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): May 2, 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 May 2, 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 its first quarter 2002 results. The text contained in
this slide show is attached hereto as Exhibit 99.1.
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: May 3, 2002 By: /s/ Nicholas J. Camera
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Nicholas J. Camera
SENIOR VICE PRESIDENT, GENERAL
COUNSEL AND SECRETARY
[slide 1] The Interpublic Group of Companies, Inc. First Quarter 2002 Conference Call Notes May 2, 2002[slide 2] Summary First Quarter Results - ------------------------------------ (Excludes restructuring charges and other unusual items) ($ Millions) 2002 2001 Change % --------- --------- --------- Revenue $1,420.1 $1,675.3 (15.2%) Operating Costs 1229.8 1426.9 13.8% EBITDA 190.3 248.4 (23.4%) Margin % 13.4% 14.8% Depreciation 48.7 51.8 6.0% Amortization of Intangibles 1.5 41.9 96.4% Income from Operations 140.1 154.7 (9.4%) Margin % 9.9% 9.2% Net Income 66.7 76.5 (12.8%) EPS .18 .20 (10.0%)
[slide 3] First Quarter 2002: Components of Revenue Change --------------------------------------- Effects of: Growth % -------- Organic (12.8%) Loss of Chrysler and Pepsi (1.0%) Currency Translation (0.9%) Net Dispositions (0.5%) ------- (15.2%) =======
[slide 4] First Quarter 2002: Components of Net Income Change --------------------------------------- (Excludes restructuring charges and other unusual items) ($ Millions) 1Q 2001 Net Income $ 76.5 Decrease in Revenue (255.2) Decrease in Operating Expenses 197.1 Decrease in Depreciation 3.1 Decrease in Amortization 40.4 Increase in Non-Operating Items 2.3 Increase in Equity Earnings and Minority Interests 2.5 -------- 1Q 2002 Net Income $ 66.7 ========
[slide 5] Pro Forma EBITDA Margin Trend - --------------------------------------- '00 '01 '02 Second Quarter 23.3% 19.5% -- Third Quarter 17.8% 14.4%* -- Fourth Quarter 20.4% 19.3% -- First Quarter -- 14.8% 13.4% * Estimated impact of September 11 is $35 million or 210 basis points, which would have resulted in an EBITDA margin trend of 16.5%.
[slide 6] Selected Cash Flow Items - --------------------------------------- ($ Millions) 1Q 1Q 2002 2001 ---- ---- Depreciation and Amortization of Fixed Assets 48.7 51.8 Amortization of Intangible Assets 1.5 41.9 Acquisitions 65.3 66.5 Capital Expenditures 31.2 60.7
[slide 7] Revenue by Discipline - --------------------------------------- ($ Millions) First Quarter Revenue ------------------------------------------- % of % of % 2002 Rev 2001 Rev Change - ------------------------------------------------------------------------------ Marketing Communications 384.8 27.1% 446.0 26.6% (14%) Marketing Intelligence 102.3 7.2% 105.6 6.3% (3%) Marketing Services 89.5 6.3% 103.6 6.2% (14%) ---- ----- Total Marketing and Communication Services 576.6 40.6% 655.2 39.1% (12%) Advertising & Media Buying 843.5 59.4% 1,020.1 60.9% (17%) ------- ------- Total Revenue 1,420.1 100.0% 1,675.3 100.0% (15%) ======= =======
[slide 8] Revenue by Region First Quarter 2002 - --------------------------------------- ($ Millions) % % Change % Change Revenue % Total Change Constant $ Organic -------------------------------------------------- Europe $ 372.2 26% (10%) (9%) (11%) Latin America 65.0 5% (11%) 0% (2%) Asia/Other 117.1 9% (11%) (7%) (8%) Canada 35.7 2% (11%) (9%) (9%) -------- ----- ------ ----- ------- Total International 590.0 42% (10%) (8%) (8%) Total Domestic 830.1 58% (18%) (18%) (16%) -------- ----- ------ ----- ------- Total $1,420.1 100% (15%) (14%) (12.8%) ======== ===== ====== ===== =======
[slide 9] 2002 Net New Business - --------------------------------------- Key Wins Key Losses - -------- ---------- AMD Clairol American Airlines MCI Worldcom Disney* Barclays Nextel Domino's Credit Suisse Revlon Deutsche Telekom* Sony* Electrolux Starwood Hotels Exxon Mobil Tricon Global Restaurants HSBC Wachovia Zenith Electronics Total Wins $831.2 Total Losses $86.6 Net New Business $744.6 *Media only
[slide 10] Outlook and Guidance - 2002 - --------------------------------------- o Second quarter revenue comparisons remain difficult o In a flat full-year revenue scenario, EPS grows 15% - If full year revenue increases, each 1% of revenue growth generates an incremental 2% EPS growth - If full year revenue declines, margins will equal or exceed 2000 level
