SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
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CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): February 28, 2002
The Interpublic Group of Companies, Inc.
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(Exact Name of Registrant as Specified in Charter)
Delaware 1-6686 13-1024020
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(State or Other Jurisdiction (Commission File (IRS Employer
of Incorporation) Number) Identification No.)
1271 Avenue of the Americas, New York, New York 10020
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: 212-399-8000
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(Former Name or Former Address, if Changed Since Last Report)
Item 9. Regulation FD Disclosure.
On February 28, 2002, The Interpublic Group of Companies, Inc., in
connection with a telephone conference with investors, made available via the
internet a slide show relating to fourth quarter and full-year 2001 results.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
THE INTERPUBLIC GROUP OF
COMPANIES, INC.
Date: March 4, 2002 By: /s/ Nicholas J. Camera
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Nicholas J. Camera
SENIOR VICE PRESIDENT, GENERAL
COUNSEL AND SECRETARY
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The
Interpublic
Group of
Companies, Inc
Fourth Quarter 2001
Conference Call Notes
February 28, 2002
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Summary
Fourth Quarter Results
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(Excludes restructuring charges and other unusual items)
$ Millions
2001 2000 Change %
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Revenue $1,719.5 $ 2,041.8 (15.8%)
EBITDA 331.8 417.0 (20.4)
Margin % 19.3% 20.4%
Depreciation 50.1 49.2 2.0
Amortization of Intangibles 46.1 42.4 8.7
Income from Operations 235.6 325.4 (27.6)
Margin % 13.7% 15.9%
Net Income 111.2 190.5 (41.6)
EPS .30 .51 (41.2)
Summary
Full Year Results
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(Excludes restructuring charges and other unusual items)
$ Millions
2001 2000 Change %
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Revenue $ 6,726.8 $ 7,182.7 (6.3%)
EBITDA 1,148.2 1,363.7 (15.8)
Margin % 17.1% 19.0%
Depreciation 199.2 192.6 3.4
Amortization of Intangibles 173.0 144.3 20.0
Income from Operations 776.0 1,026.8 (24.4)
Margin % 11.5% 14.3%
Net Income 359.2 570.3 (37.0)
EPS .96 1.53 (37.3)
Fourth Quarter 2001:
Components of Revenue Change
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$ Millions
2000 Revenue $2,041.8
Effects of: Variance %
Organic (205.8) (10.1)%
Loss of Chrysler (35.9) (1.8)
Currency Translation (52.2) (2.6)
Acquisitions (net of dispositions) (28.4) (1.3)
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2001 Revenue $1,719.5 (15.8)%
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Year 2001:
Components of Revenue Change
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$ Millions
2000 Revenue $7,182.7
Effects of: Variance %
Organic (207.4) (2.9)%
Loss of Chrysler (116.3) (1.6)
Currency Translation (159.4) (2.2)
Acquisitions (net of dispositions) 62.2 0.9
September 11 (35.0) (0.5)
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2001 Revenue $6,726.8 (6.3)%
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4Q01 Components of Net Income Change
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(Excludes restructuring charges and other unusual items)
$ Millions
4Q 2000 Net Income $190.5
Decrease in Revenue (322.3)
Decrease in Operating Expenses 237.1
Increase in Depreciation and Amortization (4.6)
Decrease in Non-Operating Items 8.6
Increase in Equity Earnings and Minority Interests 1.9
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4Q 2001 Net Income $111.2
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2001 Components of Net Income Change
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(Excludes restructuring charges and other unusual items)
$ Millions
2000 Net Income $570.3
Decrease in Revenue (455.9)
Decrease in Operating Expenses 240.4
Increase in Depreciation and Amortization (35.3)
Decrease in Non-Operating Items 32.9
Increase in Equity Earnings and Minority Interests 6.8
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2001 Net Income $359.2
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Pro Forma EBITDA Margin Trend
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* Estimated impact of September 11: $35 million or 210 basis points.
'00 '01
First Quarter 13.4% 14.8%
Second Quarter 23.3% 19.5%
Third Quarter 17.8% 14.4%*
Fourth Quarter 20.4% 19.3%
* Estimated impact of September 11 is $35 million or 210 basis points, which
would have resulted in an EBITDA margin trend of 16.5%.
