Delaware                                                  
(State or other jurisdiction of
incorporation or organization)

    13 -1024020    
(I.R.S. Employer
Identification No.)

1271 Avenue of the Americas, New York, New York
(Address of principal executive offices)

         10020         
       (Zip Code)

Page No.

          Item 1.

Financial Statements

Consolidated Statement of Operations

3

  Three months ended September 30, 2003

  and 2002 (unaudited)

Consolidated Statement of Operations

4

  Nine months ended September 30, 2003

  and 2002 (unaudited)

Consolidated Balance Sheet

5

  September 30, 2003 and

  December 31, 2002 (unaudited)

Consolidated Statement of Comprehensive Income

7

  Three months ended September 30, 2003

  and 2002 (unaudited)

Consolidated Statement of Comprehensive Income

8

  Nine months ended September 30, 2003

  and 2002 (unaudited)

Consolidated Statement of Cash Flows

9

  Nine months ended September 30, 2003

  and 2002 (unaudited)

Notes to Consolidated Financial Statements (unaudited)

10

         Item 2.

Management's Discussion and Analysis of

27

   Financial Condition and Results of Operations

         Item 3.

Quantitative and Qualitative Disclosures about Market Risk

43

         Item 4.

Controls and Procedures

44

         Item 1.

Legal Proceedings

46

         Item 2.

Changes in Securities and Use of Proceeds

48

         Item 6.

Exhibits and Reports on Form 8-K

50

SIGNATURES

52

INDEX TO EXHIBITS

53

THE INTERPUBLIC GROUP OF COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
THREE MONTHS ENDED SEPTEMBER 30,
(Amounts In Millions)
(Unaudited)

2003

2002

Net Loss

$(327.1)    

$(89.6)    

Foreign Currency Translation Adjustments

   11.3     

  (36.2)    

Adjustment for Minimum Pension Liability

      Adjustment for minimum pension liability (due to sale of NFO)

3.2     

--     

Unrealized Holding Gains (Losses) on Securities

      Unrealized holding gains

14.5     

--     

      Tax expense

(6.0)    

--     

      Unrealized holding losses

--     

(9.9)    

      Tax benefit

        --     

      4.1     

Unrealized Holding Gains (Losses) on Securities

     8.5     

    (5.8)    

Comprehensive Loss

$(304.1)    

$(131.6)    

The accompanying notes are an integral part of these consolidated financial statements.

THE INTERPUBLIC GROUP OF COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
NINE MONTHS ENDED SEPTEMBER 30,
(Amounts In Millions)
(Unaudited)

2003

2002

Net Income (Loss)

$(349.2)   

$  79.2      

Foreign Currency Translation Adjustments

      88.0    

   53.0      

Adjustment for Minimum Pension Liability

      Adjustment for minimum pension liability

--    

--      

      Tax benefit

           --    

        --      

           --    

        --      

Unrealized Holding Gains (Losses) on Securities

      Unrealized holding gains

19.8    

0.9      

      Tax expense

(8.2)   

(0.4)     

      Unrealized holding losses

(0.8)   

(15.4)     

      Tax benefit

        0.3    

     6.4      

Unrealized Holding Gains (Losses) on Securities

      11.1    

   (8.5)     

Comprehensive Income (Loss)

$(250.1)   

$123.7      

The accompanying notes are an integral part of these consolidated financial statements.

THE INTERPUBLIC GROUP OF COMPANIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS

NINE MONTHS ENDED SEPTEMBER 30,

(Amounts in Millions)

(Unaudited)

2003

2002

CASH FLOWS FROM OPERATING ACTIVITIES FROM CONTINUING OPERATIONS:

Net income (loss) from continuing operations

$(450.4) 

$ 58.3  

Adjustments to reconcile net income (loss) from continuing operations to

  cash provided by (used in) operating activities:

   Depreciation and amortization of fixed assets

138.4  

140.1  

   Amortization of intangible assets 

9.1  

6.5  

   Amortization of restricted stock awards and bond discounts

56.7  

62.9  

   Provision for (benefit of) deferred income taxes

(106.2) 

25.1  

   Undistributed equity earnings

2.2  

(3.1) 

   Income applicable to minority interests

19.4  

22.1  

   Restructuring charges - non cash

6.2  

--  

   Long-lived asset impairment

244.8  

118.7  

   Investment impairment

42.2  

21.1  

   Litigation settlements

127.6  

--  

   Other

(2.7)  

(7.5) 

Change in assets and liabilities, net of acquisitions:

   Accounts receivable

238.8  

390.8  

   Expenditures billable to clients

(5.5) 

(109.7) 

   Prepaid expenses and other current assets

(38.2) 

(58.1) 

   Accounts payable and accrued expenses

(419.8) 

(414.7) 

   Other non-current assets and liabilities

        9.3  

   (11.4) 

               Net cash provided by (used in) operating activities from continuing operations

  (128.1) 

   241.1  

CASH FLOWS FROM INVESTING ACTIVITIES FROM CONTINUING OPERATIONS:

   Acquisitions, net of cash acquired

(194.0) 

(252.2) 

   Capital expenditures

(138.4) 

(116.6) 

   Proceeds from the sale of discontinued operations, net of cash sold

376.7  

--  

   Proceeds from sales of businesses

2.0  

8.9  

   Proceeds from sales of long-term investments

25.2  

42.6  

   Purchases of long-term investments

(15.0) 

