finance and Operations
(Principal Financial
Officer) and Director
Frank J. Borelli Director March 20, 1997
Frank J. Borelli
Reginald K. Brack Director March 20, 1997
Reginald K. Brack
Jill M. Considine Director March 20, 1997
Jill M. Considine
John J. Dooner, Jr. Director March 20, 1997
John J. Dooner, Jr.
Frank B. Lowe Director March 20, 1997
Frank B. Lowe
PAGE
Leif H. Olsen Director March 20, 1997
Leif H. Olsen
Martin F. Puris Director March 20, 1997
Martin F. Puris
Allen Questrom Director March 20, 1997
Allen Questrom
J. Phillip Samper Director March 20, 1997
J. Phillip Samper
Joseph J. Sisco Director March 20, 1997
Joseph J. Sisco
Joseph M. Studley Vice President and March 20, 1997
Joseph M. Studley Controller (Principal
Accounting Officer)
By Philip H. Geier, Jr.
Philip H. Geier, Jr.
Attorney-in-fact
PAGE
INDEX TO FINANCIAL STATEMENTS
The Financial Statements appearing under the headings: Financial
Highlights, Management's Discussion and Analysis of Financial
Condition and Results of Operations, Consolidated Financial
Statements, Notes to Consolidated Financial Statements, Report of
Independent Accountants, Selected Financial Data for Five Years
and Report of Management accompanying the Annual Report to
Stockholders for the year ended December 31, 1996, together with
the report thereon of Price Waterhouse LLP dated February 14,
1997 appearing on page 48 thereof, are incorporated by reference
in this report on Form 10-K. With the exception of the
aforementioned information and the information incorporated in
Items 5, 6 and 7, no other data appearing in the Annual Report to
Stockholders for the year ended December 31, 1996 is deemed to be
filed as part of this report on Form 10-K.
The following financial statement schedule should be read in
conjunction with the financial statements in such Annual Report
to Stockholders for the year ended December 31, 1996. Financial
statement schedules not included in this report on Form 10-K have
been omitted because they are not applicable or the required
information is shown in the financial statements or the notes
thereto.
Separate financial statements for the companies which are 50% or
less owned and accounted for by the equity method have been
omitted because, considered in the aggregate as a single
subsidiary, they do not constitute a significant subsidiary.
INDEX TO FINANCIAL STATEMENT SCHEDULES
Page
Report of Independent Accountants on
Financial Statement Schedules F-2
Consent of Independent Accountants F-2
Financial Statement Schedules Required to be filed by
Item 8 of this form:
VIII Valuation and Qualifying Accounts F-3
F-1
PAGE
REPORT OF INDEPENDENT ACCOUNTANTS
ON FINANCIAL STATEMENT SCHEDULES
To the Board of Directors of
The Interpublic Group of Companies, Inc.
Our audits of the consolidated financial statements referred to in
our report dated February 14, 1997 appearing in the 1996 Annual
Report to Stockholders of The Interpublic Group of Companies, Inc.
(which report and consolidated financial statements are
incorporated by reference in this Annual Report on Form 10-K) also
included an audit of the Financial Statement Schedules listed in
Item 14 (a) of this Form 10-K. In our opinion, these Financial
Statement Schedules present fairly, in all material respects, the
information set forth therein when read in conjunction with the
related consolidated financial statements.
PRICE WATERHOUSE LLP
New York, New York
February 14, 1997
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the
Registration Statements on Form S-8 of The Interpublic Group of
Companies, Inc. (the "Company"), of our report dated February 14,
1997, appearing in the 1996 Annual Report to Stockholders which is
incorporated in this Annual Report on Form 10-K: Registration
Statements No. 2-79071; No. 2-43811; No. 2-56269; No. 2-61346; No.
2-64338; No. 2-67560; No. 2-72093; No. 2-88165; No. 2-90878,
No. 2-97440 and No. 33-28143, relating variously to the Stock Option
Plan (1971), the Stock Option Plan (1981), the Stock Option Plan
(1988) and the Achievement Stock Award Plan of the Company;
Registration Statements No. 2-53544; No. 2-91564, No. 2-98324, No.
33-22008, No. 33-64062 and No. 33-61371, relating variously to the
Employee Stock Purchase Plan (1975), the Employee Stock Purchase
Plan (1985) and the Employee Stock Purchase Plan of the Company
(1995); Registration Statements No. 33-20291 and No. 33-2830
relating to the Management Incentive Compensation Plan of the
Company; Registration Statements No. 33-5352, No. 33-21605, 333-4747
and 333-23603 relating to the 1986 Stock Incentive Plan, the 1986
United Kingdom Stock Option Plan and the 1996 Stock Incentive Plan,
of the Company; and Registration Statements No. 33-10087 and
No. 33-25555 relating to the Long-Term Performance Incentive Plan of
the Company. We hereby consent to the incorporation by reference in
the Prospectuses constituting part of the Registration Statements on
Form S-3 (No. 33-37346 and 333-22899) of The Interpublic Group of
Companies, Inc. of our report dated February 14, 1997 appearing in
PAGE
the 1996 Annual Report to Stockholders which is incorporated in this
Annual Report on Form 10-K. We also consent to the incorporation by
reference of our report on the Financial Statement Schedules, which
appears above.
PRICE WATERHOUSE LLP
New York, New York
March 26, 1997
F-2
PAGE
SCHEDULE VIII
THE INTERPUBLIC GROUP OF COMPANIES, INC. AND ITS SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
For the Years Ended December 31, 1996, 1995 and 1994
(Dollars in Thousands)
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
Additions
Balance Charged Charged
at to to Other Balance
Beginning Costs & Accounts- Deductions- at End
Description of Period Expenses Describe Describe of Period
Allowance for
Doubtful Accounts -
deducted from
Receivables in the
Consolidated
Balance Sheet:
1996 $21,942 $15,603 $ 920 $ (815) $33,301
771 (4,755)
(365)
1995 $22,656 $ 8,894 $1,324 $(9,619) $21,941
137 (819)
(632)
1994 $16,834 $ 6,522 $4,097 $(6,109) $22,656
699
613
Allowance for doubtful accounts of acquired and newly consolidated
companies.
Foreign currency translation adjustment.
Principally amounts written off.
Reversal of previously written off accounts.
Miscellaneous.
F-3PAGE
INDEX TO DOCUMENTS
Exhibit No. Description
3 (i) The Restated Certificate of Incorporation of the
Registrant, as amended is incorporated by reference to
its Report on Form 10-Q for the quarter ended June 30,
1995. See Commission file number 1-6686.
(ii) The By-Laws of the Registrant, amended as of February
19, 1991, are incorporated by reference to its Report
on Form 10-K for the year ended December 31, 1990. See
Commission file number 1-6686.
4 Instruments Defining the Rights of Security Holders.
(i) Indenture, dated as of April 1, 1992, between
Interpublic and Morgan Guaranty Trust Company of New
York is not included as an Exhibit to this Report but
will be furnished to the Commission upon its request.
(ii) The Preferred Share Purchase Rights Plan as adopted on
July 18, 1989 is incorporated by reference to
Registrant's Registration Statement on Form 8-A dated
August 1, 1989 (No. 00017904) and, as amended, by
reference to Registrant's Registration Statement on
Form 8 dated October 3, 1989 (No. 00106686).
10 Material Contracts.
(a) Underwriting Agreement, dated March 30, 1992, by and
between Interpublic and Goldman Sachs International
Limited is incorporated by reference to Registrant's
Report on Form 10-K for the year ended December 31,
1992. See Commission file number 1-6686.
(b) Employment, Consultancy and other Compensatory
Arrangements with Management.
Employment and Consultancy Agreements and any
amendments or supplements thereto and other
compensatory arrangements filed with the Registrant's
Reports on Form 10-K for the years ended December 31,
1980 through December 31, 1995, inclusive, or filed
with the Registrant's Reports on Form 10-Q for the
periods ended March 31, 1996, June 30, 1996 and
September 30, 1996 are incorporated by reference in
this Report on Form 10-K. See Commission file number
PAGE
1-6686. Listed below are agreements or amendments to
agreements between the Registrant and its executive
officers which remain in effect on and after the date
hereof or were executed during the year ended December
31, 1996 and thereafter, unless previously submitted,
which are filed as exhibits to this Report on Form 10-K.
(i) Eugene P. Beard
Supplemental Agreement, dated as of March 12, 1997
to an Employment Agreement dated as of July 1,
1995.
(ii) Barry R. Linsky
(a) Supplemental Agreement, dated as of August
15, 1992 to an Employment Agreement dated as
of January 1, 1991.
(b) Early Termination Agreement with respect to
Restrictions Relating to Restricted Shares,
dated as of December 15, 1992.
(c) Executive Special Benefit Agreement, dated as
of March 1, 1993.
(d) Supplemental Agreement, dated as of January
1, 1995 to an Employment Agreement dated as
of January 1, 1991.
(e) Supplemental Agreement, dated as of January
1, 1996 to an Employment agreement dated
January 1, 1991.
(f) Supplemental Agreement dated as of August 1,
1996 to an Employment Agreement dated as of
January 1, 1991.
(iii) Martin Puris
Executive Special Benefit Agreement, dated as of
April 1, 1996.
(c) Executive Compensation Plans.
(i) Trust Agreement, dated as of June 1, 1990 between
The Interpublic Group of Companies, Inc., Lintas
Campbell-Ewald Company, McCann-Erickson USA, Inc.,
McCann-Erickson Marketing, Inc., Lintas, Inc. and
Chemical Bank, as Trustee, is incorporated by
PAGE
reference to Registrant's Annual Report on Form
10-K for the year ended December 31, 1990. See
Commission file number 1-6686.
(ii) The Stock Option Plan (1988) and the Achievement
Stock Award Plan of the Registrant are
incorporated by reference to Appendices C and D of
the Prospectus dated May 4, 1989 forming part of
its Registration Statement on Form S-8
(No. 33-28143).
(iii) The Management Incentive Compensation Plan of the
Registrant is incorporated by reference to the
Registrant's Report on Form 10-Q for the quarter
ended June 30, 1995. See Commission file number
1-6686.
(iv) The 1986 Stock Incentive Plan of the Registrant is
incorporated by reference to Registrant's Annual
Report on Form 10-K for the year ended December
31, 1993. See Commission file number 1-6686.
(v) The 1986 United Kingdom Stock Option Plan of the
Registrant is incorporated by reference to
Registrant's Annual Report on Form 10-K for the
year ended December 31, 1992. See Commission file
number 1-6686.
(vi) The Employee Stock Purchase Plan (1985) of the
Registrant, as amended, is incorporated by
reference to Registrant's Annual Report on Form
10-K for the year ended December 31, 1993. See
Commission file number 1-6686.
(vii) The Long-Term Performance Incentive Plan of the
Registrant is incorporated by reference to
Appendix A of the Prospectus dated December 12,
1988 forming part of its Registration Statement on
Form S-8 (No. 33-25555).
(viii) Resolution of the Board of Directors adopted on
February 16, 1993, amending the Long-Term
Performance Incentive Plan is incorporated by
reference to Registrant's Annual Report on Form
10-K for the year ended December 31, 1992. See
Commission file number 1-6686.
PAGE
(ix) Resolution of the Board of Directors adopted on
May 16, 1989 amending the Long-Term Performance
Incentive Plan is incorporated by reference to
Registrant's Report on Form 10-K for the year
ended December 31, 1989. See Commission file
number 1-6686.
(x) The 1996 Stock Incentive Plan of the Registrant is
incorporated by reference to the Registrant's
Report on Form 10-Q for the quarter ended June 30,
1996. See Commission file number 1-6686.
(d) Loan Agreements.
(i) Letter, dated September 20, 1996, extending the
term of a certain Credit Agreement dated December
1, 1994 by and between Interpublic and The Fuji
Bank, Limited.
(ii) Credit Agreement, dated as of October 21, 1996
between Interpublic and Wachovia Bank of Georgia,
N.A.
(iii) Note dated October 21, 1996 between Interpublic
and Wachovia Bank of Georgia, N.A. pursuant to the
Credit Agreement dated and effective as of October
21, 1996.
(iv) Note Purchase Agreement, dated as of October 31,
1996 between Interpublic and The Prudential
Capital Group, a division of The Prudential
Insurance Company of America.
(v) Note dated October 31, 1996 between Interpublic
and Prudential Insurance Company of America,
pursuant to the Note Purchase Agreement dated and
effective as of October 31, 1996.
(vi) Other Loan and Guaranty Agreements filed with
the Registrant's Annual Report on Form 10-K for
the years ended December 31, 1988 and December 31,
1986 are incorporated by reference in this Report
on Form 10-K. Other Credit Agreements, amendments
to various Credit Agreements, Supplemental
Agreements, Termination Agreements, Loan
Agreements, a Note Purchase Agreement, dated
August 20, 1991, Guarantee, dated December 17,
1991, Notification dated March 14, 1991 by
Registrant and Intercreditor Agreements filed with
the Registrant's Report on Form 10-K for the years
ended December 31, 1989 through December 31, 1995,
inclusive and filed with Registrant's Reports on
Form 10-Q for the periods ended March 31, 1996,
June 30, 1996 and September 30, 1996 are
incorporated by reference into this Report on Form
10-K. See Commission file number 1-6686.
(e) Leases.
Material leases of premises are incorporated by
reference to the Registrant's Annual Report on Form
10-K for the years ended December 31, 1980 and December
31, 1988. See Commission file number 1-6686.
(f) Acquisition Agreement for Purchase of Real Estate.
Acquisition Agreement (in German) between
Treuhandelsgesellschaft Aktiengesellschaft & Co.
Grundbesitz OHG and McCann-Erickson Deutschland GmbH &
Co. Management Property KG ("McCann-Erickson
Deutschland") and the English translation of the
Acquisition Agreement are incorporated by reference to
Registrant's Annual Report on Form 10-K for the year
ended December 31, 1992. See Commission file number 1-6686.
(g) Mortgage Agreements and Encumbrances.
(i) Summaries In German and English of Mortgage
Agreements between McCann-Erickson Deutschland and
Frankfurter Hypothekenbank Aktiengesellschaft
("Frankfurter Hypothekenbank"), Mortgage
Agreement, dated January 22, 1993, between
McCann-Erickson Deutschland and Frankfurter
Hypothekenbank, Mortgage Agreement, dated January
22, 1993, between McCann-Erickson Deutschland and
Hypothekenbank are incorporated by reference to
Registrant's Annual Report on Form 10-K for the
year ended December 31, 1993.
See Commission file number 1-6686. Summaries In
German and English of Mortgage Agreement, between
McCann-Erickson Deutschland and Frankfurter
Sparkasse and Mortgage Agreement, dated January 7,
1993, between McCann-Erickson Deutschland and
Frankfurter Sparkasse are incorporated by
reference to Registrant's Annual Report on Form
10-K for the year ended December 31, 1992. See
Commission file number 1-6686.
PAGE
(ii) Summaries In German and English of Documents
Creating Encumbrances In Favor of Frankfurter
Hypothekenbank and Frankfurter Sparkasse In
Connection With the Aforementioned Mortgage
Agreements, Encumbrance, dated January 15, 1993,
In Favor Of Frankfurter Hypothekenbank, and
Encumbrance, dated January 15, 1993, In Favor of
Frankfurter Sparkasse are incorporated by
reference to Registrant's Annual Report on Form
10-K for the year ended December 31, 1992. See
Commission file number 1-6686.
(iii) Loan Agreement (in English and German), dated
January 29, 1993 between Lintas Deutschland GmbH
and McCann-Erickson Deutschland is incorporated by
reference to Registrant's Annual Report on Form
10-K for the year ended December 31, 1992. See
Commission file number 1-6686.
11 Computation of Earnings Per Share.
13 This Exhibit includes: (a) those portions of the Annual
Report to Stockholders for the year ended December 31, 1996
which are included therein under the following headings:
Financial Highlights; Management's Discussion and Analysis
of Financial Condition and Results Of Operations;
Consolidated Balance Sheet; Consolidated Statement of
Income; Consolidated Statement of Cash Flows; Consolidated
Statement of Stockholders' Equity; Notes to Consolidated
Financial Statements (the aforementioned consolidated
financial Statements together with the Notes to Consolidated
Financial Statements hereinafter shall be referred to as the
"Consolidated Financial Statements"); Report of Independent
Accountants; Selected Financial Data For Five Years; Report
of Management; and Stockholders' Information; and (b)
Appendix to Exhibit 13.
21 Subsidiaries of the Registrant.
23 Consent of Independent Accountants.
24 Power of Attorney to sign Form 10-K and resolution of Board
of Directors re Power of Attorney.
27 Financial Data Schedules
99 No reports on Form 8-K were filed during the quarter ended
December 31, 1996.
SUPPLEMENTAL AGREEMENT
SUPPLEMENTAL AGREEMENT made as of March 12, 1997,
by and between THE INTERPUBLIC GROUP OF COMPANIES, INC., a
corporation of the State of Delaware (hereinafter referred
to as the "Corporation"), and EUGENE P. BEARD (hereinafter
referred to as "Executive").
W I T N E S S E T H
WHEREAS, the Corporation and Executive are parties
to an Employment Agreement made as of July 1,
1995,(hereinafter referred to as the "Employment Agreement";
and
WHEREAS, the Corporation and Executive desire to
amend the Employment Agreement;
NOW, THEREFORE, in consideration of the mutual
promises herein and in the Employment Agreement set forth,
the parties hereto, intending to be legally bound, agree as
follows:
1. Paragraph 1.01 of the Employment Agreement is
amended effective this date, by deleting "and ending on
December 31, 1997" therefrom and substituting "and ending on
December 31, 1998" therefor.
PAGE
2. Paragraph 5.04 of the Employment Agreement is
hereby amended, effective this date, by deleting "December
31, 1997" therefrom and substituting "December 31, 1998"
therefor.
3. Except as hereinabove amended, the Employment
Agreement shall continue in full force and effect.
4. This Supplemental Agreement shall be governed by
the laws of the State of New York.
THE INTERPUBLIC GROUP OF COMPANIES, INC.
By: C. KENT KROEBER
EUGENE P. BEARD
SUPPLEMENTAL AGREEMENT
SUPPLEMENTAL AGREEMENT dated as of August 15, 1992, by and
between THE INTERPUBLIC GROUP OF COMPANIES, INC., a corporation of the
State of Delaware (hereinafter referred to as the "Corporation"), and
BARRY R. LINSKY (hereinafter referred to as "Executive").
W I T N E S S E T H
WHEREAS, the Corporation and Executive are parties to an
Employment Agreement dated as of January 1, 1991 (hereinafter referred
to as the "Employment Agreement"); and
WHEREAS, the Corporation and Executive desire to amend the
Employment Agreement;
NOW, THEREFORE, in consideration of the mutual promises herein
and in the Employment Agreement set forth, the parties hereto,
intending to be legally bound, agree as follows:
1. Paragraph 3.01 of the Employment Agreement is amended,
effective October 1, 1992, so as to delete "One Hundred
Eighty-Five Thousand Dollars ($185,000)" and substitute "Two
Hundred Five Thousand Dollars ($205,000)" therefor.
2. Except as hereinabove amended, the Employment Agreement
shall continue in full force and effect.
3. This Supplemental Agreement shall be governed by the laws of
the State of New York
THE INTERPUBLIC GROUP OF COMPANIES, INC.
By C. Kent Kroeber
Barry R. Linsky
December 15, 1992
1986 STOCK INCENTIVE PLAN
Agreement re Early Termination of
Restrictions Relating to Restricted Shares
On this date, December 15, 1992, the Compensation
Committee of the Board of Directors of The Interpublic Group
of Companies, Inc. (the "Corporation"), acting as the
Committee established pursuant to Article IV of the 1986 Stock
Incentive Plan of the Corporation (the "Plan"), determined
that the Restriction Period with respect to that number of
Restricted Shares shown on Schedule A awarded to the executive
whose signature appears on Schedule A under the Plan on the
date(s) shown on Schedule A would end at noon today, provided,
however, that the ending of the Restriction Period would be
conditional on the executive's agreeing to pay to the
Corporation (or to such of its subsidiaries as the Corporation
should designate), upon demand, the sum(s) shown on Schedule A
as the value of the shares being released if, prior to the
date(s) listed on Schedule A as "Scheduled Release Date(s)",
the executive should no longer be in the employ of the
Corporation or any of its subsidiaries for any reason or in
any circumstance other than those set forth in the next
sentence of this Agreement, unless the Compensation Committee
waives such payment. The Corporation and the executive agree
that the obligation to make the payment referred to in the
preceding sentence shall not arise if the executive ceases to
be in the employ of the Corporation or one of its subsidiaries
because of (a) death, (b) resignation on account of Disability
as that term is defined in the Interpublic Long-Term
Disability Plan, or (c) resignation for "Good Reason" pursuant
to an Executive Severance Agreement between the executive and
the Corporation.
The executive hereby agrees to the termination of the
Restriction Period on this date on the conditions, and subject
to the conditional payment obligation, set forth above.
Without in any way limiting any rights or remedies otherwise
available to the Corporation, the executive hereby authorizes
the Corporation and each of its subsidiaries to withhold and
apply toward any payment obligation by the executive which may
arise under this Agreement, any money, property, stock or
other thing of value which may be or become owing by the
Corporation or any of its subsidiaries to the executive
pursuant to any agreement, plan or arrangement of any kind
between the Corporation or any of its subsidiaries and the
executive.
PAGE
The Inter public Group of Companies, Inc.
Release of Restricted Stock
December 15, 1992
BARRY R. LINSKY
Schedule A
Scheduled Value at
Date of Grant # of Shares Release Date $34.0000 per Share
9/15/87 3,000 2/28/94 $102,000
The Interpublic Group of Companies, Inc.
By: C. Kent Kroeber Date: 12/16/92
By: BARRY R. LINSKY Date: 12/17/92
EXECUTIVE SPECIAL BENEFIT AGREEMENT
AGREEMENT made as of March 1, 1993, by and between THE
INTERPUBLIC GROUP OF COMPANIES, INC., a corporation of the State
of Delaware (hereinafter referred to as "Interpublic"), and
BARRY LINSKY (hereinafter referred to as "Executive"):
W I T N E S S E T H
WHEREAS, Executive is in the employ of Interpublic and/or
one or more of its subsidiaries (Interpublic and its
subsidiaries being hereinafter referred to collectively as the
"Corporation"); and
WHEREAS, Interpublic and Executive desire to enter into an
Executive Special Benefit Agreement which shall be supplementary
to any employment agreement or arrangement which Executive now
or hereafter may have with respect to Executive's employment by
Interpublic or any of its subsidiaries;
NOW, THEREFORE, in consideration of the mutual promises
herein set forth, the parties hereto, intending to be legally
bound, agree as follows:
ARTICLE I
Death and Special Retirement Benefits
1.01 For purposes of this Agreement the "Accrual Term"
shall mean the period of seventy-two months beginning on the date
of this Agreement and ending on the day preceding the sixth
anniversary hereof or on such earlier date on which Executive
shall cease to be in the employ of the Corporation.
1.02 The Corporation shall provide Executive with the
following benefits contingent upon Executive's compliance with
all the terms and conditions of this Agreement and Executive's
satisfactory completion of a physical examination in connection
with an insurance policy on the life of Executive which
Interpublic or its assignee (other than Executive) proposes to
obtain and own. Effective at the end of the Accrual Term,
Executive's annual compensation will be increased by $20,000.00
if Executive is in the employ of the Corporation at that time.
1.03 If, during the Accrual Term or thereafter during a
period of employment by the Corporation which is continuous from
the date of this Agreement, Executive shall die while in the
employ of the Corporation, the Corporation shall pay to such
beneficiary or beneficiaries as Executive shall have designated
PAGE
pursuant to Section 1.07 (or in the absence of such designation,
shall pay to the Executor of the Will or the Administrator of the
Estate of Executive) survivor income payments of Forty Thousand
Five Hundred Sixty Dollars ($40,560) per annum for fifteen years
following Executive's death, such payments to be made on January
15 of each of the fifteen years beginning with the year following
the year in which Executive dies.
1.04 If, after a continuous period of employment from
the date of this Agreement, Executive shall retire from the
employ of the Corporation so that the first day on which
Executive is no longer in the employ of the Corporation occurs on
or after Executive's sixty-second birthday, the Corporation shall
pay to Executive special retirement benefits at the rate of Forty
Thousand Five Hundred Sixty Dollars ($40,560) per annum for
fifteen years beginning with the calendar month following
Executive's last day of employment, such payments to be made in
equal monthly installments.
1.05 If, after a continuous period of employment from
the date of this Agreement, Executive shall retire, resign, or be
terminated from the employ of the Corporation so that the first
day on which Executive is no longer in the employ of the
Corporation occurs on or after Executive's fifty-seventh birthday
but prior to Executive's sixty-second birthday, the Corporation
shall pay to Executive special retirement benefits at the annual
rates set forth below for fifteen years beginning with the
calendar month following Executive's last day of employment,
such payments to be made in equal monthly installments:
Last Day of Employment Annual Rate
On or after 57th birthday but prior to 58th birthday $20,280
On or after 58th birthday but prior to 59th birthday $24,960
On or after 59th birthday but prior to 60th birthday $29,640
On or after 60th birthday but prior to 61st birthday $34,320
On or after 61st birthday but prior to 62nd birthday $39,000
1.06 If, following such termination of employment,
Executive shall die before payment of all of the installments
provided for in Section 1.04 or Section 1.05, any remaining
installments shall be paid to such beneficiary or
beneficiaries as Executive shall have designated pursuant to
Section 1.07 or, in the absence of such designation, to the
Executor of the Will or the Administrator of the Estate of
Executive.
1.07 For purposes of Sections 1.03, 1.04 and 1.05,
or any of them, Executive may at any time designate a
beneficiary or beneficiaries by filing with the chief
personnel officer of Interpublic a Beneficiary Designation
Form provided by such officer. Executive may at any time, by
filing a new Beneficiary Designation Form, revoke or change
any prior designation of beneficiary.
PAGE
1.08 If Executive shall die while in the employ of
the Corporation, no sum shall be payable pursuant to Sections
1.04, 1.05, 1.06, 2.01, 2.02 or 2.03.
1.09 In connection with the life insurance policy
referred to in Section 1.02, Interpublic has relied on
written representations made by Executive concerning
Executive's age and the state of Executive's health. If said
representations are untrue in any material respect, whether
directly or by omission, and if the Corporation is damaged by
any such untrue representations, no sum shall be payable
pursuant to Sections 1.03, 1.04, 1.05, 1.06, 2.01, 2.02 or
2.03.
1.10 It is expressly agreed that Interpublic or its
assignee (other than Executive) shall at all times be the
sole and complete owner and beneficiary of the life insurance
policy referred to in Sections 1.02 and 1.09, shall have the
unrestricted right to use all amounts and exercise all
options and privileges thereunder without the knowledge or
consent of Executive or Executive's designated beneficiary or
any other person and that neither Executive nor Executive's
designated beneficiary nor any other person shall have any
right, title or interest, legal or equitable, whatsoever in
or to such policy.
ARTICLE II
Alternative Deferred Compensation
2.01 If Executive shall, for any reason other than
death, cease to be employed by the Corporation on a date
prior to Executive's fifty-seventh birthday, the Corporation
shall, in lieu of any payment pursuant to Article I of this
Agreement, compensate Executive by payment, at the times and
in the manner specified in Section 2.02, of a sum computed at
the rate of Twenty Thousand Dollars ($20,000) per annum for
each full year and proportionate amount for any part year
from the date of this Agreement to the date of such
termination during which Executive is in the employ of the
Corporation. Such payment shall be conditional upon
Executive's compliance with all the terms and conditions of
this Agreement.
2.02 The aggregate compensation payable under
Section 2.01 shall be paid in equal consecutive monthly
installments commencing with the first month in which
Executive is no longer in the employ of the Corporation and
continuing for a number of months equal to the number of
months which have elapsed from the date of this Agreement to
the commencement date of such payments.
2.03 If Executive dies while receiving payments in
accordance with the provisions of Section 2.02, any
installments payable in accordance with the provisions of
PAGE
Section 2.02 less any amounts previously paid Executive in
accordance therewith, shall be paid to the Executor of the
Will or the Administrator of the Estate of Executive.
2.04 It is understood that none of the payments
made in accordance with this Agreement shall be considered
for purposes of determining benefits under the Interpublic
Pension Plan, nor shall such sums be entitled to credits
equivalent to interest under the Plan for Credits Equivalent
to Interest on Balances of Deferred Compensation Owing under
Employment Agreements adopted effective as of January 1,
1974 by Interpublic.
ARTICLE III
Nonsolicitation of Clients or Employees
3.01 Following the termination of the employment of
Executive with the Corporation for any reason, Executive
shall not for a period of one year from such termination
either (a) solicit any employee of the Corporation to leave
such employ to enter into the employ of Executive or of any
Corporation or other enterprise with which Executive is then
associated or (b) solicit or handle on Executive's own
behalf or on behalf of any other person, firm or
corporation, the advertising, public relations, sales
promotion or market research business of any advertiser
which is a client of the Corporation at the time of such
termination.
ARTICLE IV
Assignment
4.01 This Agreement shall be binding upon and inure
to the benefit of the successors and assigns of Interpublic.
Neither this Agreement nor any rights hereunder shall be
subject in any matter to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance or charge by
Executive and any such attempted action by Executive shall be
void. This Agreement may not be changed orally, nor may this
Agreement be amended to increase the amount of any benefits
that are payable pursuant to this Agreement or to accelerate
the payment of any such benefits.
PAGE
ARTICLE V
Contractual Nature of Obligation
5.01 The liabilities of the Corporation to
Executive pursuant to this Agreement shall be those of a
debtor pursuant to such contractual obligations as are
created by the Agreement. Executive's rights with respect to
any benefit to which Executive has become entitled under
this Agreement, but which Executive has not yet received,
shall be solely the rights of a general unsecured creditor
of the Corporation.
ARTICLE VI
Applicable Law
6.01 This Agreement shall be governed by and
construed in accordance with the laws of the State of New
York.
THE INTERPUBLIC GROUP OF COMPANIES, INC.
By C. Kent Kroeber
Barry Linsky
SUPPLEMENTAL AGREEMENT
SUPPLEMENTAL AGREEMENT dated as of January 1, 1995, by and
between THE INTERPUBLIC GROUP OF COMPANIES, INC., a corporation
of the State of Delaware (hereinafter referred to as the
"Corporation"), and BARRY R. LINSKY (hereinafter referred to as
"Executive").
W I T N E S S E T H
WHEREAS, the Corporation and Executive are parties to an
Employment Agreement dated as of January 1, 1991, and a
Supplemental Agreement dated as of August 15, 1992 (hereinafter
collectively referred to as the "Employment Agreement"); and
WHEREAS, the Corporation and Executive desire to amend the
Employment Agreement;
NOW, THEREFORE, in consideration of the mutual promises
herein and in the Employment Agreement set forth, the parties
hereto, intending to be legally bound, agree as follows:
1. Paragraph 3.01 of the Employment Agreement is amended,
effective January 1, 1995, so as to delete "Two Hundred
Five Thousand Dollars ($205,000)" and substitute "Two
Hundred Twenty-Five Thousand Dollars ($225,000)"
therefor.
2. Except as hereinabove amended, the Employment Agreement
shall continue in full force and effect.
3. This Supplemental Agreement shall be governed by the
laws of the State of New York.
THE INTERPUBLIC GROUP OF COMPANIES, INC.
By C. Kent Kroeber
Barry Linsky
SUPPLEMENTAL AGREEMENT
SUPPLEMENTAL AGREEMENT dated as of January 1, 1996, by and
between THE INTERPUBLIC GROUP OF COMPANIES, INC., a corporation
of the State of Delaware (hereinafter referred to as the
"Corporation"), and BARRY R. LINSKY (hereinafter referred to as
"Executive").
W I T N E S S E T H
WHEREAS, the Corporation and Executive are parties to an
Employment Agreement dated as of January 1, 1991, a Supplemental
Agreement dated as of August 15, 1992, and a Supplemental
Agreement dated as of January 1, 1995 (hereinafter collectively
referred to as the "Employment Agreement")' and
WHEREAS, the Corporation and Executive desire to amend the
Employment Agreement;
NOW, THEREFORE, in consideration of the mutual promises
herein and in the Employment Agreement set forth, the parties
hereto, intending to be legally bound, agree as follows:
1. Paragraph 1.01 of the Employment agreement is amended,
effective January 1, 1996, so as to delete "and ending
on December 31, 1995" and substitute "and ending on
December 31, 2000" therefor.
2. Except as hereinabove amended, the Employment Agreement
shall continue in full force and effect.
3. This Supplemental Agreement shall be governed by the
laws of the State of New York.
THE INTERPUBLIC GROUP OF COMPANIES, INC.
BY: C. Kent Kroeber
Barry Linsky
SUPPLEMENTAL AGREEMENT
SUPPLEMENTAL AGREEMENT made as of August l, 1996, by
and between THE INTERPUBLIC GROUP OF COMPANIES, INC., a
corporation of the State of Delaware (hereinafter referred to as
the "Corporation"), and BARRY R. LINSKY (hereinafter referred to
as "Executive"):
W I T N E S S E T H
WHEREAS, the Corporation and Executive are parties to an
Employment Agreement made as of January 1, 1991, a Supplemental
Agreement dated as of August 15, 1992, a Supplemental Agreement
dated as of January 1, 1995 and a Supplemental Agreement dated
January 1, 1996 (hereinafter collectively referred to as the
"Employment Agreement"; and
WHEREAS, the Corporation and Executive desire to amend the
Employment Agreement;
NOW, THEREFORE, in consideration of the mutual promises
herein and in the Employment Agreement set forth, the parties
hereto, intending to be legally bound, agree as follows:
1. Section 3.01 of the Employment Agreement is
amended effective January 1, 1996, so as to delete
"$225,000" and substitute "$280,000."
PAGE
2. Except as hereinabove amended, the Employment
Agreement shall continue in full force and effect.
3. This Supplemental Agreement shall be governed by the
laws of the State of New York.
THE INTERPUBLIC GROUP OF COMPANIES, INC.
By: C. KENT KROEBER
BARRY R. LINSKY
EXECUTIVE SPECIAL BENEFIT AGREEMENT
AGREEMENT made as of April 1, 1996, by and between
THE INTERPUBLIC GROUP OF COMPANIES, INC., a corporation of the
State of Delaware (hereinafter referred to as "Interpublic"), and
MARTIN PURIS (hereinafter referred to as "Executive"):
W I T N E S S E T H
WHEREAS, Executive is in the employ of Interpublic
and/or one or more of its subsidiaries (Interpublic and its
subsidiaries being hereinafter referred to collectively as the
"Corporation"); and
WHEREAS, Interpublic and Executive desire to enter
into an Executive Special Benefit Agreement which shall be
supplementary to any employment agreement or arrangement which
Executive now or hereafter may have with respect to Executive's
employment by Interpublic or any of its subsidiaries;
NOW, THEREFORE, in consideration of the mutual
promises herein set forth, the parties hereto, intending to be
legally bound, agree as follows:
ARTICLE I
Death and Special Retirement Benefits
1.01 SECTION INTENTIONALLY OMITTED
1.02 In lieu of Executive's rights with respect
to a bonus as set forth in Section 4.03 of the Employment
Agreement made as of August 11, 1994 by and among Interpublic,
Ammirati & Puris Inc. and Executive, which rights Executive
hereby expressly waives, the Corporation shall provide Executive
with the following benefits contingent upon Executive's
compliance with all the terms and conditions of this Agreement
and Executive's satisfactory completion of a physical examination
in connection with an insurance policy on the life of Executive
which Interpublic or its assignee (other than Executive) proposes
to obtain and own.
