As filed with the Securities Exchange Commission on August 13, 1999
Registration No. 333-84573
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------
PRE-EFFECTIVE AMENDMENT NO. 1 TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
THE INTERPUBLIC GROUP OF COMPANIES, INC.
(Exact name of registrant as specified in its charter)
----------------
Delaware 13-1024020
(State or other jurisdiction of (I.R.S. Employer
Incorporation or organization) Identification No.)
1271 Avenue of the Americas
New York, New York 10020
212-399-8000
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
NICHOLAS J. CAMERA, VICE PRESIDENT,
GENERAL COUNSEL & SECRETARY
THE INTERPUBLIC GROUP OF COMPANIES, INC.
1271 Avenue of the Americas
New York, New York 10020
212-399-8000
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
----------------
The Commission is requested to mail signed copies of all orders, notices
and communications to:
Theodore H. Paraskevas, Esq. James F. Munsell, Esq.
The Interpublic Group of Companies, Inc. Cleary, Gottlieb, Steen & Hamilton
1271 Avenue of the Americas One Liberty Plaza
New York, New York 10020 New York, New York 10006
212-399-8000 212-225-2000
----------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [_]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(b)
under the Securities Act, please check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its Effective Date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
PROSPECTUS
THE INTERPUBLIC GROUP OF
COMPANIES, INC.
$361,000,000 Principal Amount of
1.87% Convertible Subordinated Notes Due 2006
(Interest payable June 1 and December 1)
and
Shares of Common Stock Issuable Upon Conversion Thereof
----------------
This prospectus relates to (i) $361,000,000 aggregate principal amount at
maturity of 1.87% convertible subordinated notes due 2006 of The Interpublic
Group of Companies, Inc., a Delaware corporation, and (ii) the shares of common
stock, par value $.10 per share, of Interpublic issuable upon conversion of the
notes. The notes and the common stock that are offered for resale in this
prospectus are offered for the accounts of their current holders, to whom we
also refer as the selling securityholders. The notes were initially acquired
from Interpublic by Morgan Stanley & Co. Incorporated, Goldman, Sachs & Co. and
Salomon Smith Barney Inc., to whom we refer collectively as the initial
purchasers, in June 1999 in connection with a private offering.
The notes are convertible into common stock of The Interpublic Group of
Companies, Inc. at any time until June 1, 2006, unless The Interpublic Group of
Companies, Inc. has previously redeemed or otherwise purchased the notes, at a
conversion rate of 17.616 shares per $1,000 principal amount at maturity,
subject to adjustment in certain events. The common stock is listed on the New
York Stock Exchange under the symbol "IPG." On August 2, 1999, the last sale
price of the common stock as reported on the New York Stock Exchange Composite
Tape was $40 3/4 per share.
The notes are not redeemable by The Interpublic Group of Companies, Inc.
prior to June 5, 2002. Thereafter, the notes will be redeemable on at least 30
days' notice at the option of The Interpublic Group of Companies, Inc., in whole
or in part at any time, at the redemption prices set forth in "Description of
the Notes--Optional Redemption by Interpublic", together with accrued and unpaid
interest, in each case to the redemption date. The notes may also be redeemed at
the option of the holder if there is a Fundamental Change (as defined herein) at
the redemption prices set forth in "Description of the Notes--Redemption at
Option of the Holder", together with accrued and unpaid interest, to the date of
purchase.
The notes are general, unsecured obligations of The Interpublic Group of
Companies, Inc., subordinated in right of payment to all senior debt of The
Interpublic Group of Companies Inc., and are subordinated by operation of law to
all liabilities (including trade payables) of its subsidiaries. At June 30,
1999, The Interpublic Group of Companies, Inc. had senior debt outstanding in
the principal amount of $422 million, and its subsidiaries had $270 million of
debt outstanding which it did not guarantee.
The Interpublic Group of Companies, Inc. will not receive any of the
proceeds from sales of the notes or the shares by the selling securityholders.
The notes and the shares may be offered in negotiated transactions or otherwise
at market prices prevailing at the time of sale or at negotiated prices. The
selling securityholders may be deemed to be "underwriters" as defined in the
Securities Act of 1933, as amended. If any broker-dealers are used by the
selling securityholders, any commissions paid to broker-dealers and, if
broker-dealers purchase any notes or shares as principals, any profits received
by such broker-dealers on the resale of the notes or shares may be deemed to be
underwriting discounts or commissions under the Securities Act. In addition, any
profits realized by the selling securityholders may be deemed to be underwriting
commissions.
This prospectus does not constitute an offer to sell, or a solicitation of
an offer to buy, any of the securities offered hereby by any person in any
jurisdiction in which it is unlawful for such person to make such an offering or
solicitation.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is a
criminal offense.
August 13, 1999
TABLE OF CONTENTS
Page
----
Summary .......................................................................4
Use of Proceeds ...............................................................7
Common Stock Price Range and Dividend Policy ..................................7
Ratio of Earnings to Fixed Charges ............................................8
Selected Consolidated Financial Data ..........................................9
Business .....................................................................11
Description of the Notes .....................................................13
Description of Capital Stock .................................................24
Selling Securityholders ......................................................25
Certain Federal Income Tax Considerations ....................................25
Plan of Distribution .........................................................29
Legal Matters ................................................................30
Experts ......................................................................30
Where You Can Find More Information ..........................................30
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
We incorporate by reference into this prospectus the documents listed below
and any future filings we make with the SEC under Sections 13(a), 13(c), 14 or
15(d) of the Securities Exchange Act of 1934, as amended, including any filings
after the date of this prospectus, until we have sold all of the notes to which
this prospectus relates or the offering is otherwise terminated:
o Our Annual Report on Form 10-K for the year ended December 31, 1998
o Our Quarterly Report on Form 10-Q for the quarter ended March 31, 1999
o Our Quarterly Report on Form 10-Q for the quarter ended June 30, 1999
o Our Proxy Statement for the 1999 annual meeting of stockholders
The information incorporated by reference is an important part of this
prospectus. Any statement in a document incorporated by reference into this
prospectus will be deemed to be modified or superseded for purposes of this
prospectus to the extent a statement contained in (1) this prospectus or (2) any
other subsequently filed document that is incorporated by reference into this
prospectus modifies or supersedes such statement.
You may request a copy at no cost of any or all of the documents referred
to above other than those exhibits to such documents which are not specifically
incorporated by reference therein. Written or telephone requests should be
directed to Thomas J. Volpe, Senior Vice President-Financial Operations, The
Interpublic Group of Companies, Inc., 1271 Avenue of the Americas, New York, New
York 10020; telephone number (212) 399-8000.
CAUTIONARY STATEMENT REGARDING FORWARD LOOKING STATEMENTS
This prospectus, including the documents incorporated into it by reference,
contains forward-looking statements within the meaning of the federal securities
laws, including statements about our plans, intentions and current expectations
and trends affecting our business. We have identified certain important factors
that may cause actual results to differ materially from those contained in such
forward-looking statements. These factors include the effect of national and
regional economic conditions, our ability to attract new clients and retain
existing clients, the financial success of our clients, other developments
effecting our clients and developments from changes in the regulatory and legal
environment for advertising agencies around the world. We undertake no
obligation to update any forward-looking statement, whether as a result of new
information, future events or otherwise.
In making an investment decision, you must rely on your own examination of
The Interpublic Group of Companies, Inc. and the terms of the offering made in
this prospectus, including the merits and risks involved. The securities offered
by this prospectus have not been recommended by any federal or state securities
commission or regulatory authority. Furthermore, these authorities have not
confirmed the accuracy or determined the adequacy of this document. Any
representation to the contrary is a criminal offense. The notes and shares of
common stock issuable upon conversion of the notes may not be transferred or
resold except as permitted under the Securities Act or an exemption therefrom
and applicable state securities laws. You should be aware that you may be
required to bear the financial risks of this investment for an indefinite period
of time.
Unless the context otherwise requires, "Interpublic" means The Interpublic
Group of Companies, Inc., and "the company", "we", "us" or "our" means
Interpublic and its subsidiaries. Interpublic is a trademark of Interpublic. All
other trademarks or trade names referred to herein are the property of their
respective owners.
SUMMARY
This summary highlights some information from this prospectus, and it may
not contain all of the information that is important to you. It is qualified in
its entirety by the more detailed information and financial statements,
including the notes to the financial statements, included or incorporated by
reference in this prospectus. You should read the full text of, and consider
carefully the more specific details contained in, this prospectus, before
investing in the notes.
The Interpublic Group of Companies, Inc. was incorporated in Delaware in
September 1930 under the name of McCann-Erickson Incorporated, as successor to
the advertising agency business founded in 1902 by A.W. Erickson and in 1911 by
Harrison K. McCann. The Interpublic Group of Companies, Inc. has operated under
the Interpublic name since January 1961.
For the twelve months ended June 30, 1999, we reported total gross income
of $4.2 billion, net income of $337.8 million and net income per share (basic)
of $1.23.
Our Advertising Businesses
Our primary business is the advertising agency business. We conduct this
business globally using the three advertising agency systems noted below plus a
number of stand-alone local agencies:
o McCann-Erickson WorldGroup
o Ammirati Puris Lintas
o The Lowe Group
The principal functions of our advertising agencies are to plan and create
advertising programs for their clients and to place advertising in various media
such as television, cinema, radio, magazines, newspapers, direct mail, outdoor
and interactive electronic media. Our advertising agencies develop a
communications strategy and then create an advertising program, within the
limits imposed by the client's advertising budget, and place orders for space or
time with media that have been selected. Planning advertising programs involves:
o analyzing the market for the particular product or service
o creating the appropriate advertising campaign to convey the agreed
upon benefit or message
o choosing the appropriate media to reach the desired market most
efficiently
Other Businesses and Activities
We conduct other businesses closely related to our advertising business, in
part through our ownership of companies as noted below:
o media buying through Western Initiative Media Worldwide and its
affiliates
o direct and promotional marketing through DraftWorldwide
o global public relations through International Public Relations
o multinational sports and event marketing through Octagon
We also conduct other related activities within the areas of "marketing
communications" that include:
o brand equity and corporate identity o sales meetings and events
services
o graphic design and interactive services o sales promotion
o management consulting and market research o other related specialized marketing and
communications services
Our principal executive offices are located at 1271 Avenue of the Americas,
New York, NY 10020, telephone (212) 399-8000.