[slide 11] Appendix I: 2001 Revenue by Discipline - --------------------------------------- ($ Millions) 1st Q 2nd Q 3rd Q 4th Q 2001 2001 2001 2001 --------------------------------------- Marketing Communications $ 446.0 $ 462.2 $ 478.5 $ 470.1 Marketing Intelligence 105.6 113.4 105.7 121.3 Marketing Services 103.6 129.5 120.0 103.9 --------------------------------------- Total Marketing and Communication Services $ 655.2 $ 705.1 $ 704.2 $ 695.3 Advertising & Media Buying 1,020.1 1,055.4 918.5 1,041.2 --------------------------------------- Total Revenue $1,675.3 $1,760.5 $1,622.7 $1,736.5 =======================================
[slide 12] Appendix II: 2001 Quarterly Results Restated for FAS 142 - --------------------------------------- (Excludes one time charges and restructuring items) 1Q 2Q 3Q 4Q Year ------------------------------------------------------------------- Revenue $1,675.3 $1,760.4 $1,622.7 $1,736.5 $6,794.9 EBITDA 248.4 341.1 234.3 335.3 1,159.1 Margin % 14.8% 19.4% 14.4% 19.3% 17.1% Depreciation 51.8 52.3 52.2 53.6 209.9 Amortization of Intangibles 0.9 1.0 1.0 1.0 3.9 Income from Operations 195.7 287.8 181.1 280.7 945.3 Margin % 11.7% 16.3% 11.2% 16.2% 13.9% Net Income 111.8 152.1 89.8 150.3 504.0 EPS .30 .40 .24 .40 1.34
[slide 13] Cautionary Statement - --------------------------------------- This document contains forward-looking statements. Interpublic's representatives may also make forward-looking statements orally from time to time. Statements in this document that are not historical facts, including statements about Interpublic's beliefs and expectations, particularly regarding recent business and economic trends, the integration of acquisitions and restructuring costs, constitute forward-looking statements. These statements are based on current plans, estimates and projections, and therefore undue reliance should not be placed on them. Forward-looking statements speak only as of the date they are made, and Interpublic undertakes no obligation to update publicly any of them in light of new information or future events. Forward-looking statements involve inherent risks and uncertainties. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. Such factors include, but are not limited to, those associated with the effects of national and regional economic conditions, Interpublic's ability to attract new clients and retain existing clients, the financial success of Interpublic's clients, developments from changes in the regulatory and legal environment for advertising and marketing and communications services companies around the world, and the successful completion and integration of acquisitions which complement and expand Interpublic's business capabilities. One of Interpublic's business strategies is to acquire businesses that complement and expand Interpublic's current business capabilities. Accordingly, Interpublic is usually engaged in evaluating potential acquisition candidates. Interpublic is frequently engaged in a number of preliminary discussions that may result in one or more substantial acquisitions. These acquisition opportunities require confidentiality and from time to time give rise to bidding scenarios that require quick responses by Interpublic. Although there is uncertainty that any of these discussions will result in definitive agreements or the completion of any transactions, the announcement of any such transaction may lead to increased volatility in the trading price of Interpublic's securities. Moreover, the success of recent or contemplated future acquisitions will depend on the effective integration of newly-acquired businesses into Interpublic's current operations. Important factors for integration include realization of anticipated synergies and cost savings and the ability to retain and attract new personnel and clients. This document also contains financial information calculated on a "pro forma" basis, such as results before taking into account certain types of items. In addition, Interpublic's representatives may from time to time refer to "pro forma" financial information. Because "pro forma" financial information by its very nature departs from traditional accounting conventions, this information should not be viewed as a substitute for the information prepared by Interpublic in accordance with Generally Accepted Accounting Principles, including the balance sheets and statements of income and cash flow contained in Interpublic's quarterly and annual reports filed with the SEC on Forms 10-Q and 10-K. Investors should evaluate any statements made by Interpublic in light of these important factors.