1.03 If, during a period of employment by the
Corporation which is continuous from the date of this Agreement,
Executive shall die while in the employ of the Corporation, the
Corporation shall pay to such beneficiary or beneficiaries as
PAGE
Executive shall have designated pursuant to Section 1.07 (or in
the absence of such designation, shall pay to the Executor of the
Will or the Administrator of the Estate of Executive) survivor
income payments of Three Hundred Thousand Dollars ($300,000) per
annum for fifteen years following Executive's death, such
payments to be made on January 15 of each of the fifteen years
beginning with the year following the year in which Executive
dies.
1.04 If, after a continuous period of
employment from the date of this Agreement, Executive shall
retire from the employ of the Corporation so that the first day
on which Executive is no longer in the employ of the Corporation
occurs on or after Executive's sixty-fifth birthday, the
Corporation shall pay to Executive special retirement benefits at
the rate of Three Hundred Thousand Dollars ($300,000) per annum
for fifteen years beginning with the calendar month following
Executive's last day of employment, such payments to be made in
equal monthly installments.
1.05 If, after a continuous period of
employment from the date of this Agreement, Executive shall
retire, resign, or be terminated from the employ of the
Corporation so that the first day on which Executive is no longer
in the employ of the Corporation occurs on or after Executive's
sixty-third birthday but prior to Executive's sixty-fifth
birthday, the Corporation shall pay to Executive special
retirement benefits at the annual rates set forth below for
fifteen years beginning with the calendar month following
Executive's last day of employment, such payments to be made in
equal monthly installments:
Last Day of Employment Annual Rate
On or after 63rd birthday but
prior to 64th birthday $ 230,000
On or after 64th birthday but
prior to 65th birthday $ 265,000
1.06 If, following such termination of
employment, Executive shall die before payment of all of the
installments provided for in Section 1.04 or Section 1.05, any
remaining installments shall be paid to such beneficiary or
beneficiaries as Executive shall have designated pursuant to
Section 1.07 or, in the absence of such designation, to the
Executor of the Will or the Administrator of the Estate of
Executive.
PAGE
1.07 For purposes of Sections 1.03, 1.04 and
1.05, or any of them, Executive may at any time designate a
beneficiary or beneficiaries by filing with the chief personnel
officer of Interpublic a Beneficiary Designation Form provided by
such officer. Executive may at any time, by filing a new
Beneficiary Designation Form, revoke or change any prior
designation of beneficiary.
1.08 If Executive shall die while in the employ
of the Corporation, no sum shall be payable pursuant to Sections
1.04, 1.05, 1.06, 2.01, 2.02 or 2.03.
1.09 In connection with the life insurance
policy referred to in Section 1.02, Interpublic has relied on
written representations made by Executive concerning Executive's
age and the state of Executive's health. If said representations
are untrue in any material respect, whether directly or by
omission, and if the Corporation is damaged by any such untrue
representations, no sum shall be payable pursuant to Sections
1.03, 1.04, 1.05, 1.06, 2.01, 2.02 or 2.03.
1.10 It is expressly agreed that Interpublic or
its assignee (other than Executive) shall at all times be the
sole and complete owner and beneficiary of the life insurance
policy referred to in Sections 1.02 and 1.09, shall have the
unrestricted right to use all amounts and exercise all options
and privileges thereunder without the knowledge or consent of
Executive or Executive's designated beneficiary or any other
person and that neither Executive nor Executive's designated
beneficiary nor any other person shall have any right, title or
interest, legal or equitable, whatsoever in or to such policy.
ARTICLE II
Alternative Deferred Compensation
2.01 If Executive shall, for any reason other
than death, cease to be employed by the Corporation on a date
prior to Executive's sixty-third birthday, the Corporation shall,
in lieu of any payment pursuant to Article I of this Agreement,
compensate Executive by payment, at the time and in the manner
specified in Section 2.02, of the sum of One Million Five Hundred
Thousand Dollars ($1,500,000). Such payment shall be conditional
upon Executive's compliance with all the terms and conditions of
this Agreement and shall be made without any payment of interest.
However, if such cessation of employment is made at the behest of
the Corporation without "cause" as defined below, or at the
behest of Executive for "good reason" as defined in Section 6.02
of his Employment Agreement dated August 11, 1994, then the
payment called for by this section 2.01 shall be made with
PAGE
interest at the prime rate plus 1%, adjusted and compounded
semi-annually during the period from April 1, 1996 until the date
of payment. For purposes of this section, "cause" shall be
defined as follows:
(i) the conviction of, or pleading guilty or no
contest to, a felony or crime involving moral turpitude; or
(ii) the willful and continued failure of the
Executive to substantially perform his duties to Interpublic or
one of its affiliates (other than any such failure resulting from
physical or mental disability), after written demand for
substantial performance is delivered to Executive by the Board of
Directors (the "Board") of Interpublic, which demand the Board
subsequently determines in good faith has not been satisfactorily
responded to by the Executive.
2.02 The compensation payable under Section
2.01 shall be paid in one lump sum in the month following the
month in which Executive is no longer in the employ of the
Corporation.
2.03 If Executive dies prior to receiving the
payment in accordance with the provisions of Section 2.02, said
payment shall be paid to the Executor of the Will or the
Administrator of the Estate of Executive.
2.04 It is understood that none of the payments
made in accordance with this Agreement shall be considered for
purposes of determining benefits under the Interpublic Pension
Plan, nor shall such sums be entitled to credits equivalent to
interest under the Plan for Credits Equivalent to Interest on
Balances of Deferred Compensation Owing under Employment
Agreements adopted effective as of January 1, 1974 by
Interpublic.
ARTICLE III
Nonsolicitation of Clients or Employees
3.01 Following the termination of Executive's
employment hereunder for any reason, Executive shall not for a
period of twelve months from such termination either (a) solicit
any employee of the Corporation to leave such employ to enter the
employ of Executive or of any corporation or enterprise with
which Executive is then associated or (b) solicit or handle on
Executive's own behalf or on behalf of any other person, firm or
corporation, the advertising, public relations, sales promotion
or market research business of any advertiser for which the
Corporation had actively performed services for compensation
during the 180-day period immediately prior to Executive's
termination, or to whom the Corporation had made a substantive
presentation during such period seeking such advertiser's
business.
PAGE
ARTICLE IV
Assignment
4.01 This Agreement shall be binding upon and
inure to the benefit of the successors and assigns of
Interpublic. Neither this Agreement nor any rights hereunder
shall be subject in any matter to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance or charge by Executive,
and any such attempted action by Executive shall be void. This
Agreement may not be changed orally, nor may this Agreement be
amended to increase the amount of any benefits that are payable
pursuant to this Agreement or to accelerate the payment of any
such benefits.
ARTICLE V
Contractual Nature of Obligation
5.01 The liabilities of the Corporation to
Executive pursuant to this Agreement shall be those of a debtor
pursuant to such contractual obligations as are created by the
Agreement. Executive's rights with respect to any benefit to
which Executive has become entitled under this Agreement, but
which Executive has not yet received, shall be solely the rights
of a general unsecured creditor of the Corporation.
ARTICLE VI
Applicable Law
6.01 This Agreement shall be governed by and
construed in accordance with the laws of the State of New York.
THE INTERPUBLIC GROUP OF COMPANIES, INC.
By______________________________________
C. KENT KROEBER
______________________________________
MARTIN PURIS
September 20, 1996
Mr. Richard Janda
Vice President
The Fuji Bank, Limited
2 World Trade Center, 79th Floor
New York, NY 10048
RE: CREDIT AGREEMENT BETWEEN THE INTERPUBLIC GROUP OF COMPANIES,
INC. AND THE FUJI BANK, LIMITED, NY BRANCH
Dear Richard:
We are writing to you in connection with the Credit Agreement
between The Interpublic Group of Companies, Inc. and The Fuji
Bank Limited, New York Branch dated September 30, 1992 and
effective as of December 16, 1992 (the "Agreement"). Section
2.13 of the Agreement provides that the Borrower may request
extension of the Commitment under the Agreement for an additional
period of one year from the then current Termination Date.
Notwithstanding the dates specified in Section 2.13 of the
Agreement for requesting such extension, we hereby request that
you extend the Termination Date of the Agreement to December 1,
1998. If you are agreeable to our request, please so indicate by
signing and returning the duplicate copy of this letter which we
have enclosed herewith.
Thank you.
Sincerely,
Alan M. Forster
Vice President & Treasurer
ACCEPTED & AGREED
THE FUJI BANK LIMITED, NY BRANCH
Massa Kobayashi
Vice President and Manager
Corporate Finance Originations
Date: 11/13/96
cc: Mr. Kenneth E. Dutcher
Ms. Barbara S. Gmora
Ms. Regina E. Dooley
_________________________________________________________________
_________________________________________________________________
CREDIT AGREEMENT
BETWEEN
THE INTERPUBLIC GROUP OF COMPANIES, INC.
AND
WACHOVIA BANK OF GEORGIA, N.A.
__________________________
US$20,000,000
___________________________
Dated as of October 21, 1996
_________________________________________________________________
_________________________________________________________________
PAGE
TABLE OF CONTENTS
SECTION PAGE
SECTION 1
INTERPRETATIONS AND DEFINITIONS
1.1 Definitions 1
1.2 Accounting Terms and Determinations 6
SECTION 2
TERMS OF THE TERM LOAN
2.1 Commitment of the Bank 8
2.2 Termination and Reduction of Commitment 8
2.3 Disbursement of Term Loan 8
2.4 Principal Payments 8
2.5 Interest Payments 9
2.6 Payment Method 10
2.7 No Setoff or Deduction 10
2.8 Payment on Non-Business Day; Payment Computations 10
2.9 Indemnification 11
2.10 Additional Costs 12
SECTION 3
CONDITIONS OF LENDING
3.1 Conditions of Lending 13
SECTION 4
REPRESENTATIONS AND WARRANTIES
4.1 Corporate Existence and Power 15
4.2 Corporate and Governmental Authorization; Contravention 15
4.3 Binding Effect 15
4.4 Financial Information 15
4.5 Litigation 16
4.6 Compliance with ERISA 16
4.7 Taxes 16
4.8 Subsidiaries 17
PAGE
SECTION 5
COVENANTS
5.1 Information 18
5.2 Maintenance of Property; Insurance 20
5.3 Conduct of Business and Maintenance of Existence 21
5.4 Compliance with Laws 21
5.5 Inspection of Property, Books and Records 21
5.6 Cash Flow to Total Borrowed Funds 22
5.7 Total Borrowed Funds to Consolidated Net Worth 22
5.8 Minimum Consolidated Net Worth 22
5.9 Negative Pledge 22
5.10 Consolidations, Mergers and Sales of Assets 24
5.11 Use of Proceeds 24
SECTION 6
EVENTS OF DEFAULT
6.1 Events of Default 26
SECTION 7
MISCELLANEOUS
7.1 Notices 30
7.2 Amendments and Waivers; Cumulative Remedies 30
7.3 Successors and Assigns 31
7.4 Expenses; Documentary Taxes; Indemnification 31
7.5 Counterparts 32
7.6 Headings; Table of Contents 32
7.7 Governing Law 33
CREDIT AGREEMENT
AGREEMENT dated as of October 21, 1996 between THE
INTERPUBLIC GROUP OF COMPANIES, INC., a Delaware corporation (the
"Borrower"), and WACHOVIA BANK OF GEORGIA, N.A., a Georgia
banking corporation (the "Bank").
WITNESSETH:
Whereas, the Borrower has requested the Bank to extend in an
aggregate principal amount not to exceed $20,000,000 at any time
outstanding and the Bank is prepared to extend such credit upon
the following terms and conditions:
SECTION 1
INTERPRETATIONS AND DEFINITIONS
1.1 Definitions. The following terms, as used herein,
shall have the following respective meanings:
"Benefit Arrangement" means, at any time, an employee
benefit plan within the meaning of Section 3(3) of ERISA
which is not a Plan or a Multiemployer Plan and which is
maintained or otherwise contributed to by any member of the
ERISA Group.
"Business Day" means a day other than a Saturday,
Sunday or other day on which the Bank is not open to the
public for carrying on substantially all of its banking
functions.
"Cash Flow" means the sum of net income of the Borrower
and its Consolidated Subsidiaries (plus any amount by which
net income has been reduced by reason of the recognition of
post-retirement and post-employment benefit costs prior to
the period in which such benefits are paid), depreciation
expenses, amortization costs and changes in deferred taxes,
provided that such sum shall not be adjusted for any
increase or decrease in deferred taxes resulting from Quest
& Associates, Inc., a Subsidiary of the Borrower, investing
in a portfolio of computer equipment leases (it being
further understood that such increase or decrease in
deferred taxes relating to such investment shall not exceed
$25,000,000).
"Code" means the Internal Revenue Code of 1986, as
amended, and any successor statute thereto.
PAGE
"Commitment" means the commitment of the Bank to make
the Term Loan pursuant to Section 2.1 in the principal
amount of $20,000,000.
PAGE
"Consolidated Subsidiary" means at any date any
Subsidiary or other entity the accounts of which would be
consolidated with those of the Borrower in its consolidated
financial statements as of such date.
"Consolidated Net Worth" means at any date the
consolidated stockholders' equity of the Borrower and its
Consolidated Subsidiaries as such appear on the financial
statements of the Borrower determined in accordance with
generally accepted accounting principles (plus any amount by
which retained earnings has been reduced by reason of the
recognition of post-retirement and post-employment benefit
costs prior to the period in which such benefits are paid
and without taking into account the effect of cumulative
currency translation adjustments).
"Debt" of any Person means at any date, without
duplication, (i) all obligations of such Person for borrowed
money, including reimbursement obligations for letters of
credit, (ii) all obligations of such Person evidenced by
bonds, debentures, notes or other similar instruments, (iii)
all obligations of such Person to pay the deferred purchase
price of property or services, except trade accounts payable
arising in the ordinary course of business, (iv) all
obligations of such Person as lessee under capital leases,
(v) all Debt of others secured by a Lien on any asset of
such Person, whether or not such Debt is assumed by such
Person, and (vi) all Debt of others Guaranteed by such
Person, but in each case specified in (i) through (vi)
excludes obligations arising in connection with securities
repurchase transactions.
"Default" means any condition or event which
constitutes an Event of Default or which with the giving of
notice or lapse of time, or both, would become an Event of
Default.
"Dollars" and the sign "$" mean lawful money of the
United States of America.
"ERISA" means the Employee Retirement Income Security
Act of 1974, as amended.
"ERISA Group" means the Borrower and all members of a
controlled group of corporations and all trades or
businesses (whether or not incorporated) under common
control which, together with the Borrower, are treated as a
single employer under Section 414(b) or (c) of the Code.
"Event of Default" has the meaning set forth in Section
6 hereof.
PAGE
"Guarantee" by any Person means any obligation,
contingent or otherwise, of such Person directly or
indirectly guaranteeing any Debt or other obligation of any
other Person and, without limiting the generality of the
foregoing, any obligation, direct or indirect, contingent or
otherwise, of such Person (i) to purchase or pay (or advance
or supply funds for the purchase or payment of) such Debt or
other obligation (whether arising by virtue of partnership
arrangements, by agreement to keep-well, to purchase assets,
goods, securities or services, to take-or-pay, to maintain
financial statement conditions or otherwise) or (ii) entered
into for the purpose of assuring in any other manner the
obligee of such Debt or other obligation of the payment
thereof or to protect such obligee against loss in respect
thereof (in whole or in part), provided that the term
Guarantee shall not include endorsements for collection or
deposit in the ordinary course of business. The term
"Guarantee" used as a verb has a corresponding meaning.
"Interest Payment Date" means subject to Section 2.4
hereof, the last day of each March, June, September and
December occurring after the date hereof, commencing with
the first such day occurring after the date of this
Agreement, except that an adjustment will be made if any
Interest Payment Date would otherwise fall on a day that is
not a New York Banking Day and a London Banking Day so that
the Interest Payment Date will be the first following day
that is a New York Banking Day and a London Banking Day,
unless that day falls in the next calendar month, in which
case the Interest Payment Date will be the first preceding
day that is a New York Banking Day and a London Banking Day.
"Lien" means, with respect to any asset, any mortgage,
lien, pledge, charge, security interest or other encumbrance
of any kind in respect of such asset. For purposes of this
Agreement, the Borrower or any Subsidiary shall be deemed to
own subject to a Lien any asset which it has acquired or
holds subject to the interest of a vendor or lessor under
any conditional sale agreement, capital lease or other title
retention agreement relating to such asset.
"London Banking Day" means any day in which dealings
and deposits in U.S. dollars are transacted in the London
interbank market.
"Material Plan" means at any time a Plan or Plans
having aggregate unfunded benefit liabilities (within the
meaning of Section 4001(a)(18) of ERISA) in excess of
$25,000,000.
PAGE
"Maturity Date" means the Interest Payment Date
occurring on October 21, 1999.
"Multiemployer Plan" means at any time an employee
pension benefit plan that is a "multiemployer plan" within
the meaning of Section 4001(a)(3) of ERISA to which any
member of the ERISA Group is then making or accruing an
obligation to make contributions or has within the preceding
five plan years made contributions, including for these
purposes any Person which ceased to be a member of the ERISA
Group during such five year period.
"New York Banking Day" means any day other than a
Saturday, a Sunday or a day on which commercial banks in New
York City are required or authorized to be closed.
"1934 Act" has the meaning set forth in Section 6.1(j)
hereof.
"Overdue Rate" means a rate per annum that is equal to
the sum of three percent (3%) per annum plus the per annum
rate in effect under the Term Note.
"PBGC" means the Pension Benefit Guaranty Corporation
or any entity succeeding to any or all of its functions
under ERISA.
"Participant" has the meaning set forth in Section 7.3.
"Person" means an individual, a corporation, a
partnership, an association, a business trust or any other
entity or organization, including a government or political
subdivision or an agency or instrumentality thereof.
"Plan" means at any time a defined benefit pension plan
(other than a Multiemployer Plan) which is covered by Title
IV of ERISA or subject to the minimum funding standards
under Section 412 of the Code and either (i) is maintained,
or contributed to, by any member of the ERISA Group for
employees of any member of the ERISA Group or (ii) has at
any time within the preceding five years been maintained, or
contributed to, by any Person which was at such time a
member of the ERISA Group for employees of any Person which
was at such time a member of the ERISA Group.
"Regulation U" means Regulation U of the Board of
Governors of the Federal Reserve System, as in effect from
time to time.
PAGE
"Significant Subsidiary" or "Significant Group of
Subsidiaries" at any time of determination means any
Consolidated Subsidiary or group of Consolidated
Subsidiaries, respectively, which, individually or in the
aggregate,together with its or their Subsidiaries, accounts
or account for more than 10% of the consolidated gross
revenues of the Borrower and its Consolidated Subsidiaries
for the most recently ended fiscal year or for more than 10%
of the total assets of the Borrower and its Consolidated
Subsidiaries as of the end of such fiscal year; provided
that in connection with any determination with respect to a
Significant Group of Subsidiaries under (x) Section 6.1.(e),
there shall be a payment default, failure or other event (of
the type described therein but without regard to the
principal amount of such obligation) of each Consolidated
Subsidiary included in such group, (y) Sections 6.1.(f) and
(g) and the last sentence of Section 5.10, the condition or
event described therein shall exist with respect to each
Consolidated Subsidiary included in such group or (z)
Section 6.1.(i), there shall be a final judgment (of the
type specified therein but without regard to the amount of
such judgment) rendered against each Consolidated Subsidiary
included in such group.
"Subsidiary" means any corporation or other entity of
which securities or other ownership interests having
ordinary voting power to elect a majority of the board of
directors or other persons performing similar functions is
at the time directly or indirectly owned by the Borrower.
"Term Loan" means the borrowing under Section 2.3
evidenced by the Term Note and made pursuant to Section 2.1.
"Term Note" means any promissory note of the Borrower
evidencing the Term Loan, in substantially the form annexed
hereto as Exhibit A, as amended or modified from time to
time and together with any promissory note or notes issued
in exchange or replacement therefor.
"Total Borrowed Funds" means at any date, without
duplication, (i) all outstanding obligations of the Borrower
and its Consolidated Subsidiaries for borrowed money, (ii)
all outstanding obligations of the Borrower and its
Consolidated Subsidiaries evidenced by bonds, debentures,
notes or similar instruments and (iii) any outstanding
obligations of the type set forth in (i) or (ii) of any
other Person Guaranteed by theBorrower and its Consolidated
Subsidiaries, it being understood that the obligation to
repurchase securities transferred pursuant to a securities
repurchase agreement shall not be deemed to give rise to any
amount of Total Borrowed Funds pursuant to this definition.
PAGE
1.2 Accounting Terms and Determinations. Unless otherwise
specified herein, all accounting terms used herein shall be
interpreted, all accounting determinations hereunder shall be
made, and all financial statements required to be delivered
hereunder, shall be prepared in accordance with generally
accepted accounting principles as in effect from time to time,
applied on a basis consistent (except for changes concurred in by
the Borrower's independent public accountants) with the most
recent audited consolidated financial statements of the Borrower
and its Consolidated Subsidiaries delivered to the Bank.
SECTION 2
TERMS OF THE LOANS
2.1 Commitment of the Bank. The Bank agrees, subject
to the terms and conditions of this Agreement, to make a
single Term Loan to the Borrower, and the Borrower agrees to
borrow such Term Loan from the Bank, on October 21, 1996, in
the principal amount of $20,000,000.
2.2 Termination and Reduction of Commitment. Neither
the Borrower nor the Bank shall have the right to terminate
or reduce the Commitment.
2.3 Disbursement of Term Loan. (a) Subject to the
terms and conditions of this Agreement, the proceeds of the
Term Loan shall be made available to the Borrower by
depositing the proceeds thereof, in immediately available
funds, in an account maintained and designated by the
Borrower at the Bank or by wire transfer or otherwise as
requested by the Borrower.
(b) The Term Loan made under this Section 2.3 shall be
evidenced by the Term Note, and the Term Loan shall be due
and payable and bear interest as provided in Sections 2.4
and 2.5. The Bank is hereby authorized by the Borrower to
record on the schedule attached to the Term Note, or in its
books and records, the amount of each payment of principal
thereon, and the other information provided for on such
schedule, which schedule or books and records, as the case
may be, shall constitute prima facie evidence of the
information so recorded, provided, however, that failure of
the Bank to record, or any error in recording, any such
information shall not relieve the Borrower of its obligation
to repay the outstanding principal amount of the Term Loan,
all accrued interest thereon and other amounts payable with
respect thereto in accordance with the terms of this
Agreement.
2.4. Principal Payments.
(a) Unless earlier payment is required under this
Agreement pursuant to Section 6.1, the Borrower shall pay to
the Bank the outstanding principal amount of the Term Loan
in the amount of $20,000,000 on the Maturity Date, when the
entire outstanding principal amount of, and accrued interest
on, the Term Loan shall be due and payable.
PAGE
(b) The Borrower may prepay all (but not less than
all) of the outstanding principal amount of the Term Loan,
on any Interest Payment Date provided, that the Borrower
shall have paid to the Bank, together with such prepayment
of principal, all accrued interest on the principal amount
prepaid to the date of prepayment and the amount, if any, of
the prepayment indemnity determined pursuant to Section 2.9
to be payable to the Bank. The Borrower shall give the Bank
not more than ten, and not less than five, London Banking
Days' notice of any proposed prepayment specifying the
prepayment date and the person or persons authorized to
notify the Bank of acceptance of the terms of prepayment
referred to in the next succeeding sentence. The Bank shall
provide oral notice to a person so specified by the Borrower
on the second London Banking Day prior to the proposed
prepayment date of the amount, if any, of the prepayment
indemnity which shall be paid in connection with such
proposed prepayment by the Borrower or the Bank, as the case
may be, pursuant to Section 2.9. At the time of such oral
notice, such person shall state whether the Borrower elects
to make such proposed prepayment on such terms. If the
Borrower so elects to make such prepayment, the notice of
prepayment given by the Borrower shall be irrevocable and
the entire outstanding principal amount of the Term Loan,
together with such accrued interest and any such additional
sum payable pursuant to Section 2.9, shall become due and
payable on the specified prepayment date. The Bank may, but
shall not be obligated to, provide written confirmation of
such election to the Borrower, but any failure of the Bank
to provide such confirmation shall not affect the obligation
of the Borrower to make such prepayment on the agreed terms.
2.5 Interest Payments. The Borrower shall pay
interest to the Bank on the unpaid principal amount of the
Term Loan, for the period commencing on the date such Term
Loan is made until such Term Loan is paid in full, on each
Interest Payment Date and at maturity (whether at stated
maturity, by acceleration or otherwise), at the per annum
rate of six and sixty-seven one-hundredths percent (6.67%).
Notwithstanding the foregoing, the Borrower shall pay
interest on demand at the Overdue Rate on the outstanding
principal amount of the Term Loan and any other amount
payable by the Borrower hereunder (other than interest)
which is not paid in full when due (whether at stated
maturity, by acceleration or otherwise) for the period
commencing on the due date thereof until the same is paid in
full.
PAGE
2.6 Payment Method. (a) All payments to be made by
the Borrower hereunder will be made in Dollars and in
immediately available funds to the Bank at its address set
forth in Section 7.1 not later than 3:00 p.m. Atlanta time
on the date on which such payment shall become due.
Payments received after 3:00 p.m. Atlanta time shall be
deemed to be payments made prior to 3:00 p.m. Atlanta time
on the next succeeding Business Day.
(b) At the time of making each such payment, the
Borrower shall, subject to the other terms and conditions of
this Agreement, specify to the Bank that obligation of the
Borrower hereunder to which such payment is to be applied.
In the event that the Borrower fails to so specify the
relevant obligation or if an Event of Default shall have
occurred and be continuing, the Bank may apply such payments
as it may determine in its sole discretion to obligations of
the Borrower to the Bank arising under this Agreement.
2.7 No Setoff or Deduction. All payments of principal
and interest on the Term Note and other amounts payable by
the Borrower hereunder shall be made by the Borrower without
setoff or counterclaim, and free and clear of, and without
deduction or withholding for, or on account of, any present
or future taxes, levies, imposts, duties, fees, or
assessments imposed by any governmental authority, or by any
department, agency or other political subdivision or taxing
authority.
2.8 Payment on Non-Business Day; Payment Computations.
Except as otherwise provided in this Agreement to the
contrary, whenever any interest on the Term Loan or any
other amount due hereunder becomes due and payable on a day
which is not a Business Day, the maturity thereof shall be
extended to the next succeeding Business Day. Computations
of interest and other amounts due under this Agreement shall
be made on the basis of a year of 360 days for the actual
number of days elapsed, including the first day but
excluding the last day of the relevant period.
2.9 Indemnification.
(a) In the event that the Borrower shall make any
optional prepayment pursuant to Section 2.4 (b), the
Borrower will pay to the Bank, if a positive number, and the
Bank will pay to the Borrower, if a negative number, a
prepayment indemnity equal to the amount determined in
accordance with clause (c) below.
PAGE
(b) In the event that the principal of, and accrued
interest on, the Term Loan shall become due and payable
prior to scheduled maturity under Section 6, the Borrower
will pay to the Bank a prepayment indemnity equal to the
amount, if a positive number, determined in accordance with
clause (c) below.
(c) The amount payable by the Borrower pursuant to
clauses (a) or (b) above, or by the Bank pursuant to clause
(a) above, shall be the amount (expressed as a positive
number) determined by the Bank in good faith to be necessary
to preserve the economic equivalent of the yield anticipated
to be earned by the Bank in connection with the Term Loan
and to compensate the Bank for any other losses and costs
(including loss of bargain and loss of funding) that it may
incur as a result of such prepayment or acceleration of, the
Term Loan. If the Bank determines that it would gain or
benefit from such occurrence, the Bank's loss will be an
amount (expressed as a negative number) equal to the amount
of the gain or benefit as determined by the Bank. Unless
such quotations are not ascertainable, are not deemed by
Bank to reasonably preserve such economic equivalent or the
determination is being made due to an Event of Default
specified in Section 6.1 (g), the amount payable by the
Borrower or the Bank pursuant to this Section 2.9 shall be
determined by the Bank on the basis of quotations obtained
by the Bank in its discretion from one or more dealers or
other counterparties in the interest rate swap market for an
interest rate swap (i) with payment dates coincident with
the Interest Payment Dates hereunder after the date of such
occurrence, (ii) with a notional amount equal to the
principal amount of the Term Loan scheduled to be
outstanding after such date, and (iii) pursuant to which
such dealer or other counterparty is the fixed rate payor
and the Bank is the floating rate payor at the three-month
London interbank offered rate.
(d) The parties agree that the amounts payable under
this Section 2.9 are a reasonable pre-estimate of loss and
not a penalty. Such amounts are payable for the loss of
bargain and payment of such amounts shall not in any way
reduce, affect or impair the obligations of the Borrower
under this Agreement to pay the principal amount of, and
interest on, the Term Loan. The Bank shall provide a
certificate by an officer of the Bank to confirm the amounts
payable under this Section 2.9 and such certificate of the
Bank shall, in the absence of manifest error, constitute
prima facie evidence of such amount payable under this
Section 2.9.
PAGE
2.10 Additional Costs. If the Bank shall have
determined that the adoption, after the date hereof, of any
applicable law, rule or regulation regarding capital
adequacy, or any change therein, or any change in the
interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with
the interpretation or administration thereof, or compliance
by the Bank with any request or directive regarding a
capital adequacy (whether or not having the force of law) of
any such authority, central bank or comparable agency, has
or would have the effect of reducing the rate of return on
the Bank's capital as a consequence of its obligations
hereunder to a level below that which the Bank could have
achieved but for such adoption, change or compliance (taking
into consideration the Bank's policies with respect to
capital adequacy) by an amount deemed by the Bank to be
material, then from time to time, within 15 days after
demand by the Bank, the Borrower shall pay to the Bank such
additional amount or amounts as will compensate the Bank for
such reduction. A certificate by an officer of the Bank
claiming compensation under this Section and setting forth
the additional amount or amounts to be paid to it hereunder
shall, in the absence of manifest error, constitute prima
facie evidence of such amount. In determining such amount,
the Bank may use any reasonable averaging and attribution
methods.
SECTION 3
CONDITIONS OF LENDING
3.1 Conditions of Lending. The obligation of the Bank
to make the Term Loan hereunder is subject to the
performance by the Borrower of all its obligations under
this Agreement and to the satisfaction of the following
further conditions:
(a) receipt by the Bank of a duly executed Term Note;
(b) that on the date the Term Loan is made no Default
or Event of Default shall have occurred and be continuing;
(c) that the representations and warranties contained
in this Agreement shall be true on and as of the date of the
Term Loan;
(d) receipt by the Bank of an opinion of counsel to
the Borrower as to the matters referred to in Sections
4.1,4.2, 4.3, 4.5 and 4.8 hereof, and covering such other
matters as the Bank may reasonably request, dated the date
of the Term Loan, satisfactory in form and substance to the
Bank;
PAGE
(e) receipt by the Bank of certified copies of all
corporate action taken by the Borrower to authorize the
execution, delivery and performance of this Agreement and
the Term Note, and the Term Loan hereunder and such other
corporate documents and other papers as the Bank may
reasonably request;
(f) receipt by the Bank of a certificate of a duly
authorized officer of the Borrower as to the incumbency, and
setting forth a specimen signature, of each of the persons
(i) who has signed this Agreement on behalf of the Borrower;
(ii) who will sign the Term Note on behalf of the Borrower;
and (iii) who will, until replaced by other persons duly
authorized for that purpose, act as the representatives of
the Borrower for the purpose of signing documents in
connection with this Agreement and the transactions
contemplated hereby; and
(g) receipt by the Bank of such other documents,
evidence, materials and information with respect to the
matters contemplated hereby as the Bank may reasonably
request.
The Borrower shall be deemed to have made a representation and
warranty to the Bank at the time of the making of the Term Loan
to the effects set forth in clauses (b) and (c) of this Section
3.
PAGE
SECTION 4
REPRESENTATIONS AND WARRANTIES
The Borrower hereby represents and warrants to the Bank
that:
4.1 Corporate Existence and Power. The Borrower is a
corporation duly organized, incorporated, validly existing and in
good standing under the laws of the State of its incorporation,
and has all corporate powers and all material governmental
licenses, authorizations, consents and approvals required to
carry on its business as now conducted.
4.2 Corporate and Governmental Authorization;
Contravention. The execution, delivery and performance by the
Borrower of this Agreement and the Term Note are within the
Borrower's corporate powers, have been duly authorized by all
necessary corporate action, require no action by or in respect
of, or filing with, any governmental body, agency or official and
do not contravene, or constitute a default under, any provision
of applicable law or regulation or of the certificate of
incorporation or by-laws of the Borrower or of any judgment,
injunction, order, decree, material agreement or other instrument
binding upon the Borrower or result in the creation or imposition
of any Lien on any asset of the Borrower or any of its
Consolidated Subsidiaries.
4.3 Binding Effect. This Agreement constitutes a valid and
binding agreement of the Borrower and the Term Note, when
executed and delivered in accordance with this Agreement, will
constitute a valid and binding obligation of the Borrower.
4.4 Financial Information.
(a) The consolidated balance sheet of the Borrower and
its Consolidated Subsidiaries as at December 31, 1995 and
the related consolidated statements of income and retained
earnings and cash flows of the Borrower and its Consolidated
Subsidiaries for the fiscal year then ended, certified by
Price Waterhouse, certified public accountants, and set
forth in the Borrower's most recent Annual Report on Form
10-K, a copy of which has been delivered to the Bank, fairly
present in conformity with generally accepted accounting
principles, the consolidated financial position of the
Borrower and its Consolidated Subsidiaries at such date and
the consolidated results of operations for such fiscal year;
(b) Since December 31, 1995 there has been no material
adverse change in the business, financial position or
results of operations of the Borrower and its Consolidated
Subsidiaries, considered as a whole.
PAGE
4.5 Litigation. There is no action, suit or proceeding
pending against, or to the knowledge of the Borrower threatened
against, the Borrower or any of its Consolidated Subsidiaries
before any court or arbitrator or any governmental body, agency
or official in which there is a significant probability of an
adverse decision which would materially adversely affect the
business, consolidated financial position or consolidated results
of operations of the Borrower and its Consolidated Subsidiaries
taken as a whole or which in any manner draws into question the
validity of this Agreement or the Term Note.
4.6 Compliance with ERISA. Each member of the ERISA Group
has fulfilled its obligations under the minimum funding standards
of ERISA and the Code with respect to each Plan and is in
compliance in all material respects with the presently applicable
provisions of ERISA and the Code except where the failure to
comply would not have a material adverse effect on the Borrower
and its Consolidated Subsidiaries taken as a whole. No member of
the ERISA Group has incurred any unsatisfied material liability
to the PBGC or a Plan under Title IV of ERISA other than a
liability to the PBGC for premiums under Section 4007 of ERISA.