THE OFFERING
Securities Offered ............... $361,000,000 principal amount at maturity of
1.87% Convertible Subordinated Notes due 2006
previously issued in a private offering.
Such shares of common stock as may be issued
upon conversion of the notes.
Issue Price ...................... 83.018% plus accrued interest, if any, from
the date of issue.
Interest ......................... 1.87% per annum on the principal amount,
payable semiannually in arrears in cash on
June 1 and December 1 of each year, beginning
December 1, 1999.
Yield to Maturity of Notes ....... 43/4% per annum (calculated on a semi-annual
basis giving effect both to accrued original
issue discount and to accrued interest)
calculated from June 1, 1999.
Conversion ....................... You may convert each note into common stock
at any time until June 1, 2006, unless we
have previously redeemed or otherwise
purchased the notes. The conversion rate is
17.616 shares of common stock per $1,000
principal amount at maturity of notes. The
conversion rate will not be adjusted for
accrued original issue discount or interest,
but will be adjusted if certain events
affecting the common stock occur. Upon
conversion, you will not receive any cash
payment representing accrued original issue
discount or interest.
Subordination .................... The notes will be subordinated in right of
payment to all of our existing and future
Senior Debt (as defined herein) and to all
debt and other liabilities of our
subsidiaries. At June 30, 1999, we had Senior
Debt outstanding in the principal amount of
$422 million, and our subsidiaries had $270
million of debt outstanding which we did not
guarantee. The indenture does not limit the
amount of debt, including Senior Debt, that
we may incur, as more fully described in
"Description of the Notes--Subordination of
Notes."
Original Issue Discount .......... Each note is being offered at an original
issue discount for federal income tax
purposes equal to the difference between the
principal amount at maturity of the note and
its issue price. You should be aware that
accrued original issue discount will be
includable periodically in your gross income
for federal income tax purposes before
conversion, redemption, other disposition or
maturity of your notes, whether or not those
notes are ultimately converted, redeemed,
sold (to us or otherwise) or paid at
maturity.
Sinking Fund ..................... None.
Optional Redemption .............. We may redeem any of the notes on or after
June 5, 2002 by giving you at least 30 days'
notice. We may redeem the notes either in
whole or in part at the redemption prices set
forth in "Description of the Notes--Optional
Redemption by Interpublic", together with
accrued and unpaid interest.
Fundamental Change ............... If a Fundamental Change (as described under
"Description of the Notes--Redemption at
Option of the Holder") occurs before June 1,
2006, you may require us to purchase all or
part of your notes at the redemption prices
set forth in "Description of the
Notes--Redemption at Option of the Holder",
together with accrued and unpaid interest to
the date of purchase.
Use of Proceeds .................. We will not receive any proceeds from the
sale by the selling securityholders of the
notes or common stock.
Registration Rights .............. We have agreed to use reasonable efforts to
keep effective a shelf registration
statement, of which this prospectus forms a
part, covering the resale of the notes and
the underlying common stock until either of
the following has occurred:
o all securities covered by the
registration statement have been sold,
or
o the expiration of the holding period
applicable under Rule 144(k) under the
Securities Act, or any successor
provision.
NYSE Symbol ...................... IPG.
USE OF PROCEEDS
Interpublic will not receive any proceeds from the sale by the selling
securityholders of the notes or the shares.
COMMON STOCK PRICE RANGE AND DIVIDEND POLICY
Interpublic's common stock is listed on the New York Stock Exchange under
the symbol "IPG." The table below shows the range of reported last sale prices
on the New York Stock Exchange Composite Tape for Interpublic's common stock for
the periods indicated and the dividends declared per share on the common stock
for such periods. On May 17, 1999, Interpublic announced:
o a $.085 per share cash dividend for the second quarter of 1999 payable
on June 15, 1999 to stockholders of record on May 27, 1999
o a two-for-one stock split payable in the form of a stock dividend on
July 15, 1999 to stockholders of record on June 29, 1999
Sales prices and per share amounts have been adjusted to reflect this
two-for-one stock split.
Common Cash Dividends
Stock Price Declared Per Share
----------- ------------------
High Low
---- ---
Year ended December 31, 1997:
First Quarter $18 7/24 $16 1/8 $.0565
Second Quarter 20 17/24 17 13/24 .065
Third Quarter 25 11/16 20 7/16 .065
Fourth Quarter 26 9/32 22 5/8 .065
Year ended December 31, 1998:
First Quarter $31 5/16 $23 27/32 $.065
Second Quarter 32 1/4 27 11/16 .075
Third Quarter 32 7/16 26 1/8 .075
Fourth Quarter 39 7/8 23 1/2 .075
Year ended December 31, 1999:
First Quarter $40 $34 7/8 $.075
Second Quarter 43 5/16 34 19/32 .085
Third Quarter (through August 2, 1999) 44 1/16 40 11/16 .085
On August 2, 1999, the last sale price of our common stock, as reported on
the New York Stock Exchange Composite Tape, was $40 3/4 per share.
We are not aware of any restrictions on our present or future ability to
pay dividends. However, in connection with certain borrowing facilities entered
into by Interpublic and its subsidiaries, we are subject to certain restrictions
on the ratio of cash flow to consolidated borrowings, the ratio of consolidated
borrowings to net worth and the minimum amount of net worth. Any future dividend
payments will be made at the discretion of Interpublic's board of directors.
RATIO OF EARNINGS TO FIXED CHARGES
Six Months
Year Ended December 31, Ended June 30,
------------------------------------------------ ---------------
1994 1995 1996 1997 1998 1998 1999
---- ---- ---- ---- ---- ---- ----
Ratio of earnings to fixed charges 3.29x 3.84x 4.8x 4.5x 5.4x 5.61x 5.56x
The ratio of earnings to fixed charges is computed by dividing (a) earnings
before taxes adjusted for fixed charges, minority interest and capitalized
interest net of amortization by (b) fixed charges, which includes interest
expense and capitalized interest incurred, plus the portion of interest expense
under operating leases deemed by Interpublic to be representative of the
interest factor, plus amortization of debt issuance costs.
SELECTED CONSOLIDATED FINANCIAL DATA
The following selected consolidated financial data are derived from audited
financial statement information for the years ended December 31, 1994 through
December 31, 1998 and should be read in conjunction with our consolidated
financial statements and related notes contained in our annual report on Form
10-K for the year ended December 31, 1998. All periods prior to 1998 have been
restated to reflect the aggregate effect of acquisitions accounted for as
poolings of interests. In addition all per share data has been adjusted to
reflect the two for one stock split effective July 15, 1999.
The financial data for the three month periods ended March 31, 1998 and
March 31, 1999 are derived from unaudited interim financial statements for those
periods and should be read in conjunction with our quarterly report on Form 10-Q
for the period ended March 31, 1999. In the opinion of Interpublic's management,
all adjustments, consisting only of normal recurring adjustments, necessary for
a fair presentation of those unaudited interim financial statements, have been
reflected therein. The results of operations for the three months ended March
31, 1999 are not necessarily indicative of results to be expected for the entire
year.
Three Months
Year Ended December 31, Ended March 31,
-------------------------------------------------------------- -------------------
1994 1995 1996 1997 1998 1998 1999
---- ---- ---- ---- ---- ---- ----
(in thousands, except per share and ratio data)
Statement of Operations Data:
Gross income.................. $ 2,350,809 $ 2,606,467 $ 2,983,899 $ 3,482,384 $ 3,968,728 $ 831,183 $ 925,080
Operating expenses............ 2,059,233 2,257,138 2,558,336 2,988,532 3,347,158 752,956 830,131
Restructuring charges......... 48,715 -- -- -- -- -- --
Write-down of goodwill
and other related assets... -- 38,687 -- -- -- -- --
Special compensation charge... -- -- -- 32,229 -- -- --
Interest expense.............. 41,500 47,940 51,695 57,793 58,699 12,801 13,945
Provision for income taxes.... 92,311 126,537 156,783 186,246 232,005 25,498 33,618
Income before effect of
accounting change.......... 108,767 134,311 214,619 200,378 309,905 37,739 44,785
----------- ----------- ----------- ----------- ----------- --------- ---------
Effect of accounting change (1) (34,325) -- -- -- -- -- --
----------- ----------- ----------- ----------- ----------- --------- ---------
Net income.................... $ 74,442 $ 134,311 $ 214,619 $ 200,378 $ 309,905 $ 37,739 $ 44,785
=========== =========== =========== =========== =========== ========= =========
Per Share Data:
Basic
Income before effect of
accounting changes......... $ 0.43 $ 0.53 $ 0.82 $ 0.77 $ 1.14 $ 0.14 $ 0.17
Effect of accounting change (1) (0.13) -- -- -- -- -- --
----------- ----------- ----------- ----------- ----------- --------- ---------
Net income.................... $ 0.30 $ 0.53 $ 0.82 $ 0.77 $ 1.14 $ 0.14 $ 0.17
=========== =========== =========== =========== =========== ========= =========
Weighted Average Shares ...... 251,127,454 255,605,266 260,594,738 260,499,892 270,970,652 270,374,096 272,533,860
Diluted
Income before effect of
accounting changes......... $ 0.42 $ 0.51 $ 0.80 $ 0.74 $ 1.10 $ 0.13 $ 0.16
Effect of accounting change (1) (0.13) -- -- -- -- -- --
----------- ----------- ----------- ----------- ----------- --------- ---------
Net income.................... $ 0.29 $ 0.51 $ 0.80 $ 0.74 $ 1.10 $ 0.13 $ 0.16
=========== =========== =========== =========== =========== ========= =========
Weighted Average Shares ...... 257,917,658 263,609,246 277,177,616 277,619,064 281,050,544 280,477,976 283,349,544
Other Data:
Cash dividends................ $ 40,360 $ 46,124 $ 51,786 $ 61,242 $ 76,894 $ 17,015 $ 20,450
Cash dividends per share...... $ 0.18 $ 0.20 $ 0.22 $ 0.25 $ 0.29 $ 0.07 $ 0.08
Number of employees........... 21,400 23,700 25,500 31,100 34,200 32,000 34,800
Ratio of earnings to fixed
charges.................... 3.3x 3.8x 4.8x 4.5x 5.4x 3.3x 3.4x
December 31, March 31,
--------------------------------------------------- -----------------------
1994 1995 1996 1997 1998 1998 1999
---- ---- ---- ---- ---- ---- ----
(in thousands)
Consolidated Balance Sheet
Data:
Working Capital .............. $ 56,748 $ 101,833 $ 128,808 $ 216,367 $ 118,593 $ 227,990 $ 79,823
Total assets.................. 4,090,906 4,631,912 5,119,927 5,983,443 6,942,823 5,510,908 6,906,530
Long-term debt................ 320,902 361,945 418,618 519,036 506,618 454,671 551,499
Book value per share.......... 2.24 2.60 3.07 3.70 4.54 4.37 4.46
- -------------------------
(1) Reflects the cumulative effect of adopting SFAS 112, "Employers' Accounting
for Postemployment Benefits" in 1994.