Selected Cash Flow Items
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$ Millions
2001 2000
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Depreciation and Amortization
of Fixed Assets $ 199.2 $ 192.6
Amortization of Intangible Assets 173.0 144.3
Acquisitions 314.1 653.2
Capital Expenditures 268.0 259.5
Dividends -- IPG only 136.6 109.1
Purchase of Treasury Stock 115.7 253.9
Selected Balance Sheet Items
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$ Millions
December 31, September 30, December 31,
2001 2001 2000
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Cash & Cash Equivalents $ 935.2 $ 685.6 $ 844.6
Total Debt 2,933.7 3,125.9 2,081.1
Debt as % of Capital 60% 63% 46%
Stockholders' Equity 1,979.3 1,863.5 2,482.4
2001 Net New Business
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Key Wins Key Losses
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Verizon Gateway
L'Oreal Dell
United Parcel Service Fidelity
Sepracor Gillette Oral Care
Microsoft
Sirius Satellite Radio
Pfizer/Pharmacia AT&T Wireless
Coca-Cola Reckitt & Benkiser
H.J. Heinz PepsiCo
Best Foods (Unilever)
Total Wins $5,548.5 Total Losses $2,762.9
Net New Business $2,785.6
2002 New Business Wins
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Sony American Airlines
Starwood Hotels HSBC
Zenith Electronics Tricon Global Restaurants
Electrolux Nextel
Revlon Deutsche Telekom
MCI Worldcom
Outlook and Guidance -- 2002
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o First and second quarter revenue comparisons remain difficult
o In a flat full-year revenue scenario, EPS grows 15%
- If full year revenue increases, each 1% of revenue growth generates an
incremental 2% EPS growth
- If full year revenue declines, margins will equal or exceed 2000 level
Appendix I: Revenue by Discipline
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($Millions)
Fourth Quarter Full Year
Revenue Revenue
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% of % of % % of % of %
2001 Rev 2000 Rev Change 2001 Rev 2000 Rev Change
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Promotion Event And Direct Marketing
(Incl. Healthcare Marketing) 371.5 21.6% 415.5 20.3% (11%) 1,429.1 21.2% 1,366.6 19.0% 5%
Public Relations 124.8 7.3% 165.7 8.1% (25%) 578.1 8.6% 611.3 8.5% (5%)
Marketing Intelligence 146.8 8.5% 158.5 9.7% (7%) 551.5 8.2% 555.6 7.7% (1%)
Interactive 23.9 1.4% 39.1 2.0% (39%) 106.7 1.6% 164.9 2.3% (35%)
------- ------- ------- -------
Total Specialized Marketing Services 667.0 38.8% 778.8 38.1% (14%) 2,665.4 39.6% 2,698.3 37.6% (1%)
Total Media Buying & Advertising 1,052.5 61.2% 1,263.0 61.9% (17%) 4,061.4 60.4% 4,484.4 62.4% (9%)
------- ------- ------- -------
Total 1,719.5 100% 2,041.8 100% (16%) 6,726.8 100% 7,182.7 100% (6%)
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Appendix II: Revenue by Region
Fourth Quarter 2001
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($Millions)
% % Change % Change
Revenue % Total Change Constant $ Organic
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Europe $ 496.6 29% (10%) (6%) (7%)
Latin America 96.4 6% (14%) (6%) (7%)
Asia/Other 158.5 9% (18%) (12%) (11%)
Canada 49.5 3% (5%) (1%) 3%
-------- -------- -------- -------- --------
Total International 801.0 47% (12%) (7%) (6%)
Total Domestic 918.5 53% (19%) (19%) (15%)
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Total $1,719.5 100% (16%) (14%) (10.1%)
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Appendix II: Revenue by Region
Year 2001
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($Millions)
% % Change % Change
Revenue % Total Change Constant $ Organic
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Europe $1,840.7 27% 0% 4% 0%
Latin America 327.1 5% (2%) 9% 4%
Asia/Other 583.6 9% (3%) 4% 0%
Canada 169.6 2% 4% 8% 3%
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Total International 2,921.0 43% (1%) 5% 3%
Total Domestic 3,805.8 57% (10%) (10%) (7%)
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Total $6,726.8 100% (6%) (4%) (2.9%)
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Appendix III: 2001 Quarterly Results
Restated for FAS 142
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(Excludes one time charges and restructuring items)
1Q 2Q 3Q 4Q Year
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Revenue $1,658.3 $1,743.4 $1,605.6 $1,719.5 $6,726.8
EBITDA 246.1 339.1 231.2 331.8 1,148.2
Margin % 14.8% 19.5% 14.4% 19.3% 17.1%
Depreciation 49.6 50.4 49.1 50.1 199.2
Amortization of Intangibles 0.9 1.0 1.0 1.0 3.9
Income from Operations 195.6 287.8 181.1 280.7 945.2
Margin % 11.8% 16.5% 11.3% 16.3% 14.1%
Net Income 111.8 152.1 89.8 150.3 504.0
EPS .30 .40 .24 .40 1.34
Appendix IV: Summary of Restructuring