4.7 Taxes. United States Federal income tax returns of the
Borrower and its Consolidated Subsidiaries have been examined and
closed through the fiscal year ended December 31, 1987. The
Borrower and its Consolidated Subsidiaries have filed all United
States Federal income tax returns and all other material tax
returns which are required to be filed by them and have paid all
taxes due reported on such returns or pursuant to any assessment
received by the Borrower or any Consolidated Subsidiary, to the
extent that such assessment has become due. The charges, accruals
and reserves on the books of the Borrower and its Consolidated
Subsidiaries in respect of taxes or other governmental charges
are, in the opinion of the Borrower, adequate except for those
which are being contested in good faith by the Borrower.
4.8 Subsidiaries. Each of the Borrower's Consolidated
Subsidiaries is a corporation duly organized, validly existing
and in good standing under the laws of its jurisdiction of
incorporation, and has all corporate powers and all material
governmental licenses, authorizations, consents and approvals
required to carry on its business as now conducted, all to the
extent material to the Borrower and its Subsidiaries taken as a
whole.
PAGE
SECTION 5
COVENANTS
So long as the Term Loan shall be in effect, the Borrower
agrees that:
5.1 Information. The Borrower will deliver to the Bank:
(a) as soon as available and in any event within 95
days after the end of each fiscal year of the Borrower, a
consolidated balance sheet of the Borrower and its
Consolidated Subsidiaries as at the end of such year, and
consolidated statements of income and retained earnings and
statement of cash flows of the Borrower and its Consolidated
Subsidiaries for such year, setting forth in each case in
comparative form the figures for the preceding fiscal year,
all reported on by Price Waterhouse or other independent
certified public accountants of nationally recognized
standing;
(b) as soon as available and in any event within 50
days after the end of each of the first three quarters of
each fiscal year of the Borrower, an unaudited consolidated
balance sheet of the Borrower and its Consolidated
Subsidiaries as at the end of such quarter and the related
unaudited consolidated statements of income and retained
earnings and statement of cash flows of the Borrower and its
Consolidated Subsidiaries for such quarter and for the
portion of the Borrower's fiscal year ended at the end of
such quarter setting forth in each case in comparative form
the figures for the corresponding quarter and the
corresponding portion of the Borrower's previous fiscal
year, all certified (subject to changes resulting from
year-end adjustments) as to fairness of presentation, in
conformity with generally accepted accounting principles
(other than as to footnotes) and consistency (except to the
extent of any changes described therein and permitted by
generally accepted accounting principles) by the chief
financial officer or the chief accounting officer of the
Borrower;
(c) simultaneously with the delivery of each set of
financial statements referred to in clauses (a) and (b)
above, a certificate of the chief financial officer or the
chief accounting officer of the Borrower (i) setting forth
in reasonable detail the calculations required to establish
whether the Borrower was in compliance with the requirements
of Sections 5.6 to 5.8, inclusive, on the date of such
financial statements and (ii) stating whether any Default
has
PAGE
occurred and is continuing on the date of such certificate
and, if any Default then has occurred and is continuing,
setting forth the details thereof and the action which the
Borrower is taking or proposes to take with respect thereto;
(d) within 10 days of the chief executive officer,
chief operating officer, principal financial officer or
principal accounting officer of the Borrower obtaining
knowledge of any event or circumstance known by such person
to constitute a Default, if such Default is then continuing,
a certificate of the principal financial officer or the
principal accounting officer of the Borrower setting forth
the details thereof and within five days thereafter, a
certificate of either of such officers setting forth the
action which the Borrower is taking or proposes to take with
respect thereto;
(e) promptly upon the mailing thereof to the
shareholders of the Borrower generally, copies of all
financial statements, reports and proxy statements so
mailed;
(f) promptly upon the filing thereof, copies of all
registration statements (other than the exhibits thereto and
any registration statements on Form S-8 or its equivalent)
and annual, quarterly or monthly reports which the Borrower
shall have filed with the Securities and Exchange
Commission;
(g) if and when the chief executive officer, chief
operating officer, principal financial officer or principal
accounting officer of the Borrower obtains knowledge that
any member of the ERISA Group (i) has given or is required
to give notice to the PBGC of any "reportable event" (as
defined in Section 4043 of ERISA) with respect to any Plan
which might constitute grounds for a termination of such
Plan under Title IV of ERISA, or knows that the plan
administrator of any Plan has given or is required to give
notice of any such reportable event, a copy of the notice of
such reportable event given or required to be given to the
PBGC; (ii) has received notice of complete or partial
withdrawal liability under Title IV of ERISA or notice that
any Multiemployer Plan is in reorganization, is insolvent or
has been terminated, a copy of such notice; or (iii) has
received notice from the PBGC under Title IV of ERISA of an
intent to terminate, impose liability in excess of
$1,000,000 (other than for (i) contributions of less than
$5,000,000 under Section 302 of ERISA or Section 412 of the
Code; (ii) premiums under Section 4007 of ERISA, or (iii)
penalties under Section 4071 of ERISA) in respect of, or
appoint a trustee to administer any Plan, a copy of such
notice;
PAGE
(h) if at any time the value of all "margin stock" (as
defined in Regulation U) owned by the Borrower and its
Consolidated Subsidiaries exceeds (or would, following
application of the proceeds of the Term Loan hereunder,
exceed) 25% of the value of the total assets of the Borrower
and its Consolidated Subsidiaries, in each case as
reasonably determined by the Borrower, prompt notice of such
fact; and
(i) from time to time such additional information
regarding the financial position or business of the Borrower
as the Bank may reasonably request;
provided, however, that the Borrower shall be deemed to have
satisfied its obligations under clauses (a) and (b) above if and
to the extent that the Borrower has provided to the Bank pursuant
to clause (f) the periodic reports on Forms 10-Q and 10-K
required to be filed by the Borrower with the Securities and
Exchange Commission pursuant to the Securities Exchange Act of
1934, as amended, for the quarterly and annual periods described
in such clauses (a) and (b).
5.2 Maintenance of Property; Insurance.
(a) The Borrower will maintain or cause to be
maintained in good repair, working order and condition all
properties used and useful in the business of the Borrower
and each Consolidated Subsidiary and from time to time will
make or cause to be made all appropriate repairs, renewals
and replacement thereof, except where the failure to do so
would not have a material adverse effect on the Borrower and
its Consolidated Subsidiaries taken as a whole.
(b) The Borrower will maintain or cause to be
maintained, for itself and its Consolidated Subsidiaries,
all to the extent material to the Borrower and its
Consolidated Subsidiaries taken as a whole, physical damage
insurance on all real and personal property on an all risks
basis, covering the repair and replacement cost of all such
property and consequential loss coverage for business
interruption and extra expense, public liability insurance
in an amount not less than $10,000,000 and such other
insurance of the kinds customarily insured against by
corporations of established reputation engaged in the same
or similar business and similarly situated, of such type and
in such amounts as are customarily carried under similar
circumstances.
PAGE
5.3 Conduct of Business and Maintenance of Existence. The
Borrower will continue, and will cause each Consolidated
Subsidiary to continue, to engage predominantly in business of
the same general type as now conducted by the Borrower and its
Consolidated Subsidiaries, and, except as otherwise permitted by
Section 5.10 hereof, will preserve, renew and keep in full force
and effect, and will cause each Consolidated Subsidiary to
preserve, renew and keep in full force and effect their
respective corporate existence and their respective rights and
franchises necessary in the normal conduct of business, all to
the extent material to the Borrower and its Consolidated
Subsidiaries taken as a whole.
5.4 Compliance with Laws. The Borrower will comply, and
cause each Consolidated Subsidiary to comply, in all material
respects with all applicable laws, ordinances, rules,
regulations, and requirements of governmental authorities
(including, without limitation, ERISA and the rules and
regulations thereunder and all federal, state and local statutes
laws or regulations or other governmental restrictions relating
to environmental protection, hazardous substances or the cleanup
or other remediation thereof), except where the necessity of
compliance therewith is contested in good faith by appropriate
proceedings or where the failure to comply would not have a
material adverse effect on the Borrower and its Consolidated
Subsidiaries taken as a whole.
5.5 Inspection of Property, Books and Records.
(a) The Borrower will keep, and will cause each
Consolidated Subsidiary to keep, proper books of record and
account in accordance with sound business practice so as to
permit its financial statements to be prepared in accordance
with generally accepted accounting principles; and will
permit representatives of the Bank at the Bank's expense to
visit and inspect any of the Borrower's properties, to
examine and make abstracts from any of the Borrower's
corporate books and financial records and to discuss the
Borrower's affairs, finances and accounts with the principal
officers of the Borrower and its independent public
accountants, all at such reasonable times and as often as
may reasonably be necessary to ensure compliance by the
Borrower with its obligations hereunder.
(b) With the consent of the Borrower (which consent
will not be unreasonably withheld) or, if an Event of
Default has occurred and is continuing, without the
requirement of any such consent, the Borrower will permit
representatives of the Bank, at the Bank's expense, to visit
and inspect any of the properties of and to examine the
corporate books and financial records of any Consolidated
PAGE
Subsidiary and make copies thereof or extracts therefrom and
to discuss the affairs, finances and accounts of such
Consolidated Subsidiary with its and the Borrower's
principal officers and the Borrower's independent public
accountants, all at such reasonable times and as often as
the Bank may reasonably request.
5.6 Cash Flow to Total Borrowed Funds. The ratio of Cash
Flow to Total Borrowed Funds shall not be less than .30 for any
consecutive four quarters, such ratio to be calculated at the end
of each quarter on a trailing four quarter basis.
5.7 Total Borrowed Funds to Consolidated Net Worth. Total
Borrowed Funds will not exceed 85% of Consolidated Net Worth at
the end of any quarter of any fiscal year.
5.8 Minimum Consolidated Net Worth. Consolidated Net Worth
will at no time be less than $550,000,000 plus 25% of the
consolidated net income of the Borrower at the end of each fiscal
quarter for each fiscal year commencing after the fiscal year
ending December 31, 1994.
5.9 Negative Pledge. Neither the Borrower nor any
Consolidated Subsidiary will create, assume or suffer to exist
any Lien on any asset now owned or hereafter acquired by it,
except for:
(a) Liens existing on the date hereof;
(b) any Lien existing on any asset of any corporation
at the time such corporation becomes a Consolidated
Subsidiary and not created in contemplation of such event;
(c) any Lien on any asset securing Debt incurred or
assumed for the purpose of financing all or any part of the
cost of acquiring such asset, provided that such Lien
attaches to such asset concurrently with or within 90 days
after the acquisition thereof;
(d) any Lien on any asset of any corporation existing
at the time such corporation is merged into or consolidated
with the Borrower or a Consolidated Subsidiary and not
created in contemplation of such event;
(e) any Lien existing on any asset prior to the
acquisition thereof by the Borrower or a Consolidated
Subsidiary and not created in contemplation of such
acquisition;
PAGE
(f) any Lien created in connection with capitalized
lease obligations, but only to the extent that such Lien
encumbers property financed by such capital lease obligation
and the principal component of such capitalized lease
obligation is not increased;
(g) Liens arising in the ordinary course of its
business which (i) do not secure Debt and (ii) do not in the
aggregate materially impair the operation of the business of
the Borrower and its Consolidated Subsidiaries, taken as a
whole;
(h) any Lien arising out of the refinancing,
extension, renewal or refunding of any Debt secured by any
Lien permitted by any of the foregoing clauses of this
Section, provided that such Debt is not increased and is not
secured by any additional assets;
(i) Liens securing taxes, assessments, fees or other
governmental charges or levies, Liens securing the claims of
materialmen, mechanics, carriers, landlords, warehousemen
and similar Persons, Liens incurred in the ordinary course
of business in connection with workmen's compensation,
unemployment insurance and other similar laws, Liens to
secure surety, appeal and performance bonds and other
similar obligations not incurred in connection with the
borrowing of money, and attachment, judgment and other
similar Liens arising in connection with court proceedings
so long as the enforcement of such Liens is effectively
stayed and the claims secured thereby are being contested in
good faith by appropriate proceedings;
(j) Liens not otherwise permitted by the foregoing
clauses of this Section securing Debt in an aggregate
principal amount at any time outstanding not to exceed 10%
of Consolidated Net Worth;
(k) any Lien(s) on any asset of Quest & Associates,
Inc., a Subsidiary of Borrower, created in connection with
the August 1995 investment by Quest & Associates, Inc., in a
portfolio of computer equipment leases; and
(l) any Liens on property arising in connection with a
securities repurchase transaction.
5.10 Consolidations, Mergers and Sales of Assets. The
Borrower will not (i) consolidate or merge with or into any other
Person (other than a Subsidiary of the Borrower) unless the
Borrower's shareholders immediately before the merger or
consolidation are to own more than 70% of the combined voting
power of the resulting entity's voting securities or (ii) sell,
lease or otherwise transfer all or substantially all of the
PAGE
Borrower's business or assets to any other Person (other than a
Subsidiary of the Borrower). The Borrower will not permit any
Significant Subsidiary or (in a series of related transactions)
any Significant Group of Subsidiaries to consolidate with, merge
with or into or transfer all of any substantial part of its
assets to any Person other than the Borrower or a Subsidiary of
the Borrower.
PAGE
5.11 Use of Proceeds. The proceeds of the Term Loan will be
used for general corporate purposes, including the making of
acquisitions. No part of the proceeds of the Term Loan hereunder
will be used, directly or indirectly, for the purpose, whether
immediate, incidental or ultimate of buying or carrying any
"margin stock" in violation of Regulation U. If requested by the
Bank, the Borrower will furnish to the Bank in connection with
the Term Loan hereunder a statement in conformity with the
requirements of Federal Reserve Form U-l referred to in
Regulation U.
SECTION 6
EVENTS OF DEFAULT
6.1 Events of Default. If any one or more of the following
events ("Events of Default") shall have occurred and be
continuing:
(a) the Borrower shall fail to pay (i) any principal
of the Term Note when due or (ii) interest on the Term Note
within four days after the same has become due; or
(b) the Borrower shall fail to observe or perform any
covenant contained in Section 5.1(d) or Sections 5.6 to 5.8
or 5.10 hereof; or
(c) the Borrower shall fail to observe or perform any
covenant or agreement contained in this Agreement (other
than those covered by clause (a) or (b) above) for 30 days
after written notice thereof has been given to the Borrower
by the Bank; or
(d) any representation, warranty or certification made
by the Borrower in this Agreement or in any certificate,
financial statement or other document delivered pursuant to
this Agreement shall prove to have been incorrect in any
material respect upon the date when made or deemed made; or
(e) (1) the Borrower or any Significant Subsidiary or
Significant Group of Subsidiaries defaults in any payment at
any stated maturity of principal of or interest on any other
obligation for money borrowed (or any capitalized lease
obligation, any obligation under a purchase money mortgage,
conditional sale or other title retention agreement or any
obligation under notes payable or drafts accepted
representing extensions of credit) beyond any period of
grace provided with respect thereto or (2) the Borrower or
any Significant Subsidiary or Significant Group of
Subsidiaries defaults in any payment other than at any
stated maturity of principal of or interest on any other
obligation for money borrowed (or anycapitalized lease
obligation, any obligation under a purchase money mortgage,
conditional sale or other title retention agreement or any
obligation under notes payable or drafts accepted
representing extensions of credit) beyond any period of
grace provided with respect thereto, or the Borrower or any
Significant Subsidiary or Significant Group of Subsidiaries
fails to perform or observe any other agreement, term or
condition contained in any agreement under which any such
obligation is created (or if any other event thereunder or
PAGE
under any such agreement shall occur and be continuing), and
the effect of such default with respect to a payment other
than at any stated maturity, failure or other event is to
cause, or to permit the holder or holders of such obligation
(or a trustee on behalf of such holder or holders) to cause,
such obligation to become due or to require the purchase
thereof prior to any stated maturity; Provided that the
aggregate amount of all obligations as to which any such
payment defaults (whether or not at stated maturity),
failures or other events shall have occurred and be
continuing exceeds $10,000,000 and provided, further, that
it is understood that the obligations referred to herein
exclude those obligations arising in connection with
securities repurchase transactions; or
(f) the Borrower or any Significant Subsidiary or
Significant Group of Subsidiaries shall commence a voluntary
case or other proceeding seeking liquidation, reorganization
or other relief with respect to itself or its debts under
any bankruptcy, insolvency or other similar law now or
hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of
it or any substantial part of its property, or shall consent
to any such relief or to the appointment of or taking
possession by any such official in an involuntary case or
other proceeding commenced against it, or shall make a
general assignment for the benefit of creditors, or shall
fail generally to pay its debts as they become due, or shall
take any corporate action to authorize any of the foregoing;
or
(g) an involuntary case or other proceeding shall be
commenced against the Borrower or any Significant Subsidiary
or Significant Group of Subsidiaries seeking liquidation,
reorganization or other relief with respect to it or its
debts under any bankruptcy, insolvency or other similar law
now or hereafter in effect or seeking the appointment of a
trustee, receiver, liquidator, custodian or other similar
official of it or any substantial part of its property, and
such involuntary case or other proceeding shall remain
undismissed and unstayed for a period of 60 days; or an
order for relief shall be entered against the Borrower or
any Significant Subsidiary or Significant Group of
Subsidiaries under the federal bankruptcy laws as now or
hereafter in effect; or
(h) any member of the ERISA Group shall fail to pay
when due any amount or amounts aggregating in excess of
$1,000,000 which it shall have become liable to pay to the
PBGC or to a Plan under Title IV of ERISA (except where such
liability is contested in good faith by appropriate
proceedings as permitted under Section 5.4); or notice of
PAGE
intent to terminate a Material Plan (other than any multiple
employer plan within the meaning of Section 4063 of ERISA)
shall be filed under Title IV of ERISA by any member of the
ERISA Group, any plan administrator or any combination of
the foregoing; or the PBGC shall institute proceedings under
Title IV of ERISA to terminate, to impose liability in
excess of $1,000,000 (other than for (i) contributions of
less than $5,000,000 under Section 302 of ERISA or Section
412 of the Code (ii) premiums under Section 4007 of ERISA or
(iii) penalties under Section 4071 of ERISA) in respect of,
or to cause a trustee to be appointed to administer any such
Material Plan; or
(i) judgments or orders for the payment of money in
excess of $10,000,000 in the aggregate shall be rendered
against the Borrower or any Significant Subsidiary or
Significant Group of Subsidiaries and such judgments or
orders shall continue unsatisfied and unstayed for a period
of 60 days; or
(j) any person or group of persons (within the meaning
of Section 13(d) or 14(d) of the Securities Exchange Act of
1934, as amended (the "1934 Act")), other than the Borrower
or any of its Subsidiaries, becomes the beneficial owner
(within the meaning of Rule 13d-3 under the 1934 Act) of 30%
or more of the combined voting power of the Borrower's then
outstanding voting securities; or a tender offer or exchange
offer (other than an offer by the Borrower or a Subsidiary)
pursuant to which 30% or more of the combined voting power
of the Borrower's then outstanding voting securities was
purchased, expires; or during any period of two consecutive
years, individuals who, at the beginning of such period,
constituted the Board of Directors of the Borrower cease for
any reason to constitute at least a majority thereof, unless
the election or the nomination for the election by the
Borrower's stockholders of each new director was approved by
a vote of at least two-thirds of the directors then still in
office who were directors at the beginning of the period;
then, and in every such event, (1) in the case of any of the
Events of Default specified in paragraphs (f) or (g) above, the
principal of and accrued interest on the Term Note shall
automatically become due and payable without presentment, demand,
protest or other notice or formality of any kind, all of which
are hereby expressly waived and (2) in the case of any other
Event of Default specified above, the Bank may, by notice in
writing to the Borrower, declare the Term Note and all other sums
payable under this Agreement to be, and the same shall thereupon
forthwith become, due and payable without presentment, demand,
protest or other notice or formality of any kind, all of which
are hereby expressly waived.
PAGE
SECTION 7
MISCELLANEOUS
7.1 Notices. Unless otherwise specified herein all
notices, requests, demands or other communications to or from the
parties hereto shall be sent by United States mail, certified,
return receipt requested, telegram, telex or facsimile, and shall
be deemed to have been duly given upon receipt thereof. In the
case of a telex, receipt of such communication shall be deemed to
occur when the sender receives its answer back. In the case of a
facsimile, receipt of such communication shall be deemed to occur
when the sender confirms such receipt by telephone. Any such
notice, request, demand or communication shall be delivered or
addressed as follows:
(a) if to the Borrower, to it at 1271 Avenue of the
Americas, New York, New York 10020; Attention: Vice
President and Treasurer (with a copy at the same address to
the Vice President and General Counsel);
(b) if to the Bank, to it at 191 Peachtree Street,
N.E., Atlanta, Georgia 30303; Attention: William C.
Christie;
or at such other address or telex number as any party hereto may
designate by written notice to the other party hereto.
7.2 Amendments and Waivers; Cumulative Remedies.
(a) None of the terms of this Agreement may be waived,
altered or amended except by an instrument in writing duly
executed by the Borrower and the Bank.
(b) No failure or delay by the Bank in exercising any
right, power or privilege hereunder or the Term Note shall
operate as a waiver thereof, nor shall any single or partial
exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or
privilege. The rights and remedies provided herein shall be
cumulative and not exclusive of any rights or remedies
provided by law.
7.3 Successors and Assigns.
(a) The provisions of this Agreement shall be binding
upon and shall inure to the benefit of the Borrower and the
Bank, except that the Borrower may not assign or otherwise
transfer any of its rights and obligations under this
Agreement except as provided in Section 5.10 hereof, without
PAGE
the prior written consent of the Bank which the Bank shall
not unreasonably delay or withhold.
(b) The Bank may at any time grant to one or more
banks or other institutions (each a "Participant")
participating interests in the Term Loan. In the event of
any such grant by the Bank of a participating interest to a
Participant, whether or not upon notice to the Borrower the
Bank shall remain responsible for the performance of its
obligations hereunder, and the Borrower shall continue to
deal solely and directly with the Bank in connection with
the Bank's rights and obligations under this Agreement. Any
agreement pursuant to which the Bank may grant such a
participating interest shall provide that the Bank shall
retain the sole right and responsibility to enforce the
obligations of the Borrower hereunder including, without
limitation, the right to approve any amendment, modification
or waiver of any provision of this Agreement; provided that
such participation agreement may provide that the Bank will
not agree to any modification, amendment or waiver of this
Agreement which (i) reduces the principal of or rate of
interest on the Term Loan or (ii) postpones the date fixed
for any payment of principal of or interest on the Term Loan
without the consent of the Participant. The Borrower agrees
that each Participant shall be entitled to the benefits of
Section 2 with respect to its participating interest.
(c) No Participant or other transferee of the Bank's
rights shall be entitled to receive any greater payment
under Section 2 than the Bank would have been entitled to
receive with respect to the rights transferred, unless such
transfer is made with the Borrower's prior written consent.
7.4 Expenses; Documentary Taxes; Indemnification.
(a) The Borrower shall pay (i) all out-of-pocket
expenses and internal charges of the Bank (including
reasonable fees and disbursements of counsel) in connection
with any Default hereunder and (ii) if there is an Event of
Default, all out-of-pocket expenses incurred by the Bank
(including reasonable fees and disbursements of counsel) in
connection with such Event of Default and collection and
other enforcement proceedings resulting therefrom. The
Borrower shall indemnify the Bank against any transfer
taxes, documentary taxes, assessments or charges made by any
governmental authority by reason of the execution and
delivery of this Agreement or the Term Note.
PAGE
(b) The Borrower agrees to indemnify the Bank and hold
the Bank harmless from and against any and all liabilities,
losses, damages, costs and expenses of any kind (including,
without limitation, the reasonable fees and disbursements of
counsel for the Bank in connection with any investigative,
administrative or judicial proceeding, whether or not the
Bank shall be designated a party thereto) which may be
incurred by the Bank relating to or arising out of any
actual or proposed use of proceeds of the Term Loan
hereunder or any merger or acquisition involving the
Borrower; provided, that the Bank shall not have the right
to be indemnified hereunder for its own gross negligence or
willful misconduct as determined by a court of competent
jurisdiction.
7.5 Counterparts. This Agreement may be signed in any
number of counterparts with the same effect as if the signatures
thereto and hereto were upon the same instrument.
7.6 Headings; Table of Contents. The section and
subsection headings used herein and the Table of Contents have
been inserted for convenience of reference only and do not
constitute matters to be considered in interpreting this
Agreement.
7.7 Governing Law. This Agreement and the Term Note shall
be construed in accordance with and governed by the law of the
State of New York.
IN WITNESS WHEREOF, the parties have caused this Agreement
to be duly executed and delivered by their proper and duly
authorized officers as of October 21, 1996.
THE INTERPUBLIC GROUP OF COMPANIES, INC.
By: Thomas J. Volpe
Title: Senior Vice President-Financial
Operations
WACHOVIA BANK OF GEORGIA, N.A.
By: William C. Christie
Title: Senior Vice President
PAGE
EXHIBIT A
NOTE
U.S. $20,000,000
October 21, 1996
New York, New York
FOR VALUE RECEIVED, THE INTERPUBLIC GROUP OF COMPANIES, INC.,
a Delaware Corporation (the "Borrower"), hereby promises to pay to
the order of WACHOVIA BANK OF GEORGIA, N.A. (the "Bank"), the
principal sum of TWENTY MILLION AND NO/ 100 United States Dollars
(U.S. $20,000,000.), plus all accrued and unpaid interest thereon.
Principal shall be due and payable on October 21, 1999.
Interest shall be payable at the rate and on the dates
provided in the Credit Agreement.
All such payments of principal and interest shall be made in
lawful money of the United States of America in Federal or other
immediately available funds at the office of the Bank located at
191 Peachtree Street, N.E., Atlanta, Georgia 30303, or at such
other place as the holder hereof may designate.
This note is the Note referred to in the Credit Agreement
dated as of October 21, 1996, between the Borrower and the Bank, as
the same may be amended from time to time (the "Credit Agreement").
Terms defined in the Credit Agreement are used herein with same
meanings. Reference is made to the Credit Agreement for provisions
governing indemnity obligations for prepayment hereof and providing
for the acceleration of the maturity hereof.
THE INTERPUBLIC GROUP OF COMPANIES, INC.
By:
Title:
NOTE
U.S. $20,000,000
October 21, 1996
New York, New York
FOR VALUE RECEIVED, THE INTERPUBLIC GROUP OF COMPANIES, INC.,
a Delaware Corporation (the "Borrower"), hereby promises to pay to
the order of WACHOVIA BANK OF GEORGIA, N.A. (the "Bank"), the
principal sum of TWENTY MILLION AND NO/ 100 United States Dollars
(U.S. $20,000,000.), plus all accrued and unpaid interest thereon.
Principal shall be due and payable on October 21, 1999.
Interest shall be payable at the rate and on the dates
provided in the Credit Agreement.
All such payments of principal and interest shall be made in
lawful money of the United States of America in Federal or other
immediately available funds at the office of the Bank located at
191 Peachtree Street, N.E., Atlanta, Georgia 30303, or at such
other place as the holder hereof may designate.
This note is the Note referred to in the Credit Agreement
dated as of October 21, 1996, between the Borrower and the Bank, as
the same may be amended from time to time (the "Credit Agreement").
Terms defined in the Credit Agreement are used herein with same
meanings. Reference is made to the Credit Agreement for provisions
governing indemnity obligations for prepayment hereof and providing
for the acceleration of the maturity hereof.
THE INTERPUBLIC GROUP OF COMPANIES, INC.
By: Thomas J. Volpe
Title: Senior Vice President-Financial
Operations
EXECUTION COPY
____________________________________________________
____________________________________________________
THE INTERPUBLIC GROUP OF COMPANIES, INC.
________________________________________
________________________________________
NOTE PURCHASE AGREEMENT
_______________________________________
_______________________________________
7.31% Senior Notes due 2006
($30,000,000)
________________________________________
________________________________________
Dated as of October 31, 1996
_________________________________________________
_________________________________________________
TABLE OF CONTENTS
(Not Part of Agreement)
Page
1. AUTHORIZATION OF ISSUE OF NOTES 1
2. PURCHASE AND SALE OF NOTES 1
3. CONDITIONS OF CLOSING 2
4. PREPAYMENTS 3
5. AFFIRMATIVE COVENANTS 4
6. NEGATIVE COVENANTS 7
7. EVENTS OF DEFAULT 9
8. REPRESENTATIONS, COVENANTS AND WARRANTIES 12
9. REPRESENTATIONS OF THE PURCHASER 15
10. DEFINITIONS 16
11. MISCELLANEOUS 20
PURCHASER SCHEDULE
EXHIBIT A -- FORM OF COMPANY NOTE
EXHIBIT B -- FORM OF OPINION OF COMPANY'S GENERAL COUNSEL
PAGE
THE INTERPUBLIC GROUP OF COMPANIES, INC.
1271 Avenue of the Americas
Rockefeller Center
New York, New York 10020
as of October 31, 1996
The Prudential Insurance Company
of America
c/o Prudential Capital Group
One Gateway Center, 11th Floor
7-45 Raymond Boulevard West
Newark, NJ 07102
Ladies and Gentlemen:
The undersigned, The Interpublic Group of Companies, Inc.,
a Delaware corporation (herein called the "Company"), hereby
agrees with you as follows:
1. AUTHORIZATION OF ISSUE OF NOTES. The Company will
authorize the issue and delivery of its senior promissory notes
(herein, together with any such notes which may be issued
pursuant to any provision of this Agreement, and any such notes
which may be issued hereunder in substitution or exchange
therefor, collectively called the "Notes" and individually called
a "Note") in the aggregate principal amount of $30,000,000, to be
dated the date of issue thereof, to mature October 31, 2006, to
bear interest on the unpaid balance thereof (payable
semi-annually on the last day of April and October in each year)
from the date thereof until the principal thereof shall have
become due and payable at the rate of 7.31% per annum and on
overdue principal, premium and interest at the rate specified
therein, and to be substantially in the form of Exhibit A
attached hereto.
2. PURCHASE AND SALE OF NOTES. Subject to the terms and
conditions herein set forth, the Company hereby agrees to sell to
you and you agree to purchase from the Company the Notes in the
aggregate principal amount set forth opposite your name in the
Purchaser Schedule attached hereto at 100% of such aggregate
principal amount. The Company will deliver to you, at the
Company's offices at 1271 Avenue of the Americas, Rockefeller
Center, New York, New York 10020, one or more Notes registered in
your name, evidencing the aggregate principal amount of Notes to
be purchased by you and in the denomination or denominations
specified with respect to you in the Purchaser Schedule attached
PAGE
hereto, against payment of the purchase price thereof by transfer
of immediately available funds for credit to the Company's
account #143-46-358 at Morgan Guaranty Trust Company of New York,
60 Wall Street, New York, New York, ABA #021000238, on the date
of closing, which shall be October 31, 1996 or any other date
upon which the Company and you may mutually agree (herein called
the "closing" or the "date of closing").
3. CONDITIONS OF CLOSING. Your obligation to purchase and
pay for the Notes to be purchased by you hereunder is subject to
the satisfaction, on or before the date of closing, of the
following conditions:
3A. Opinion of Purchaser's Special Counsel. You shall
have received from Sabrina M. Coughlin, Assistant General Counsel
of The Prudential Insurance Company of America ("Prudential"),
who is acting as special counsel for you in connection with this
transaction, a favorable opinion reasonably satisfactory to you
as to such matters incident to the matters herein contemplated as
you may reasonably request.
3B. Opinion of the Company's Counsel. You shall have
received from either the Vice President, General Counsel or the
Vice President, Assistant General Counsel of the Company, a
favorable opinion reasonably satisfactory to you and
substantially in the form of Exhibit B attached hereto.
3C. Representations and Warranties; No Default. The
representations and warranties contained in paragraph 8 shall be
true on and as of the date of closing, except to the extent of
changes caused by the transactions herein contemplated; there
shall exist on the date of closing no Event of Default or
Default; and the Company shall have delivered to you an Officer's
Certificate, dated the date of closing, to both such effects.
3D. Purchase Permitted by Applicable Laws. The purchase
of and payment for the Notes to be purchased by you on the date
of closing on the terms and conditions herein provided (including
the use of the proceeds of such Notes by the Company) shall not
violate any applicable law or governmental regulation (including,
without limitation, section 5 of the Securities Act or Regulation
G, T or X of the Board of Governors of the Federal Reserve
System) and shall not subject you to any tax, penalty or
liability under or pursuant to any applicable law or governmental
regulation relating to the extension of credit or the making of
investments, and you shall have received such certificates or
other evidence as you may reasonably request to establish
compliance with this condition.
PAGE
3E. Proceedings. All corporate and other proceedings
taken or to be taken in connection with the transactions
contemplated hereby and all documents incident thereto shall be
reasonably satisfactory in substance and form to you, and you
shall have received all such counterpart originals or certified
or other copies of such documents as you may reasonably request.
3F. Payment of Fees. Prudential shall have received in
immediately available funds a $10,000 structuring fee.
4. PREPAYMENTS. The Notes shall be subject to prepayment
only with respect to the optional prepayments permitted by
paragraph 4A.
4A. Optional Prepayment with Yield-Maintenance Premium.
The Notes shall be subject to prepayment, in whole at any time or
from time to time in part (in multiples of $500,000), at the
option of the Company at 100% of the principal amount so prepaid
plus interest thereon to the prepayment date and the Yield
Maintenance Premium, if any, with respect to each such Note.
4B. Notice of Optional Prepayment. The Company shall give
each holder of such Notes irrevocable written notice of any
prepayment pursuant to paragraph 4A not less than 10 Business
Days prior to the prepayment date, specifying such prepayment
date and the principal amount of the Notes, and of the Notes held
by such holder, to be prepaid on such date and stating that such
prepayment is to be made pursuant to paragraph 4A. Notice of
prepayment having been given as aforesaid, the principal amount
of the Notes specified in such notice, together with interest
thereon to the prepayment date and together with the premium, if
any, herein provided, shall become due and payable on such
prepayment date.
4C. Partial Payments Pro Rata. Upon any partial
prepayment of the Notes pursuant to paragraph 4A, the principal
amount so prepaid of the Notes shall be allocated among the Notes
at the time outstanding (including, for the purpose of this
paragraph 4C only, all Notes prepaid or otherwise retired or
purchased or otherwise acquired by the Company or any of its
Subsidiaries or Affiliates other than by prepayment pursuant to
paragraph 4A) in proportion to the respective outstanding
principal amounts thereof.
PAGE
4D. Retirement of Notes. The Company shall not, and shall
not permit any of its Subsidiaries or Affiliates to, prepay or
otherwise retire in whole or in part prior to their stated final
maturity (other than by prepayment pursuant to paragraph 4A or
upon acceleration of such final maturity pursuant to paragraph
7A), or purchase or otherwise acquire, directly or indirectly,
Notes held by any holder unless the Company, such Subsidiary or
such Affiliate shall have offered to prepay or otherwise retire
or purchase or otherwise acquire, as the case may be, the same
proportion of the aggregate principal amount of Notes held by
each other holder of Notes at the time outstanding upon the same
terms and conditions. Any Notes so prepaid or otherwise retired
or purchased or otherwise acquired by the Company or any of its
Subsidiaries or Affiliates shall not be deemed to be outstanding
for any purpose under this Agreement, except as provided in
paragraph 4C.