BUSINESS
The Interpublic Group of Companies, Inc. was incorporated in Delaware in
September 1930 under the name of McCann-Erickson Incorporated, as successor to
the advertising agency business founded in 1902 by A.W. Erickson and in 1911 by
Harrison K. McCann. The Interpublic Group of Companies, Inc. has operated under
the Interpublic name since January 1961.
For the twelve months ended June 30, 1999, we reported total gross income
of $4.2 billion, net income of $337.8 million and net income per share (basic)
of $1.23.
Our Advertising Businesses
Our primary business is the advertising agency business. We conduct this
business globally using the three advertising agency systems noted below plus a
number of stand-alone local agencies:
o McCann-Erickson WorldGroup
o Ammirati Puris Lintas
o The Lowe Group
The principal functions of our advertising agencies are to plan and create
advertising programs for their clients and to place advertising in various media
such as television, cinema, radio, magazines, newspapers, direct mail, outdoor
and interactive electronic media. Our advertising agencies develop a
communications strategy and then create an advertising program, within the
limits imposed by the client's advertising budget, and place orders for space or
time with media that have been selected. Planning advertising programs involves:
o analyzing the market for the particular product or service
o creating the appropriate advertising campaign to convey the agreed
upon benefit or message
o choosing the appropriate media to reach the desired market most
efficiently
Other Businesses and Activities
We conduct other businesses closely related to our advertising business, in
part through our ownership of companies as noted below:
o media buying through Western Initiative Media Worldwide and its
affiliates
o direct and promotional marketing through DraftWorldwide
o global public relations through International Public Relations
o multinational sports and event marketing through Octagon
We also conduct other related activities within the areas of "marketing
communications" that include:
o brand equity and corporate identity services
o graphic design and interactive services
o management consulting and market research
o sales meetings and events
o sales promotion
o other related specialized marketing and communications services
DESCRIPTION OF THE NOTES
Interpublic issued the notes under an indenture dated as of June 1, 1999,
between Interpublic and The Bank of New York, as trustee. You may request a copy
of the indenture and the registration rights agreement, dated as of June 1, 1999
between Interpublic and Morgan Stanley & Co. Incorporated, Goldman, Sachs & Co.,
and Salomon Smith Barney Inc. from the trustee.
As used throughout this prospectus and in this section, "Description of the
Notes", "Interpublic" refers only to The Interpublic Group of Companies, Inc.
and not to any of its subsidiaries.
The following description is a summary of the material provisions of the
notes and the indenture. It does not purport to be complete and is subject to,
and is qualified in its entirety by reference to, all the provisions of the
notes and the indenture, including the definitions of certain terms which are
not otherwise defined in this prospectus. Wherever particular provisions or
defined terms of the indenture (or of the form of note which is a part of the
indenture) are referred to, those provisions or defined terms are incorporated
in this prospectus by reference.
General
The notes represent unsecured general obligations of Interpublic
subordinate in right of payment to certain other obligations of Interpublic as
described under "--Subordination of Notes" and convertible into common stock as
described under "--Conversion of Notes." The notes are limited to $361,000,000
(including the initial purchasers' over-allotment option, which they have
exercised in full) aggregate principal amount at maturity, were issued only in
denominations of $1,000 or any multiple thereof and will mature on June 1, 2006
unless earlier redeemed at the option of Interpublic or at the option of the
holder upon a Fundamental Change (as defined below) or converted prior thereto.
The indenture does not contain any financial covenants or restrictions on
the payment of dividends, the incurrence of Senior Debt (as defined below) or
the issuance or repurchase of securities of Interpublic. The indenture contains
no covenants or other provisions to afford protection to holders of the notes in
the event of a highly leveraged transaction or a change in control of
Interpublic except to the extent described under "--Redemption at Option of the
Holder."
The notes bear interest at the annual rate set forth on the cover page
hereof from June 1, 1999, payable semi-annually in arrears on June 1 and
December 1, commencing on December 1, 1999 to holders of record at the close of
business on the preceding May 18 and November 17, respectively, except:
o the interest payment upon redemption (unless the date of redemption is
an interest payment date) will be payable to the person to whom
principal is payable, as set forth in the next sentence
In the case of any note (or portion thereof) which is converted into common
stock of Interpublic during the period from (but excluding) a record date to
(but excluding) the next succeeding interest payment date either:
o if such note (or portion thereof) has been called for redemption on a
redemption date which occurs during such period, or is to be redeemed
in connection with a Fundamental Change on a Fundamental Change
Redemption Date (as defined below) which occurs during such period,
Interpublic shall not be required to pay interest on such interest
payment date in respect of any such note (or portion thereof), or
o if otherwise, any note (or portion thereof) submitted for conversion
during such period shall be accompanied by funds equal to the interest
payable on such succeeding interest payment date on the principal
amount at maturity so converted unless at the time of conversion there
exists a default in the payment of interest on the notes (see
"--Conversion of Notes" below)
Interest may, at Interpublic's option, be paid either:
o by check mailed to the address of the person entitled thereto as it
appears in the note register, or
o by transfer to an account maintained by such person located in the
United States
However, payments to The Depository Trust Company, New York, New York,
which we refer to as DTC, will be made by wire transfer of immediately available
funds to the account of DTC or its nominee. Interest will be computed on the
basis of a 360-day year composed of twelve 30-day months.
The notes are being offered at a substantial discount from their principal
amount at maturity. For further discussion, see "Certain Federal Income Tax
Considerations." The calculation of the accrual of original issue discount (the
difference between the issue price and the principal amount at maturity of a
note) in the period during which a note remains outstanding will be on a
semi-annual basis using a 360-day year composed of twelve 30-day months; such
accrual will commence on the first date of issuance of any of the notes.
Maturity, conversion or redemption of a note will cause original issue discount
and interest, if any, to cease to accrue on such note under the terms and
subject to the conditions of the indenture. Interpublic may not reissue a note
that has matured or been converted, redeemed or otherwise canceled (except for
registration of transfer, exchange or replacement thereof).
Form, Denomination and Registration
Global Note, Book-Entry Form
Notes are issuable in fully registered form without coupons, in
denominations of $1,000 principal amount and multiples thereof. Notes sold by
the selling securityholders pursuant to the registration statement of which this
prospectus forms a part will be represented by global notes, except as set forth
below under "Certificated Notes." The global notes will be deposited with, or on
behalf of, DTC and registered in the name of Cede & Co. as DTC's nominee.
Beneficial interests in the global notes will be exchangeable for definitive
certificated notes only in accordance with the terms of the indenture.
DTC is a limited-purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Exchange Act. DTC
holds securities that its participants deposit with DTC. DTC also facilitates
the settlement among participants of securities transactions, such as transfers
and pledges, in deposited securities through electronic computerized book-entry
changes in participants' accounts, thereby eliminating the need for physical
movement of securities certificates. Direct participants include securities
brokers and dealers, banks, trust companies, clearing corporations, and certain
other organizations. DTC is owned by a number of its direct participants and by
the NYSE, the American Stock Exchange, Inc., and the NASD. Access to DTC's
system is also available to others such as securities brokers and dealers, banks
and trust companies that clear through or maintain a custodial relationship with
a direct participant, either directly or indirectly. The rules applicable to DTC
and its participants are on file with the SEC.
Purchases of interests in global notes under DTC's system must be made by
or through direct participants, which will receive a credit for the interest in
the global notes on DTC's records. The ownership interest of each actual
purchaser of each interest in the global notes (the "beneficial owner") is in
turn to be recorded on the direct and indirect participants' records. Beneficial
owners will not receive written confirmation from DTC of their purchase, but
beneficial owners are expected to receive written confirmations providing
details of the transaction, as well as periodic statements of their holdings,
from the direct or indirect participant through which the beneficial owner
entered into the transaction. Transfers of ownership interests in the global
notes are to be accomplished by entries made on the books of participants acting
on behalf of beneficial owners. Beneficial owners will not receive certificates
representing their ownership interests in global notes, except in the event that
use of the book-entry system for one or more global notes is discontinued.
To facilitate subsequent transfers, all global notes deposited by
participants with DTC are registered in the name of DTC's partnership nominee,
Cede & Co. The deposit of global notes with DTC and their registration in the
name of Cede & Co. effects no change in beneficial ownership. DTC has no
knowledge of the actual beneficial owners of the global notes; DTC's records
reflect only the identity of the direct participants to whose accounts such
global notes are credited, which may or may not be the beneficial owners. The
participants will remain responsible for keeping account of their holdings on
behalf of their customers.
Conveyance of notices and other communications by DTC to direct
participants, by direct participants to indirect participants, and by direct
participants and indirect participants to beneficial owners will be governed by
arrangements among them, subject to any statutory or regulatory requirements as
may be in effect from time to time.
Redemption notices will be sent to Cede & Co. If less than all of the
global notes are being redeemed, and unless otherwise notified by either us or
the trustee, DTC's practice is to determine by lot the amount of the interest of
each direct participant in such issue to be redeemed.