Charges and One Time Items
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Full Year 2001
($ Millions)
Annualized
Total Cash Non-cash Savings
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Severance $297.5 $297.5 $ - $250.0
Facilities costs 257.6 180.1 77.5 50.0
Other Restructuring Costs 53.3 32.2 21.1
Transaction costs 37.2 31.5 5.7
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$645.6 $541.3 $104.3 $300.0
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Goodwill and other charges $303.1 - $303.1 -
Investment write-offs 208.3 - 208.3 -
Other Non Recurring (Net) 35.4 35.4
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$546.8 $546.8
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Appendix V: Summary of Reported
Fourth Quarter Results
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$ Millions
2001 2000 Change %
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Revenue $ 1,719.5 $ 2,041.8 (15.8%)
EBITDA 331.8 354.8 (6.5)
Margin % 19.3% 17.4%
Depreciation 50.1 49.1 2.0
Amortization of Intangibles 46.1 42.5 8.5
Income from Operations 235.6 263.2 (10.5)
Margin % 13.7% 12.9%
Net Income 111.2 113.0 (1.6)
EPS .30 .30 -
Appendix VI: Summary of Reported
Full Year Results
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$ Millions
2001 2000 Change %
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Revenue $ 6,726.8 $ 7,182.7 (6.3%)
EBITDA 164.0 1,186.0 (86.2)
Margin % 2.4% 16.5%
Depreciation 199.2 192.6 3.4
Amortization of Intangibles 173.0 144.3 19.9
Income (Loss) from Operations (208.1) 849.1 (124.5)
Margin % (3.1%) 11.8%
Net Income (Loss) (505.3) 420.3 (220.2)
EPS (1.37) 1.14 (220.2)
Cautionary Statement
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This document contains forward-looking statements. Statements that are not
historical fact, including statements about Interpublic's beliefsand
expectations constitute forward-looking statements. These statements are based
on current plans, estimates and projections, and therefore undue reliance should
not be placed on them. Forward-looking statements speak only as of the date they
are made, and Interpublic undertakes no obligation to update publicly any of
them in light of new information or future events.
Forward-looking statements involve inherent risks and uncertainties. Interpublic
cautions that a number of important factors could cause actual results to differ
materially from those contained in any forward-looking statement. Such factors
include, but are not limited to, those associated with the effect of national
and regional economic conditions, the ability of Interpublic to attract new
clients and retain existing clients, the financial success of the clients of
Interpublic, and developments from changes in the regulatory and legal
environment for advertising companies around the world, and the successful
completion and integration of acquisitions which complement and expand
Interpublic's business capabilities.
Another important factor is Interpublic's acquisition strategy. One of
Interpublic's business strategies is to acquire businesses that complement and
expand its current business capabilities. Accordingly, Interpublic is usually
engaged in evaluating potential acquisition candidates. Interpublic is currently
engaged in a number of preliminary discussions that may result in one or more
substantial acquisitions. These acquisition opportunities require
confidentiality and from time to time give rise to bidding scenarios that
require quick responses by Interpublic. Although there is uncertainty that any
of these discussions will result in definitive agreements or the completion of
any transactions, the announcement of any such transaction may lead to increased
volatility in the trading price of the shares of Interpublic.
Moreover, the success of recent or contemplated future acquisitions will depend
on the effective integration of newly-acquired businesses into Interpublic's
current activities. Important factors for integration include realization of
anticipated synergies and the ability to retain new personnel and clients.
This document includes financial information calculated on a "pro forma" basis.
This "pro forma" financial information, by its very nature, departs from
traditional accounting conventions. Accordingly, "pro forma" financial
information should be read in conjunction with, and should not be viewed as a
substitute for, the information prepared in accordance with Generally Accepted
Accounting Principles (GAAP) contained in this document, including the GAAP
numbers under the "actual reported" columns in the unaudited "consolidated
summaries of earnings" contained in this document.
Investors should evaluate any statements in light of these important factors.