5. AFFIRMATIVE COVENANTS.
5A. Financial Statements. The Company covenants that it
will deliver to each holder of a Note:
(i) as soon as practicable and in any event within 50
days after the end of each quarterly period (other than the
last quarterly period) in each fiscal year, an unaudited
consolidated statement of income and retained earnings and
statement of cash flows of the Company and its Consolidated
Subsidiaries for the period from the beginning of the
current fiscal year to the end of such quarterly period,
and an unaudited consolidated balance sheet of the Company
and its Consolidated Subsidiaries as at the end of such
quarterly period, setting forth in each case in comparative
form figures for the corresponding period in the preceding
fiscal year, all in reasonable detail and certified,
subject to changes resulting from year-end adjustments, as
to fairness of presentation, generally accepted accounting
principles (other than as to footnotes) and consistency by
the chief financial officer or chief accounting officer of
the Company (except to the extent of any change described
therein and permitted by generally accepted accounting
principles);
(ii) as soon as practicable and in any event within
95 days after the end of each fiscal year, a consolidated
statement of income and retained earnings and statement of
cash flows of the Company and its Consolidated Subsidiaries
for such year, and a consolidated balance sheet of the
PAGE
Company and its Consolidated Subsidiaries as at the end of such
year, setting forth in each case in comparative form
corresponding consolidated figures from the preceding annual
audit, and all reported on by Price Waterhouse or other
independent public accountants of recognized standing selected by
the Company whose report shall state that such audit shall have
been conducted by them in accordance with generally accepted
auditing standards;
(iii) promptly upon distribution thereof to
shareholders of the Company, copies of all such financial
statements, proxy statements, notices and reports so
distributed, and promptly upon filing thereof, copies of
all registration statements (other than exhibits or any
registration statement on Form S-8, or other equivalent
substitute form, under the Securities Act) and all reports
which it files with the Securities and Exchange Commission
(or any governmental body or agency succeeding to the
functions of the Securities and Exchange Commission);
(iv) with reasonable promptness, such other
information with respect to the business and consolidated
financial position of the Company and its Consolidated
Subsidiaries as such holder may reasonably request;
(v) within five (5) days of the chief executive
officer, chief operating officer, principal financial
officer or principal accounting officer of the Company
obtaining knowledge of any condition or event known by such
person to constitute a continuing Default, an Officer's
Certificate specifying the nature thereof and, within five
(5) days thereafter, an Officer's Certificate specifying
what action the Company proposes to take with respect
thereto; and
(vi) promptly following the chief executive officer,
chief operating officer, principal financial officer or
principal accounting officer of the Company obtaining
knowledge that any member of the Controlled Group (a) has
given or is required to give notice to the PBGC of any
"reportable event" (as defined in Section 4043 of ERISA)
with respect to any Plan which might constitute grounds for
a termination of such Plan under Title IV of ERISA, or that
the plan administrator of any Plan has given or is required
to give notice of any such reportable event, a copy of the
notice of such reportable event given or required to be
given to the PBGC, (b) has received notice of complete or
PAGE
partial withdrawal liability under Title IV of ERISA, a
copy of such notice, or (c) has received notice from the
PBGC under Title IV of ERISA of an intent to terminate or
appoint a trustee to administer any Plan, a copy of such
notice;
provided, however, that the Company shall be deemed to have
satisfied its obligations under clauses (i) and (ii) above if and
to the extent that the Company has provided to each holder of a
Note pursuant to clause (iii) periodic reports (on Forms 10-Q and
10-K) required to be filed by the Company with the Securities and
Exchange Commission pursuant to the Securities Exchange Act of
1934 for the quarterly and annual periods described in such
clauses (i) and (ii).
Together with each delivery of financial statements required by
clauses (i) and (ii) above, the Company will deliver an Officer's
Certificate with computations in reasonable detail to establish
whether the Company was in compliance on the date of such
financial statements with the provisions of paragraphs 6A through
6C and stating whether, to the knowledge of the individual
signing such Certificate after having exercised reasonable
diligence to ascertain the relevant facts, there exists a
continuing Default, and, if any Default exists, specifying the
nature thereof and what action the Company proposes to take with
respect thereto.
5B. Books and Records; Inspection of Property.
(i) The Company will maintain or cause to be maintained the
books of record and account of the Company and each Consolidated
Subsidiary, in good order in accordance with sound business
practice so as to permit its financial statements to be prepared
in accordance with generally accepted accounting principles.
(ii) The Company will permit any Person designated by any
holder of Notes in writing, at such holder's expense, to visit
and inspect any of the properties of and to examine the corporate
books and financial records of the Company and make copies
thereof or extracts therefrom and to discuss the affairs,
finances and accounts of the Company with its principal officers
and its independent public accountants, all at such reasonable
times and as often as such holder may reasonably request.
(iii) With the consent of the Company (which consent will
not be unreasonably withheld) or, if an Event of Default has
occurred and is continuing, without the requirement of any such
PAGE
consent, the Company will permit any Person designated by any
holder of Notes in writing, at such holder's expense, to visit
and inspect any of the properties of and to examine the corporate
books and financial records of any Consolidated Subsidiary and
make copies thereof or extracts therefrom and to discuss the
affairs, finances and accounts of such Consolidated Subsidiary
with its and the Company's principal officers and the Company's
independent public accountants, all at such reasonable times and
as often as such holder may reasonably request.
5C. Maintenance of Property; Insurance. The Company will
maintain or cause to be maintained in good repair, working order
and condition all properties used and useful in the business of
the Company and each Consolidated Subsidiary and from time to
time will make or cause to be made all appropriate repairs,
renewals and replacement thereof, except where the failure to do
so would not have a material adverse effect on the Company and
its Consolidated Subsidiaries taken as a whole.
The Company will maintain or cause to be maintained,
for itself and its Consolidated Subsidiaries, all to the extent
material to the Company and its Consolidated Subsidiaries taken
as a whole, physical damage insurance on all real and personal
property on an all risks basis, covering the repair and
replacement cost of all such property and consequential loss
coverage for business interruption and extra expense, public
liability insurance in an amount not less than $10,000,000 and
such other insurance of the kinds customarily insured against by
corporations of established reputation engaged in the same or
similar business and similarly situated, of such type and in such
amounts as are customarily carried under similar circumstances.
5D. Conduct of Business and Maintenance of Existence. The
Company and its Consolidated Subsidiaries will continue to be
predominantly engaged in business of the same general type as is
now conducted by the Company and its Consolidated Subsidiaries.
Except as otherwise permitted by paragraph 6E, the Company will
at all times preserve and keep in full force and effect its
corporate existence, and rights and franchises material to its
business, and (to the extent material to the Company and its
Consolidated Subsidiaries taken as a whole) those of each of its
Consolidated Subsidiaries, and will qualify, and cause each
Consolidated Subsidiary to qualify, to do business in any
jurisdiction where the failure to do so would have a material
adverse effect on the Company and its Consolidated Subsidiaries
taken as a whole.
5E. Compliance with Laws. The Company will comply, and
cause each Consolidated Subsidiary to comply, in all material
respects, with the requirements of all applicable laws,
ordinances, rules, regulations, and requirements of any
governmental authority (including, without limitation, ERISA and
the rules and regulations thereunder), except where the necessity
of compliance therewith is contested in good faith by appropriate
proceedings or where the failure to comply would not have a
material adverse effect upon the Company and its Consolidated
Subsidiaries taken as a whole.
5F. Information Required by Rule 144A. The Company
covenants that it will, upon the request of the holder of any
Note, provide such holder, and any qualified institutional buyer
designated by such holder, such financial and other information
as such holder may reasonably determine to be necessary in order
to permit compliance with the information requirements of Rule
144A under the Securities Act in connection with the resale of
Notes, except at such times as the Company is subject to the
reporting requirements of section 13 or 15(d) of the Exchange
Act. For the purpose of this paragraph 5F, the term "qualified
institutional buyer" shall have the meaning specified in Rule
144A under the Securities Act.
5G. Rank of Notes. The Company agrees that its
obligations under this Agreement and the Notes shall rank at
least pari passu with all other unsecured senior obligations of
the Company now or hereafter existing.
6. NEGATIVE COVENANTS.
6A. Cash Flow to Total Borrowed Funds. The Company will
not permit the ratio of Cash Flow to Total Borrowed Funds to be
less than 0.25 for any consecutive four quarters, such ratio to
be calculated at the end of each fiscal quarter, on a trailing
four quarter basis.
6B. Total Borrowed Funds to Consolidated Net Worth. The
Company will not permit Total Borrowed Funds to exceed 85% of
Consolidated Net Worth at the end of any quarter.
PAGE
6C. Minimum Consolidated Net Worth. The Company will not
permit Consolidated Net Worth at any time to be less than the sum
of (i) $550,000,000 and (ii) 25% of the consolidated net income
of the Company for all fiscal quarters ending on or after
December 31, 1994 in which consolidated net income is a positive
number.
6D. Negative Pledge. The Company covenants that neither
it nor any Consolidated Subsidiary will create, assume or suffer
to exist any Lien upon any of its property or assets, whether now
owned or hereafter acquired; provided, however, that the
foregoing restriction and limitation shall not apply to the
following Liens:
(i) Liens existing on the date hereof;
(ii) any Lien existing on any asset of any
corporation at the time such corporation becomes a
Consolidated Subsidiary and not created in contemplation of
such event;
(iii) any Lien on any asset securing Debt incurred or
assumed for the purpose of financing all or any part of the
cost of acquiring such asset, provided that such Lien
attached to such asset concurrently with or within 90 days
after the acquisition thereof;
(iv) any Lien on any asset of any corporation
existing at the time such corporation is merged or
consolidated with the Company or a Consolidated Subsidiary
and not created in contemplation of such event;
(v) any Lien existing on any asset prior to the
acquisition thereof by the Company or a Consolidated
Subsidiary and not created in contemplation of such
acquisition;
(vi) Liens created in connection with Capitalized
Lease Obligations, but only to the extent that such Liens
encumber property financed by such Capitalized Lease
Obligation and the principal component of such Capitalized
Lease Obligation is not increased;
PAGE
(vii) Liens arising in the ordinary course of its
business which (i) do not secure Debt and (ii) do not in
the aggregate materially impair the operation of the
business of the Company and its Consolidated Subsidiaries
taken as a whole;
(viii) any Lien arising out of the refinancing,
extension, renewal or refunding of any Debt secured by any
Lien permitted by any of the foregoing clauses of this
Section, provided that such Debt is not increased and is
not secured by any additional assets;
(ix) Liens securing taxes, assessments, fees or other
governmental charges or levies, Liens securing the claims
of materialmen, mechanics, carriers, landlords,
warehousemen and similar Persons, Liens incurred in the
ordinary course of business in connection with workmen's
compensation, unemployment insurance and other similar
laws, Liens to secure surety, appeal and performance bonds
and other similar obligations not incurred in connection
with the borrowing of money, and attachment, judgment and
other similar Liens arising in connection with court
proceedings so long as the enforcement of such Liens is
effectively stayed and the claims secured thereby are being
contested in good faith by appropriate proceedings;
(x) any Lien on property arising in connection with,
and which is the subject of, a securities repurchase
transaction;
(xi) any Lien(s) on any asset of Quest & Associates,
Inc., a Subsidiary of the Company, created in connection
with the August 1995 investment by Quest & Associates,
Inc., in a portfolio of computer equipment leases; and
(xii) Liens not otherwise permitted by the foregoing
clauses of this paragraph 6D securing Debt in an aggregate
principal amount at any time outstanding not to exceed 10%
of Consolidated Net Worth.
6E. Consolidations, Mergers and Sales of Assets. The
Company covenants that it will not, and will not permit any
Consolidated Subsidiary to, be a party to any merger or
consolidate with any other corporation or sell, lease or transfer
or otherwise dispose of all or substantially all of its assets
except that
PAGE
(i) any Consolidated Subsidiary may merge or
consolidate with, or sell, lease, transfer or otherwise
dispose of all or substantially all of its assets to, any
other Consolidated Subsidiary; and
(ii) any Consolidated Subsidiary may merge or
consolidate with, or sell, lease, transfer or otherwise
dispose of all or substantially all of its assets to, the
Company; and
(iii) the Company and any Consolidated Subsidiary may
merge or consolidate with or sell, lease, transfer or
otherwise dispose of all or substantially all of its assets
to, any other Person (a "Transaction"); provided, however,
that (a) in the case of a Transaction involving the
Company, either (x) the Company shall be the continuing or
surviving corporation or (y) the continuing or surviving
corporation or the transferee of such assets shall be a
corporation organized under the laws of the United States
or Canada and such continuing or surviving corporation or
transferee shall expressly assume in a writing (in a form
reasonably satisfactory to the Required Holder(s)) all of
the Company's obligations under this Agreement and the
Notes, and (b) immediately after such merger, consolidation
or transfer no Default or Event of Default shall exist.
7. EVENTS OF DEFAULT.
7A. Acceleration. If any of the following events shall
occur and be continuing for any reason whatsoever (and whether
such occurrence shall be voluntary or involuntary or come about
or be effected by operation of law or otherwise):
(i) the Company defaults in the payment of any
principal of or premium on any Note when the same shall
become due, either by the terms thereof or otherwise as
herein provided; or
(ii) the Company defaults in the payment of any
interest on any Note for more than five (5) days after the
date due; or
(iii) the Company or any Significant Subsidiary or
Significant Group of Subsidiaries defaults in any payment
of principal of or interest on any other obligation for
money borrowed (or any Capitalized Lease Obligation, any
obligation under a purchase money mortgage, conditional
PAGE
sale or other title retention agreement or any obligation
under notes payable or drafts accepted representing
extensions of credit) beyond any period of grace provided
with respect thereto, or the Company or any Significant
Subsidiary or Significant Group of Subsidiaries fails to
perform or observe any other agreement, term or condition
contained in any agreement under which any such obligation
is created (or if any other event thereunder or under any
such agreement shall occur and be continuing), and the
effect of such payment default, failure or other event is
to cause, or to permit the holder or holders of such
obligation (or a trustee on behalf of such holder or
holders) to cause, such obligation to become due or to
require the purchase thereof prior to any stated maturity,
provided that the aggregate amount of all obligations as to
which such a payment default shall occur and be continuing
or such a failure or other event causing or permitting
acceleration shall occur and be continuing exceeds
$10,000,000; or
(iv) any representation or warranty made by the
Company herein or in any certificate furnished pursuant to
this Agreement shall be false in any material respect on
the date as of which made; or
(v) the Company fails to perform or observe any
agreement contained in paragraph 6A, 6B, 6C or 6E; or
(vi) the Company fails to perform or observe any
other agreement, term or condition contained herein and
such failure shall not be remedied within 30 days after the
Company shall have received notice thereof; or
(vii) the Company or any Significant Subsidiary or
Significant Group of Subsidiaries makes a general
assignment for the benefit of creditors or is generally not
paying its debts as such debts become due; or
(viii) the Company or any Significant Subsidiary or
Significant Group of Subsidiaries shall commence a
voluntary case or other proceeding seeking liquidation,
reorganization or other relief with respect to itself or
its debts under any bankruptcy, insolvency or other similar
law now or hereafter in effect or seeking the appointment
of a trustee, receiver, liquidator, custodian or other
similar official of it or any substantial part of its
property, or shall consent to any such relief or to the
PAGE
appointment of or taking possession by any such official in
an involuntary case or other proceeding commenced against
it; or
(ix) an involuntary case or other proceeding shall be
commenced against the Company or any Significant Subsidiary
or Significant Group of Subsidiaries seeking liquidation,
reorganization or other relief with respect to it or its
debts under any bankruptcy, insolvency or other similar law
now or hereafter in effect or seeking the appointment of a
trustee, receiver, liquidator, custodian or other similar
official of it or any substantial part of its property, and
such involuntary case or other proceeding shall remain
undismissed and unstayed for a period of 60 days; or
(x) an order for relief shall be entered against the
Company or any Significant Subsidiary or Significant Group
of Subsidiaries under the federal bankruptcy laws as now or
hereafter in effect; or
(xi) any order, judgment or decree is entered in any
proceedings against the Company in a court of competent
jurisdiction of the United States (or a State or other
jurisdiction thereof) or Canada (or a Province or other
jurisdiction thereof) decreeing the dissolution of the
Company and such order, judgment or decree remains unstayed
and in effect for more than 60 days; or
(xii) the Company or any other member of the Controlled
Group shall fail to pay when due any amount or amounts
aggregating in excess of $1,000,000 which it shall have
become liable to pay to the PBGC or to a Plan under Title
IV of ERISA (except where such liability is contested in
good faith by appropriate proceedings as permitted under
paragraph 5E); or notice of intent to terminate a Plan or
Plans (other than any multi-employer plan or multiple
employer plan, within the meaning of Section 4001(a)(3) or
4063, respectively, of ERISA) having unfunded benefit
liabilities (within the meaning of Section 4001(a)(18) of
ERISA) in excess of $25,000,000 shall be filed under Title
IV of ERISA by any member of the Controlled Group, any plan
administrator or any combination of the foregoing; or the
PBGC shall institute proceedings under Title IV of ERISA to
terminate or to cause a trustee to be appointed to
administer any such Plan; or
PAGE
(xiii) final judgment in an amount in excess of
$10,000,000 is rendered against the Company or any
Significant Subsidiary or Significant Group of Subsidiaries
and, within 90 days after entry thereof, such judgment is
not discharged or satisfied or execution thereof stayed
pending appeal, or within 90 days after the expiration of
any such stay, such judgment is not discharged or
satisfied;
then (a) if such event is an Event of Default specified in clause
(viii), (ix) or (x) of this paragraph 7A with respect to the
Company, all of the Notes at the time outstanding shall
automatically become immediately due and payable at par together
with interest accrued thereon, without presentment, demand,
protest or notice of any kind, all of which are hereby waived by
the Company and (b) if such event is any other Event of Default,
the Required Holder(s) may at its or their option, by notice in
writing to the Company, declare all of the Notes to be, and all
of the Notes shall thereupon be and become, immediately due and
payable together with interest accrued thereon and together with
the Yield-Maintenance Premium, if any, with respect to each Note
without presentment, demand, protest or other notice of any kind,
all of which are hereby waived by the Company; provided that the
Yield-Maintenance Premium, if any, with respect to each such Note
shall be due and payable upon such declaration only if (x) such
event is an Event of Default specified in any of clauses (i) to
(vi), inclusive, or clause (xii) or (xiii) of this paragraph 7A,
(y) the Required Holders shall have given to the Company at least
10 Business Days before such declaration written notice stating
their intention so to declare such Notes to be due and payable
and identifying one or more such Events of Default the occurrence
of which on or before the date of such notice permits such
declaration and (z) one or more of the Events of Default so
identified shall be continuing at the time of such declaration.
It is agreed that Repurchase Transactions are not deemed to
create obligations which may give rise to an Event of Default
under clause (iii) of this paragraph 7A, provided that the
aggregate face amount of all Treasury securities involved in all
such Repurchase Transactions at no time exceeds 15% of the
Company's consolidated total assets (as reported on the audited
statement of financial condition of the Company most recently
filed with the Securities and Exchange Commission by the Company
prior to the inception of such a Repurchase Transaction) after
giving effect to such proposed Repurchase Transaction.
PAGE
7B. Other Remedies. If any Event of Default or Default
shall occur and be continuing, the holder of any Note may proceed
to protect and enforce its rights under this Agreement and such
Note by exercising such remedies as are available to such holder
in respect thereof under applicable law, either by suit in equity
or by action at law, or both, whether for specific performance of
any covenant or other agreement contained in this Agreement or in
aid of the exercise of any power granted in this Agreement. No
remedy conferred in this Agreement upon the holder of any Note is
intended to be exclusive of any other remedy, and each and every
such remedy shall be cumulative and shall be in addition to every
other remedy conferred herein or now or hereafter existing at law
or in equity or by statute or otherwise.
7C. Rescission of Acceleration. At any time after any
declaration of acceleration of any of the Notes shall have been
made pursuant to paragraph 7A by any holder or holders of such
Notes, and before a judgment or decree for the payment of money
due has been obtained by such holder or holders, the Required
Holder(s) may, by written notice to the Company and to the other
holders of such Notes, rescind and annul such declaration and its
consequences, provided that (i) the principal of and interest on
the Notes which shall have become due otherwise than by such
declaration of acceleration shall have been duly paid, and (ii)
all Events of Default other than the nonpayment of principal of
and interest on the Notes which have become due solely by such
declaration of acceleration, shall have been cured or waived by
the Required Holder(s). No rescission or annulment referred to
above shall affect any subsequent Default or any right, power or
remedy arising out of such subsequent Default.
8. REPRESENTATIONS, COVENANTS AND WARRANTIES. The Company
represents, covenants and warrants:
8A. Organization. The Company is a corporation duly
organized and existing in good standing under the laws of the
State of Delaware, and has the corporate power and all material
governmental licenses, authorizations, consents and approvals
required to own its property and to carry on its business as now
being conducted.
8B. Corporate Authorization; Governmental Authorization;
Contravention. (i) The Company has the corporate power and
authority to execute, deliver and perform this Agreement and has
taken all necessary corporate action to authorize the execution,
delivery and performance of this Agreement. The Company has the
corporate authority to issue and sell the Notes and has taken all
PAGE
necessary corporate action to authorize the issuance of and sale
of the Notes on the terms and conditions of this Agreement.
(ii) None of the offering, issuance, sale and delivery of
the Notes, and fulfillment of or compliance with the terms and
provisions hereof or of the Notes, by the Company requires any
authorization, consent, approval, exemption or other action by or
notice to or filing with any court or administrative or
governmental body (other than routine filings after the date of
closing with the Securities and Exchange Commission and/or state
Blue Sky authorities).
(iii) Neither the execution, delivery or performance of
this Agreement and the Notes nor the offering, issuance and sale
of the Notes, nor fulfillment or any compliance with the terms
and provisions hereof and thereof, will conflict with, or result
in a breach of the terms, conditions or provisions of, or
constitute a default under, or result in any violation of, or
result in the creation of any Lien upon any of the properties or
assets of the Company or any Consolidated Subsidiary pursuant to,
the charter or by-laws of the Company or any Consolidated
Subsidiary, any award of any arbitrator or any material agreement
(including any agreement with stockholders), instrument, order,
judgment, decree, statute, law, rule or regulation to which the
Company or any Consolidated Subsidiary is subject.
8C. Binding Effect. Each of the Agreement and the Notes
constitutes, or when executed and delivered will constitute, a
legal, valid and binding obligation of the Company in accordance
with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium and other similar laws affecting
creditors' rights generally, and subject to general principles of
equity (regardless of whether enforceability is considered in a
proceeding in equity or at law).
8D. Business; Financial Statements. The Company has
furnished you with the following documents and financial
statements:
(i) The following financial statements of the
Company: the audited consolidated balance sheets of the
Company and its Consolidated Subsidiaries as of December
31, 1995, 1994 and 1993 and the related consolidated
statements of earnings and retained earnings and statement
of cash flows for the three year period ended December 31,
1995, reported on by Price Waterhouse. The financial
statements referred to in this subparagraph (i) are herein
collectively referred to as the "Historical Financial
Statements."
PAGE
(ii) The Company's Annual Report on Form 10-K for the
years ended December 31, 1995, 1994 and 1993, in each case
as filed with the Securities and Exchange Commission. The
reports referred to in this subparagraph (ii) are herein
collectively referred to as the "Public Documents."
The Historical Financial Statements (including any related
schedules and/or notes) fairly present the consolidated
financial position and the consolidated results of operations and
consolidated cash flows of the corporations described therein at
the dates and for the periods shown, all in conformity with
generally accepted accounting principles applied on a consistent
basis (except as otherwise therein or in the notes thereto
stated) throughout the periods involved. There has been no
material adverse change in the business, condition (financial or
otherwise) or operations of the Company and its Consolidated
Subsidiaries taken as a whole since December 31, 1995. The
Public Documents have been prepared in all material respects in
conformity with the rules and regulations of the Securities and
Exchange Commission applicable thereto and set forth an accurate
description in all material respects of the business conducted by
the Company and its Consolidated Subsidiaries and the properties
owned and operated in connection therewith.
8E. Actions Pending. There is no action, suit or
proceeding pending or, to the knowledge of the Company,
threatened against the Company or any of its Consolidated
Subsidiaries by or before any court, arbitrator or administrative
or governmental body in which there is a significant probability
of an adverse decision which, if adversely decided, would result
in any material adverse change in the business, condition
(financial or otherwise) or operations of the Company and its
Consolidated Subsidiaries taken as a whole or which in any manner
draws into question the validity of this Agreement or any Note.
8F. Compliance with ERISA. Each member of the Controlled
Group has fulfilled its obligations under the minimum funding
standards of ERISA and the Code with respect to each Plan and is
in compliance in all material respects with the presently
applicable provisions of ERISA and the Code except where the
failure to comply would not have a material adverse effect on the
Company and its Consolidated Subsidiaries taken as a whole, and
has not incurred any unsatisfied material liability to the PBGC
or a Plan under Title IV of ERISA other than a liability to the
PBGC for premiums under Section 4007 of ERISA.
8G. Taxes. United States Federal income tax returns of
the Company and its Consolidated Subsidiaries have been examined
PAGE
and closed through the fiscal year ended December 31, 1987. The
Company has and each of its Consolidated Subsidiaries has filed
all Federal and other material income tax returns which, to the
best knowledge of the officers of the Company, are required to be
filed, and each has paid all taxes as shown on such returns and
on all assessments received by it to the extent that such taxes
have become due except for those which are being contested in
good faith by the Company or the Consolidated Subsidiary, as the
case may be. The charges and accruals and reserves on the books
of the Company and its Consolidated Subsidiaries in respect of
taxes or other governmental charges are, in the opinion of the
Company, adequate.
8H. Subsidiaries; Qualifications. Each of the Company's
Consolidated Subsidiaries is a corporation duly organized and
existing in good standing under the laws of its jurisdiction of
incorporation, and the Company and its Consolidated Subsidiaries
have such corporate powers and all such governmental licenses,
authorizations, consents and approvals required to own their
respective properties and to carry on their respective business
as now being conducted, all to the extent material to the Company
and its Consolidated Subsidiaries taken as a whole.
8I. Offering of Notes. Neither the Company nor any agent
authorized to act on its behalf has, directly or indirectly,
offered the Notes, or any similar security of the Company for
sale to, or solicited any offers to buy the Notes or any similar
security of the Company from, or otherwise approached or
negotiated with respect thereto with, any Person other than not
more than 10 institutional investors, and neither the Company nor
any agent authorized to act on its behalf has taken or will take
any action which would subject the issuance or sale of the Notes
to the provisions of section 5 of the Securities Act or to the
provisions of any securities or Blue Sky law of any applicable
jurisdiction.
8J. Regulation G, etc. The proceeds of sale of the Notes
will be used to refinance a portion of the Company's short-term
borrowings. None of such proceeds will be used, directly or
indirectly, for the purpose, whether immediate, incidental or
ultimate, of purchasing or carrying any "margin stock" as defined
in Regulation G (12 CFR Part 207) of the Board of Governors of
the Federal Reserve System (herein called "margin stock") or for
the purpose of maintaining, reducing or retiring any indebtedness
which was originally incurred to purchase or carry any stock that
is then currently a margin stock or for any other purpose which
might constitute this transaction a "purpose credit" within the
PAGE
meaning of such Regulation G. Neither the Company nor any agent
acting on its behalf has taken or will take any action which
might cause this Agreement or the Notes to violate Regulation G,
Regulation T or any other regulation of the Board of Governors of
the Federal Reserve System or to violate the Securities Exchange
Act of 1934, as amended, in each case as in effect now or as the
same may hereafter be in effect.
8K. Disclosure. The Historical Financial Statements and
the Public Documents (as of the respective dates thereof and when
taken as a whole) do not contain any untrue statement of a
material fact and do not omit to state a material fact necessary
in order to make the statements contained therein not misleading.
8L. Title to Properties. The Company has and each of its
Consolidated Subsidiaries has good and marketable title to its
respective real properties (other than properties which it
leases) and good title to all of its other respective properties
and assets, except where the failure to have such title would not
have a material adverse effect on the Company and its
Consolidated Subsidiaries taken as a whole, subject to no Lien of
any kind except Liens permitted by paragraph 6D. All leases
necessary in any material respect for the conduct of the
respective businesses of the Company and its Consolidated
Subsidiaries are valid and subsisting and are in full force and
effect, except where the failure to be so in effect would not
have a material adverse effect on the Company and its
Consolidated Subsidiaries taken as a whole.
9. REPRESENTATIONS OF THE PURCHASER. By acceptance of the
Notes, you hereby acknowledge that the Notes have not been
registered under the Securities Act and may not be sold, offered
for sale or otherwise transferred except pursuant to an exemption
from such registration requirements. You represent, and in
making this sale to you it is specifically understood and agreed,
that you are not acquiring the Notes to be purchased by you
hereunder with a view to or for sale in connection with any
distribution thereof within the meaning of the Securities Act,
provided that the disposition of your property shall at all times
be and remain within your control. You further acknowledge that
you are a "qualified institutional buyer" as that term is defined
in Rule 144A under the Securities Act. You also represent that
the source of all of the funds being used by you to pay the
purchase price of the Notes being purchased by you hereunder
constitutes assets allocated to your "insurance company general
account" (as such term is defined under Section V of the United
States Department of Labor's Prohibited Transaction Class
Exemption ("PTCE") 95-60), and that as of the date of the
purchase of the Notes you satisfy all of the applicable
requirements for relief under Sections I and IV of PTCE 95-60.
PAGE
10. DEFINITIONS. The following terms shall have the
meanings specified with respect thereto below:
10A. Yield-Maintenance Terms.
"Called Principal" shall mean, with respect to any Note,
the principal of such Note that is to be prepaid pursuant to
paragraph 4B (any partial prepayment being applied in
satisfaction of required payments of principal in inverse order
of their scheduled due dates) or is declared to be immediately
due and payable pursuant to paragraph 7A, as the context
requires.
"Discounted Value" shall mean, with respect to the Called
Principal of any Note, the amount obtained by discounting all
Remaining Scheduled Payments with respect to such Called
Principal from their respective scheduled due dates to the
Settlement Date with respect to such Called Principal, in
accordance with accepted financial practice and at a discount
factor (applied on a semiannual basis) equal to the Reinvestment
Yield with respect to such Called Principal.
"Reinvestment Yield" shall mean, with respect to the Called
Principal of any Note, the yield to maturity implied by (i) the
yields reported, as of 10:00 A.M. (New York City time) on the
Business Day next preceding the Settlement Date with respect to
such Called Principal, on the display designated as "Page 678" on
the Telerate Service (or such other display as may replace Page
678 on the Telerate Service) for actively traded U.S. Treasury
securities having a maturity equal to the Remaining Average Life
of such Called Principal as of such Settlement Date, or if such
yields shall not be reported as of such time or the yields
reported as of such time shall not be ascertainable, (ii) the
Treasury Constant Maturity Series yields reported, for the latest
day for which such yields shall have been so reported as of the
Business Day next preceding the Settlement Date with respect to
such Called Principal, in Federal Reserve Statistical Release
H.15 (519) (or any comparable successor publication) for actively
traded U.S. Treasury securities having a constant maturity equal
to the Remaining Average Life of such Called Principal as of such
Settlement Date. Such implied yield shall be determined, if
necessary, by (a) converting U.S. Treasury bill quotations to
bond-equivalent yields in accordance with accepted financial
practice and (b) interpolating linearly between reported yields.
"Remaining Average Life" shall mean, with respect to the
Called Principal of any Note, the number of years (calculated to
the nearest one-twelfth year) obtained by dividing (i) such
Called Principal into (ii) the sum of the products obtained by
PAGE
multiplying (a) each Remaining Scheduled Payment of such Called
Principal (but not of interest thereon) by (b) the number of
years (calculated to the nearest one-twelfth year) which will
elapse between the Settlement Date with respect to such Called
Principal and the scheduled due date of such Remaining Scheduled
Payment.
"Remaining Scheduled Payments" shall mean, with respect to
the Called Principal of any Note, all payments of such Called
Principal and interest thereon that would be due on or after the
Settlement Date with respect to such Called Principal if no
payment of such Called Principal were made prior to its scheduled
due date.
"Settlement Date" shall mean, with respect to the Called
Principal of any Note, the date on which such Called Principal is
to be prepaid pursuant to paragraph 4B or is declared to be
immediately due and payable pursuant to paragraph 7A, as the
context requires.
"Yield-Maintenance Premium" shall mean, with respect to any
Note, a premium equal to the excess, if any, of the Discounted
Value of the Called Principal of such Note over the sum of (i)
such Called Principal plus (ii) interest accrued thereon as of
(including interest due on) the Settlement Date with respect to
such Called Principal. The Yield-Maintenance Premium shall in no
event be less than zero.
10B. Other Terms.
"Affiliate" shall mean any Person directly or indirectly
controlling, controlled by, or under direct or indirect common
control with, the Company, except a Subsidiary. A Person shall
be deemed to control a corporation if such Person possesses,
directly or indirectly, the power to direct or cause the
direction of the management and policies of such corporation,
whether through the ownership of voting securities, by contract
or otherwise.
"Business Day" shall mean any day other than a Saturday, a
Sunday or a day on which commercial banks in New York City are
required or authorized to be closed.
"Capitalized Lease Obligation" shall mean, as to any
Person, any rental obligation which, under generally accepted
accounting principles, is or will be required to be capitalized
on the books of such Person, taken at the amount thereof
accounted for as indebtedness (net of interest expense) in
accordance with such principles.
PAGE
"Cash Flow" shall mean the sum of net income (plus any
amount by which net income has been reduced by reason of the
recognition of post-retirement and post-employment benefit costs
prior to the period in which such benefits are paid),
depreciation expenses, amortization costs and changes in deferred
taxes, provided that such sum shall not be adjusted for any
increase or decrease in deferred taxes resulting from Quest &
Associates, Inc., a Subsidiary of the Company, investing in a
portfolio of computer equipment leases (it being further
understood that such increase or decrease in deferred taxes
relating to lease investment transactions shall not exceed
$25,000,000).
"Code" shall mean the Internal Revenue Code of 1986, as
amended, and any successor statute thereto.
"Company" shall have the meaning specified in the
introductory paragraph.
"Consolidated Net Worth" shall mean, at any date, the
consolidated stockholders' equity of the Company and its
Consolidated Subsidiaries as such appear on the financial
statements of the Company determined in accordance with generally
accepted accounting principles ((i) plus any amount by which
retained earnings has been reduced by reason of the recognition
of post-retirement and post-employment benefit costs prior to the
period in which such benefits are paid and (ii) without taking
into account the effect of cumulative translation adjustments).
"Consolidated Subsidiary" shall mean at any date any
Subsidiary or other entity the accounts of which would be
consolidated with those of the Company in its consolidated
financial statements as of such date.
"Controlled Group" shall mean all members of a controlled
group of corporations and all trades or businesses (whether or
not incorporated) under common control which, together with the
Company, are treated as a single employer under Section 414(b) or
414(c) of the Code.