Neither DTC nor Cede & Co. will consent or vote with respect to global
notes. Under its usual procedures, DTC will mail an omnibus proxy to us as soon
as possible after the record date. The omnibus proxy assigns Cede & Co.'s
consenting or voting rights to those direct participants to whose accounts the
global notes are credited on the record date (identified in a listing attached
to the omnibus proxy).
Payment of interest on and the redemption price of the global notes will be
made to DTC. DTC's practice is to credit direct participants' accounts on the
payment date in accordance with their respective holdings shown on DTC's records
unless DTC has reason to believe that it will not receive payment on the payable
date. Payments by participants to beneficial owners will be governed by standing
instructions and customary practices as is the case with securities held for the
accounts of customers in bearer form or registered in "street name" and will be
the responsibility of such participant and not of DTC, any agents, or us,
subject to any statutory or regulatory requirements as may be in effect from
time to time. Payment of interest on and the redemption price of the global
notes to DTC is our responsibility, disbursement of such payments to direct
participants will be the responsibility of DTC, and disbursement of such
payments to the beneficial owners will be the responsibility of direct and
indirect participants.
A beneficial owner must give notice to elect to have its interest in the
global notes purchased or tendered, through its participant, to the paying
agent, and must effect delivery of this interest by causing the direct
participant to transfer the participant's interest in the global notes, on DTC's
records, to the paying agent. The requirement for physical delivery of global
notes in connection with a demand for purchase or a mandatory purchase will be
deemed satisfied when the ownership rights in the global notes are transferred
by direct participants on DTC's records.
DTC may discontinue providing its services as securities depositary with
respect to the global notes at any time by giving reasonable notice to us or to
our agents. Under such circumstances, or if DTC is at any time unable to
continue as depositary, and a successor depositary is not appointed by
Interpublic within 90 days, Interpublic will cause notes to be issued in
definitive form in exchange for the global notes.
DTC's management is aware that some computer applications, systems, and the
like for processing data, which we refer to collectively as systems, that are
dependent upon calendar dates, including dates before, on, and after January 1,
2000, may encounter "Year 2000 problems." DTC has informed its participants and
other members of the financial community that it has developed and is
implementing a program so that its systems, relating to the timely payment of
distributions (including principal and income payments) to securityholders,
book-entry deliveries, and settlement of trades within DTC, continue to function
appropriately. This program includes a technical assessment and a remediation
plan, each of which is complete. Additionally, DTC's plan includes a testing
phase, which is expected to be completed within appropriate time frames.
However, DTC's ability to perform properly its services is also dependent
upon other parties, including but not limited to issuers and their agents, as
well as third-party vendors from whom DTC licenses software and hardware, and
third-party vendors on whom DTC relies for information or the provision of
services, including telecommunication and electrical utility service providers,
among others. DTC has informed the financial community that it is contacting
(and will continue to contact) third-party vendors from whom DTC acquires
services to:
o impress upon them the importance of such services being Year 2000
compliant
o determine the extent of their efforts for Year 2000 remediation (and,
as appropriate, testing) of their services
In addition, DTC is in the process of developing such contingency plans as it
deems appropriate.
According to DTC, the foregoing information with respect to DTC has been
provided to the financial community for informational purposes only and is not
intended to serve as a representation, warranty, or contract modification of any
kind. The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that we believe to be reliable, but we take no
responsibility for the accuracy thereof.
Neither we, the trustee, any paying agent nor the registrar for the notes
will have any responsibility or liability for any aspect of the records relating
to or payments made on account of beneficial ownership interest in a global
security or for maintaining, supervising or reviewing any records relating to
such beneficial ownership interests.
Certificated Notes
Notes sold to institutional accredited investors will be issued in
definitive registered form and may not be represented by global notes.
Conversion of Notes
A holder may convert a note into common stock of Interpublic at any time
through the close of business on the final maturity date of the notes; provided
that if a note is called for redemption, the holder may convert such note only
until the close of business on the day prior to the redemption date. A note in
respect of which a holder is exercising its option to require redemption upon a
Fundamental Change may be converted only if such holder withdraws its election
to exercise its option in accordance with the terms of the indenture. A holder
may convert such holder's notes in part so long as such part is $1,000 principal
amount at maturity or an integral multiple thereof. If notes not called for
redemption are converted after a record date for the payment of interest and
prior to the next succeeding interest payment date, such notes must be
accompanied by funds equal to the interest payable on such succeeding interest
payment date on the principal amount at maturity so converted provided that no
such payment will be required if Interpublic exercises its rights to redeem the
notes or there shall exist at the time of conversion a default in the payment of
interest on the notes.
The current conversion rate is 17.616 shares of common stock per $1,000
principal amount at maturity of notes, subject to adjustment upon the occurrence
of certain events. A holder who would otherwise be entitled to a fractional
share of common stock shall receive cash equal to the then current market value
of such fractional share. On conversion of a note, a holder will not receive any
cash payment representing accrued original issue discount or accrued interest
thereon. Interpublic's delivery to the holder of the fixed number of shares of
common stock into which the note is convertible (together with the cash payment
in lieu of any fractional share of common stock) will be deemed to satisfy
Interpublic's obligation to pay the principal amount of the note including the
accrued original issue discount attributable to the period from the first date
of issuance of any of the notes to the date of surrender for conversion and
accrued interest thereon. Thus, the accrued original issue discount and accrued
interest are deemed to be paid in full rather than canceled, extinguished or
forfeited. The conversion rate will not be adjusted at any time during the term
of the notes for such accrued original issue discount or accrued interest.
To convert a note into shares of common stock, the holder of a note must:
o complete and manually sign the conversion notice on the back of the
note (or complete and manually sign a facsimile thereof) and deliver
such notice to the conversion agent
o surrender the note to the conversion agent
o if required, furnish appropriate endorsements and transfer documents
o if required, pay all transfer or similar taxes
o if required, pay funds equal to interest payable on the next interest
payment date
Pursuant to the indenture, the date on which all of the foregoing
requirements have been satisfied is the date of surrender for conversion.
The initial conversion rate is subject to adjustment under formulae as set
forth in the indenture in certain events, including:
(1) the issuance of common stock of Interpublic as a dividend or distribution
on the common stock;
(2) certain subdivisions and combinations of the common stock;
(3) the issuance to all holders of common stock of certain rights or warrants
to purchase common stock;
(4) the distribution to all holders of common stock of capital stock (other
than common stock), of evidences of indebtedness of Interpublic or of
assets (including securities, but excluding those rights, warrants,
dividends and distributions referred to in clause (3) above or paid in
cash);
(5) distributions consisting of cash, excluding any quarterly cash dividend on
the common stock to the extent that the aggregate cash dividend per share
of common stock in any quarter does not exceed the greater of (x) the
amount per share of common stock of the next preceding quarterly cash
dividend on the common stock to the extent that such preceding quarterly
dividend did not require an adjustment of the conversion rate pursuant to
this clause (5) (as adjusted to reflect subdivisions or combinations of the
common stock), and (y) 3.75% of the average of the last reported sales
price of the common stock during the ten trading days immediately prior to
the date of declaration of such dividend, and excluding any dividend or
distribution in connection with the liquidation, dissolution or winding up
of Interpublic. If an adjustment is required to be made as set forth in
this clause (5) as a result of a distribution that is a quarterly dividend,
such adjustment would be based upon the amount by which such distribution
exceeds the amount of the quarterly cash dividend permitted to be excluded
pursuant to this clause (5). If an adjustment is required to be made as set
forth in this clause (5) as a result of a distribution that is not a
quarterly dividend, such adjustment would be based upon the full amount of
the distribution;
(6) payment in respect of a tender offer or exchange offer by Interpublic or
any subsidiary of Interpublic for the common stock to the extent that the
cash and value of any other consideration included in such payment per
share of common stock exceeds the Current Market Price (as defined in the
indenture) per share of common stock on the trading day next succeeding the
last date on which tenders or exchanges may be made pursuant to such tender
or exchange offer; and
(7) payment in respect of a tender offer or exchange offer by a person other
than Interpublic or any subsidiary of Interpublic in which, as of the
closing date of the offer, the Board of Directors is not recommending
rejection of the offer. The adjustment referred to in this clause (7) will
only be made if the tender offer or exchange offer is for an amount which
increases the offeror's ownership of common stock to more than 25% of the
total shares of common stock outstanding, and if the cash and value of any
other consideration included in such payment per share of common stock
exceeds the Current Market Price per share of common stock on the trading
day next succeeding the last date on which tenders or exchanges may be made
pursuant to such tender or exchange offer. The adjustment referred to in
this clause (7) will not be made, however, if, as of the closing of the
offer, the offering documents with respect to such offer disclose a plan or
an intention to cause Interpublic to engage in a consolidation or merger of
Interpublic or a sale of all or substantially all of Interpublic's assets.
In the case of:
o any reclassification of the common stock, or
o a consolidation, merger or combination involving Interpublic or a sale
or conveyance to another person of the property and assets of
Interpublic as an entirety or substantially as an entirety
in each case as a result of which holders of common stock shall be entitled to
receive stock, other securities, other property or assets (including cash) with
respect to or in exchange for such common stock, the holders of the notes then
outstanding will generally be entitled thereafter to convert such notes into the
kind and amount of shares of stock, other securities or other property or assets
which they would have owned or been entitled to receive upon such
reclassification, change, consolidation, merger, combination, sale or conveyance
had such notes been converted into common stock immediately prior to such
reclassification, change, consolidation, merger, combination, sale or conveyance
assuming that a holder of notes would not have exercised any rights of election
as to the stock, other securities or other property or assets receivable in
connection therewith.
In the event of a taxable distribution to holders of common stock or in
certain other circumstances requiring conversion rate adjustments, the holders
of notes may, in certain circumstances, be deemed to have received a
distribution subject to United States federal income tax as a dividend; in
certain other circumstances, the absence of such an adjustment may result in a
taxable dividend to the holders of common stock.
Interpublic from time to time may, to the extent permitted by law, increase
the conversion rate by any amount for any period of at least 20 days, in which
case Interpublic shall give at least 15 days' notice of such increase if
Interpublic's board of directors has made a determination that such increase
would be in the best interests of Interpublic, which determination shall be
conclusive. Interpublic may, at its option, make such increases in the
conversion rate, in addition to those set forth above, as the board of directors
deems advisable to avoid or diminish any income tax to holders of common stock
resulting from any dividend or distribution of stock (or rights to acquire
stock) or from any event treated as such for income tax purposes.