"Debt" shall mean, as to any Person, without duplication,
(i) all obligations of such Person for borrowed money, including
reimbursement obligations for letters of credit, (ii) all
obligations of such Person evidenced by bonds, debentures, notes
or other similar instruments, (iii) all obligations of such
Person to pay the deferred purchase price of property or
services, except trade accounts payable arising in the ordinary
course of business, (iv) all Capitalized Lease Obligations of
such Person, (v) all Debt of others secured by a Lien on any
PAGE
asset of such Person, whether or not such Debt is assumed by such
Person and (vi) all Debt of others Guaranteed by such Person;
provided, however, that the obligations specified in (i) through
(vi) shall not include obligations arising in connection with
securities repurchase transactions.
"ERISA" shall mean the Employee Retirement Income Security
Act of 1974, as amended.
"Event of Default" shall mean any of the events specified
in paragraph 7A, provided that there has been satisfied any
requirement in connection with such event for the giving of
notice, or the lapse of time, or both, and "Default" shall mean
any of such events, whether or not any such requirement has been
satisfied.
"Guarantee" shall mean, as to any Person, any obligation,
contingent or otherwise, of such Person directly or indirectly
guaranteeing any Debt or other obligation of any other Person
and, without limiting the generality of the foregoing, any
obligation, direct or indirect, contingent or otherwise, of such
Person (i) to purchase or pay (or advance or supply funds for the
purchase or payment of) such Debt or other obligation (whether
arising by virtue of partnership arrangements, by agreement to
keep-well, take-or-pay, to maintain financial statement
conditions or otherwise) or (ii) entered into for the purpose of
assuring in any other manner the obligee of such Debt or other
obligation of the payment thereof or to protect such obligee
against loss in respect thereof (in whole or in part), provided
that the term Guarantee shall not include endorsements for
collection or deposit in the ordinary course of business. The
term "Guarantee" used as a verb shall have a corresponding
meaning.
"Historical Financial Statements" shall have the meaning
specified in clause (i) of paragraph 8D.
"Lien" shall mean, with respect to any asset, any mortgage,
pledge, security interest, encumbrance, lien or charge of any
kind in respect of such asset (including as a result of any
conditional sale or other title retention agreement and any lease
in the nature thereof).
"Note(s)" shall have the meaning specified in paragraph 1.
"Officer's Certificate" shall mean a certificate signed in
the name of the Company by its President, one of its Vice
Presidents or its Treasurer.
PAGE
"PBGC" shall mean the Pension Benefit Guaranty Corporation
or any entity succeeding to any or all of its functions under
ERISA.
"Person" shall mean and include an individual, a
partnership, a joint venture, a corporation, a trust, an
unincorporated organization and a government or any department or
agency thereof.
"Plan" shall mean, at a particular time, any defined
benefit pension plan which is covered by Title IV of ERISA or
subject to the minimum funding standards under Section 412 of the
Code and is either (i) maintained by a member of the Controlled
Group for employees of a member of the Controlled Group or (ii)
maintained pursuant to a collective bargaining agreement or any
other arrangement under which more than one employer makes
contributions and to which a member of the Controlled Group is
then making or accruing an obligation to make contributions or
has within the preceding five plan years made contributions.
"Public Documents" shall have the meaning specified in
clause (ii) of paragraph 8D.
"Repurchase Transaction" shall mean one or more
transactions in which the Company purchases United States
Treasury securities with a remaining term to maturity of 90 days
or less and simultaneously enters into a repurchase transaction
with respect to such securities with a securities broker/dealer,
where (a) all or substantially all of the initial purchase price
for the Treasury securities is paid directly from the proceeds of
the repurchase transaction and (b) the Treasury securities would
not be included in a balance sheet of the Company prepared in
accordance with generally accepted accounting principles.
"Required Holder(s)" shall mean the holder or holders of at
least 66-2/3% of the aggregate principal amount of the Notes from
time to time outstanding.
"Securities Act" shall mean the Securities Act of 1933, as
amended.
"Significant Subsidiary or Significant Group of
Subsidiaries" at any time of determination means any Consolidated
Subsidiary or group of Consolidated Subsidiaries which,
individually or in the aggregate, together with its or their
Subsidiaries, accounts or account for more than 10% of the
consolidated gross revenues of the Company and its Consolidated
Subsidiaries for the most recently ended fiscal year or for more
PAGE
than 10% of the total assets of the Company and its Consolidated
Subsidiaries as of the end of such fiscal year; provided that in
connection with any determination under (x) paragraph 7A(iii)
there shall be a payment default, failure or other event (of the
type specified in that paragraph) with respect to an obligation
(of the type specified in that paragraph but without regard to
the principal amount of such obligation) of each Consolidated
Subsidiary included in such group, (y) paragraph 7A (vii),
(viii), (ix) or (x) the condition or event described therein
shall exist with respect to each Consolidated Subsidiary included
in such group or (z) paragraph 7A(xiii) there shall be a final
judgment (of the type specified in that paragraph but without
regard to the amount of such judgment) rendered against each
Consolidated Subsidiary included in such group.
"Subsidiary" shall mean any corporation or other entity of
which securities or other ownership interests having ordinary
voting power to elect a majority of the board of directors or
other persons performing similar functions is at the time
directly or indirectly owned by the Company.
"Total Borrowed Funds" shall mean at any date, without
duplication, (i) all outstanding obligations of the Company and
its Consolidated Subsidiaries for borrowed money, (ii) all
outstanding obligations of the Company and its Consolidated
Subsidiaries evidenced by bonds, debentures, notes or similar
instruments and (iii) any outstanding obligations of the type set
forth in (i) or (ii) of any other Person Guaranteed by the
Company or a Consolidated Subsidiary; provided, however, that
Total Borrowed Funds shall not include any obligation to
repurchase securities under a securities repurchase transaction.
"Transferee" shall mean any direct or indirect transferee
of all or any part of any Note purchased by you under this
Agreement.
10C. Accounting Terms And Determinations. All references
in this Agreement to "generally accepted accounting principles"
shall mean generally accepted accounting principles in effect in
the United States of America at the time of application thereof.
Unless otherwise specified herein, all accounting terms used
herein shall be interpreted, all determinations with respect to
accounting matters hereunder shall be made, and all financial
statements and certificates and reports as to financial matters
required to be furnished hereunder shall be prepared, in
accordance with generally accepted accounting principles, applied
on a basis consistent (except for changes concurred in by the
Company's independent public accountants) with the most recent
audited consolidated financial statements of the Company and its
Consolidated Subsidiaries delivered pursuant to paragraph 5A(ii).
PAGE
11. MISCELLANEOUS.
11A. Note Payments. The Company agrees that, so long as
you shall hold any Note, it will make payments of principal
thereof and premium, if any, and interest thereon, which comply
with the terms of this Agreement, by wire transfer of immediately
available funds for credit to your account or accounts as
specified in the Purchaser Schedule attached hereto, or such
other account or accounts in the United States as you may
designate in writing not less than 5 Business Days prior to any
payment date, notwithstanding any contrary provision herein or in
any Note with respect to the place of payment. Any payment under
this Agreement or any Note due on a day that is not a Business
Day may be made on the next succeeding day which is a Business
Day without penalty or additional interest. You agree that,
before disposing of any Note, you will make a notation thereon
(or on a schedule attached thereto) of all principal payments
previously made thereon and of the date to which interest thereon
has been paid. The Company agrees to afford the benefits of this
paragraph 11A to any Transferee which shall have made the same
agreement as you have made in this paragraph 11A.
11B. Expenses. The Company agrees to pay, and save you
and any Transferee harmless against liability for the payment of,
all out-of-pocket expenses arising in connection with (i) all
document production and duplication charges and the fees and
expenses of one special counsel (and any local counsel) engaged
in connection with any subsequent proposed modification of, or
proposed consent under, this Agreement or the Notes, whether or
not such proposed modification shall be effected or proposed
consent granted (but in either event only if requested by the
Company), and (ii) the costs and expenses, including attorneys'
fees, incurred by you or any Transferee in enforcing any rights
under this Agreement or the Notes. In addition, with respect to
you only, the Company agrees to pay, and save you harmless
against liability for the payment of, all out-of-pocket expenses
incurred by you in connection with your responding to any
subpoena or other legal process or informal investigative demand
issued in connection with and arising pursuant to this Agreement
or the transactions contemplated hereby or by reason of your
having acquired any Note (but not including any general
investigation or proceeding involving your investments or
activities generally), including without limitation costs and
expenses incurred in any bankruptcy case. The obligations of the
Company under this paragraph 11B shall survive the transfer of
any Note or portion thereof or interest therein and the payment
of any Note.
PAGE
11C. Consent to Amendments. This Agreement may be
amended, and the Company may take any action herein prohibited,
or omit to perform any act herein required to be performed by it,
if the Company shall obtain the written consent to such
amendment, action or omission to act, of the Required Holder(s),
except that, without the written consent of the holder or holders
of all the Notes at the time outstanding, no amendment to this
Agreement shall change the maturity of any Note, or change the
principal of, or the rate or time of payment of interest or any
premium payable with respect to any Note, or affect the time,
amount or allocation of any required prepayments, or reduce the
proportion of the principal amount of the Notes required with
respect to any consent, amendment or waiver or to accelerate the
Notes. Each holder of any Note at the time or thereafter
outstanding shall be bound by any consent authorized by this
paragraph 11C, whether or not such Note shall have been marked to
indicate such consent, but any such Notes issued thereafter may
bear a notation referring to any such consent. The Company will
not, directly or indirectly, pay or cause to be paid any
remuneration, whether by way of supplemental or additional
interest, fee or otherwise, to any holder of Notes as
consideration for or as an inducement to the entering into by
such holder of Notes of any waiver or amendment of, or giving a
consent in respect of, any of the terms and provisions of this
Agreement or any Note unless such remuneration is concurrently
paid, on the same terms, ratably to all holders of Notes. The
Company will give prompt written notice of the receipt and effect
of each such waiver, amendment or consent to all holders of the
Notes. No course of dealing between the Company and the holder
of any Note, nor any delay in exercising any rights hereunder or
under any Note, shall operate as a waiver of any rights of any
holder of any Note. As used herein and in the Notes, the term
"this Agreement" and references thereto shall mean this Agreement
as it may from time to time be amended or supplemented.
11D. Form, Registration, Transfer and Exchange of Notes;
Lost Notes. The Notes are issuable as registered notes without
coupons in denominations of at least $5,000,000, except in
connection with the transfer of Notes issued by the Company in
smaller denominations in which case and with respect to those
Notes only, the minimum denomination will be such smaller amount.
The Company shall keep at its principal office a register in
which the Company shall provide for the registration of Notes and
of transfers of Notes. Upon surrender for registration of
transfer of any Note at the principal office of the Company, the
Company shall, at its expense, execute and deliver one or more
new Notes of like tenor and of a like aggregate principal amount,
registered in the name of such transferee or transferees. At the
option of the holder of any Note, such Note may be exchanged for
PAGE
other Notes of like tenor and of any authorized denominations, of
a like aggregate principal amount, upon surrender of the Note to
be exchanged at the principal office of the Company. Whenever
any Notes are so surrendered for exchange, the Company shall, at
its expense, execute and deliver the Notes which the holder
making the exchange is entitled to receive. Every Note
surrendered for registration of transfer or exchange shall be
duly endorsed, or be accompanied by a written instrument of
transfer duly executed, by the holder of such Note or such
holder's attorney duly authorized in writing. Any Note or Notes
issued in exchange for any Note or upon transfer thereof shall
carry the rights to unpaid interest and interest to accrue which
were carried by the Note so exchanged or transferred, so that
neither gain nor loss of interest shall result from any such
transfer or exchange. Upon receipt of written notice from the
holder of any Note of the loss, theft, destruction or mutilation
of such Note and, in the case of any such loss, theft or
destruction, upon receipt of such holder's unsecured indemnity
agreement (satisfactory in form and substance to the Company), or
in the case of any such mutilation upon surrender and
cancellation of such Note, the Company will make and deliver a
new Note, of like tenor, in lieu of the lost, stolen, destroyed
or mutilated Note.
11E. Persons Deemed Owners. Prior to due presentment for
registration of transfer, the Company may treat the Person in
whose name any Note is registered as the owner and holder of such
Note for the purpose of receiving payment of principal of and
premium, if any, and interest on such Note and for all other
purposes whatsoever, whether or not such Note shall be overdue,
and the Company shall not be affected by notice to the contrary.
11F. Survival of Representations and Warranties; Entire
Agreement. All representations and warranties contained herein
or made in writing by or on behalf of the Company in connection
herewith shall survive the execution and delivery of this
Agreement and the Notes, the transfer by you of any Note or
portion thereof or interest therein and the payment of any Note,
and may be relied upon by any Transferee, regardless of any
investigation made at any time by or on behalf of you or any
Transferee. Subject to the preceding sentence, this Agreement
and the Notes embody the entire agreement and understanding
between you and the Company and supersede all prior agreements
and understandings relating to the subject matter hereof.
11G. Successors and Assigns. All covenants and other
agreements in this Agreement contained by or on behalf of any of
the parties hereto shall bind and inure to the benefit of the
respective successors and assigns of the parties hereto
(including, without limitation, any Transferee) whether so
expressed or not.
PAGE
11H. Disclosure to Other Persons. You agree to use your
best efforts (and each other holder of a Note, by availing itself
of the benefits of paragraph 5A(iv) or 5B, similarly agrees) to
hold in confidence and not disclose any information (other than
information (i) which was publicly known or otherwise known to
you, at the time of disclosure (except pursuant to disclosure in
connection with this Agreement), (ii) which subsequently becomes
publicly known through no act or omission by you, or (iii) which
otherwise becomes known to you, other than through disclosure by
the Company or any of its Subsidiaries) delivered or made
available by or on behalf of the Company or any of its
Subsidiaries to you which is proprietary in nature, provided that
nothing herein shall prevent the holder of any Note from
delivering copies of any financial statements and other documents
delivered to such holder, and disclosing any other information
disclosed to such holder, by or on behalf of the Company or any
Subsidiary in connection with or pursuant to this Agreement to
(i) such holder's directors, officers, employees, agents and
professional consultants (which Persons shall be bound by the
provisions hereof), (ii) any other holder of any Note, (iii) any
Person to which such holder offers to sell such Note or any part
thereof (which Person agrees to be bound by the provisions of
this paragraph 11H), (iv) any federal or state regulatory
authority having jurisdiction over such holder, (v) the National
Association of Insurance Commissioners or any similar
organization or (vi) any other Person to which such delivery or
disclosure may be necessary or appropriate (a) in compliance with
any law, rule, regulation or order applicable to such holder, (b)
in response to any subpoena or other legal process or informal
investigative demand, (c) in connection with any litigation to
which such holder is a party or (d) in order to protect such
holder's investment in such Note.
11I. Notices. All written communications provided for
hereunder shall be sent by first class mail or nationwide
overnight delivery service (with charges prepaid) and (i) if to
you, addressed to you at the address specified for such
communications in the Purchaser Schedule attached hereto, or at
such other address as you shall have specified to the Company in
writing, (ii) if to any other holder of any Note, addressed to
such other holder at such address as such other holder shall have
specified to the Company in writing or, if any such other holder
shall not have so specified an address to the Company, then
addressed to such other holder in care of the last holder of such
Note which shall have so specified an address to the Company, and
(iii) if to the Company addressed to it at 1271 Avenue of the
Americas, New York, New York 10020, Attention: Senior Vice
President - Financial Operations (together with a copy similarly
addressed but marked Attention: General Counsel), or at such
other address as the Company shall have specified to the holder
PAGE
of each Note in writing; provided, however, that any such
communication to the Company may also, at the option of the
holder of any Note, be delivered by any other reasonable means to
the Company at its address specified above.
11J. Descriptive Headings. The descriptive headings of
the several paragraphs of this Agreement are inserted for
convenience only and do not constitute a part of this Agreement.
11K. Satisfaction Requirement. If any agreement,
certificate or other writing, or any action taken or to be taken,
is by the terms of this Agreement required to be satisfactory to
you or to the Required Holder(s), the determination of such
satisfaction shall be made by you or the Required Holder(s), as
the case may be, in the sole and exclusive judgment (exercised in
good faith) of the Person or Persons making such determination.
11L. Governing Law. This Agreement shall be construed and
enforced in accordance with, and the rights of the parties shall
be governed by, the law of the State of New York applicable to
agreements to be performed wholly therein.
11M. Counterparts. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall
be deemed an original, and it shall not be necessary in making
proof of this Agreement to produce or account for more than one
such counterpart.
[Signatures appear on the next page.]
PAGE
If you are in agreement with the foregoing, please sign the
form of acceptance on the enclosed counterpart of this letter and
return the same to the Company, whereupon this letter shall
become a binding agreement among you and the Company.
Very truly yours,
THE INTERPUBLIC GROUP OF COMPANIES,
INC.
By: Alan M. Forster
Vice President and Treasurer
The foregoing Agreement is
hereby accepted as of the
date first above written.
THE PRUDENTIAL INSURANCE COMPANY
OF AMERICA
By: Kevin J. Kraska
Vice President
PAGE
PURCHASER SCHEDULE
Aggregate
Principal
Amount of
Notes to be Note
THE PRUDENTIAL Purchased Denomination(s)
INSURANCE COMPANY
OF AMERICA $30,000,000 $30,000,000
(1) All payments on account of Notes held by such purchaser
shall be made by wire transfer of immediately available
funds for credit to:
Account No. 890-0304-391,
Prudential Managed Account
Bank Of New York
New York, New York
(ABA No.: 021-000-018)
Each such wire transfer shall set forth the name of the Company,
a reference to "7.31% Senior Notes
due October 31, 2006, Security No. !INV5498!", and the due date
and application (as among principal, interest and
Yield-Maintenance Premium) of the payment being made.
(2) Address for all notices relating to payments:
The Prudential Insurance Company of America
Three Gateway Center
100 Mulberry Street
Newark, New Jersey 07102-4077
Attention: Manager, Investment Operations Group (Privates)
Telephone: (201) 802-5260
Fax: (201) 802-8055
PAGE
(3) Address for all other communications and notices:
The Prudential Insurance Company of America
c/o Prudential Capital Group
One Gateway Center, 11th Floor
7-45 Raymond Boulevard West
Newark, New Jersey 07102-5311
Attention: Managing Director
Telephone: (201) 802-9182
Fax: (201) 802-3200
(4) Recipient of telephonic prepayment notices:
Manager, Investment Structure and Pricing
Telephone: (201) 802-6660
Fax: (201) 802-9425
(5) Tax Identification No.: 22-1211670
PAGE
EXHIBIT A
[FORM OF NOTE]
THE INTERPUBLIC GROUP OF COMPANIES, INC.
7.31% SENIOR NOTE DUE OCTOBER 31, 2006
No. R-_______ _____________________,199___
$_____________
FOR VALUE RECEIVED, the undersigned, The Interpublic Group
of Companies, Inc. (herein called the "Company"), a corporation
organized and existing under the laws of the State of Delaware,
hereby promises to pay to ________________________, or registered
assigns, the principal sum of __________________________________
DOLLARS on October 31, 2006 with interest (computed on the basis
of a 360-day year of twelve 30-day months) (a) on the unpaid
balance thereof at the rate of 7.31% per annum from the date
hereof, payable semi-annually on the last day of April and
October in each year, commencing with the first such date next
succeeding the date hereof, until the principal hereof shall have
become due and payable, and (b) on any overdue payment (including
any overdue prepayment) of principal and premium and, to the
extent permitted by applicable law, each overdue payment of
interest, payable semi-annually as aforesaid (or, at the option
of the registered holder hereof, on demand), at a rate per annum
equal to 9.31%.
Payments of both principal and interest are to be made at
the office of Morgan Guaranty Trust Company of New York, 16 Broad
Street, New York, New York, or at such other place as the holder
hereof shall designate to the Company in writing, in lawful money
of the United States of America.
This Note is one of a series of Senior Notes (herein called
the "Notes") issued pursuant to a Note Purchase Agreement, dated
as of October 31, 1996 (herein called the "Agreement"), between
the Company and The Prudential Insurance Company of America and
is entitled to the benefits thereof.
PAGE
The Notes are issuable only as registered Notes. This Note
is a registered Note and, as provided in the Agreement, upon
surrender of this Note for registration of transfer, duly
endorsed, or accompanied by a written instrument of transfer duly
executed, by the registered holder hereof or such holder's
attorney duly authorized in writing, a new Note for a like
principal amount will be issued to, and registered in the name
of, the transferee. Prior to due presentment for registration of
transfer, the Company may treat the person in whose name this
Note is registered as the owner hereof for the purpose of
receiving payment and for all other purposes, and the Company
shall not be affected by any notice to the contrary.
This Note is subject to optional prepayment, as specified
in the Agreement.
In case an Event of Default, as defined in the Agreement,
shall occur and be continuing, the principal of this Note may be
declared or otherwise become due and payable in the manner and
with the effect provided in the Agreement.
THIS NOTE IS INTENDED TO BE PERFORMED IN THE STATE OF NEW
YORK AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE
LAW OF SUCH STATE.
THE INTERPUBLIC GROUP OF
COMPANIES, INC.
By: Alan M. Forster
Vice President and Treasurer
THE INTERPUBLIC GROUP OF COMPANIES, INC.
7.31% SENIOR NOTE DUE OCTOBER 31, 2006
No. R-01 October 31, 1996
$30,000,000
FOR VALUE RECEIVED, the undersigned, The Interpublic
Group of Companies, Inc. (herein called the "Company"), a
corporation organized and existing under the laws of the State of
Delaware, hereby promises to pay to The Prudential Insurance
Company of America, or registered assigns, the principal sum of
THIRTY MILLION DOLLARS on October 31, 2006 with interest
(computed on the basis of a 360-day year of twelve 30-day months)
(a) on the unpaid balance thereof at the rate of 7.31% per annum
from the date hereof, payable semi-annually on the last day of
April and October in each year, commencing with the first such
date next succeeding the date hereof, until the principal hereof
shall have become due and payable, and (b) on any overdue payment
(including any overdue prepayment) of principal and premium and,
to the extent permitted by applicable law, each overdue payment
of interest, payable semi-annually as aforesaid (or, at the
option of the registered holder hereof, on demand), at a rate per
annum equal to 9.31%.
Payments of both principal and interest are to be made
at the office of Morgan Guaranty Trust Company of New York, 16
Broad Street, New York, New York, or at such other place as the
holder hereof shall designate to the Company in writing, in
lawful money of the United States of America.
This Note is one of a series of Senior Notes (herein
called the "Notes") issued pursuant to a Note Purchase Agreement,
dated as of October 31, 1996 (herein called the "Agreement"),
between the Company and The Prudential Insurance Company of
America and is entitled to the benefits thereof.
The Notes are issuable only as registered Notes. This
Note is a registered Note and, as provided in the Agreement, upon
surrender of this Note for registration of transfer, duly
endorsed, or accompanied by a written instrument of transfer duly
executed, by the registered holder hereof or such holder's
attorney duly authorized in writing, a new Note for a like
principal amount will be issued to, and registered in the name
of, the transferee. Prior to due presentment for registration of
transfer, the Company may treat the person in whose name this
Note is registered as the owner hereof for the purpose of
receiving payment and for all other purposes, and the Company
shall not be affected by any notice to the contrary.
PAGE
This Note is subject to optional prepayment, as specified in
the Agreement.
In case an Event of Default, as defined in the Agree-
ment, shall occur and be continuing, the principal of this Note
may be declared or otherwise become due and payable in the manner
and with the effect provided in the Agreement.
THIS NOTE IS INTENDED TO BE PERFORMED IN THE STATE OF
NEW YORK AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH
THE LAW OF SUCH STATE.
THE INTERPUBLIC GROUP OF
COMPANIES, INC.
By Alan M. Forster
Vice President and Treasurer
EXHIBIT 11
Page 1 of 2
THE INTERPUBLIC GROUP OF COMPANIES, INC.
COMPUTATION OF EARNINGS PER SHARE
(Dollars in Thousands Except Per Share Data)
Year Ended December 31
1996 1995 1994 1993 1992
PRIMARY:
Net Income before effect of
accounting changes $205,205 $129,812 $115,247 $125,279 $111,913
Effect of accounting changes - - (21,780) (512) (24,640)
Add: Dividends paid net
of related income tax
applicable to the
Restricted Stock Plan 354 427 349 311 365
Net income, as adjusted $205,559 $130,239 $ 93,816 $125,078 $ 87,638
Weighted average number of
common shares outstanding 77,895,650 75,756,630 73,363,084 72,607,363 72,168,964
Weighted average number of
incremental shares in
connection with assumued
exercise of stock options
based on the treasury stock
method using average market
price 1,411,485 1,141,532 1,010,179 1,088,155 1,321,447
Weighted average number of
incremental shares in
connection with the
Restricted Stock Plan
based on the treasury
stock method using average
unamortized deferred
compensation and average
market price 986,043 1,281,910 1,197,182 1,520,003 1,484,207
Total 80,293,178 78,180,072 75,570,445 75,215,521 74,974,618
Primary earnings per common
and common equivalent
share $2.56 $1.66 $1.24 $1.66 $1.17
Restated to reflect the two-for-one stock split effected in June 1992 in the form
of a 100% stock dividend.
EXHIBIT 11
Page 2 of 2
THE INTERPUBLIC GROUP OF COMPANIES, INC.
COMPUTATION OF EARNINGS PER SHARE
(Dollars in Thousands Except Per Share Data)
Year Ended December 31
1996 1995 1994 1993 1992
FULLY DILUTED:
Net Income before effect of
accounting changes $ 205,205 $ 129,812 $ 115,247 $ 125,279 $ 111,913
Effect of accounting changes - - (21,780) (512) (24,640)
After tax interest savings
on assumed conversion of
subordinated debentures 6,410 6,217 6,074 5,941 4,385
Add: Dividends paid net of
related income tax applicable
to the Restricted Stock Plan 384 461 366 330 375
Net income, as adjusted $ 211,999 $ 136,490 $ 99,907 $ 131,038 $ 92,033
Weighted average number of
common shares outstanding 77,895,650 75,756,630 73,363,084 72,607,363 72,168,964
Assumed conversion of
subordinated debentures 2,977,668 3,002,130 3,002,130 3,002,130 2,251,598
Weighted average number of
incremental shares in connection
with assumed exercise of stock
options based on year-end market
price when higher than average
market prices and market prices
on dates of exercise and
termination 1,479,582 1,281,282 1,015,837 1,097,745 1,333,738
Weighted average number of
incremental shares in connection
with the Restricted Stock Plan
based on ending unamortized
deferred compensation and
ending or average market price,
whichever is higher 1,070,376 1,386,711 1,247,564 1,598,026 1,525,738
Total 83,423,276 81,426,753 78,628,615 78,305,264 77,280,038
Fully diluted earnings per common
common equivalent share $2.54 $1.68 $1.27 $1.67 $1.19
Restated to reflect the two-for-one stock split effected in June 1992 in the form of a 100%
stock dividend.
THE INTERPUBLIC GROUP OF COMPANIES, INC.
The Interpublic Group of Companies is one of the largest organizations of
advertising agencies and communications companies in the world. It
includes the parent company, The Interpublic Group of Companies, Inc.,
McCann-Erickson Worldwide, Ammirati Puris Lintas, The Lowe Group, Western
International Media, DraftDirect Worldwide and the Allied Communications
Group. The Interpublic Group employs more than 21,000 people and maintains
offices in over 110 countries.
TABLE OF CONTENTS
Financial Highlights
Chairman's Report to Shareholders
Financial Statements
Board of Directors and Executive Officers
Stockholders' Information
PAGE
FINANCIAL HIGHLIGHTS
(Dollars in Thousands Except Per Share Data)
______________________________________________________________________
Percent
1996 1995 Increase
_______________________________________________________________________
Operating Data
Gross income $ 2,537,516 $ 2,179,739 16.4%
Net Income 205,205 129,812 58.1
Per Share Data
Net Income 2.56 1.66 54.2
Cash dividends $ .665 $ .605 9.9
Weighted average number
of shares 80,293,178 78,180,072 2.7
Financial Position
Working capital $ 154,430 $ 147,701 4.6
Total assets 4,765,130 4,259,766 11.9
Stockholders'equity per share $ 10.73 9.42 13.9
Return on stockholders' average
equity 25.8% 18.4% 40.2%
Gross Income
1996 $2,537,516
1995 $2,179,739 1993 $1,793,856
1994 $1,984,255 1992 $1,855,971
_____________________________________________________________________
Earnings Per Share
1996 $ 2.56/2.46
1995 $ 2.15/1.66 1993 $ 1.67/1.66
1994 $ 1.87/1.53/1.24 1992 $ 1.50/1.17
_____________________________________________________________________
Cash Dividends Per Share
1996 $ .665
1995 $ .605 1993 $ .49
1994 $ .545 1992 $ .45
_____________________________________________________________________
Return On Average Stockholders' Equity
1996 25.8%/25.0%
1995 23.5%/18.4% 1993 23.3/23.2%
1994 22.6%/18.6/15.5% 1992 19.1/15.4%
Includes an after-tax gain of approximately $8.1 million or $.10
per share resulting from the sale of a portion of the Company's
shares in CKS Group, Inc.
Includes an after-tax charge of $38.2 million or $.49 per share
for the write-down of goodwill and related assets.
Includes an after-tax charge of $25.7 million or $.34 per share
for restructuring and an after-tax charge of $21,780,000 or $.29
per share for the cumulative effect of accounting change,
FAS 112, "Employers' Accounting for Postemployment Benefits".
Includes a charge of $512,000 or $.01 per share for the
cumulative effect of accounting change, FAS 109, "Accounting for
Income Taxes."
Includes an after-tax charge of $24,640,000 or $.33 per share for
cumulative effect of accounting change, FAS 106, "Employers'
Accounting for Postretirement Benefits Other Than Pensions".
PAGE
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Liquidity and Capital Resources
Working capital increased by $6.7 million and $67.6 million in 1996 and
1995, respectively, and decreased $87.0 million in 1994. The increase in
working capital in 1996 and 1995 primarily resulted from the growth in the
Company's business, and the long-term refinancing of short-term debt. The
decline in working capital in 1994 was primarily due to acquisitions. The
ratio of current assets to current liabilities was approximately 1.1 to 1
in 1996 and 1995, and approximately 1.0 to 1 in 1994.
The Company's principal source of working capital during the three years
has been from operations. The Company's solid financial position provides
flexibility in obtaining short- and long-term financing on competitive
terms.
The Company and its domestic subsidiaries had credit lines aggregating
$199.6 million in 1996 and in 1995 and $203.6 million in 1994. At December
31, 1996, $15.2 million of these credit lines were utilized compared with
utilization of $36.2 million in 1995, and $11.5 million in 1994.
Subsidiaries outside the United States had credit lines totaling $215.2
million in 1996, $229.1 million in 1995, and $243.4 million in 1994. At
December 31, 1996, $86.6 million of these credit lines were utilized
compared with utilization of $73.5 million in 1995, and $86.5 million in
1994.
Approximately 53%, 56% and 59% of the Company's assets at December 31,
1996, 1995 and 1994, respectively, were outside the United States. Working
PAGE
capital was not significantly affected by the fluctuation of foreign
exchange rates during 1996, 1995 and 1994, but the continuation of this
trend is dependent upon the future movement of the dollar in relation to
foreign currencies.
The Company is not aware of any significant occurrences which could
negatively impact its liquidity. However, should such a trend develop, the
Company believes that there are sufficient funds available under its
existing lines of credit and from internal cash-generating capabilities to
adequately manage its liquidity requirements for the foreseeable future.
The principal use of the Company's working capital is to provide for the
operating needs of its advertising agencies, which includes payments for
space or time purchased from various media on behalf of clients. The
Company's practice is to bill and collect from its clients in sufficient
time to pay the amounts due media on a timely basis. Other uses of working
capital include the repurchase of the Company's stock, payment of cash
dividends, capital expenditures, and acquisitions.
During 1996, the Company acquired 1,926,872 shares ($86.9 million) of its
own common stock for purposes of fulfilling its obligations under various
compensation plans. The Company acquired 1,910,555 shares ($69.7 million)
in 1995 and 1,264,761 shares ($44.5 million) in 1994 which were used for
similar purposes.
Quarterly dividends paid to shareholders increased to $51.8 million (17.0
cents per share) in 1996 from $46.1 million (15.5 cents per share) in 1995
and $40.4 million (14.0 cents per share) in 1994.
PAGE
The Company's capital expenditures in 1996 were $79.1 million, an increase
of 14% from 1995. Capital expenditures for 1995 were $69.6 million, an
increase of 25% from 1994. The primary purpose of expenditures has been to
modernize the offices and upgrade the computer and communications systems
to better serve clients.
During 1996, 1995 and 1994, the Company acquired several advertising
agencies and related companies with cash and shares of the Company's common
stock. Some of these acquisitions provide for deferred payments which are
contingent upon future revenues or profits of the companies acquired.
Return on stockholders' average equity was 25.8%, 18.4% and 15.5% in 1996,
1995 and 1994, respectively. The return on stockholders' average equity in
1995 excluding the effect of the write-down of goodwill and other related
assets was 23.5%. Excluding the effect of FAS 112, "Employer's Accounting
for Postemployment Benefits" and restructuring charges, return on
stockholders' average equity was 18.6% in 1994.
Results of Operations
Worldwide income from commissions and fees increased 16.1% in 1996, 9.3%
in 1995 and 10.2% in 1994. The increase in 1996 was mainly due to the
continued expansion of the business through strategic acquisitions and
investments (See Note 3), in addition to net new business gains. The
increases in 1995 and 1994 were also primarily attributable to acquisitions
coupled with net new business gains. International revenue increased $89.7
million in 1996 to $1,429 million (59% of worldwide revenue), $136.4
million in 1995 to $1,339 million (64% of worldwide revenue)and $45.3
million in 1994 to $1,203 million (63% of worldwide revenue). Commissions
and fees from domestic operations increased 32.7% in 1996, 5.8% in 1995 and
PAGE
22.6% in 1994. These increases were largely attributable to acquisitions
and net new business gains.
Other income increased 24.6% in 1996, 26.6% in 1995 and 25.5% in 1994. The
increases in 1996 and 1995 were primarily due to the proceeds from the sale
of assets, including CKS and Spotlink in 1996 and Fremantle in 1995. The
1994 increase is primarily due to interest income from international
operations.
Total costs and expenses worldwide increased 13%, 8% and 14% in 1996, 1995
and 1994, respectively. Costs and expenses outside the United States
increased 5% in 1996, 9% in 1995 and 7% in 1994. Domestic costs increased
29% in 1996, 6% in 1995 and 29% in 1994. A significant portion of the
Company's expenses relate to employee compensation and various employee
incentive and benefit programs which are based primarily upon operating
results. Cost increases for both domestic and international are generally
in line with increases in revenue. The increase in 1994 primarily resulted
from the restructuring charges.
The Company recorded restructuring charges of approximately $48.7 million
in the fourth quarter of 1994. The net effect of such charges on net
income in 1994 was $25.7 million or $.34 per share. These restructuring
charges, which were of a one-time nature, related principally to
terminations and office consolidations resulting from the merger of the
Lintas New York and Ammirati & Puris agencies and various other
international offices. These charges have permitted the Company to operate
effectively and efficiently in serving its
growing list of clients and to concentrate its resources on creative talent
and client service.
PAGE
Restructuring charges included severance costs of $38.3 million for
involuntary terminations of approximately 600 employees. The Company
realized a reduction of $16.9 million in salary costs in 1995 from these
terminations. As a direct result of the Lintas New York and Ammirati &
Puris merger, the Company sold its Fahlgren Martin and GS&B operations,
incurring charges of $6.7 million. Other costs related to the
consolidation of the Lintas New York and Ammirati & Puris agencies amounted
to $3.7 million.
At December 31, 1994, the liability related to these restructuring charges
amounted to $29.6 million, which consisted of $27.6 million for severance
and $2.0 million for the consolidation of facilities. The amount of cash
payments made during 1995 was approximately $27.8 million. At December 31,
1995, the Company's liability related to these restructuring charges
totaled $1.3 million for severance which was paid in 1996.
Interest expense increased 7.2%, 15.5% and 24.5% in 1996, 1995 and 1994,
respectively. The increases are primarily attributable to additional
borrowings.
Equity in net income of unconsolidated affiliates increased in 1996, 1995
and 1994. The 1996 and 1995 increases were primarily due to the Company's
investment in Campbell Mithun Esty. The increase in 1994 primarily
resulted from the Company's investment in All American Communications Inc.
Income applicable to minority interests increased in 1996 and 1995 after a
decrease in 1994. The increases in 1996 and 1995 were primarily
attributable to acquisitions. The decrease in 1994 was attributable to the
PAGE
sale of Fremantle and the purchase of the remaining interest in McCann
Hakuhodo, Inc. in the latter part of 1993.
In 1995, the Company wrote down goodwill and other related assets and
recorded a charge of $38.2 million or $.49 per share. On January 1, 1994,
the Company adopted FAS 112, "Employers' Accounting for Postemployment
Benefits", and recorded a net charge of $21.8 million or $.29 per share.
The Company's effective income tax rates were 42.0% in 1996, 48.3% in 1995
and 43.0% in 1994. The higher rate in 1995 was primarily attributable to
the impact of the write-down of goodwill and other related assets of $38.2
million.
PAGE
FINANCIAL STATEMENTS
THE INTERPUBLIC GROUP OF COMPANIES, INC. AND ITS SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
DECEMBER 31
(Dollars in Thousands Except Per Share Data)
ASSETS 1996 1995
Current Assets:
Cash and cash equivalents (includes
certificates of deposit: 1996-$83,680;
1995-$114,182) $ 468,526 $ 418,448
Marketable securities, at cost which
approximates market 35,408 38,926
Receivables (net of allowance for doubtful
accounts: 1996-$33,301; 1995-$21,941) 2,646,259 2,320,248
Expenditures billable to clients 130,185 108,165
Prepaid expenses and other
current assets 73,081 88,611
Total current assets 3,353,459 2,974,398
Other Assets:
Investment in unconsolidated affiliates 102,711 119,473
Deferred taxes on income 79,371 103,497
Other investments and miscellaneous
assets 173,308 144,963
Total other assets 355,390 367,933
Fixed Assets, at cost:
Land and buildings 82,332 76,813
Furniture and equipment 413,029 360,653
495,361 437,466
Less: accumulated depreciation 276,448 240,274
218,913 197,192
Unamortized leasehold improvements 88,045 82,075
Total fixed assets 306,958 279,267
Intangible Assets (net of accumulated
amortization: 1996-$186,189;
1995-$157,673) 749,323 638,168
Total Assets $4,765,130 $4,259,766
PAGE
FINANCIAL STATEMENTS
INTERPUBLIC GROUP OF COMPANIES, INC. AND ITS SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
DECEMBER 31
(Dollars in Thousands Except Per Share Data)
LIABILITIES AND STOCKHOLDERS' EQUITY 1996 1995
Current Liabilities:
Payable to banks $ 121,655 $ 162,524
Accounts payable 2,626,695 2,291,208
Accrued expenses 317,157 256,408
Accrued income taxes 133,522 116,557
Total current liabilities 3,199,029 2,826,697
Noncurrent Liabilities:
Long-term debt 231,760 170,262
Convertible subordinated debentures 115,192 113,235
Deferred compensation and reserve
for termination allowances 210,670 235,325
Accrued postretirement benefits 46,726 46,461
Other noncurrent liabilities 66,457 102,909
Minority interests in consolidated
subsidiaries 23,281 15,171
Total noncurrent liabilities 694,086 683,363
Stockholders' Equity:
Preferred Stock, no par value
shares authorized: 20,000,000
shares issued: none
Common Stock, $.10 par value
shares authorized: 150,000,000
shares issued:
1996 - 90,940,361;
1995 - 89,630,568 9,094 8,963
Additional paid-in capital 465,945 446,931
Retained earnings 859,660 704,946
Adjustment for minimum pension liability (12,979) (9,088)
Cumulative translation adjustment (82,978) (93,436)
1,238,742 1,058,316
Less:
Treasury stock, at cost:
1996 - 9,808,095 shares;
1995 - 10,002,567 shares 319,377 268,946
Unamortized expense of restricted
stock grants 47,350 39,664
Total stockholders' equity 872,015 749,706
Commitments and Contingencies (see Note 15)
Total Liabilities and Stockholders'
Equity $4,765,130 $4,259,766
PAGE
FINANCIAL STATEMENTS
THE INTERPUBLIC GROUP OF COMPANIES, INC. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
YEAR ENDED DECEMBER 31
(Dollars in Thousands Except Per Share Data)
1996 1995 1994
Income:
Commissions and fees $2,430,508 $2,093,832 $1,916,376
Other income 107,008 85,907 67,879
Gross income 2,537,516 2,179,739 1,984,255
Costs and Expenses:
Salaries and related expenses 1,344,238 1,149,964 1,040,579
Office and general expenses 795,367 699,423 661,238
Interest expense 40,765 38,020 32,924
Write-down of goodwill and other
related assets - 38,177 -
Restructuring charges - - 48,715
Total costs and expenses 2,180,370 1,925,584 1,783,456
Income before provision for
income taxes and effect of
accounting change 357,146 254,155 200,799
Provision for Income Taxes: 150,003 122,743 86,333
Income of consolidated
companies 207,143 131,412 114,466
Income applicable to minority
interests (14,382) (7,686) (3,262)
Equity in net income of
unconsolidated affiliates 12,444 6,086 4,043
Income before effect of
accounting change 205,205 129,812 115,247
Effect of accounting change:
Postemployment benefits - - (21,780)
Net Income $ 205,205 $ 129,812 $ 93,467
Per Share Data:
Income before effect of
accounting changes $ 2.56 $ 1.66 $ 1.53
Effect of accounting change:
Postemployment benefits - - (.29)
Net Income $ 2.56 $ 1.66 $ 1.24
FINANCIAL STATEMENTS
THE INTERPUBLIC GROUP OF COMPANIES, INC. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31
(Dollars in Thousands)
CASH FLOWS FROM OPERATING ACTIVITIES: 1996 1995 1994
Net Income $205,205 $129,812 $ 93,467
Adjustments to reconcile net income to cash provided by
operating activities:
Depreciation and amortization of fixed assets 60,457 49,967 45,565
Amortization of intangible assets 28,516 27,628 18,335
Amortization of restricted stock awards 14,451 13,558 11,694
Provision for deferred income taxes 4,072 (18,535) (16,609)
Equity in net income of unconsolidated affiliates (12,444) (6,086) (4,043)
Income applicable to minority interests 14,382 7,686 3,262
Translation losses 3,484 4,071 13,962
Effect of accounting change - - 21,780
Restructuring charges, non-cash - - 14,001
Write-down of goodwill and other related assets - 38,177 -
Sale of investments (35,043) - -
Other (6,513) (9,526) (8,272)
Change in assets and liabilities, net of acquisitions
Receivables (243,701) (243,109) (114,077)
Expenditures billable to clients (12,720) (2,107) (2,120)
Prepaid expenses and other assets (36,496) (30,008) 3,207
Accounts payable and accrued expenses 263,859 182,580 192,600
Accrued income taxes 22,538 11,633 3,233
Deferred compensation and reserve for termination allowances (21,021) 8,638 9,293
Net cash provided by operating activities 249,026 164,379 285,278
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions (51,348) (64,224) (54,926)
Capital expenditures (79,081) (69,562) (55,925)
Proceeds from sales of assets 39,398 1,722 34,057PAGE
Net proceeds from (net purchase of) sales of marketable
securities 1,037 (8,524) 5,161
Investment in unconsolidated affiliates 17,210 (14,044) -
Net cash used in investing activities (72,784) (154,632) (71,633)
CASH FLOWS FROM FINANCING ACTIVITIES:
(Decrease) increase in short-term borrowings (25,178) 17,565 (44,007)
Proceeds from long-term debt 75,514 67,858 33,026
Payments of long-term debt (51,581) (14,682) (24,528)
Treasury stock acquired (86,949) (69,720) (44,520)
Issuance of common stock 19,588 31,206 12,977
Cash dividends (51,786) (46,124) (40,360)
Net cash used in financing activities (120,392) (13,897) (107,412)
Effect of exchange rates on cash and cash equivalents (5,772) 8,889 15,208
Increase in cash and cash equivalents 50,078 4,739 121,441
Cash and cash equivalents at beginning of year 418,448 413,709 292,268
Cash and cash equivalents at end of year $468,526 $418,448 $413,709
PAGE
FINANCIAL STATEMENTS
THE INTERPUBLIC GROUP OF COMPANIES, INC. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
For The Three-Year Period Ended December 31, 1996
(Dollars in Thousands)
Unamortized
Additional Minimum Cumulative Expense
Common Paid-In Retained Pension Translation Treasury of Restricted
Stock Capital Earnings Liability Adjustment Stock Stock Grants
Balances, December 31, 1995 $8,963 $446,931 $704,946 $( 9,088) $(93,436) $268,946 $ 39,664
Net income 205,205
Cash dividends (51,786)
Foreign currency translation
adjustment 10,458
Awards of common stock under Company
plans:
Management Incentive Compensation Plan 172
Achievement Stock Award Plan 159 (103)
1986 Stock Incentive
Plan - Restricted Stock 50 22,831 23,247
Employee Stock Purchase Plan 19 7,273
Exercise of stock options 61 12,738
Purchase of Company's own stock 86,949
Tax benefit relating to
exercise of stock options 4,381
Restricted Stock: Forfeitures (1) 1,244 (1,110)
Amortization (14,451)
Issuance of shares for acquisitions
and pooling of interests (29,463) 1,295 (37,659)
Conversion of Convertible Debt 2 923
Adjustment for minimum pension
liability ( 3,891)
Balances, December 31, 1996 $9,094 $465,945 $859,660 $(12,979) $(82,978) $319,377 $ 47,350
/TABLE>
FINANCIAL STATEMENTS
THE INTERPUBLIC GROUP OF COMPANIES, INC. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
For The Three-Year Period Ended December 31, 1996
(Dollars in Thousands)
Unamortized
Additional Minimum Cumulative Expense
Common Paid-In Retained Pension Translation Treasury of Restricted
Stock Capital Earnings Liability Adjustment Stock Stock Grants
Balances, December 31, 1994 $8,771 $383,678 $619,627 $(6,422) $ (97,587) $222,698 $35,942
Net income 129,812
Cash dividends (46,124)
Foreign currency translation
adjustment 4,151
Awards of common stock under Company
plans:
Achievement Stock Award Plan 167 (98)
1986 Stock Incentive
Plan - Restricted Stock 50 18,256 18,306
Employee Stock Purchase Plan 15 5,073
Exercise of stock options 127 28,849
Purchase of Company's own stock 75,229
Tax benefit relating to
exercise of stock options 5,809
Restricted Stock: Forfeitures 1,608 (1,026)
Amortization (13,558)
Issuance of shares for acquisitions
and pooling of interests 5,099 1,631 (30,491)
Adjustment for minimum pension
liability (2,666)
Balances, December 31, 1995 $8,963 $446,931 $704,946 $(9,088) $(93,436) $268,946 $39,664
PAGE
FINANCIAL STATEMENTS
THE INTERPUBLIC GROUP OF COMPANIES, INC. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE THREE-YEAR PERIOD ENDED DECEMBER 31, 1996
(Dollars in Thousands)
Unamortized
Additional Minimum Cumulative Expense
Common Paid-In Retained Pension Translation Treasury of Restricted
Stock Capital Earnings Liability Adjustment Stock Stock Grants
Balances, December 31, 1993 $8,630 $335,340 $570,267 $ (704) $(116,432) $208,821 $24,265
Net income before effect of
accounting change 115,247
Effect of accounting change (21,780)
Cash dividends (40,360)
Foreign currency translation
adjustment 18,845
Awards of common stock under Company
plans:
Achievement Stock Award Plan 209 (119)
1986 Stock Incentive
Plan - Restricted Stock 63 23,386 (1,749) 25,087
Employee Stock Purchase Plan 15 3,910
Exercise of stock options 63 8,988
Purchase of Company's own stock 44,520
Tax benefit relating to
exercise of stock options 2,923
Restricted Stock: Forfeitures 2,283 (1,716)
Amortization (11,694)
Issuance of shares for acquisitions
and pooling of interests 8,922 (3,747) (31,058)
Adjustment for minimum pension
liability (5,718)
Balances, December 31, 1994 $8,771 $383,678 $619,627 $ (6,422) $ (97,587) $222,698 $35,942
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THE INTERPUBLIC GROUP OF COMPANIES, INC. AND ITS SUBSIDIARIES
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations: The Company is a worldwide provider of advertising
agency and related services. The business is conducted through three
worldwide advertising agency systems, (McCann-Erickson Worldwide,
Ammirati Puris Lintas, and The Lowe Group) as well as other related
services through Western International Media and DraftDirect Worldwide.
Interpublic also has arrangements through association with local
agencies in various parts of the world. Other activities conducted by
the Company within the area of "marketing communications" include market
research, sales promotion, product development, direct marketing,
telemarketing and other related services.
Principles of Consolidation: The consolidated financial statements
include the accounts of the Company and its subsidiaries, most of which
are wholly owned. The Company's investment in unconsolidated affiliates
is carried on the equity basis.
Use of Estimates: The preparation of financial statements in conformity
with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
Translation of Foreign Currencies: Balance sheet accounts are
translated principally at rates of exchange prevailing at the end of the
year except for fixed assets and related depreciation in countries with
highly inflationary economies which are translated at rates in effect on
dates of acquisition. Revenue and expense accounts are translated at
average rates of exchange in effect during each year. Translation
adjustments are included as a separate component of stockholders' equity
except for countries with highly inflationary economies, which are
included in current operations.PAGE
Commissions, Fees and Costs: Commissions and fees are generally
recognized when media placements appear and production costs are
incurred. Salaries and other agency costs are generally expensed as
incurred.
Depreciation and Amortization: Depreciation is computed principally
using the straight-line method over estimated useful lives of the
related assets, ranging generally from 3 to 20 years for furniture and
equipment and from 10 to 45 years for various component parts of
buildings.
Leasehold improvements and rights are amortized over the terms of
related leases. Company policy provides for the capitalization of all
major expenditures for renewal and improvements and for current charges
to income for repairs and maintenance.
Intangible Assets: The excess of purchase price over the value of net
tangible assets acquired is amortized on a straight-line basis over
periods not exceeding 40 years.
Recoverability of the carrying value of long-lived assets is evaluated
whenever events or changes in circumstances indicate that the net book
value may not be recoverable. If the sum of projected future
undiscounted cash flows is less than the carrying value, an impairment
loss is recognized. The impairment loss is measured by the excess of
the carrying value over fair value based on estimated discounted future
cash flows or other valuation measures.
Income Taxes: Deferred income taxes reflect the impact of temporary
differences between the amount of assets and liabilities recognized for
financial reporting purposes and such amounts recognized for income tax
purposes.
Earnings per Common and Common Equivalent Share: Earnings per share are
based on the weighted average number of common shares outstanding during
each year and, if dilutive, common equivalent shares applicable to
PAGE
grants under the stock incentive and stock option plans, and assumed
conversion of Convertible Subordinated Debentures.
Treasury Stock: Treasury stock is acquired at market value and is
recorded at cost. Issuances are accounted for on a first in, first out
basis.
Concentrations of Credit Risk: The Company's clients are in various
businesses, located primarily North America, Latin America, Europe and
the Pacific Region. The Company performs ongoing credit evaluations of
its clients. Reserves for credit losses are maintained at levels
considered adequate by management. The Company invests its excess cash
in deposits with major banks and in money market securities. These
securities typically mature within 90 days and bear minimal risk.
NOTE 2: STOCKHOLDERS' EQUITY
In May 1995, the Company's certificate of incorporation was amended to
increase the number of authorized shares of common stock from
100,000,000 to 150,000,000.
The Company has a Preferred Share Rights Plan designed to deter coercive
takeover tactics. Pursuant to this plan, common stockholders are
entitled to purchase 1/100 of a share of preferred stock at an exercise
price of $100 if a person or group acquires or commences a tender offer
for 15% or more of Interpublic's Common Stock. Rights holders (other
than the 15% stockholder) will also be entitled to buy, for the $100
exercise price, shares of Interpublic's Common Stock with a market value
of $200 in the event a person or group actually acquires 15% or more of
Interpublic's Common Stock. Rights may be redeemed at $.01 per right
under certain circumstances.
NOTE 3: ACQUISITIONS AND RELATED COSTS
During 1996, the Company acquired several advertising agencies and
related companies for an aggregate purchase price of approximately $172
million. This amount includes the acquisition of DraftDirect Worldwide
PAGE
for 1,824,609 shares of the Company's common stock in exchange for all
of the issued and outstanding common stock of DraftDirect Worldwide.
The Company issued 330,664 shares of the Company's common stock in
exchange for all of the issued and outstanding common stock of the Weber
Group. The Company also issued 191,291 shares of the Company's common
stock in exchange for all of the issued and outstanding common stock of
Torre Renta Lazur. These acquisitions were accounted for as poolings of
interests; however, the
Company's financial statements were not restated for the prior periods
as the Company's consolidated results would not have changed
significantly. In addition, the Company purchased Angotti Thomas Hedge
for approximately $4 million which included a cash payment of $3.4
million and issuance of 14,767 shares of the Company's common stock.
The Company purchased Jay Advertising for a cash payment of $3.8
million and issuance of 30,012 shares of the Company's common stock.
The Company acquired Media Inc. and McAdams Healthcare for cash payments
of $7 million and $10.3 million, respectively. The Company acquired a
49% interest in GGK for $5.7 million and also acquired a 49% interest in
Goldberg Moser O'Neill for a cash payment of $6.8 million and the
issuance of 48,154 shares of the Company's common stock. During 1996,
the Company made deferred payments of $16.0 million related to prior
year acquisitions.
During 1996, the Company sold its 50% investment in Mark Goodson
Productions for approximately $29 million and sold part of its 28%
investment in the CKS Group for $37.6 million. The Company also sold
its investment in Spotlink for $11.7 million in shares of the
purchaser's common stock.
During 1995, the Company acquired several advertising agencies and
related companies for an aggregate purchase price of approximately
$140.1 million. This amount includes the acquisition of Anderson &
Lembke effective October 1995 for 587,842 shares of the Company's common
stock in exchange for all of the issued and outstanding common stock of
Anderson & Lembke. The Company issued 260,756 shares of the Company's
PAGE
common stock in exchange for all the issued and outstanding common stock
of Addison Whitney. These acquisitions were accounted for as poolings
of interests; however, the Company's financial statements were not
restated for the prior periods as the Company's consolidated results
would not have changed significantly. In addition, the Company acquired
all the outstanding stock of Hasan & Partners for approximately $11.6
million which included cash payments of $6.9 million and the issuance of
121,160 shares of the Company's common stock. The Company acquired 80%
of the outstanding stock of Bosch & Butz for 63,720 shares of the
Company's common stock and a cash payment of $2.6 million. During
1995, the Company purchased Newspaper Services of America Inc. ("NSA")
and Kevin Morley Marketing ("KMM").
The purchase price for NSA was comprised of cash payments of $5.3
million and 48,882 shares of the Company's common stock. The purchase
price of the KMM acquisition amounted to cash payments of $8.0 million.
The Company acquired 50% ownership in Mark Goodson Productions for
656,167 shares of the Company's common stock. Also, the Company
acquired 50% ownership in Campbell Mithun Esty for a cash payment of
$3.2 million. Additionally, the Company acquired a 28% interest in the
CKS Group for cash payments totaling $9.6 million. During 1995, the
Company made deferred payments of $26.9 million related to prior year
acquisitions.
During 1994, the Company acquired several advertising agencies and
related companies for an aggregate purchase price of approximately
$100.2 million. The 1994 acquisitions included Ammirati & Puris, Alice
France, Adam Turkey, the minority interest in Fremantle International
and a pooling of interests with Western International Media. The
Company acquired Ammirati & Puris effective September 1994 for $56.0
million, which included cash
payments of $21.9 million and the issuance of 1,092,629 shares of the
Company's common stock. The Company acquired a 50% interest in Alice
France for $7.7 million. The Company purchased the remaining 20%
ownership interest in Fremantle for $6.3 million and the issuance of
112,000 shares of the Company's Common Stock. The Company subsequently
PAGE
sold Fremantle for $31.5 million in cash and a 39% ownership interest in
All American Communications Inc. valued at $31.5 million. In 1994, the
Company issued 1,472,393 shares of common stock in exchange for all the
issued and outstanding common stock of Western International Media.
This acquisition was accounted for as a pooling of interests; however,
the Company's financial statements were not restated for prior periods
as the Company's consolidated results would not have changed
significantly. During 1994, the Company made deferred payments of $18.3
million relating to prior year acquisitions.
For each of the three years presented, the Company's consolidated
results would not have changed significantly had the revenue and net
income of the companies acquired as purchases been fully included in
each year.
In March 1995, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards (FAS) No 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed
of", which establishes accounting standards for recognition and
measurement of
impairment of long-lived assets, certain identifiable intangibles and
goodwill related to those assets. The Company elected to adopt the
Statement in the fourth quarter of 1995.
In the fourth quarter of 1995, the Company recorded a non-cash charge of
$38.2 million for impairment of assets (including investments in and
advances to certain unconsolidated companies) and related goodwill.
This write-down is comprised of goodwill of $25.8 million and
investments and advances of $12.4 million and is reported as the
write-down of goodwill and other related assets in the consolidated
statement of income.
The write-down related primarily to a number of advertising and
promotion agencies, most of which are located in Europe. The amount of
the write-down was based on the excess of the carrying value of the
PAGE
assets over the fair value of these operations based primarily on
discounted projected cash flows. In determining the fair values, among
other factors, management considered the profitability and trend in
profitability of each of the units, the effects of economic recessions
in various markets, changes in client relationships and spending
patterns, the effects of the strong U.S. dollar versus certain foreign
currencies and other economic and legal factors where applicable.
NOTE 4: PROVISION FOR INCOME TAXES
The Company accounts for income taxes under Statement of Financial
Accounting Standards No. 109 "Accounting for Income Taxes". This
Statement applies an asset and liability approach that requires the
recognition of deferred tax assets and liabilities with respect to the
expected future tax consequences of events that have been recognized in
the consolidated financial statements and tax returns.
The components of income before taxes are as follows:
(Dollars in Thousands) 1996 1995 1994
Domestic $169,919 $107,431 $ 70,135
Foreign 187,227 146,724 130,664
Total $357,146 $254,155 $200,799
The provision for income taxes consisted of:
(Dollars in Thousands) 1996 1995 1994
Federal income taxes (including foreign
withholding taxes):
Current $ 56,289 $ 37,149 $ 29,657
Deferred 246 3,751 (2,841)
56,535 40,900 26,816
State and local income taxes:
Current 19,830 11,741 12,293
Deferred 2,824 625 (2,431)
22,654 12,366 9,862
PAGE
Foreign income taxes:
Current 69,812 61,255 60,992
Deferred 1,002 8,222 (11,337)
70,814 69,477 49,655
Total $150,003 $122,743 $ 86,333
At December 31, 1996 and 1995 the deferred tax assets and (liabilities)
consisted of the following items:
1996 1995
Postretirement/postemployment benefits $ 38,588 $ 36,695
Deferred compensation 9,759 7,066
Pension costs 6,785 10,060
Depreciation (7,733) (4,695)
Rent 10,364 26,902
Interest 6,051 5,048
Accrued reserves 4,551 12,388
Tax loss/tax credit carryforwards 22,510 24,833
Other 3,016 4,279
Total deferred tax assets 93,891 122,576
Deferred tax valuation allowance 14,520 19,079
Net deferred tax assets $ 79,371 $103,497
The valuation allowance of $14,520,000 and $19,079,000 at December 31,
1996 and 1995, respectively, represents a provision for uncertainty as
to the realization of certain deferred tax assets, including U.S. tax
credit and net operating loss carryforwards in certain jurisdictions.
The change during 1996 in the deferred tax valuation allowance primarily
relates to the utilization of the tax credit and net operating loss
carryforwards. At December 31, 1996 there were $8,809,000 of tax credit
carryforwards with expiration periods through 2001 and net operating
loss carryforwards with a tax effect of $13,701,000 with various
expiration periods. The Company has concluded that based upon expected
future results, it is more likely than not that the net deferred tax
asset balance will be realized.
PAGE
A reconciliation of the effective income tax rate as shown in the
consolidated statement of income to the federal statutory rate is as
follows:
1996 1995 1994
Statutory federal income tax rate 35.0% 35.0% 35.0%
State and local income taxes,
net of federal income tax benefit 2.9 3.2 2.5
Impact of foreign operations, including
withholding taxes 1.1 3.8 5.4
Goodwill and intangible assets 2.5 7.3 3.1
Other 0.5 (1.0) (3.0)
Effective tax rate 42.0% 48.3% 43.0%
The total amount of undistributed earnings of foreign subsidiaries for
income tax purposes was approximately $331.8 million at December 31,
1996. No provision has been made for foreign withholding taxes or
United States income taxes which may become payable if undistributed
earnings of foreign subsidiaries were paid as dividends to the Company,
since a major portion of these earnings has been reinvested in working
capital and other business needs. The additional taxes on that portion
of undistributed earnings which is available for dividends are not
practicably determinable.
NOTE 5: LONG-TERM PERFORMANCE INCENTIVE PLAN
Under the Long-Term Performance Incentive Plan (the "Plan"), grants
consisting of performance units are awarded to certain key employees of
the Company and its subsidiaries. The ultimate value of these
performance units is contingent upon the annual growth of profit (as
defined in the Plan) of the Company, its operating components or both,
over a four-year performance period (the 1993-1996 Plan and the
1995-1998 Plan), and is generally payable in cash. The projected value
of these units is accrued by the Company and charged to expense over the
four-year performance period.
PAGE
The Plan also provides that a portion of each participant's grant may be
issued as the equivalent of "phantom" shares of the Company's common
stock, at the rate of thirty-six phantom shares for each performance
unit. The value of phantom shares is a function of the amount, if any,
by which the market value of the Company's common stock increases during
the performance period and is payable either in cash or in shares of the
Company's common stock. The increase in the value of these units is
accrued and expensed over the four-year performance period. No phantom
share awards have been made subsequent to the 1991-1994 Plan.
The cash equivalent to quarterly dividends on the Company's common stock
was paid on options relating to the 1993-1996 Plan and was expensed.
There are no payments on options relating to the 1995-1998 Plan.
The Plan cost charged to income was $13.6 million in 1996, $9.6 million
in 1995 and $8.5 million in 1994. As of December 31, 1996, the
Company's liability for the 1993-1996 and 1995-1998 performance periods
was $29.8 million, which represents the estimated amounts payable for
the two Plans. As of December 31, 1995, the Company's liability was
$24.1 million. The Company's payout to participants for the 1993-1996
performance period as of December 31, 1996 was approximately $20.2
million, of which $7.9 million was paid in December 1996, with the
remaining $12.3 million to be paid in the first quarter of 1997.
NOTE 6: EMPLOYEE STOCK PLANS
The Company has established various stock option plans, with similar
terms, for key employees of the Company and its subsidiaries. Options
are generally granted at prices not less than 100% of the fair market
value of the Company's common stock on the date of grant. Options are
exercisable on the basis of a schedule determined by the Compensation
Committee of the Board of Directors. Awards generally become
exercisable either in three annual installments of 40% in the first year
and 30% in the succeeding two years commencing on the third anniversary
PAGE
of the grant or after two to four and one half years from the date of
the grant. Options generally expire ten years from grant date.
The 1996 Stock Incentive Plan ("1996 Plan") was adopted by the
stockholders to replace the 1986 Stock Incentive Plan ("1986 Plan")
which expired on May 20, 1996. Under the 1996 Plan, 25,000,000 shares
of common stock of the Company are reserved for issuance. Both the 1996
and 1986 Plans incorporate stock option and restricted stock award
features. Shares of restricted stock awarded under these Plans are
subject to certain restrictions and vesting requirements, generally five
to seven years. No monetary consideration is paid by a recipient for a
restricted stock award. The cost of these shares is amortized over the
restriction periods. The Plans authorize the Compensation Committee to
direct that discretionary tax assistance payments may be made to
recipients when the restrictions lapse. Such payments are expensed as
awarded. At December 31, 1996, there were outstanding a total of
2,399,689 shares of restricted stock. During 1996 and 1995, the Company
awarded 480,602 shares and 497,228 shares of restricted stock under
these Plans with a weighted-average grant date fair value of $46.70 and
$36.82, respectively.
The 1986 United Kingdom Stock Option Plan expired in 1996 and was not
replaced. Under the 1988 Stock Option Plan, the Company can grant,
through 1998, options to purchase 600,000 shares of the Company's common
stock to key employees who are employed outside the United States. As
permitted under this Plan, certain options were granted at prices less
than the market value of the Company's common stock.
The Company also maintains a stock plan for outside directors who are
not current employees. The Interpublic Outside Directors' Stock
Incentive Plan (previously the Interpublic Outside Directors' Stock
Option Plan) was amended in 1996 to incorporate both stock option and
restricted stock award features. Under the Plan, 200,000 shares of
PAGE
common stock of the Company are reserved for issuance. Stock options
under this Plan are awarded at the fair market value of the Company's
common stock on the date the option is granted. Options generally
become exercisable three years after the date of grant and expire ten
years from the date of grant.
Restricted shares under the Outside Directors' Plan are subject to
certain restrictions and vesting requirements, generally five years. No
monetary consideration is paid by a recipient for a restricted stock
award. The cost of these shares is being amortized over the restriction
periods. At December 31, 1996, there were 10,000 shares of restricted
stock outstanding. During 1996, the Company awarded 10,000 shares under
this Plan with a weighted-average grant date fair value of $46.75.
PAGE
Following is a summary of stock option transactions during the
three-year period ended December 31, 1996:
Number of Weighted
Shares Average
Under Option Exercise Price
Balance, December 31, 1993 6,727,220 $22
New Awards 387,324 31
Exercised (627,374) 15
Canceled (397,028) 27
Balance, December 31, 1994 6,090,142 23
Exercisable, December 31, 1994 1,563,498 16
New Awards 2,076,797 33
Exercised (1,269,033) 21
Canceled (273,138) 30
Balance, December 31, 1995 6,624,768 33
Exercisable, December 31, 1995 3,025,655 17
New Awards 2,335,720 47
Exercised (605,244) 21
Canceled (311,282) 33
Balance, December 31, 1996 8,043,962 33
Exercisable, December 31, 1996 2,564,001 21
PAGE
The following table summarizes information about stock options outstanding at December 31, 1996:
Weighted
Average Weighted Weighted
Number Remaining Average Number Average
Range of Outstanding Contractual Exercise Exercisable Exercise
Exercise Prices at 12/31/96 Life Price at 12/31/96 Price
$7.37 to $23.99 2,181,863 4.41 $20 2,155,151 $20
24.00 to 31.99 1,504,026 6.18 29 327,250 $28
32.00 to 41.99 2,096,801 7.98 33 81,600 $34
42.00 to 49.19 2,261,272 9.41 47 - -
PAGE
Under the Employee Stock Purchase Plan (ESPP), employees may purchase
common stock of the Company through payroll deductions not exceeding 10%
of their compensation. The price an employee pays for a share of stock
is 85% of the market price on the last business day of the month.
During 1996, 1995 and 1994, respectively, 186,586 shares, 158,547 shares
and 144,662 shares were issued. An additional 5,724,820 shares were
reserved for issuance at December 31, 1996.
Under the Company's Achievement Stock Award Plan, awards may be made up
to an aggregate of 1,248,000 shares of common stock together with cash
awards to cover any applicable withholding taxes. During 1996, 1995 and
1994, respectively, 5,670 shares, 7,185 shares and 10,580 shares were
awarded. The weighted-average fair value on the date of grant in 1996
and 1995 was $46.29 and $37.10, respectively.
The Company has adopted Financial Accounting Standard No. 123,
"Accounting for Stock-Based Compensation" (FAS 123). As permitted by
the provisions of FAS 123, the Company applies APB Opinion 25
"Accounting for Stock Issued to Employees" and related interpretations
in accounting for its stock-based employee compensation plans.
Accordingly, no compensation cost has been recognized for the Company's
stock options or for purchase under the Company's stock purchase plan.
PAGE
The cost recorded for restricted stock and achievement stock awards in
1996, 1995 and 1994 was $14,527,086, $13,738,872 and $12,021,746,
respectively. If compensation cost for the Company's stock option plans
and its stock purchase plan had been determined based on the fair value
at the grant dates as defined by FAS 123, the Company's pro forma net
income and earnings per share would have been as follows:
1996 1995
Net Income As reported $205,205 $129,812
Pro forma $198,219 $125,636
Earnings per share
As reported $2.56 $1.66
Pro forma $2.47 $1.61
For purposes of this pro forma information, the fair value of shares
issued under the Employee Stock Purchase Plan was based on the 15%
discount received by the employees. The weighted-average fair value on
the date of purchase for stock purchased under this Plan was $6.90 and
$5.58 in 1996 and 1995, respectively.
For purposes of this pro forma information, the fair value of each
option grant is estimated on the date of grant using the Black-Scholes
option-pricing model with the following weighted-average assumptions
used for grants in 1996 and 1995, respectively: dividend yield of 1.41%
and 1.72%; expected volatility of 20.71% and 22.08%; risk-free interest
rate of 6.43% and 7.66%; and expected life of 6 years for both years.
The weighted average fair value on the date of grant for options granted
PAGE
in 1996 and 1995 was $14.45 and $10.89, respectively. As required by FAS
123, this pro forma information is based on stock awards made beginning
in 1995 and accordingly is not likely to be representative of the pro
forma effects in future years because options vest over several years
and additional awards generally are made each year.
NOTE 7: RETIREMENT PLANS
Domestic Retirement Plan
The Company and certain of its domestic subsidiaries have a defined
benefit plan ("Domestic Plan") which covers substantially all regular
employees. The Company's policy is to fund pension costs as permitted
by applicable tax regulations. Pension costs are determined by the
projected unit credit
method based upon career average pay. Funding requirements for the
Domestic Plan are determined using the accrued benefit unit credit
method. The Domestic Plan was amended as of January 1, 1992 to provide
that pension benefits accrued after that date would be calculated under
a new "cash balance" formula. Under the cash balance formula, the
participant's account balance is credited each year with an amount equal
to a percentage of that year's annual compensation, plus interest
credits. Participants in the Domestic Plan on December 31, 1991 who
continued to work for the Company after that date had their normal
retirement benefits under the plan as of that date converted on an
actuarial basis into an opening account balance as of January 1, 1992.