No adjustment in the conversion rate will be required unless such
adjustment would require a change of at least one percent in the conversion rate
then in effect; provided that any adjustment that would otherwise be required to
be made shall be carried forward and taken into account in any subsequent
adjustment. Except as stated above, the conversion rate will not be adjusted for
the issuance of common stock or any securities convertible into or exchangeable
for common stock or carrying the right to purchase any of the foregoing.
Optional Redemption by Interpublic
No sinking fund is provided for the notes. Prior to June 5, 2002, the notes
will not be redeemable at the option of Interpublic. At any time on or after
such date, Interpublic may redeem the notes for cash in whole or in part at the
applicable redemption price together with accrued interest to, but excluding,
the date fixed for redemption; provided that any semi-annual payment of interest
becoming due on the date fixed for redemption shall be payable to the registered
holders of such notes on the relevant record date. Not less than 30 days' nor
more than 60 days' notice of redemption shall be given by mail to holders of
notes. In addition, the indenture provides that notice of the redemption will be
published in each of Bloomberg Business News, Dow Jones News (DJN) and Reuter
Financial Report in the City of New York; provided, however, that failure to
publish this notice will not prevent the optional redemption of the notes by
Interpublic. The notes will be redeemable in integral multiples of $1,000
principal amount at maturity.
The table below shows redemption prices of a note per $1,000 principal
amount at maturity, at June 5, 2002, at each June 1 thereafter prior to maturity
and at maturity on June 1, 2006, which prices reflect the accrued original issue
discount calculated to each such date. The redemption price of a note redeemed
between such dates would include an additional amount reflecting the additional
original issue discount accrued since the next preceding date in the table to
the actual redemption date.
Redemption Date (1) (2) (3)
- ---------------
Note Original Redemption
Issue Issue Price
Price Discount (1) + (2)
----- -------- ---------
June 5, 2002 ........................... $830.18 $ 66.49 $ 896.67
June 1, 2003 ........................... 830.18 90.18 920.36
June 1, 2004 ........................... 830.18 115.49 945.67
June 1, 2005 ........................... 830.18 142.02 972.20
June 1, 2006 ........................... 830.18 169.82 1,000.00
If less than all of the outstanding notes are to be redeemed, the trustee
shall select the notes to be redeemed in principal amounts of $1,000 or
multiples thereof by lot, pro rata or by another method the trustee considers
fair and appropriate. If a portion of a holder's notes is selected for partial
redemption and such holder converts a portion of such notes, such converted
portion shall be deemed to be of the portion selected for redemption.
Redemption at Option of the Holder
If a Fundamental Change (as defined below) occurs at any time prior to June
1, 2006, each holder shall have the right, at the holder's option, to require
Interpublic to redeem any or all of such holder's notes on the date (the
"Fundamental Change Redemption Date") that is 45 days after the date of
Interpublic's notice of such Fundamental Change. The notes will be redeemable in
multiples of $1,000 principal amount at maturity at their accreted value on the
Fundamental Change Redemption Date.
Interpublic shall redeem such notes at a price (the "Fundamental Change
Redemption Price") equal to the accreted value of the note to, but excluding,
the Fundamental Change Redemption Date. The Fundamental Change Redemption Price
is equal to:
o $830.18 if the Fundamental Change Redemption Date is June 1, 1999
o $851.17 if the Fundamental Change Redemption Date is June 1, 2000
o $873.16 if the Fundamental Change Redemption Date is June 1, 2001
o $896.20 if the Fundamental Change Redemption Date is June 1, 2002
o thereafter at the redemption price set forth under "--Optional
Redemption by Interpublic" which would be applicable to a redemption
at the option of Interpublic on a redemption date.
However, if the Fundamental Change Redemption Date falls between two of
these dates, the Fundamental Change Redemption Price will include an additional
amount reflecting the additional original issue discount accrued since the
preceding June 1 to the actual Fundamental Change Redemption Date. In each case,
Interpublic shall also pay accrued interest on the redeemed notes to, but
excluding, the Fundamental Change Redemption Date; provided that, if such
Fundamental Change Redemption Date is an interest payment date, then the
interest payable on such date shall be paid to the holder of record of the notes
on the relevant record date.
Interpublic is required to mail to all holders of record of the notes a
notice of the occurrence of a Fundamental Change and of the redemption right
arising as a result thereof on or before the tenth day after the occurrence of
such Fundamental Change. Interpublic is also required to deliver to the trustee
a copy of such notice. To exercise the redemption right, a holder of notes must
deliver, on or before the 30th day after the date of Interpublic's notice of a
Fundamental Change, written notice of the holder's exercise of such right,
together with the notes to be so redeemed, duly endorsed for transfer, to
Interpublic (or an agent designated by Interpublic for such purpose).
The term "Fundamental Change" means the occurrence of any transaction or
event in connection with which all or substantially all of Interpublic's common
stock shall be exchanged for, converted into, acquired for or constitute the
right to receive consideration (whether by means of an exchange offer,
liquidation, tender offer, consolidation, merger, combination, reclassification,
recapitalization or otherwise) which is not all or substantially all common
stock of a company listed (or, upon consummation or immediately following such
transaction or event, which will be listed) on a United States national
securities exchange or approved for quotation on the Nasdaq National Market or
any similar United States system of automated dissemination of quotations of
securities prices.
Interpublic will comply with the provisions of Rule 13e-4 and any other
tender offer rules under the Exchange Act which may then be applicable in
connection with the redemption rights of note holders in the event of a
Fundamental Change. The redemption rights of the holders of notes could
discourage a potential acquiror of Interpublic. The Fundamental Change
redemption feature, however, is not the result of management's knowledge of any
specific effort to obtain control of Interpublic by means of a merger, tender
offer, solicitation, or otherwise, or part of a plan by management to adopt a
series of anti-takeover provisions.
Interpublic, may, in the future, enter into certain transactions, including
certain recapitalizations of Interpublic, that would not constitute a
Fundamental Change, but that would increase the amount of indebtedness,
including Senior Debt, outstanding at such time. Further, payment of the
Fundamental Change Redemption Price on the notes may be subordinated to the
prior payment of Senior Debt as described under "--Subordination of Notes"
below. There are no restrictions in the indenture on the creation of additional
Senior Debt or other indebtedness. Under certain circumstances, the incurrence
of additional indebtedness could have an adverse effect on Interpublic's ability
to service its indebtedness, including the notes. If a Fundamental Change were
to occur, there can be no assurance that Interpublic would have sufficient funds
to pay the Fundamental Change Redemption Price for all notes tendered by the
holders thereof. A default by Interpublic on its obligations to pay the
Fundamental Change Redemption Price could result in acceleration of the payment
of other indebtedness of Interpublic at the time outstanding pursuant to
cross-default provisions.
Subordination of Notes
The payment of the principal of and premium, if any, and interest on the
notes is, to the extent set forth in the indenture, subordinated in right of
payment to the prior payment in full of all Senior Debt. Upon any payment or
distribution of assets to creditors upon any liquidation, dissolution, winding
up, reorganization, assignment for the benefit of creditors, marshalling of
assets or any bankruptcy, insolvency or similar proceedings of Interpublic, the
holders of all Senior Debt will first be entitled to receive payment in full of
all amounts due or to become due thereon before the holders of the notes will be
entitled to receive any payment in respect of the principal of or premium, if
any, or interest on the notes. In the event of the acceleration of the maturity
of any notes, the holders of all Senior Debt will first be entitled to receive
payment in full of all amounts due or to become due thereon before the holders
of the notes will be entitled to receive any payment in respect of the principal
of or premium, if any, or interest on the notes. No payments on account of
principal, premium, if any, or interest in respect of the notes may be made if
there shall have occurred and be continuing a default in any payment with
respect to Senior Debt, or an event of default with respect to any Senior Debt
permitting the holders thereof to accelerate the maturity thereof.
By reason of such subordination, in the event of insolvency, creditors of
Interpublic who are not holders of Senior Debt or of the notes may recover less,
ratably, than holders of Senior Debt and may recover more, ratably, than holders
of the notes. The notes are also subordinated by operation of law to all
liabilities (including trade payables) of Interpublic's subsidiaries.
"Senior Debt" is defined to mean the principal of and premium, if any, and
interest on the following, whether outstanding at the date of execution of the
indenture or thereafter incurred or created:
(a) indebtedness of Interpublic for money borrowed, or evidenced by a note
or similar instrument or written agreement given in connection with
the acquisition of any businesses, properties or assets, including
securities;
(b) indebtedness of Interpublic to banks or financial institution
evidenced by notes or other written obligations;
(c) indebtedness of Interpublic evidenced by notes, debentures, bonds or
other securities issued under the provisions of an indenture or
similar instrument;
(d) indebtedness of others of the kinds described in the preceding clauses
(a), (b) and (c) that Interpublic has assumed, guaranteed or otherwise
assured the payment thereof, directly or indirectly; and
(e) deferrals, renewals, extensions and refundings of, or bonds,
debentures, notes or other evidences of indebtedness issued in
exchange for, the indebtedness described in the preceding clauses (a)
through (d) whether or not there is any notice to or consent of the
holders of notes; except (1) indebtedness and advances among
Interpublic and its direct and indirect subsidiaries, (2) any
particular indebtedness, deferral, renewal, extension or refunding, if
it is expressly stated in the governing terms, or in the assumption or
guarantee, thereof that the indebtedness involved is not Senior Debt
and (3) Interpublic's 1.80% Convertible Subordinated Debentures due
2004.
At June 30, 1999, the aggregate principal amount of Senior Debt outstanding
was $422 million. Interpublic expects from time to time to incur additional
indebtedness constituting Senior Debt. The indenture does not prohibit or limit
the incurrence of additional Senior Debt.
Events of Default; Notice and Waiver
The indenture provides that if any Event of Default shall have occurred and
be continuing the trustee or the holders of not less than 25% in aggregate
principal amount at maturity of the notes then outstanding may declare due and
payable immediately the sum of the issue price plus accrued original issue
discount from the date of issue of the notes to the date of declaration and
accrued interest, but if Interpublic shall cure all defaults (except the
nonpayment of principal amount at maturity, issue price and accrued original
issue discount, redemption price, Fundamental Change Redemption Price and
interest which shall have become due by acceleration) and certain other
conditions are met, such declaration may be annulled and past defaults may be
waived by the holders of a majority in aggregate principal amount at maturity of
the notes then outstanding. In the case of certain events of bankruptcy or
insolvency, the issue price of the notes plus the original issue discount and
any interest accrued thereon to the occurrence of such event shall automatically
become and be immediately due and payable. Prior to any declaration accelerating
the maturity of the notes, under some circumstances, the holders of a majority
in aggregate principal amount at maturity of the outstanding notes may waive any
past default and its consequences. If the trustee so demands, interest shall
accrue and be payable upon a default in the payment of the principal amount at
maturity, issue price, accrued original issue discount, any redemption price or
Fundamental Change Redemption Price and any interest to the extent that payment
of such interest shall be legally enforceable.
Under the indenture, Events of Default are defined as:
o default in payment of the principal amount at maturity, issue price,
accrued original issue discount, redemption price or Fundamental
Change Redemption Price with respect to any note when such becomes due
and payable (whether or not payment is prohibited by the provisions of
the indenture)
o default for 30 days in payment of any installment of interest on the
notes
o failure by Interpublic to comply with any of its other agreements in
the notes or the indenture upon the receipt by Interpublic of notice
of such default by the trustee or by holders of not less than 25% in
aggregate principal amount at maturity of the notes then outstanding
and Interpublic's failure to cure such default within 45 days after
receipt by Interpublic of such notice, or
o certain events of bankruptcy or insolvency
The indenture provides that the trustee may withhold notice to the holders
of notes of any default (except in payment of the principal amount at maturity,
issue price, accrued original issue discount, redemption price, Fundamental
Change Redemption Price or interest on, the notes) if the trustee considers it
in the interest of the holders of the notes to do so.
Modification
The indenture contains provisions permitting Interpublic and the trustee,
with the consent of the holders of not less than a majority in aggregate
principal amount at maturity of the notes at the time outstanding, to modify the
indenture or any supplemental indenture or the rights of the holders of the
notes, except that no such modification shall:
o extend the fixed maturity of any note, reduce the rate or extend the
time of payment of interest thereon, change the rate of accrual or
extend the time of payment in connection with original issue discount,
reduce the principal amount at maturity thereof, reduce any amount
payable upon redemption thereof, change the obligation of Interpublic
to make redemption of any note upon the happening of any Fundamental
Change, impair or affect the right of a holder to institute suit for
the payment thereof, change the currency in which the notes are
payable, impair the right to convert the notes into common stock
subject to the terms set forth in the indenture or modify the
provisions of the indenture with respect to the subordination of the
notes in a manner adverse to the holders of the notes in any material
respect, without the consent of the holder of each note so affected,
or
o reduce the aforesaid percentage of notes the holders of which are
required to consent to any such modification, without the consent of
the holders of all the notes then outstanding
Registration Rights of the Noteholders and Holders of the Common Stock
Interpublic has filed with the SEC a shelf registration statement, of which
this prospectus is a part, covering resales by holders of the notes and the
common stock issuable upon conversion of the notes. Interpublic will use its
reasonable efforts to keep the registration statement effective until the
earlier of:
o the sale pursuant to the shelf registration statement of all the
securities registered thereunder
o the expiration of the holding period applicable to such securities
under Rule 144(k) under the Securities Act, or any successor provision
Interpublic will be permitted to suspend the use of this prospectus for a
period not to exceed 30 days in any three-month period, or not to exceed an
aggregate of 90 days in any 12-month period under certain circumstances relating
to pending corporate developments, public filings with the SEC and similar
events. Interpublic has agreed to pay predetermined liquidated damages to those
holders of notes and those holders of common stock issued upon conversion of the
notes who have requested to sell pursuant to the registration statement if the
registration statement is not timely filed or if the prospectus is unavailable
for periods in excess of those permitted above. Interpublic has further agreed,
if such failure to file or unavailability continues for an additional 30 day
period, to pay predetermined liquidated damages to all holders of notes and all
holders of common stock issued upon conversion of the notes, whether or not such
holder has requested to sell pursuant to the shelf registration statement. Such
predetermined liquidated damages shall be determined, in respect of any note, at
a rate equal to .5% of the accreted amount thereof and, in respect of any shares
of common stock, at a rate equal to .5% of the then applicable conversion price,
which equals the accreted amount of the notes divided by the conversion rate. A
holder who sells notes and common stock issued upon conversion of the notes
pursuant to the shelf registration statement generally will be required to be
named as a selling stockholder in the related prospectus, deliver a prospectus
to purchasers and be bound by those provisions of the registration rights
agreement which are applicable to such holder (including certain indemnification
provisions). Interpublic will pay all expenses of the registration statement,
provide to each registered holder copies of such prospectus, notify each
registered holder when the shelf registration statement has become effective and
take certain other actions as are required to permit, subject to the foregoing,
unrestricted resales of the notes and the common stock issued upon conversion of
the notes.
Limitations of Claims in Bankruptcy
If a bankruptcy proceeding is commenced in respect of Interpublic, the
claim of the holder of a note is, under Title 11 of the United States Code,
limited to the issue price of the note plus that portion of the original issue
discount and interest that has accrued from the date of issue to the
commencement of the proceeding. In addition, the holders of the notes will be
subordinated in right of payment to Senior Debt and effectively subordinated to
the indebtedness and other obligations of Interpublic's subsidiaries.
Taxation of Notes
See "Certain Federal Income Tax Considerations" for a discussion of certain
federal tax aspects which will apply to holders of notes.
Information Concerning the Trustee
The Bank of New York, as the trustee under the indenture, has been
appointed by Interpublic as paying agent, conversion agent, registrar and
custodian with regard to the notes. The indenture provides that in case an Event
of Default has occurred (which has not been cured or waived), the trustee
thereunder will exercise such rights and powers vested in it under the indenture
and use the same degree of care and skill in its exercise as a prudent person
would exercise under the circumstances in the conduct of such person's own
affairs.
The indenture and provisions of the Trust Indenture Act of 1939, as
amended, incorporated by reference therein contain limitations on the rights of
the trustee thereunder, should it become a creditor of Interpublic, to obtain
payment of certain claims in certain cases or to realize on certain property
received by it in respect of any such claims, as security or otherwise. The
trustee is permitted to engage in other transactions; provided, however, that if
it acquires any conflicting interest (within the meaning of the Trust Indenture
Act) it must eliminate such conflicting interest or resign.
DESCRIPTION OF CAPITAL STOCK
Authorized and Outstanding Capital Stock
As of June 30, 1999, the total number of shares of all classes of capital
stock which Interpublic has the authority to issue is 570,000,000 shares
consisting of 550,000,000 shares of common stock, par value $.10 per share, and
20,000,000 shares of preferred stock, without par value. No shares of preferred
stock have been issued. The number of shares of common stock which were issued
as of June 30, 1999 was 295,179,952 (of which 13,634,912 were treasury stock),
as restated to reflect a two-for-one stock split paid in the form of a stock
dividend on July 15, 1999. To the best of Interpublic's knowledge based on
publicly available information, no person was the beneficial owner of more than
5% of common stock other than those set forth on the following table:
Beneficial
Ownership
Beneficial Owner (as of March 31, 1999)
- ---------------- ----------------------
Fidelity Management & Research Company ................ 6.2%
Montag & Caldwell Inc ................................. 5.6
Putnam Investments, Inc. and its subsidiaries ......... 5.5
The following description of common stock is qualified in its entirety by
reference to the restated certificate of incorporation, as amended, and by-laws
of Interpublic as amended, copies of which will be available for inspection at
the office of the trustee in New York during the term of the notes.
Common Stock
Dividends
The holders of common stock are entitled to receive such dividends as
Interpublic's board of directors from time to time may declare out of funds
legally available for distribution.
Voting Rights
Each holder of common stock is entitled to one vote for each share held on
all matters voted upon by the stockholders of Interpublic, including the
election of directors. The common stock does not have cumulative voting rights.
Election of directors is decided by the holders of a plurality of the shares
entitled to vote and present in person or by proxy at a meeting for the election
of directors.
Liquidation Rights
In the event of any voluntary or involuntary liquidation, dissolution or
winding up of Interpublic, holders of common stock are entitled to share equally
and ratably in the balance of assets, if any, remaining after payment of all
debts and liabilities.
The common stock has no conversion or preemptive rights or redemption or
sinking fund provisions. The issued and outstanding shares of common stock are
fully paid and non-assessable.
Transfer Agent and Registrar
The transfer agent and registrar for the common stock is First Chicago
Trust Company of New York.
SELLING SECURITYHOLDERS
The notes offered hereby were originally issued by Interpublic and sold by
the initial purchasers in transactions exempt from the registration requirements
of the Securities Act to "qualified institutional buyers" (as defined in Rule
144A under the Securities Act) or other institutional "accredited investors" (as
defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act). The
selling securityholders (which term includes their transferees, pledgees, donees
or their successors) may from time to time offer and sell pursuant to this
prospectus any or all of the notes and common stock issued upon conversion of
the notes.
Prior to any use of this prospectus in connection with an offering of the
notes and/or the common stock issued upon conversion of the notes, this
prospectus will be supplemented to set forth the name and number of shares
beneficially owned by the selling securityholder intending to sell such notes
and/or common stock and the number of notes and/or shares of common stock to be
offered. The prospectus supplement will also disclose whether any selling
securityholder selling in connection with the prospectus supplement has held any
position or office with, been employed by or otherwise has had a material
relationship with, Interpublic or any of its affiliates during the three years
prior to the date of the prospectus supplement.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following is a summary of certain United States federal income tax
consequences of the purchase, ownership and disposition of the notes and the
common stock into which notes may be converted, but does not purport to be a
complete analysis of all the potential tax considerations relating thereto. This
summary is based on laws, regulations, rulings and decisions now in effect, all
of which are subject to change. This summary deals only with holders that will
hold notes and common stock as capital assets and does not address tax
considerations applicable to investors that may be subject to special tax rules
such as banks, insurance companies, tax-exempt organizations, dealers in
securities or currencies, persons that will hold notes or common stock as part
of an integrated investment (including a "straddle") comprised of notes or
shares of common stock and one or more other positions, persons that have a
"functional currency" other than the U.S. dollar or holders of notes that did
not acquire the notes in the initial distribution thereof at their original
issue price. Investors considering the purchase of notes should consult their
own tax advisors with respect to the application of the federal income tax laws
to their particular situations as well as any tax consequences arising under the
laws of any state, local or foreign taxing jurisdiction.