In accordance with FAS 87, "Employers' Accounting for Pensions", the
PAGE
Company recorded an additional minimum pension liability for the
Domestic Plan of $23.3 million and $19.5 million at December 31, 1996
and 1995, respectively, representing the excess of unfunded accumulated
benefit obligation over previously recorded pension cost liabilities. A
corresponding amount was recognized as an intangible asset to the extent
of unrecognized prior service cost and net transition obligation, with
the balance recorded as a separate reduction of stockholders' equity.
In 1996 and 1995, the Company recorded an intangible asset of $10.4
million and $10.5 million, respectively and a reduction to stockholders'
equity of $13.0 million and $9.1 million, respectively.
Net pension costs for the Domestic Plan for 1996, 1995 and 1994 included
the following components:
(Dollars in Thousands) 1996 1995 1994*
Service cost-benefits earned
during the year $ 4,057 $ 3,322 $ 3,688
Interest cost on projected benefit
obligation 10,248 10,398 9,768
Actual return on plan assets (10,983) (20,622) 2,457
Amortization of unrecognized
transition obligation 1,887 1,887 1,887
Amortization of unrecognized
prior service cost (1,769) (1,769) (1,738)
Amortization of unrecognized
losses 1,005 309 -
Deferred investment loss(gain) 129 10,874 (13,174)
Total pension cost $ 4,574 $ 4,399 $ 2,888
* Disaggregated for comparative purposes.
PAGE
The following table sets forth the funded status and amounts recognized
for the Domestic Plan in the Company's consolidated balance sheet at
December 31, 1996 and 1995:
(Dollars in Thousands) 1996 1995
Actuarial present value of accumulated
benefit obligation (including vested
benefits of $128,649 in 1996 and
$124,701 in 1995) $132,110 $127,964
Actuarial present value of projected benefit
obligation 139,142 135,458
Plan assets at fair value 112,284 110,730
Projected benefit obligation in excess of
plan assets (26,858) (24,728)
Unrecognized net losses 20,010 16,582
Unrecognized prior service cost 902 (867)
Unrecognized net transition obligation 9,437 11,324
Additional minimum liability (23,317) (19,545)
Accrued pension liability
$(19,826) $(17,234)
At December 31, 1996, Domestic Plan assets were primarily invested in
fixed income and equity securities. Prior service costs are being
amortized over the estimated average remaining service period of active
employees. The initial net transition obligation is being amortized over
15 years.
A discount rate of 7.5% in 1996, 7.25% in 1995 and 8.5% in 1994 and a
salary increase assumption of 6% in 1996, 1995 and 1994 were used in
determining the actuarial present value of the projected benefit
obligation. The expected return on assets was 10% in 1996, 1995 and
1994.
PAGE
Foreign Retirement Plans
The Company has several foreign pension plans in which benefits are
based primarily on years of service and employee compensation. It is
the Company's policy to fund these plans in accordance with local laws
and income tax regulations.
Net pension costs for foreign pension plans for 1996, 1995 and 1994
included the following components:
(Dollars in Thousands) 1996 1995 1994*
Service cost-benefits earned during
the year $ 4,900 $ 5,276 $ 6,215
Interest cost on projected benefit
obligation 10,084 11,054 9,726
Actual return on plan assets (9,077) (8,738) 5,109
Net amortization and deferral 1,251 1,372 (12,690)
Unrecognized net(gain)loss (2,026) (1,367) 23
Other (50) - 59
Total pension cost $ 5,082 $ 7,597 $ 8,442
* Disaggregated for comparative purposes.
PAGE
The following table sets forth the funded status and amounts recognized for the
foreign pension plans in the Company's consolidated balance sheet at December 31, 1996 and 1995:
(Dollars in Thousands) 1996 1995
Assets Accumulated Assets Accumulated
Exceed Benefits Exceed Benefits
Accumulated Exceed Accumulated Exceed
Benefits Assets Benefits Assets
Actuarial present value of
accumulated benefit obligation
(including vested benefits of:
1996 - $76,092 and $66,113;
1995 - $57,723 and $70,747) $ 76,293 $ 71,779 $57,806 $ 77,075
Actuarial present value of
projected benefit obligation 84,404 79,290 64,974 89,844
Plan assets at fair value 129,488 6,336 103,438 11,440
Projected benefit obligation
less than (in excess of)
plan assets 45,084 (72,954) 38,464 (78,404)
Unrecognized net loss (27,517) (1,884) (27,370) (4,745)
Unrecognized prior service
cost 4,519 - 4,174 46
Unrecognized net (asset)
obligation (1,492) 5,777 (1,807) 7,171
Prepaid (accrued) pension cost at
December 31, 1996 and 1995 $ 20,594 $ (69,061) $13,461 $(75,932)
PAGE
Foreign plans utilized discount rates ranging from 5.5% to 12.0% in
both 1996 and 1995 and salary increase assumptions ranging from 2.5% to
10.0% in 1996, and from 2.0% to 10.0% in 1995, to determine the
actuarial present value of the projected benefit obligation. The
expected rates of return on assets of foreign plans ranged from 4.0% to
12.0% in both 1996 and 1995.
The Company also has Special Deferred Benefit Arrangements with certain
key employees. Vesting is based upon the age of the employee and the
terms of the employee's contract. Life insurance contracts have been
purchased in amounts which may be used to fund these arrangements.
NOTE 8: POSTRETIREMENT AND POSTEMPLOYMENT BENEFITS
Postretirement Benefit Plans
The Company and its subsidiaries provide certain postretirement health
care benefits for employees who were in the employ of the Company as of
January 1, 1988, and life insurance benefits for employees who were in
the employ of the Company as of December 1, 1961. The plans cover
employees in the United States and certain key employees in foreign
countries. Effective January 1, 1993, the Company's plan covering
postretirement medical benefits was amended to place a cap on annual
benefits payable to retirees. Such coverage is self-insured, but is
administered by an insurance company.
The Company accrues the expected cost of postretirement benefits other
than pensions over the period in which the active employees become
eligible for such postretirement benefits.
PAGE
The components of periodic expense for these postretirement benefits
for 1996 and 1995 were as follows:
(Dollars in Thousands) 1996 1995
Service cost - benefits earned during the year $ 610 $ 583
Interest cost on accumulated postretirement
benefit obligation 2,824 3,047
Amortization of prior service cost (934) (934)
Total periodic expense $2,500 $2,696
The following table sets forth the funded status and amounts recognized
for the Company's postretirement benefit plans in the consolidated
balance sheet at December 31, 1996 and 1995:
(Dollars in Thousands)
1996 1995
Accumulated postretirement benefit
obligation:
Retirees $ 21,227 $ 28,505
Fully eligible active plan participants 5,110 5,614
Other active plan participants 12,420 8,133
Total accumulated postretirement
benefit obligation 38,757 42,252
Plan assets at fair value - -
Accumulated postretirement benefit
obligation in excess of plan assets (38,757) (42,252)
Unrecognized net (loss)gain (3,272) 1,423
Unrecognized prior service cost (4,697) (5,632)
Accrued postretirement benefit liability $(46,726) $(46,461)
PAGE
A discount rate of 7.50% in 1996 and 7.25% in 1995 and a salary
increase assumption of 6.0% in 1996 and 1995, were used in determining
the accumulated postretirement benefit obligation. A 10.0% and a 9.5%
increase in the cost of covered health care benefits were assumed for
1996 and 1995, respectively. This rate is assumed to decrease
incrementally to 5.5% in the year 2002 and remain at that level
thereafter. The health care cost trend rate assumption does not have a
significant effect on the amounts reported. For example, a 1% increase
in the health care cost trend rate would increase the accumulated
postretirement benefit obligation at December 31, 1996 by approximately
$1.7 million, and the net periodic cost for 1996 by approximately $0.2
million.
Postemployment Benefits
Effective January 1, 1994, the Company adopted FAS 112, "Employer's
Accounting for Postemployment Benefits", and recognized a one-time
after-tax charge of $21.8 million. This Statement requires the Company
to accrue the costs of certain benefits, including severance, worker's
compensation and health care coverage over an employee's service life.
The Company's liability for postemployment benefits totaled $32.8
million and $36.2 million at December 31, 1996 and 1995, respectively,
and is included in deferred compensation and reserve for termination
allowances. The net periodic expense recognized in 1996 and 1995 was
$21.1 million and $8.8 million, respectively.
NOTE 9: SHORT-TERM BORROWINGS AND FINANCIAL INSTRUMENTS
The Company and its domestic subsidiaries have lines of credit with
various banks. These credit lines permit borrowings at fluctuating
interest rates determined by the banks. Short-term borrowings by
subsidiaries outside the United States principally consist of drawings
PAGE
against bank overdraft facilities and lines of credit. These
borrowings bear interest at the prevailing local rates. Where
required, the Company has guaranteed the repayment of the borrowings.
Unused lines of credit by the Company and its subsidiaries at December
31, 1996 and 1995 aggregated $313.0 million and $319.0 million,
respectively. The weighted average interest rate on outstanding
balances at December 31, 1996 was 5.9%. Current maturities of long-term
debt are included in the payable to banks balance.
The Company occasionally uses forwards and options to hedge a portion
of its net investment in foreign subsidiaries and certain intercompany
transactions in order to mitigate any impact of changes in foreign
exchange rates on working capital. The amount of such hedges at the
end of the year was not significant.
NOTE 10: LONG-TERM DEBT
Long-term debt at December 31 consisted of the following:
(Dollars in Thousands) 1996 1995
Convertible Subordinated Debentures - 3.75% $115,192 $113,235
Term loans- 6.5% to 14.0%.(5.5% to 14.0%
in 1995) 202,414 158,333
Mortgage notes payable and other long-term loans-
7.6% to 9.0% (7.5% to 9.0% in 1995) 45,513 44,604
363,119 316,172
Less: current portion 16,167 32,675
Long-term debt $346,952 $283,497
The increase in long-term debt during 1996 primarily resulted from an
additional private placement with the Prudential Insurance Company
(Prudential) of $30.0 million at 7.31%, and additional term loans of
$25.0 million at 6.97% with SunTrust Bank and $20.0 million at 6.67%
with Wachovia Bank and a money market rate loan with Chase Bank of $5.0
PAGE
million at a variable rate from 5.6% to 6.5%. This debt represents
long-term refinancing of short-term debt.
The Convertible Subordinated Debentures were issued in April 1992 and
mature on April 1, 2002 with a face value of $135.0 million. The terms
of the bond offering included an issuance price equal to 77% of the
face value with a coupon of 3.75%. The debentures are convertible into
common stock of the Company at a rate of 22.238 shares per each U.S.
$1,000 principal amount. Fair value of the Convertible Subordinated
Debentures as of December 31, 1996 was approximately $142 million. The
fair value was estimated by obtaining quotes from brokers.
Term loans at December 31, 1996 consisted of $114.1 million of private
placements with Prudential, $25.0 million in term loans with First
Chicago NBD, $40.0 million in term loans with SunTrust Bank, $20.0
million in term loans with Wachovia Bank and a $3.3 million private
placement loan with Massachusetts Mutual. The private placements with
Prudential have payments due in 1997 through 1998 and 2002 through
2006. The other term loans have payments due in 1997 through 2003.
Mortgage notes payable and other long-term loans at December 31, 1996
primarily related to a $35.3 million mortgage which was used to finance
the purchase of a building and land by one of the Company's
subsidiaries during 1993. The terms of the mortgage call for annual
payments of approximately $0.6 million from 1997-2002 with a balloon
payment of $31.6 million thereafter.
PAGE
Under various loan agreements, the Company must maintain specified
levels of net worth and meet certain cash flow requirements, and is
limited in the level of indebtedness. The Company has complied with
the limitations under the terms of these loan agreements.
Long-term debt maturing over the next five years is as follows: 1997-
$16.2 million; 1998-$25.5 million; 1999-$26.4 million; 2000-$5.8
million; and 2001-$14.0 million. Of the remaining debt of $274.2
million, $212.6 million matures during the years 2002-2005 while $61.6
million matures in subsequent years.
All material financial instruments are carried in the consolidated
balance sheet at amounts which approximate fair values unless otherwise
disclosed. The fair value was estimated by obtaining quotes from
brokers.
NOTE 11: DISCLOSURES UNDER FAS 95
This Statement requires disclosures of specific cash payments and
non-cash investing and financing activities. The Company considers all
highly liquid investments with a maturity of three months or less to be
cash equivalents.
Income Tax and Interest Payments
Cash paid for income taxes was approximately $101.8 million, $80.8
million and $67.1 million, in 1996, 1995 and 1994, respectively.
Interest payments were approximately $27.1 million in 1996, $25.0
million in 1995 and $23.0 million in 1994.
PAGE
Acquisitions
As more fully described in Note 3, in 1996 the Company issued 1,824,609
shares, 330,664 shares and 191,291 shares of its common stock in
exchange for all of the issued and outstanding stock of DraftDirect
Worldwide, The Weber Group and Torre Renta Lazur, respectively.
Additionally, the Company issued in conjunction with the acquisitions
of Goldberg Moser O'Neill, Jay Advertising and Live Communications
48,154 shares, 30,012 shares and 21,490 shares of its common stock,
respectively. In 1995, the Company issued 587,842 shares and 260,756
shares of its common stock in exchange for all the issued and
outstanding stock of Anderson & Lembke and Addison Whitney,
respectively. Additionally, the Company issued in conjunction with the
acquisitions of Hasan & Partners, Bosch & Butz, and Newspaper Services
of America, Inc., 121,160 shares, 63,720 shares, and 48,882 shares of
its common stock, respectively. In 1994, the Company issued 1,092,629
shares of its common stock in conjunction with the acquisition of
Ammirati & Puris and a total of 1,472,393 shares of its common stock in
connection with the pooling of interest with Western International
Media.
Details of businesses acquired in transaction accounted for as
purchases were as follows:
(Dollars in Thousands) 1996 1995 1994
Fair value of assets acquired $182,072 $ 73,142 $163,423
Liabilities assumed 106,289 11,170 64,998
Net assets acquired 75,783 61,972 98,425
Less: non-cash consideration 7,568 9,637 38,525
Less: cash acquired 16,867 5,481 4,974
Net cash paid for acquisitions $ 51,348 $ 46,854 $ 54,926
PAGE
The fair value of assets acquired in 1996 contains approximately $66.8
million of intangible assets. The 1996 amounts shown in the previous
table exclude deferred payments of $2.6 million in connection with the
acquisition of various advertising agencies, which are payable in 1997
and thereafter, but includes $13.0 million of deferred payments made
during 1996 relating to various prior year acquisitions.
The 1995 amounts shown above exclude deferred payments of $3.2 million
in connection with the acquisition of various advertising agencies,
which are payable in 1996 and thereafter, but include $26.9 million of
deferred payments made during 1995 relating to various prior year
acquisitions.
The 1994 amounts shown above exclude deferred payments of $9.5 million
in connection with the acquisition of various advertising agencies,
which are payable in future years, but include $18.3 million of
deferred payments made during 1994 relating to various acquisitions.
PAGE
NOTE 12: RESULTS BY QUARTER (UNAUDITED)
___________________________________________________________________________________________________________________
(Dollars in Thousands 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
Except Per Share Data) 1996 1995 1996 1995 1996 1995 1996 1995
Gross income $506,160 $460,420 $675,345 $557,154 $567,718 $492,486 $788,293 $669,679
Operating expenses 466,109 425,592 521,568 435,588 509,036 444,909 642,892 543,298
Write-down of goodwill and
other related assets - - - - - - - 38,177
Provision for income
taxes 13,126 11,567 61,248 47,390 20,527 15,953 55,102 47,833
Net income 17,832 15,176 82,928 63,768 27,471 22,181 76,974 28,687
Per Share Data:
Net income .23 .20 1.04 .82 .34 .28 .95 .36
Cash dividends per share .155 .140 .17 .155 .17 .155 .17 .155
Price range per share:
High 47 1/4 37 3/8 49 3/4 39 48 1/2 40 50 43 3/8
Low $40 $32 3/8 $45 5/8 $35 1/4 $41 3/4 $36 $44 3/8 $37 3/8
PAGE
NOTE 13: GEOGRAPHIC AREAS
Total assets, income from commissions and fees and income before
provision for income taxes are presented below by major geographic
area:
(Dollars in Thousands) 1996 1995 1994
Total Assets:
United States $2,236,168 $1,864,095 $1,559,768
International
Europe 1,626,966 1,554,283 1,372,466
Asia Pacific 544,287 515,219 560,965
Latin America 224,683 193,592 183,701
Other 133,026 132,577 116,518
Total International 2,528,962 2,395,671 2,233,650
Total Consolidated $4,765,130 $4,259,766 $3,793,418
Income From Commissions and Fees:
United States $1,001,545 $ 754,576 $ 713,497
International
Europe 882,746 837,006 719,881
Asia Pacific 309,161 281,961 268,124
Latin America 170,024 152,503 153,469
Other 67,032 67,786 61,405
Total International 1,428,963 1,339,256 1,202,879
Total Consolidated $2,430,508 $2,093,832 $1,916,376
PAGE
(Dollars in Thousands) 1996 1995 1994
Income Before Provision for Income Taxes:
Operating income:
United States $ 197,793 $ 131,194 $ 88,208
International
Europe 96,948 73,424 56,281
Asia Pacific 57,439 48,292 43,376
Latin America 35,578 31,626 40,975
Other 10,153 7,638 4,884
Total International 200,118 160,980 145,516
Items not allocated to operations,
principally interest expense:
United States (27,874) (23,763) (18,073)
International (12,891) (14,256) (14,852)
Total Consolidated $ 357,146 $ 254,155 $ 200,799
The largest client of the Company contributed approximately 11% in 1996
and 1995, and 10% in 1994 to income from commissions and fees. The
Company's second largest client contributed approximately 8% in 1996,
1995 and 1994 to income from commissions and fees.
Dividends received from foreign subsidiaries were $35.2 million in
1996, $31.8 million in 1995 and $43.6 million in 1994. Net assets of
foreign subsidiaries were approximately $677 million, $584 million and
$558 million at December 31, 1996, 1995 and 1994, respectively.
Consolidated net income includes losses from exchange and translation
of foreign currencies of $4.1 million, $4.7 million and $10.6 million
in 1996, 1995 and 1994, respectively. PAGE
NOTE 14: RESTRUCTURING CHARGES
In the fourth quarter of 1994, the Company recorded restructuring
charges of $48.7 million in connection with the elimination of
duplicate facilities and excess personnel resulting primarily from the
merger of Lintas New York and Ammirati & Puris agencies and certain
international offices. This amount included $38.3 million of severance
charges for involuntary terminations of approximately 600 employees,
$6.7 million related to the abandonment of operations and $3.7 million
for the consolidation of facilities. At December 31, 1995, the
Company's liability related to these restructuring charges totaled $1.3
million for severance, and is included in accrued expenses. The amount
of cash payments made during 1995 was approximately $27.8 million. The
remaining liability was paid in 1996.
NOTE 15: COMMITMENTS AND CONTINGENT LIABILITIES
At December 31, 1996, the Company's subsidiaries operating outside the
United States were contingently liable for discounted notes receivable
of approximately $13.8 million.
The Company and its subsidiaries lease certain facilities and
equipment. Gross rental expense amounted to approximately $180 million
for 1996, $164 million for 1995 and $141 million for 1994, which was
reduced by sublease income of $29.1 million, $19.5 million and $10.8
million in 1996, 1995 and 1994, respectively.
PAGE
During 1995, the Company entered into a transaction whereby it acquired
the leasing operations of a third party at a cost of approximately $7
million. These leasing operations include equipment leased from the
equipment owner (the "Owner"), which has in turn been leased to a third
party (the "Sublessee"). Both leases are accounted for by the Company
as operating leases. The Sublessee has prepaid $46.6 million of its
obligations under the sublease agreement. This prepayment is held in
an interest-bearing escrow account and is to be used to meet the
Company's lease obligations to the Owner. At December 31, 1996, the
remaining escrow balance of $30.1 million is reflected in prepaid
expenses and miscellaneous assets and the unearned sublease income
amount of $23.1 million is reflected in other noncurrent liabilities.
The deferred tax asset attributable to the prepaid sublease obligation
amounts to $18.8 million at December 31, 1996.
Minimum rental commitments for the rental of office premises and
equipment under noncancellable leases, some of which provide for rental
adjustments due to increased property taxes and operating costs for
1995 and thereafter, are as follows:
(Dollars in Thousands) Gross Sublease
Period Amount Income
1997 $153,043 $24,150
1998 120,191 13,427
1999 98,704 6,423
2000 84,163 4,744
2001 69,991 3,900
2002 and thereafter 220,418 4,871
Certain of the Company's acquisition agreements provide for the payment
by the Company of future contingent consideration based upon future
revenues or profits of the companies acquired.PAGE
The Company and certain of its subsidiaries are party to various tax
examinations, some of which have resulted in assessments. The Company
intends to vigorously defend any and all assessments and believes that
additional taxes (if any) that may ultimately result from the
settlement of such assessments and open examinations would not have a
material adverse effect on the consolidated financial statements.
PAGE
_______________________________________________________________________
REPORT OF INDEPENDENT ACCOUNTANTS
_______________________________________________________________________
1177 Avenue of the Americas
New York, New York 10036
To the Board of Directors and Stockholders of
The Interpublic Group of Companies, Inc. February 14, 1997
In our opinion, the accompanying consolidated balance sheet and the
related consolidated statements of income, of stockholders' equity and
of cash flows present fairly, in all material respects, the financial
position of The Interpublic Group of Companies, Inc. and its
subsidiaries (the "Company") at December 31, 1996 and 1995, and the
results of their operations and their cash flows for each of the three
years in the period ended December 31, 1996, in conformity with
generally accepted accounting principles. These financial statements
are the responsibility of the Company's management; our responsibility
is to express an opinion on these financial statements based on our
audits. We conducted our audits of these statements in accordance with
generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for the opinion expressed
above.
As discussed in Notes 3 and 8 to the consolidated financial statements,
during 1995, the Company changed its method of accounting for
long-lived assets in accordance with Statement of Financial Accounting
Standards No. 121, and effective January 1, 1994, the Company changed
its method of accounting for postemployment benefits as required by
Statement of Financial Accounting Standards No. 112.
Price Waterhouse LLP
SELECTED FINANCIAL DATA FOR FIVE YEARS
__________________________________________________________________________________________________
(Dollars in Thousands
Except Per Share Data) 1996 1995 1994 1993 1992
Operating Data
Gross income $ 2,537,516 $ 2,179,739 $ 1,984,255 $ 1,793,856 $ 1,855,971
Operating expenses 2,139,605 1,849,387 1,701,817 1,535,651 1,615,592
Restructuring charges - - 48,715 - -
Write-down of goodwill and other
related assets - 38,177 - - -
Interest expense 40,765 38,020 32,924 26,445 33,221
Provision for income taxes: 150,003 122,743 86,333 99,819 91,335
Income before effect of accounting
change 205,205 129,812 115,247 125,279 111,913
Effect of accounting changes:
Postemployment benefits - - (21,780) - -
Income taxes - - - (512) -
Postretirement benefits - - - - (24,640)
Net Income 205,205 129,812 93,467 124,767 87,273
Cash dividends 51,786 46,124 40,360 35,901 32,483
Per Share Data
Income before effect of accounting
changes 2.56 1.66 1.53 1.67 1.50
Effect of accounting changes:
Postemployment benefits - - (.29) - -
Income taxes - - - (.01) -
Postretirement benefits - - - - (.33)
Net Income 2.56 1.66 1.24 1.66 1.17
Cash dividends .665 .605 .545 .49 .45
Financial Position
Working capital 154,430 147,701 80,134 167,175 224,534
Total assets 4,765,130 4,259,766 3,793,418 2,869,817 2,623,345
Long-term debt 346,952 283,497 241,803 226,085 200,237
Stockholders' equity per share $ 10.73 $ 9.42 $ 8.36 $ 7.54 $ 6.81
PAGE
Other Data
Weighted average number
of shares 80,293,178 78,180,072 75,570,445 75,215,521 74,974,618
Number of employees 21,700 19,700 18,100 17,600 16,800
Reflects the cumulative effect of adopting FAS 112, "Employers' Accounting for Postemployment Benefits."
Reflects the cumulative effect of FAS 109, "Accounting for Income Taxes."
Reflects the cumulative effect of FAS 106, "Employers' Accounting for Postretirement Benefits Other
than Pensions."
PAGE
VICE CHAIRMAN'S REPORT OF MANAGEMENT
The financial statements, including the financial analyses and
all other information in this Annual Report, were prepared by
management, who is responsible for their integrity and
objectivity. Management believes the financial statements, which
require the use of certain estimates and judgements, reflect the
Company's financial position and operating results in conformity
with generally accepted accounting principles. All financial
information in this Annual Report is consistent with the
financial statements.
Management maintains a system of internal accounting controls
which provides reasonable assurance that, in all material
respects, assets are maintained and accounted for in accordance
with management's authorization and transactions are recorded
accurately in the books and records. To assure the effectiveness
of the internal control system, the organizational structure
provides for defined lines of responsibility and delegation of
authority.
The Finance Committee of the Board of Directors, which is
comprised of the Company's Chairman and Vice Chairman and three
outside Directors, is responsible for defining these lines of
responsibility and delegating the authority to management to
conduct the day-to-day financial affairs of the Company. In
carrying out its duties, the Finance Committee primarily focuses
on the setting and monitoring of financial and operational goals;
establishing guidelines, approving and monitoring specific
proposals for acquisitions; working capital, cash and balance
sheet management; and overseeing the hedging of foreign exchange,
interest-rate and other financial risks. The Committee meets
regularly to review presentations and reports on these and other
financial matters, to the Board. It also works closely with, but
is separate from, the Audit Committee of the Board of Directors.
The Company has formally stated and communicated policies
requiring of employees high ethical standards in their conduct of
its business. As a further enhancement of the above, the
Company's comprehensive internal audit program is designed for
continual evaluation of the adequacy and effectiveness of its
internal controls and measures adherence to established policies
and procedures.
The Audit Committee of the Board of Directors is comprised of
three directors who are not employees of the Company. The
Committee reviews audit plans, internal controls, financial
reports and related matters, and meets regularly with management,
internal auditors and independent accountants. The independent
accountants and internal auditors have free access to the Audit
Committee, without management being present, to discuss the
results of their audits or any other matters.
The independent accountants, Price Waterhouse LLP, are
recommended by the Audit Committee of the Board of Directors and
selected by the Board of Directors, and their appointment is
ratified by the shareholders. The independent accountants have
examined the financial statements of the Company and their
opinion is presented on page 48.
EXHIBIT 21
February 27, 1997
PERCENTAGE
VOTING
SECURITIES
JURISDICTION OWNED BY
UNDER WHICH IMMEDIATE
NAME ORGANIZED PARENT (%) IMMEDIATE PARENT
____ ____________ __________ ________________
Domestic:
The Interpublic Group of Companies, Inc. Delaware - -
(Registrant)
Advent.LA Inc. California 100 Advent Event Marketing, Inc.
Casablanca Productions California 100 Registrant
Dailey & Associates California 100 Registrant
Eidolon Corporation California 100 Registrant
International Business Services, Inc. California 100 Infoplan International, Inc.
Main Street Media, LLC California 71.5 Western International Media Corporation
Media Inc. California 100 Registrant
Media Partnership Corporation California 100 Registrant
North Light, Ltd. California 100 Dailey & Associates
Tall Wall Media, Inc. California 100 Registrant
The Phillips-Ramsey Co. California 100 Registrant
Western Direct Marketing Group, Inc. California 100 Western International Media Corporation
Western International Media Corporation California 100 Registrant
Western International Syndication California 100 Registrant
Corporation
Western Motivational Incentives Group California 100 Western International Media Corporation
Western Trading LLC California 55.45 Registrant
PAGE
Advent Event Marketing, Inc. Delaware 100 Registrant
Advent.A2 Inc. Delaware 100 Advent Event Marketing, Inc.
Ammirati Puris Lintas Inc. Delaware 100 Registrant
Anderson & Lembke, Inc. Delaware 100 Registrant
Angotti, Thomas, Hedge, Inc. Delaware 100 Registrant
Asset Recovery Group, Inc. Delaware 100 Registrant
Business Science Research Corporation, Delaware 100 Registrant
Inc.
Campbell-Ewald Company Delaware 100 Registrant
Healthcare Capital, Inc. Delaware 100 McCann Healthcare, Inc.
Infoplan International, Inc. Delaware 100 Registrant
Interpublic Television, Inc. Delaware 100 Registrant
Jack Tinker Advertising, Inc. Delaware 100 Registrant
LFS, Inc. Delaware 100 Registrant
Lowe Direct Inc. Delaware 100 Lowe & Partners Inc.
Lowe Holdings Inc. Delaware 100 Registrant
Market Reach Retail LLC Delaware 50 Skott, Inc.
McAvey & Grogran, Inc. Delaware 100 Registrant
McCann-Erickson USA, Inc. Delaware 100 Registrant
McCann-Erickson Marketing, Inc. Delaware 100 Registrant
McCann-Erickson Corporation (S.A.) Delaware 100 Registrant
McCann-Erickson (Paraguay) Co. Delaware 100 Registrant
McCann-Erickson Worldwide, Inc. Delaware 100 Registrant
McCann Healthcare, Inc. Delaware 100 McCann-Erickson USA, Inc.
Skott, Inc. Delaware 100 Newspaper Services of America, Inc.
The Coleman Group, LLC Delaware 51 Interpublic Television, Inc.
The Lowe Group, Inc. Delaware 100 Lowe Worldwide Holdings B.V.
Weller & Klein Research, Inc. Delaware 100 Registrant
Ben Dispositions, Inc. Florida 100 LFS, Inc.
Draft Direct Worldwide, Inc. Illinois 100 Registrant
Quest & Associates, Inc. Kansas 100 Registrant
Adware Systems, Inc. Kentucky 100 McCann-Erickson USA, Inc.
Weber Group, Inc. Massachusetts 100 WPR Acquisition Corp.
Thunder House, Inc. Massachusetts 100 WPR Acquisition Corp.
WPR Acquisition Corp. Massachusetts 100 McCann-Erickson USA, Inc.
C-E Communications Company Michigan 100 Registrant
PAGE
Campbell Mithun Esty Inc. Minnesota 50 Registrant
Newspaper Services of America, Inc. Minnesota 100 Registrant
Interpublic, Inc. New Jersey 100 Registrant
Torre, Renta, Lazur, Inc. New Jersey 100 Registrant
GDL, Inc. New York 100 The Lowe Group, Inc.(100% of
Common Stock) and Goldschmidt Dunst &
Lawson Corp. (100% of Preferred Stock)
Goldschmidt Dunst & Lawson Corp. New York 100 The Lowe Group, Inc.
Interpublic Game Shows, Inc. New York 100 Registrant
Jay Advertising, Inc. New York 100 Registrant
LCF&L, Inc. New York The Lowe Group, Inc. (99.9%)
and GDL, Inc. (.1%)
Lowe McAdams Healthcare Inc. New York 100 Lowe Holdings Inc.
Lowe & Partners Inc. New York 100 Lowe International Limited (80%)
and Lowe Worldwide Holdings B.V.(20%)
McCann Direct, Inc. New York 100 Registrant
Momentum IMC Company New York 100 Registrant
Scali, McCabe, Sloves, Inc. New York 100 Registrant
The Gotham Group, Inc. New York 100 Registrant
Addison Whitney, Inc. North Carolina 100 Registrant
Long Haymes Carr Lintas, Inc. North Carolina 100 Registrant
Marketing Arts Corporation Virginia 100 The Martin Agency, Inc.
Cabell Eanes, Inc. Virginia 100 The Martin Agency, Inc.
The Martin Agency, Inc. Virginia 91 Scali, McCabe, Sloves, Inc.
FOREIGN:
Interpublic S.A. de Publicidad Argentina 100 Registrant
Ammirati Puris Lintas Communications Australia 100 Ammirati Puris Lintas
Proprietary Limited (New South Wales) Pty. Limited
Ammirati Puris Lintas Proprietary Limited Australia 100 Registrant
(New South Wales)
Ammirati Puris Lintas Melbourne Australia 100 Ammirati Puris Lintas Proprietary
Proprietary Limited (Victoria) LimitedPAGE
CWFS Australia 100 McCann Australia (50%) and
McCann New Zealand (50%)
McCann-Erickson Advertising Pty. Limited Australia 100 Registrant
(New South Wales)
Merchant and Partners (Sydney) Pty. Ltd. Australia 100 Merchant and Partners Australia
Pty. Limited
Merchant and Partners Australia Pty. Australia 100 Registrant
Limited
Sales Communications International Pty. Australia 100 McCann Erickson Advertising
Limited (New South Wales) Pty. Ltd.
Underline Design Group Pty. Limited Australia 51 Ammirati Puris Lintas
Communications Pty. Limited
Ammirati Puris Lintas Werbeagentur Austria 100 Registrant
Gesellschaft m.b.H.
Campbell Ewald Werbeagentur Ges.m.b.H. Austria 100 Lowe Worldwide Holdings B.V.
Initiatives Media Werbemittlung Austria 100 Ammirati Puris Lintas Werbe
Ges.m.b.H. agentur Gesellschaft m.b.H.
McCann-Erickson Gesellschaft m.b.H. Austria 100 Registrant
PCS Werbeagentur Ges.m.b.H. Austria 100 Ammirati Puris Lintas
Werbeagentur Gesellschaft m.b.H.
A.C.E. Advertising Creation Marketing Belgium 100 Ammirati Puris Lintas Brussels
B.V. S.A.
Ammirati Puris Lintas Brussels S.A. Belgium 100 Ammirati Puris Lintas Holding B.V.
De Roeck En Heering P.R. Consultants N.V. Belgium 100 Ammirati Puris Lintas Brussels S.A.
Direct Creations S.A. Belgium 100 Lowe Troost S.A.
Initiative Media Brussels S.A. Belgium 100 Ammirati Puris Lintas Brussels
S.A. (96%) and Initiatives
Media (a French corporation)(4%)
Initiative Media International S.A. Belgium 100 Lintas Holding B.V.
Lowe Troost S.A. Belgium 100 Lowe Worldwide Holdings B.V.
McCann-Erickson Co. S.A. Belgium 100 Registrant
Programming Media International-PMI S.A. Belgium 100 Registrant
Universal Media, S.A. Belgium 100 McCann Belgium (50%)
Lowe Troost S.A. (50%)
PAGE
Triad Assurance Limited Bermuda 100 Registrant
Interpublic Publicidade e Pesquisas Brazil 100 International Business Services,
Sociedade Limitada Inc.
McCann-Erickson Publicidade Ltda. Brazil 100 Registrant
MPM Lintas Communicacoes Ltda. Brazil 98.75 Registrant
PPA Profissionais de Promocao Associados Brazil 100 MPM Lintas Communicacoes Ltda.
Ltda.
Universal Publicidade Ltda Brazil 100 Interpublic Publicidate
E Pesquisas Sociedade Ltda.
Ammirati Puris Lintas Canada Ltd. Canada 100 Registrant
Harrod & Mirlin, Inc. Canada 100 Registrant (61.5%) and
McCann-Erickson Advertising of
Canada Ltd. (38.5%)
Lowe Holdings Ltd. Canada 100 Lowe Investments Ltd.
Lowe Investments Limited Canada 100 Lowe Worldwide Holdings B.V.(45.9%)
and Scali, McCabe, Sloves, Inc.(54.1%)
McCann-Erickson Advertising of Canada (Federal) 100 Registrant
Canada Ltd.
MacLaren Lintas Inc. Canada (Federal) 100 Registrant
Promaction Corporation Canada 100 McCann-Erickson Advertising of Canada
Ammirati Puris Lintas Chile S.A. Chile 100 Ammirati Puris Lintas Holding B.V.
Initiative Media Chile Chile 100 Ammirati Puris Lintas Chile S.A.
McCann-Erickson S.A. de Publicidad Chile 100 Registrant
Ammirati Puris Lintas Colombia Colombia 100 Registrant
Harrison Publicidad De Colombia S.A. Colombia 100 Registrant
McCann-Epoca S.A. Colombia 60 Registrant
McCann-Erickson Centroamericana Costa Rica 100 Registrant
(Costa Rica) Ltda.
McCann-Erickson Zagreb Croatia 100 McCann-Erickson International GmbH
McCann-Erickson Prague Czech Republic 100 McCann-Erickson International GmbH
PAGE
Lintas Praha Spol. s.r.o. Czech Republic 100 Ammirati Puris Lintas
Deutschland GmbH
Lintas Danmark A/S Denmark 100 Ammirati Puris Lintas Holding B.V.
McCann-Erickson A/S Denmark 100 Registrant
Milvang/GR2 A/S Denmark 100 Lintas Danmark A/S
Pool Media International Aps Denmark 100 Registrant
Signatur APS Denmark 100 Lintas Danmark A/S
McCann-Erickson Dominicana, S.A. Dominican Republic 100 Registrant
McCann-Erickson (Ecuador) Ecuador 96 McCann-Erickson Corporation
Publicidad S.A. (International)
McCann-Erickson Centro Americana El Salvador 100 Registrant
(El Salvador) S.A.
ABM Kershaw Limited England 100 Lowe International Limited
Adware Systems Limited England 100 Orkestra Limited
Allen Brady & Marsh Ltd. England 100 Tavistock Advertising Limited
Ammirati Puris Lintas Worldwide England 100 Interpublic Limited
Limited
Artel Studios Limited England 100 Stowe, Bowden, Wilson Limited
Brilliant Pictures Limited England 100 Still Price Court Twivy D'Souza
Lintas Group Limited
Brompton Advertising Ltd. England 100 The Brompton Group Ltd.
Brompton Promotions Ltd. England 100 The Brompton Group Ltd.
Bureau of Commercial Information England 100 Registrant
Limited
Bureau of Commercial Research Limited England 100 Registrant
CM Lintas International Ltd. England 100 Interpublic Limited
Clovercrest Limited England 100 Lowe International Limited
Coachouse Ltd. England 100 McCann-Erickson Manchester Limited
Colourwatch Ltd. England 100 Lowe International Limited
Colourwheel Limited England 100 Lighthold Limited
Epic (Events & Programming England 100 Interpublic Limited
International Consultancy) Limited
Face Photosetting Ltd. England 100 Smithfield Lease Limited
Fieldplan Ltd. England 100 Interpublic Limited
Gotham Limited England 100 Lowe International Limited
H.K. McCann Limited England 100 McCann Erickson Advertising
Limited
PAGE
Initiative Media Limited England 100 Interpublic Limited
Initiative Media London Limited England 99.5 Still Price Court Twivy D'Souza
Lintas Group Limited
Interfocus Group Limited England 75 Registrant
Interfocus Network Ltd. England 75 Interfocus Group Ltd.
International Poster Management Ltd. England 100 Interpublic Limited
Interpublic Limited England 100 Registrant
Interpublic Pension Fund Trustee England 100 Interpublic Limited
Company Limited
LHSB Management Services Ltd. England 100 Lowe International Limited
Lighthold Limited England 100 Lowe International Limited
Lintas Overseas Limited England 100 Interpublic Limited
Lintas Superannuation Trustees England 100 Ammirati Puris Lintas Worldwide
Limited Limited
Lintas Supplementary Pension England 100 Ammirati Puris Lintas Worldwide
Limited Limited
Lintas W.A. Limited England 100 Interpublic Limited
Lowe Direct Limited England 75 Lowe International Limited
Lowe Howard-Spink Ltd. England 100 Lowe International Limited
Lowe & Howard-Spink Media Limited England 100 Lighthold Limited
Lowe International Limited England 100 Interpublic Limited
Matter of Fact Communications Limited England 100 McCann-Erickson Bristol Limited
McCann Communications Limited England 100 Interpublic Limited
McCann-Erickson Advertising Limited England 100 Interpublic Limited
McCann-Erickson Bristol Limited England 100 McCann-Erickson United Kingdom
Limited
McCann-Erickson Central Limited England 100 McCann-Erickson United Kingdom
Limited
McCann-Erickson Manchester Limited England 100 McCann-Erickson United Kingdom
Limited
McCann-Erickson United Kingdom England 100 Interpublic Limited
Limited
McCann Properties Limited England 100 McCann-Erickson United Kingdom
Limited
Orbit International (1990) Ltd. England 100 Lowe International Limited
Orkestra Ltd. England 100 Interpublic Limited
Poundhold Ltd. England 100 Lowe International Limited
Salesdesk Limited England 100 Orkestra Ltd.
PAGE
S.C. Advertising (UK) Limited England 100 Lowe International Limited
Smithfield Lease Limited England 100 Lowe International Limited
Still Price Court Twivy D'Souza England 100 Interpublic Limited
Lintas Group Limited
Still Price Court Twivy England 100 Still Price Court Twivy D'Souza
D'Souza Lintas Limited Lintas Group Limited
Stowe, Bowden, Wilson Limited England 100 McCann-Erickson United Kingdom Limited
Talbot Television Limited England 100 Fremantle International Inc.
Tavistock Advertising Limited England 100 Lowe International Limited
The Below the Line Agency Limited England 100 Interpublic Limited
The Brompton Group Ltd. England 100 Lowe International Limited
The Howland Street Studio Ltd. England 100 Interpublic Limited
The Lowe Group Limited England 100 Lowe International Limited
The Lowe Group Nominees Ltd. England 100 Lowe International Limited
The Results Machine Limited England 100 Lowe International Limited
Two Six Seven Limited England 100 Lowe International Limited
Universal McCann Limited England 100 Interpublic Limited
Western International Media Ltd. England 100 Lowe International Holdings B.V.
Brindfors Production Oy Finland 100 Lowe Brindfors Oy
Hasan Oy Finland 100 Registrant
Lintas Make Direct Oy Finland 100 Lintas Oy
Lintas Oy Finland 100 Lintas Holding B.V.
Lintas Service Oy Finland 100 Lintas Oy
Lowe Brindfors Oy Finland 100 Lowe Scandinavia AB
Mainostoinisto Womena - McCann Oy Finland 100 Registrant
McCann-Pro Oy Finland 100 Oy Liikemainonta-McCann AB
Oy Liikemainonta-McCann AB Finland 100 Registrant
PMI - Mediaporssi Oy Finland 66 Oy Liikemainonta-McCann AB (33%)
and Lintas Oy (33%)
Womena-Myynninvauhdittajat Oy Finland 100 Oy Liikemainonta-McCann AB
Ammirati Puris Lintas-Paris France 100 France C.C.P.M.
Creation Sarl France 97.5 SP3 S.A.
Delacroix et Gervasi S.A. France 100 SP3
Delacroix S.A. France 60.1 McCann-Erickson (France)
PAGE
E.C. Television/Paris, S.A. France 100 France C.C.P.M.
Fab + S.A. France 99.4 SP3 S.A.
France C.C.P.M. France 100 Ammirati Puris Lintas Holding B.V.
Infernal Sarl France 100 SP3 S.A.
Initiatives Media Paris France 100 France C.C.P.M.
Initiative Media International S.A. France 100 Ammirati Puris Lintas Holding B.V.
Leuthe & Associates France 85 McCann-Erickson France Holding Co.
Lowe Alice S.A. France 100 Lowe Worldwide Holdings B.V.
Lowe Alice SMC France 50 Lowe Alice S.A.
McCann Communications France 75 McCann-Erickson (France)
McCann - Promotion S.A. France 99.8 McCann-Erickson (France)
McCann-Erickson (France) France 100 Registrant
McCann-Erickson (Paris) S.A. France 100 McCann-Erickson (France)
McCann CDR France 74 McCann-Erickson France Holding Co.
McCann Rhone Alpes S.A. France 100 McCann-Erickson (France)
Publi Media Service France 50 Owned in quarters by McCann,
Ammirati Puris Lintas agencies
in France, Publicis and Idemedia
Slad France 60 McCann-Erickson France Holding Co.
SP3 Conseil S.A. France 100 SP3 S.A.
SP3 Conseils Paris S.A. France 99.8 SP3 S.A.
SP3 Lyon S.A. France 95 SP3 S.A.
SP3 S.A. France 100 McCann-Erickson (France)
Sprint S.A. France 100 France C.C.P.M.
Strateus France 72 France CCPM
Universal Media S.A. France 100 McCann-Erickson (France)
Valefi France 55 McCann-Erickson France Holding Co.
Virgo (formerly Virtuelle) France 60 Fieldplan U.K.
PAGE
Adplus GmbH Germany 100 Lowe & Partners GmbH Frankfurt
Ammirati Puris Lintas Deutschland Germany 100 Registrant
GmbH
Ammirati Puris Lintas Direct GmbH Germany 100 Ammirati Puris Lintas
Deutschland GmbH
Ammirati Puris Lintas Frankfurt GmbH Germany 100 Ammirati Puris Lintas Hamburg GmbH
Ammirati Puris Lintas Hamburg GmbH Germany 100 Ammirati Puris Lintas Deutschland GmbH
Ammirati Puris Lintas S Sales Germany 100 Ammirati Puris Lintas
Communications GmbH Deutschland GmbH
Baader-Lang-Behnken GmbH Germany 82 Ammirati Puris Lintas Deutschland GmbH
Creative Media Services GmbH Germany 100 Ammirati Puris Lintas Deutschland
Fernsehproduktions GmbH Germany 100 Fremantle International, Inc.
Gottschall & Partners Germany 100 Lowe & Partners Frankfurt
Heinrich Hoffman & Partner GmbH Germany 100 Lowe & Partners GmbH Frankfurt
IMP Germany Germany 75 Ammirati Puris Lintas Deutschland GmbH
Initiativ Media GmbH Germany 100 Ammirati Puris Lintas Deutschland GmbH
Initiativ Verkaufsforderung GmbH Germany 100 Ammirati Puris Lintas Hamburg GmbH
Interpublic GmbH Germany 100 Registrant
K&S Werbeagentur Marketing und Germany 100 Adplus GmbH
Consulting GmbH
Koch Media Planning Germany 100 Ad Plus
Krakow McCann-Erickson GmbH Germany 100 McCann-Erickson Deutschland GmbH
Lowe & Partners GmbH Dusseldorf Germany 100 Lowe Worldwide Holdings B.V.
(75%)and Registrant (25%)
Lowe & Partners GmbH Frankfurt Germany 100 Lowe & Partners GmbH Dusseldorf
Lowe & Partners GmbH Hamburg Germany 100 Lowe & Partners GmbH Dusseldorf
Lowe & Partners Healthcare GmbH Germany 100 Lowe & Partners GmbH Frankfurt
Max W.A. Kamer GmbH Germany 100 Ammirati Puris Lintas Deutschland GmbH
McCann Direct GmbH Agentur Fuer Germany 100 McCann-Erickson Deutschland
Consulting GmbH GmbH
PAGE
McCann-Erickson (International) GmbH Germany 100 Registrant
McCann-Erickson Deutschland GmbH Germany 100 McCann-Erickson (International) GmbH
McCann-Erickson Scope GmbH Germany 100 McCann-Erickson Deutschland GmbH
McCann-Erickson Frankfurt GmbH Germany 100 McCann-Erickson Deutschland GmbH
McCann-Erickson Hamburg GmbH Germany 100 McCann-Erickson Deutschland GmbH
McCann-Erickson Nurnberg GmbH Germany 100 McCann-Erickson Deutschland GmbH
McCann-Erickson Service GmbH Germany 100 McCann-Erickson Deutschland GmbH
McCann-Promotion GmbH Germany 100 McCann-Erickson Deutschland GmbH
McCann Healthcare Pharma Kommunikation Germany 100 McCann-Erickson Deutschland GmbH
GmbH
McCann-Erickson Management Property GmbH Germany 100 McCann-Erickson Deutschland GmbH(80%)
Interpublic GmbH (20%)
Typo-Wenz Artwork GmbH Germany 100 Interpublic GmbH
Universalcommunication Media Intensiv Germany 100 Interpublic GmbH
GmbH
Unterstuetzungskasse der H.K. Germany 100 McCann-Erickson (International)
McCann Company GmbH GmbH
Ammirati Puris Lintas Worldwide Greece 100 Interpublic Limited
Advertising (Hellas) L.L.C.
Fremantle Hellas Greece 95 Talbot Television Limited
McCann-Erickson (Hellas) E.P.E. Greece 100 Registrant
Sprint Advertising S.A. Greece 51 Fieldplan Limited
Initiative Media Advertising S.A. Greece 100 Fieldplan Limited
Universal Media Greece Greece 100 McCann-Erickson (International)GmbH
Publicidad McCann-Erickson Guatemala 100 Registrant
Centroamericana (Guatemala), S.A.
McCann-Erickson Centroamericana Honduras 100 Registrant
S. de R.L.(Honduras)
PAGE
Ammirati Puris Lintas Hong Kong Limited Hong Kong 100 Ammirati Puris Lintas Holding B.V.
Infoplan (Hong Kong) Limited Hong Kong 100 McCann-Erickson (HK) Limited
Interpublic (China) Limited Hong Kong 100 Registrant
McCann-Erickson (HK) Limited Hong Kong 100 Registrant
Initiative Media Hungary Hungary 100 Lintas Budapest
Lintas Budapest Reklam es Marketing Hungary 90 Ammirati Puris Lintas Deutschland
Kommunicacios Kft GmbH
McCann-Erickson Interpress International Hungary 100 Registrant
Advertising Agency Ltd.
McCann-Erickson (India) Pvt. India 60 McCann-Erickson Worldwide Inc.
Ammirati Puris Lintas Milano S.p.A. Italy 100 Ammirati Puris Lintas Holding B.V.
Centro Media Planning-Buying-Booking Italy 100 Ammirati Puris Lintas Milano
S.r.l. S.p.A.
Chorus Media Srl Italy 51 Pirella Gottsche Lowe S.p.A.
Harrison McCann S.r.l. Italy 100 McCann-Erickson Italiana S.p.A.
McCann-Erickson Italiana S.p.A. Italy 100 Registrant
McCann Marketing Communications S.p.A. Italy 100 McCann-Erickson Italiana S.p.A.
Pirella Gottsche Lowe S.p.A. Italy 95 Lowe Worldwide Holdings B.V.
Pool Media International (P.M.I.) S.r.l. Italy 100 Registrant (95%) and Business
Science Research Corp (5%)
Universal Media Srl Italy 100 McCann-Erickson Italiana S.p.A.(50%)
Pirella Gottsche Lowe S.p.A. (50%)
Lintas - Abidjan Ivory Coast 67 France C.C.P.M.
McCann-Erickson (Jamaica) Limited Jamaica 100 Registrant
Hakuhodo Lintas K.K. Japan 50 Registrant
Lintas Japan K.K. Japan 100 Ammirati Puris Lintas Nederland B.V.
McCann-Erickson Inc. Japan 100 Registrant
McCann-Erickson (Kenya) Limited Kenya 73 Registrant
Ammirati Puris Lintas (Malaysia) Malaysia 100 Registrant
Sdn. Bhd.
Initiative Media (M) Sdn. Bhd. Malaysia 100 Ammirati Puris Lintas (Malaysia)
Sdn. Bhd.
PAGE
McCann-Erickson (Malaysia) Sdn. Bhd. Malaysia 100 Registrant
Mutiara-McCann (Malaysia) Sdn. Bhd. Malaysia 83.50 Registrant
Universal Communication Sdn. Bhd. Malaysia 100 McCann-Erickson (Malaysia) Sdn. Bhd.
Lowe Mauritius Limited Mauritius 100 Lowe Holdings Inc.
Ammirati Puris Lintas S.A. de C.V. Mexico 100 Registrant
Corporacion Interpublic Mexicana, Mexico 100 Registrant and Inversionistas
S.A. de C.V. Asociados, S.A. de C.V.
Inversionistas Asociados, S.A. de C.V. Mexico 100 Registrant
Lintas Direct S.A. de C.V. Mexico 100 Registrant
Lowe & Partners/SMS De Mexico, S.A. Mexico 74 Scali, McCabe, Sloves, Inc.
Lintas Worldwide Namibia (Pty) Limited Namibia 100 Fieldplan Ltd.
Ammirati Puris Lintas Direct B.V. Netherlands 80 Ammirati Puris Lintas Nederland B.V.
Ammirati Puris Lintas Holding B.V. Netherlands 100 Registrant
Ammirati Puris Lintas Nederland B.V. Netherlands 100 IPG Nederland B.V.
Data Gold B.V. Netherlands 100 IPG Nederland B.V.
Initiative Media B.V. Netherlands 100 Ammirati Puris Lintas Nederland B.V.
IPG Nederland B.V. Netherlands 100 Registrant
Lowe Europa B.V. Netherlands 100 Lowe Worldwide Holdings B.V.
Lowe International Holdings B.V. Netherlands 100 Registrant
Lowe Kuiper & Schouten B.V. Netherlands 100 Lowe Worldwide Holdings B.V.
Lowe Worldwide Holdings B.V. Netherlands 100 Poundhold Ltd.
McCann-Direct B.V. Netherlands 100 McCann-Erickson (Nederland) B.V.
McCann-Erickson (Nederland) B.V. Netherlands 100 IPG Nederland B.V.
McCann-Erickson Industrieel B.V. Netherlands 100 McCann-Erickson (Nederland) B.V.
P. Strating Promotion B.V. Netherlands 100 IPG Nederland B.V.
Programming Media International B.V. Netherlands 100 Registrant
Reclame-Adviesbureau Via B.V. Netherlands 100 IPG Nederland B.V.
Universal Media B.V. Netherlands 100 IPG Nederland B.V.
Zet Zet B.V. Netherlands 100 Data Gold B.V.
Ammirati Puris Lintas (NZ) Limited New Zealand 100 Registrant
McCann-Erickson Limited New Zealand 100 Registrant
Universal Media Limited New Zealand 100 McCann-Erickson Limited
PAGE
McCann-Erickson Belfast Limited Northern Ireland 100 McCann-Erickson United Kingdom Limited
JBR Reklamebyra A/S Norway 100 McCann-Erickson A/S
JBR Filialen A/S Norway 100 JBR Reklamebyra A/S
JBR Film A/S Norway 100 JBR Reklamebyra A/S
JBR Invest A/S Norway 100 JBR Reklamebyra A/S
Lowe Norway A/S Norway 100 Lowe Scandinavia AB
McCann-Erickson A/S Norway 100 Registrant
McCann Production A/S Norway 100 McCann-Erickson A/S
Universal Media A/S Norway 100 McCann-Erickson A/S
McCann-Erickson de Panama, S.A. Panama 100 Registrant
Universal Ideas S.A. Panama 100 McCann-Erickson de Panama, S.A.
Conte/McCann-Erickson de Panama S.A. Panama 51 McCann-Erickson de Panama, S.A.
McCann-Erickson (Paraguay) Company Paraguay 100 McCann-Erickson (Paraguay) Co.
(Delaware)
Ammirati Puris Lintas China People's Republic 50 Registrant & Shanghai Bang Da
of China Advertising
McCann-Erickson Guangming Advertising People's Republic 51 McCann-Erickson Worldwide
Limited of China
McCann-Erickson Corporacion Publicidad Peru 100 Registrant
S.A.
McCann Group of Companies, Inc. Philippines 100 Registrant
ITI McCann-Erickson International Poland 50 McCann-Erickson International
Advertising GmbH
Lintas Warszawa Poland 100 Ammirati Puris Lintas Deutschland GmbH
Ammirati Puris Lintas, Ltda. Portugal 100 Ammirati Puris Lintas Holding B.V.
Fremantle Portugal, Producoes Televisas, Portugal 100 Talbot Television Limited (95%)
LDA and Fremantle International Inc. (5%)
Inciativas De Meios-Actividades Portugal 98 Ammirati Puris Lintas, Ltda.
Publicitarias, Limitada
Lowe Portuguesa Publicidade a Estudios de Portugal 100 Lowe Worldwide Holdings B.V.
Mercado, S.A.
McCann-Erickson/Portugal Limitada Portugal 100 Business Science Research
Corporation
PAGE
Universal Media Publicidade, Limitada Portugal 100 McCann-Erickson/Portugal Limitada
Lintas Puerto Rico, Inc. Puerto Rico 100 Ammirati Puris Lintas, Inc.
McCann-Erickson, Limited Republic of 100 Registrant
Ireland
McCann-Erickson Moscow Russia 100 McCann-Erickson International
GmbH
McCann-Erickson Scotland Limited Scotland 100 McCann-Erickson United Kingdom
Limited
Lintas Worldwide (Singapore) Private Singapore 100 Registrant
Limited
Ammirati Puris Lintas (Proprietary) South Africa 100 Ammirati Puris Lintas Holding
Limited B.V. (76%) Registrant (24%)
McCann Cape Town (Proprietary) Limited South Africa 100 McCann Group
McCann Durban (Proprietary) Limited South Africa 100 McCann Group
McCann-Erickson (Singapore) Private Singapore 100 Registrant
Limited
McCann-Erickson South Africa (Pty.) South Africa 100 Registrant
Ltd. ("McCann Group")
McCann International (Proprietary) South Africa 100 McCann Group
Limited
McCann South Africa Proprietary Limited South Africa 100 McCann-Erickson Johannesburg
(Proprietary) Limited
McCann-Erickson Johannesburg South Africa 100 McCann-Erickson South Africa
(Proprietary) Limited (Proprietary) Limited
McCannix Proprietary Limited South Africa 100 McCann-Erickson Johannesburg
(Proprietary) Limited
Media Initiative (Proprietary) Limited South Africa 100 Ammirati Puris Lintas (Proprietary)
Limited
Media Solutions (Proprietary) Limited South Africa 100 McCann Group
Universal Media (Proprietary) Limited South Africa 100 McCann Group
Lintas Korea, Inc. South Korea 100 Registrant
McCann-Erickson, Inc. South Korea 51 McCann-Erickson Marketing, Inc.
Ammirati Puris Lintas S.A. Spain 100 Ammirati Puris Lintas Holding B.V.
Cinestar S.A. Spain 100 Clarin, S.A.
Clarin, S.A. Spain 100 McCann-Erickson S.A.
PAGE
Encuadre S.A. Spain 67 Clarin, S.A.
Events & Programming International Spain 100 Registrant
Consultancy, S.A. (EPIC)
Fremantle de Espana S.L. Spain 100 Fremantle International Inc.
Iniciativas de Medios, S.A. Spain 100 Ammirati Puris Lintas, S.A.
Lowe Dospordos S.A. Spain 83.7 Lowe Worldwide Holdings B.V.
Lowe MBAC S.A. Spain 100 Lowe Worldwide Holdings B.V.
Lowe RZR S.A. Spain 80 Lowe International Holdings B.V.
McCann-Erickson S.A. Spain 100 Registrant
McCann-Erickson Barcelona S.A. Spain 100 Registrant
Pool Media International S.A. Spain 100 Registrant
Universal Media S.A. Spain 100 McCann-Erickson S.A.
AB Ammirati Puris Lintas Shoppen Sweden 100 Ammirati Puris Lintas AB
Ammirati Puris Lintas AB Sweden 100 Ammirati Puris Lintas Holding B.V.
Interpublic Svenska AB Sweden 100 Lowe International Holdings B.V.
Lost Forever AB Sweden 100 Lowe Scandinavia AB
Lowe Brindfors AB Sweden 100 Lowe Scandinavia AB
Lowe Brindfors Annonsbyra AB Sweden 100 Lowe Scandinavia AB
Lowe Scandinavia AB Sweden 100 Interpublic Svenska AB
McCann-Erickson AB Sweden 100 Registrant
Message Plus Media Sweden 85 Lowe Scandinavia AB
PMI Initiative Universal Media AB Sweden 100 Ammirati Puris Lintas AB (50%)
McCann-Erickson AB (50%)
Ronnberg & Co. A.B. Sweden 100 McCann-Erickson AB
Swedish Media Exchange SMX AB Sweden 100 Lowe Scandinavia AB
Werne & Co. Annonsbyra I Malmoe AB Sweden 100 McCann-Erickson AB
Werne & Co. Annonsbyra AB Sweden 100 McCann-Erickson AB
Fisch Meier Direkt Switzerland Switzerland 100 Ammirati Puris Lintas Deutschland GmbH
Get Neue Gestaltungstechnik AG Switzerland 80 Bosch & Butz Werbeagenter
Lintas A.G. Switzerland 100 Ammirati Puris Lintas Holding B.V.
Initiative Media Switzerland Switzerland 100 Ammirati Puris Lintas Holding B.V.
McCann-Erickson S.A. Switzerland 100 Registrant
PAGE
McCann-Erickson Services S.A. Switzerland 100 Registrant
P.C.M. Marketing AG Switzerland 100 Ammirati Puris Lintas Deutschland GmbH
Pool Media-PMI S.A. Switzerland 100 Registrant
Unimedia S.A. Switzerland 100 Registrant
Werbeagenter AG Switzerland 80 Lowe International Holdings B.V.
Lintas Taiwan Limited Taiwan 100 Registrant
McCann-Erickson Communications Group Taiwan 100 Registrant
Co.Ltd.
Lintas (Thailand) Ltd. Thailand 80 Registrant
McCann-Erickson (Thailand) Ltd. Thailand 100 Registrant
Lintas Gulf Limited Tortola 51 Ammirati Puris Lintas Worldwide Limited
McCann-Erickson (Trinidad) Limited Trinidad 100 Registrant
Grafika Lintas Reklamcilik A.S. Turkey 51 Registrant
Initiative Media Istanbul Turkey 70 Registrant
Link Ajams Limited Sirketi Turkey 100 PARS
McCann-Direct Reklam Tanitama Turkey 100 PARS
Servisleri A.S.
PARS McCann-Erickson Reklamcilik Turkey 100 Registrant
A.S.("PARS")
Universal Media Planlama Ve Dagitim Turkey 100 PARS
McCann-Erickson Publicidad De Venezuela 99.67 Registrant
Venezuela, S.A.
McCann-Erickson Payne, Golley Ltd. Wales 75.9 McCann-Erickson United Kingdom Limited
Lintas (Private) Limited Zimbabwe 80 Fieldplan Ltd.
A number of inactive subsidiaries and other subsidiaries, all of which considered in the aggregate as a single
subsidiary would not constitute a significant subsidiary, are omitted from the above list.
These subsidiaries normally do business under their official corporate names. International Business Services, Inc.
does business in Michigan under the name "McCann-I.B.S., Inc." and in New York under the name "McCann International
Business Services". Ammirati Puris Lintas, Inc. conducts business through its Ammirati Puris Lintas New York division.
McCann-Erickson conducts some of its business in the states of Kentucky and Michigan under the name "McGraphics".
McCann-Erickson USA, Inc. does business in Michigan under the name SAS and does business in Indiana, Michigan, New York,
Pennsylvania and Wisconsin under the name of McCann-Erickson Universal Group.
REPORT OF INDEPENDENT ACCOUNTANTS EXHIBIT 23
ON FINANCIAL STATEMENT SCHEDULES
To the Board of Directors of
The Interpublic Group of Companies, Inc.
Our audits of the consolidated financial statements referred to in
our report dated February 14, 1997 appearing in the 1996 Annual
Report to Stockholders of The Interpublic Group of Companies, Inc.
(which report and consolidated financial statements are
incorporated by reference in this Annual Report on Form 10-K) also
included an audit of the Financial Statement Schedules listed in
Item 14 (a) of this Form 10-K. In our opinion, these Financial
Statement Schedules present fairly, in all material respects, the
information set forth therein when read in conjunction with the
related consolidated financial statements.
PRICE WATERHOUSE LLP
New York, New York
February 14, 1997
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the
Registration Statements on Form S-8 of The Interpublic Group of
Companies, Inc. (the "Company"), of our report dated February 14,
1997, appearing in the 1996 Annual Report to Stockholders which is
incorporated in this Annual Report on Form 10-K: Registration
Statements No. 2-79071; No. 2-43811; No. 2-56269; No. 2-61346; No.
2-64338; No. 2-67560; No. 2-72093; No. 2-88165; No. 2-90878,
No. 2-97440 and No. 33-28143, relating variously to the Stock Option
Plan (1971), the Stock Option Plan (1981), the Stock Option Plan
(1988) and the Achievement Stock Award Plan of the Company;
Registration Statements No. 2-53544; No. 2-91564, No. 2-98324, No.
33-22008, No. 33-64062 and No. 33-61371, relating variously to the
Employee Stock Purchase Plan (1975), the Employee Stock Purchase
Plan (1985) and the Employee Stock Purchase Plan of the Company
(1995); Registration Statements No. 33-20291 and No. 33-2830
relating to the Management Incentive Compensation Plan of the
Company; Registration Statements No. 33-5352, No. 33-21605, 333-4747
and 333-23603 relating to the 1986 Stock Incentive Plan, the 1986
United Kingdom Stock Option Plan and the 1996 Stock Incentive Plan,
of the Company; and Registration Statements No. 33-10087 and
No. 33-25555 relating to the Long-Term Performance Incentive Plan of
the Company. We hereby consent to the incorporation by reference in
the Prospectuses constituting part of the Registration Statements on
Form S-3 (No. 33-37346 and 333-22899) of The Interpublic Group of
Companies, Inc. of our report dated February 14, 1997 appearing in
the 1996 Annual Report to Stockholders which is incorporated in this
Annual Report on Form 10-K. We also consent to the incorporation by
reference of our report on the Financial Statement Schedules, which
appears above.
PRICE WATERHOUSE LLP
New York, New York
March 26, 1997 F-2
POWER OF ATTORNEY Exhibit No. 24
KNOW ALL MEN BY THESE PRESENTS, that each individual
whose signature appears below constitutes and appoints PHILIP H.
GEIER, JR., EUGENE P. BEARD, JOSEPH STUDLEY and NICHOLAS J.
CAMERA, and each of them, as true and lawful attorneys-in-fact
and agents with full power of substitution and resubstitution,
for him, and in his name, place and stead, in any and all
capacities, to sign the Report on Form 10-K for the year ended
December 31, 1996, for The Interpublic Group of Companies, Inc.,
S.E.C. File No. 1-6686, and any and all amendments and
supplements thereto and all other instruments necessary or
desirable in connection therewith, and to file the same, with all
exhibits thereto, and all documents in connection therewith, with
the Securities and Exchange Commission and the New York Stock
Exchange, granting unto said attorneys-in-fact and agents, and
each of them, full power and authority to do and perform each and
every act and thing requested and necessary to be done in and
about the premises as fully to all intents and purposes as he
might do or could do in person, hereby ratifying and confirming
all that said attorney-in-fact and agents or any of them or their
or his substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
Dated: March 20, 1997
Philip H. Geier, Jr. Frank B. Lowe
Philip H. Geier, Jr. Frank B. Lowe
Eugene P. Beard Leif H. Olsen
Eugene P. Beard Leif H. Olsen
Frank J. Borelli Martin F. Puris
Frank J. Borelli Martin F. Puris
Reginald K. Brack Allen Questrom
Reginald K. Brack Allen Questrom
Jill M. Considine J. Phillip Samper
Jill M. Considine J. Phillip Samper
John J. Dooner, Jr. Joseph J. Sisco
John J. Dooner, Jr. Joseph J. Sisco
PAGE
THE INTERPUBLIC GROUP OF COMPANIES, INC.
Certified Resolutions
I, Nicholas J. Camera, Secretary of The Interpublic
Group of Companies, Inc. (the "Corporation"), hereby certify that
the resolutions attached hereto were duly adopted on March 20,
1997 by the Board of Directors of the Corporation and that such
resolutions have not been amended or revoked.
WITNESS my hand and the seal of the Corporation this
20th day of March, 1997.
Nicholas J. Camera
Nicholas J. Camera
PAGE
THE INTERPUBLIC GROUP OF COMPANIES, INC.
MEETING OF THE BOARD OF DIRECTORS
Resolutions re Form 10-K
RESOLVED, that the Chairman of the Board and President
and the Vice Chairman-Finance and Operations of the Corporation
be, and each of them hereby is, authorized to execute and deliver
on behalf of the Corporation an annual report on Form 10-K for
the year ended December 31, 1996, in the form presented to this
meeting with such changes therein as either of them with the
advice of the General Counsel shall approve; and further
RESOLVED, that the Chairman of the Board and President
in his capacity as Chief Executive Officer, the Vice
Chairman-Finance and Operations in his capacity as Chief
Financial Officer, and the Vice President and Controller in his
capacity as Chief Accounting Officer of the Corporation be, and
each of them hereby is, authorized to execute such annual report
on Form 10-K; and further
RESOLVED, that the officers of the Corporation be and
each of them hereby is, authorized and directed to file such
annual report on Form 10-K, with all the exhibits thereto and any
other documents that may be necessary or desirable in connection
therewith, after its execution by the foregoing officers and by a
majority of this Board of Directors, with the Securities and
Exchange Commission and the New York Stock Exchange; and further
PAGE
RESOLVED, that the officers and directors of the
Corporation who may be required to execute such annual report on
Form 10-K be, and each of them hereby is, authorized to execute a
power of attorney in the form submitted to this meeting
appointing Philip H. Geier, Jr., Eugene P. Beard, Joseph Studley
and Nicholas J. Camera, and each of them, severally, his or her
true and lawful attorneys and agents to act in his or her name,
place and stead, to execute said annual report on Form 10-K and
any and all amendments and supplements thereto and all other
instruments necessary or desirable in connection therewith; and
further
RESOLVED, that the signature of any officer of the
Corporation required by law to affix his signature to such annual
report on Form 10-K or to any amendment or supplement thereto and
such additional documents as they may deem necessary or advisable
in connection therewith, may be affixed by said officer
personally or by any attorney-in-fact duly constituted in writing
by said officer to sign his name thereto; and further
RESOLVED, that the officers of the Corporation be, and
each of them hereby is, authorized to execute such amendments or
supplements to such annual report on Form 10-K and such
additional documents as they may deem necessary or advisable in
connection with any such amendment or supplement and to file the
foregoing with the Securities and Exchange Commission and the New
York Stock Exchange; and further
RESOLVED, that the officers of the Corporation be, and
each of them hereby is, authorized to take such actions and to
execute such other documents, agreements or instruments as may be
necessary or desirable in connection with the foregoing.
5
1,000
12-MOS
DEC-31-1996
DEC-31-1996
468,526
35,408
2,646,259
33,301
0
3,353,459
495,361
276,448
4,765,130
3,199,029
115,192
0
0
9,094
872,015
4,765,130
0
2,537,516
0
2,180,370
0
0
40,765
357,146
150,003
205,205
0
0
0
205,205
2.56
0