As used herein, the term "United States Holder" means the beneficial owner
of a note or common stock that is, for United States federal income tax
purposes, (1) a citizen or resident of the United States, (2) a United States
domestic corporation or (3) otherwise subject to United States federal income
taxation on a net income basis.
Interest and Original Issue Discount
Payments of interest on the notes will constitute "qualified stated
interest" (as defined below) and will generally be taxable to a United States
Holder as ordinary interest income at the time such interest is received or
accrued, in accordance with such holder's method of accounting for federal
income tax purposes.
The notes will be treated as original issue discount obligations under
United States federal income tax law, and United States Holders of notes
generally will also be subject to the special tax accounting rules for original
issue discount obligations provided by the Internal Revenue Code of 1986, as
amended (the "Code"), and certain regulations promulgated thereunder.
Accordingly, as described in more detail below, United States Holders of the
notes will be required to include original issue discount in gross income as
ordinary income as it accrues, in advance of the receipt of cash attributable to
that income.
The aggregate amount of original issue discount on each note will be the
amount by which the note's stated redemption price at maturity exceeds its issue
price. Generally, a note's issue price is the first price at which a substantial
amount of notes included in the issue of which the note is a part is sold to
persons other than bond houses, brokers or similar persons or organizations
acting in the capacity of underwriters, placement agents or wholesalers. A
note's stated redemption price at maturity is the total of all payments provided
by the note that are not payments of qualified stated interest (as defined
below).
Each United States Holder of a note, whether such holder uses the cash or
the accrual method of tax accounting, will be required to include in gross
income the sum of the "daily portions" of original issue discount on that note
for all days during the taxable year that the United States Holder owns the
note. The daily portions of original issue discount on a Note are determined by
allocating to each day in any accrual period (each successive period that ends
on an interest payment date) a ratable portion of the original issue discount
allocable to that accrual period. The amount of original issue discount
allocable to each accrual period is determined by (i) multiplying the "adjusted
issue price" (as defined below) at the beginning of the accrual period by the
annual yield to maturity of the note and (ii) subtracting from that product the
amount of qualified stated interest allocable to that accrual period. The
"adjusted issue price" of a note at the beginning of any accrual period will be
the sum of its issue price and the amount of original issue discount allocable
to all prior accrual periods, reduced by the amount of all payments previously
made on the notes that were not qualified stated interest payments. The term
"qualified stated interest" generally means stated interest that is
unconditionally payable in cash or property (other than debt instruments of
Interpublic) at least annually during the entire term of the notes at a single
fixed rate of interest or, subject to certain conditions, based on one or more
interest indices. As a result of this "constant yield" method of including
original issue discount in income, the amounts includable in income by a United
States Holder in respect of a note are generally lesser in the early years and
greater in the later years than the amounts that would be includable on a
straight-line basis.
Sale, Exchange or Retirement of the Notes
Upon the sale, exchange or retirement (including a redemption by
Interpublic) of a note, a United States Holder generally will recognize capital
gain or loss equal to the difference between the amount realized on the sale,
exchange or retirement (except to the extent such amount is attributable to
accrued interest income, which will be treated as such) and such holder's
adjusted tax basis in the note. A holder's adjusted tax basis in a note will
generally be equal to the amount paid for the note by such holder increased by
any original issue discount included in income by the holder, and reduced by any
payments received, other than payments of qualified stated interest. Such
capital gain or loss will be long-term capital gain or loss if the United States
Holder's holding period in the Note is more than one year at the time of
disposition. The distinction between capital gain or loss and ordinary income or
loss is important for purposes of the limitations on a United States Holder's
ability to offset capital losses against ordinary income and because United
States Holders that are individuals may be entitled to a preferential rate on
long-term capital gains.
Conversion of the Notes
A United States Holder generally will not recognize any income, gain, or
loss upon conversion of a note into common stock except with respect to cash
received in lieu of a fractional share of common stock. Such holder's basis in
the common stock received on conversion of a note will be the same as such
holder's tax basis in the note at the time of conversion (reduced by any basis
allocable to a fractional share interest as described below), and the holding
period for the common stock received on conversion will include the holding
period of the note converted, except that the holding period of the common stock
allocable to accrued original issue discount may commence with the conversion.
Cash received in lieu of a fractional share of common stock upon conversion
will be treated as a payment in exchange for the fractional share interest in
the common stock. Accordingly, the receipt of cash in lieu of a fractional share
of common stock will generally result in capital gain or loss (measured by the
difference between the cash received for the fractional share and the United
States Holder's basis in the fractional share).
Constructive Dividends
If at any time (a) Interpublic makes a distribution to its shareholders or
purchases common stock in a tender offer and such distribution or purchase would
be taxable to such stockholders as a dividend for United States federal income
tax purposes (e.g., distributions of evidences of indebtedness or assets of the
Company, but generally not stock dividends or rights to subscribe for common
stock) and, pursuant to the antidilution provisions of the indenture, the
conversion rate of the notes is increased, or (b) the conversion rate of the
notes is increased at the discretion of Interpublic, such increase may be deemed
to be the payment of a taxable dividend to holders or beneficial owners of notes
(pursuant to Section 305 of the Code). Holders of notes therefore could have
taxable income as a result of an event in which they receive no cash or
property. Similarly, a failure to adjust the conversion rate to reflect a stock
dividend or other event increasing the proportionate interest of the holders of
outstanding common stock could, in some circumstances, give rise to deemed
dividend income to United States Holders of such common stock.
Information Reporting and Backup Withholding Tax
In general, information reporting requirements will apply to payments of
principal, premium, if any, and interest on a note, payments of dividends on
common stock, and payment of the proceeds of the sale of a note or common stock
to certain non-corporate United States Holders, and a 31% backup withholding tax
may apply to such payments if the United States Holder (i) fails to furnish or
certify its correct taxpayer identification number to the payor in the manner
required, (ii) is notified by the Internal Revenue Service (the "IRS") that it
has failed to report payments of interest and dividends properly, or (iii) under
certain circumstances, fails to certify that it has not been notified by the IRS
that it is subject to backup withholding for failure to report interest and
dividend payments. Any amounts withheld under the backup withholding rules from
a payment to a United States Holder will be allowed as a credit against such
holder's United States federal income tax liability and may entitle the United
States Holder to a refund.
Non-United States Holders
Subject to the discussion of backup withholding below, payments of interest
(including original issue discount) on the notes to, or on behalf of, any
beneficial owner of a Note that is, with respect to the United States, a
nonresident alien or a foreign corporation and that is not subject to United
States federal income tax as a result of any direct or indirect connection to
the United States other than its ownership of a Note or common stock (a
"Non-United States Holder") will not be subject to U.S. federal income or
withholding taxes, provided that the Non-United States Holder provides an
appropriate statement (generally on IRS Form W-8 or a successor form thereto),
signed under penalties of perjury, identifying the holder and stating that the
holder is not a U.S. person (or, with respect to payments made after December
31, 2000, satisfies certain documentary evidence requirements for establishing
that it is not a U.S. person) and provided that the Non-United States Holder is
not a "10% shareholder" or "related controlled foreign corporation" with respect
to Interpublic. If these conditions are not met, a 30% withholding tax will
apply to interest income from the notes, unless an income tax treaty reduces or
eliminates such tax. A 30% withholding tax will apply to dividends paid (or
deemed paid, as described under "Constructive Dividends") on shares of common
stock held by a Non-United States Holder, unless an income tax treaty reduces or
eliminates such tax.
Any capital gain realized on the sale, exchange, redemption or other
disposition of a note or shares of common stock (including the receipt of cash
in lieu of fractional shares upon conversion of a note into shares of common
stock) by a Non-United States Holder will not be subject to United States
federal income or withholding taxes unless, in the case of an individual, such
holder is present in the United States for 183 days or more in the taxable year
of the sale, exchange, redemption, or other disposition and certain other
conditions are met.
Except as described above with respect to the receipt of cash in lieu of
fractional shares by certain Non-United States Holders upon conversion of notes,
no United States federal income or withholding taxes will be imposed upon the
conversion of notes into shares of common stock.
If interest with respect to the notes, dividends on common stock or capital
gain on the sale, exchange or other disposition of the notes or common stock is
"effectively connected" with the conduct of a trade or business by a nonresident
alien or foreign corporation in the United States, such income will be subject
to United States federal income tax at the same rate that applies for United
States Holders and may also be subject to a United States "branch profits tax"
at a 30% rate (or such lower rate as may be specified by an applicable income
tax treaty).
U.S. Information Reporting Requirements and Backup Withholding Tax
U.S. information reporting requirements and backup withholding tax will not
apply to payments made on notes or shares of common stock to a Non-United States
Holder at an address outside the United States, except that with respect to
payments made after December 31, 2000, a Non-United States Holder will be
entitled to such exemption only if it provides a Form W-8 (or satisfies certain
documentary evidence requirements for establishing that it is a non-United
States person) or otherwise establishes an exemption. Information reporting and
backup withholding also generally will not apply to a payment of the proceeds of
a sale of notes or common stock effected outside the United States by a foreign
office of a foreign broker. However, information reporting requirements (but not
backup withholding) will apply to a payment of the proceeds of a sale of notes
or common stock effected outside the United States by a foreign office of a
broker if the broker (i) is a United States person, (ii) derives 50 percent or
more of its gross income for certain periods from the conduct of a trade or
business in the United States, (iii) is a "controlled foreign corporation" as to
the United States, or (iv) with respect to payments made after December 31,
2000, is a foreign partnership that, at any time during its taxable year is 50
percent or more (by income or capital interest) owned by United States persons
or is engaged in the conduct of a U.S. trade or business, unless in any such
case the broker has documentary evidence in its records that the holder is a and
certain conditions are met, or the holder otherwise establishes an exemption.
Payment by a United States office of a broker of the proceeds of a sale of
common stock will be subject to both backup withholding and information
reporting unless the holder certifies its non-United States status under
penalties of perjury or otherwise establishes an exemption.
PLAN OF DISTRIBUTION
Interpublic will not receive any of the proceeds of the sale of the notes
and common stock offered hereby. The notes and common stock may be sold from
time to time to purchasers directly by the selling securityholders.
Alternatively, the selling securityholders may from time to time offer the notes
with discounts, concessions or commissions from the selling securityholders
and/or the purchasers of the notes and common stock for whom they may act as
agent. The selling securityholders and any such brokers, dealers or agents who
participate in the distribution of the notes and common stock may be deemed to
be "underwriters," and any profits on the sale of the notes and common stock by
them and any discounts, commissions or concessions received by any such brokers,
dealers or agents might be deemed to be underwriting discounts and commissions
under the Securities Act. To the extent the selling securityholders may be
deemed to be underwriters, the selling securityholders may be subject to certain
statutory liabilities, including, but not limited to, Sections 11, 12 and 17 of
the Securities Act and Rule 10b-5 under the Exchange Act.
The notes and common stock offered hereby may be sold from time to time in
one or more transactions at fixed prices, at prevailing market prices at the
time of sale, at varying prices determined at the time of sale or at negotiated
prices. The notes and common stock may be sold by one or more of the following
methods, without limitation: (a) a block trade in which the broker or dealer so
engaged will attempt to sell the notes and common stock issuable upon conversion
thereof as agent but may position and resell a portion of the block as principal
to facilitate the transaction; (b) purchases by a broker or dealer as principal
and resale by such broker or dealer for its account pursuant to this prospectus;
(c) ordinary brokerage transactions and transactions in which the broker
solicits purchasers; (d) an exchange distribution in accordance with the rules
of such exchange; (e) face-to-face transactions between sellers and purchasers
without a broker-dealer; (f) through the writing of options; and (g) other. At
any time a particular offer of the notes and common stock is made, a revised
prospectus or prospectus supplement, if required, will be distributed which will
set forth the aggregate amount and type of securities being offered and the
terms of the offering, including the name or names of any underwriters, dealers
or agents, any discounts, commissions, concessions and other items constituting
compensation from the selling securityholders and any discounts, commissions or
concessions allowed or reallowed or paid to dealers. Such prospectus supplement
and, if necessary, a post-effective amendment to the registration statement of
which this prospectus is a part, will be filed with the SEC to reflect the
disclosure of additional information with respect to the distribution of the
notes and common stock. In addition, the notes and common stock covered by this
prospectus may be sold in private transactions or under Rule 144 rather than
pursuant to this prospectus.
To the best knowledge of Interpublic, there are currently no plans,
arrangements or understandings between any selling securityholders and any
broker, dealer, agent or underwriter regarding the sale of the securities by the
selling securityholders. There is no assurance that any selling securityholder
will sell any or all of the securities offered by it hereunder or that any such
selling securityholder will not transfer, devise or gift such securities by
other means not described herein.
The selling securityholders and any other person participating in such
distribution will be subject to applicable provisions of the Exchange Act and
the rules and regulations thereunder, including, without limitation, Regulation
M which may limit the timing of purchases and sales of any of the notes and
common stock by the selling securityholders and any other such person.
Furthermore, Regulation M of the Exchange Act may restrict the ability of any
person engaged in the distribution of the notes and common stock to engage in
market-making activities with respect to the particular notes and common stock
being distributed for a period of up to five business days prior to the
commencement of such distribution. All of the foregoing may affect the
marketability of the notes and common stock and the ability of any person or
entity to engage in market-making activities with respect to the notes and
common stock.
Pursuant to the registration rights agreement entered into in connection
with the offer and sale of the notes by Interpublic, each of Interpublic and the
selling securityholders will be indemnified by the other against certain
liabilities, including certain liabilities under the Securities Act, or will be
entitled to contribution in connection therewith.
Interpublic has agreed to pay substantially all of the expenses incidental
to the registration, offering and sale of the securities to the public other
than commissions, fees and discounts of underwriters, brokers, dealers and
agents.
LEGAL MATTERS
The validity of the notes offered hereby has been passed upon for
Interpublic by Nicholas J. Camera, General Counsel of Interpublic.
EXPERTS
The consolidated financial statements of Interpublic and its subsidiaries
incorporated in this prospectus by reference to Interpublic's Annual Report on
Form 10-K for the three years ended December 31, 1998, have been so incorporated
in reliance on the report of PricewaterhouseCoopers LLP, independent
accountants, given on the authority of said firm as experts in auditing and
accounting.
WHERE YOU CAN FIND MORE INFORMATION
In accordance with the Exchange Act, we file reports, proxy statements and
other information with the SEC. You may read and copy materials we have filed
with the SEC at the public reference facilities maintained by the SEC at
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the
following regional offices of the SEC: Seven World Trade Center, Suite 1300, New
York, New York 10048 and Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661-2511. Please call the SEC at 1-800-SEC-0330 for further
information on the public reference rooms. Copies of such materials can be
obtained by mail from the Public Reference Section of the SEC, at Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. The
SEC maintains a World Wide Web site on the Internet at http://www.sec.gov that
contains reports, proxy statements and other information regarding registrants
that file electronically with the SEC.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The estimated expenses payable by the registrant in connection with the
distribution of the securities being registered are as follows:
Registration fees .......................................... $ 83,297
Legal fees and expenses .................................... 100,000
Fee of accountants, PricewaterhouseCoopers LLP ............. 12,000
Miscellaneous .............................................. 0
Total ...................................................... $195,297
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of Title 8 of the Delaware Code gives a corporation power to
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative (other than an action by or in
the right of the corporation) by reason of the fact that he is or was a
director, officer, employee or agent of the corporation, or is or was serving at
the request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The same Section also
gives a corporation power to indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the corporation to procure a judgment in its favor by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee, or agent of another corporation, partnership, joint
venture, trust or other enterprise against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a manner he
reasonable believed to be in or not opposed to the best interests of the
corporation and except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the corporation unless and only to the extent that the Court of
Chancery or the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably entitled to
indemnify for such expenses which the Court of Chancery or such other court
shall deem proper. Also, the Section states that, to the extent that a director,
officer, employee or agent of a corporation has been successful on the merits or
otherwise in defense or any such action, suit or proceeding, or in defense of
any claim, issue or matter therein, he shall be indemnified against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection therewith.
The Company's bylaws contain specific authority for indemnification by the
Company of current and former directors, officers, employees or agents of the
Company on terms that have been derived from Section 145 of Title 8 of the
Delaware Code.
The Company maintains policies of insurance under which the Company and its
directors and officers are insured subject to specified exclusions and
deductible and maximum amounts against loss arising from any claim which may be
made against the Company or any director or officer of the Company by reason of
any breach of duty, neglect, error, misstatement, omission or act done or
alleged to have been done while acting in their respective capabilities.
ITEM 16. EXHIBITS.
Exhibit Number Description
-------------- -----------
4.1* Indenture dated as of June 1, 1999 between the
Company and The Bank of New York, as trustee.
4.2* Form of Note.
4.3* Registration Rights Agreement dated as of June 1,
1999 between the Company and Morgan Stanley & Co.
Incorporated, Goldman, Sachs & Co., and Salomon
Smith Barney Inc.
5* Opinion of Nicholas J. Camera, Esq.
12* Statement of Ratio of Earnings to Fixed Charges.
23.1 Consent of PricewaterhouseCoopers LLP.
23.2* Consent of Nicholas J. Camera, Esq.
24* Power of Attorney.
25* Statement regarding Eligibility of Trustee on Form
T-1.
* Previously filed.
ITEM 17. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made of
the securities registered hereby, a post-effective amendment to this
registration statement;
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in this registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price represent no more than
20 percent change in the maximum aggregate offering price set forth in
the "Calculation of Registration Fee" table in this registration
statement; and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in this registration statement
or any material change to such information in this registration
statement;
provided, however, that the undertakings set forth in paragraphs (i) and (ii)
above do not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in periodic reports
filed with or furnished to the Commission by the registrant pursuant to Section
13 or Section 15(d) of the Securities Exchange Act of 1934 that are incorporated
by reference in this registration statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered herein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
(d) The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of Prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form of
Prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this Registration
Statement as of the time it was effective.
(2) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of Prospectus shall
be deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
initial bona fide offering thereof.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of New York, State of New York, on the 13th day of
August, 1999.
THE INTERPUBLIC GROUP OF COMPANIES, INC.
(Registrant)
By: /s/ Nicholas J. Camera
-----------------------------
Nicholas J. Camera
Vice President, General Counsel and Secretary
EXHIBIT INDEX
Exhibit Number Description
-------------- -----------
4.1* Indenture dated as of June 1, 1999 between
the Company and The Bank of New York, as
trustee.
4.2* Form of Note.
4.3* Registration Rights Agreement dated as of
June 1, 1999 between the Company and Morgan
Stanley & Co. Incorporated, Goldman, Sachs &
Co., and Salomon Smith Barney Inc.
5* Opinion of Nicholas J. Camera, Esq.
12* Statement of Ratio of Earnings to Fixed
Charges.
23.1 Consent of PricewaterhouseCoopers LLP.
23.2* Consent of Nicholas J. Camera, Esq.
24* Power of Attorney.
25* Statement regarding Eligibility of Trustee on
Form T-1.
* Previously filed.
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-3 of our report dated
February 19, 1999, relating to the financial statements, which appears on page
53 of the 1998 Annual Report to the Stockholders of The Interpublic Group of
Companies, Inc. (the "Company") which is incorporated by reference in the
Company's Annual Report on Form 10-K for the year ended December 31, 1998. We
also consent to the incorporation by reference of our report on the Financial
Statement Schedules, which appears on page F-2 of such Annual Report on Form
10-K. We also consent to the reference to us under the heading "Experts" in such
Prospectus.
PricewaterhouseCoopers LLP
New York, New York
August 13, 1999