(42.1) 

   Maturities of short-term marketable securities

26.3  

39.8  

   Purchases of short-term marketable securities

(34.3) 

(14.0) 

   Other investments in less than majority owned affiliates and miscellaneous assets

     (9.7) 

   (20.4) 

               Net cash provided by (used in) investing activities from continuing operations

     38.8  

 (354.0) 

CASH FLOWS FROM FINANCING ACTIVITIES FROM CONTINUING OPERATIONS:

   Increase (decrease) in short-term debt

(243.4) 

6.3  

   Payments of zero-coupon convertible senior notes

(580.0) 

--  

   Proceeds from long-term debt

22.8  

5.3  

   Proceeds from termination of interest swaps

--  

41.5  

   Proceeds from 4.5% convertible senior notes

778.0  

--  

   Payments of long-term debt

(163.4) 

(138.0) 

   Treasury stock acquired

--  

(7.9) 

   Issuance of common stock

3.1  

49.7  

   Distributions to minority interests

   (12.5) 

   (18.0) 

   Contributions from minority interests

0.5  

1.5  

   Cash dividends - Interpublic

         --  

 (109.0) 

               Net cash used in financing activities from continuing operations

  (194.9) 

 (168.6) 

Effect of exchange rates on cash and cash equivalents

      60.1  

   (42.0) 

Net cash (used in) provided by discontinued operations

    (13.4) 

     3.3  

Decrease in cash and cash equivalents

(237.5) 

(320.2) 

Cash and cash equivalents at beginning of year

    933.0  

   935.2  

Cash and cash equivalents at end of period

$ 695.5  

$ 615.0  

The accompanying notes are an integral part of these consolidated financial statements.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in Millions, Except Per Share Amounts)
(Unaudited)

1.

Basis of Presentation
In the opinion of management, the financial statements included herein contain all adjustments (consisting of normal recurring accruals) necessary to present fairly the financial position, results of operations and cash flows at September 30, 2003 and for all periods presented. These consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in The Interpublic Group of Companies, Inc.'s (the "Company" or "Interpublic") current report on Form 8-K filed on September 9, 2003. The operating results for the first nine months of the year are not necessarily indicative of the results for the year or other interim periods.

As discussed in Note 10, on July 10, 2003, the Company completed the sale of its NFO WorldGroup ("NFO") research unit to Taylor Nelson Sofres PLC ("TNS"). The results of NFO are classified as discontinued operations in accordance with SFAS 144 "Accounting for the Impairment or Disposal of Long-Lived Assets" and, accordingly, the results of operations and cash flows of NFO have been removed from the Company's results of continuing operations and cash flows for all periods presented in this document.

2.

Earnings (Loss) Per Share
The following sets forth the computation of earnings (loss) per share for the three and nine month periods ended September 30, 2003 and 2002:

Three Months Ended September 30,

2003

2002

Basic and diluted (a)

Loss from continuing operations

$(416.2)    

$ (96.4)   

Income from discontinued operations

      89.1     

       6.8    

Net loss

$(327.1)    

$ (89.6)   

Weighted average number of common shares outstanding

385.8     

377.3    

Loss per share from continuing operations

$(1.08)    

$ (0.26)   

Earnings per share from discontinued operations

   0.23     

   0.02    

Loss per share - basic and diluted

$(0.85)    

$ (0.24)   

Nine Months Ended September 30,

2003

2002

Basic

Income (loss) from continuing operations

$(450.4)     

$  58.3      

Income from discontinued operations

   101.2      

    20.9      

Net Income (loss)

$(349.2)     

$  79.2      

Weighted average number of common shares outstanding

384.0      

375.3      

Earnings (loss) per share from continuing operations

$(1.17)     

$  0.16      

Earnings per share from discontinued operations

   0.26      

   0.06      

Earnings (loss) per share - basic

$(0.91)     

$  0.21(b)

Diluted (a)

Income (loss) from continuing operations - diluted

$(450.4)     

$  58.3      

Income from discontinued operations

   101.2      

    20.9      

Net Income (loss) - diluted

$(349.2)     

$  79.2      

Weighted average number of common shares outstanding

384.0      

375.3      

Weighted average number of incremental shares in connection with

   restricted stock and assumed exercise of stock options

         --       

       5.8      

Weighted average number of common shares outstanding - diluted

384.0       

381.1      

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in Millions, Except Per Share Amounts)
(Unaudited)

Nine Months Ended September 30,

2003

2002

Earnings (loss) per share from continuing operations

$(1.17)     

$  0.15      

Earnings per share from discontinued operations

   0.26      

   0.05      

Earnings (loss) per share - diluted

$(0.91)     

$  0.21 (b)

(a)

The computation of diluted EPS for 2003 excludes the assumed conversion of the 1.80% and 1.87% Convertible Subordinated Notes, 4.5% Convertible Senior Notes, the conversion of restricted stock and assumed exercise of stock options because they were antidilutive. The computation of diluted EPS for 2002 excludes the assumed conversion of the 1.80% and 1.87% Convertible Subordinated Notes because they were anti-dilutive.

The 1.80% and 1.87% Convertible Subordinated Notes would have added 6.7 and 6.4 shares, respectively, to the diluted shares outstanding had they been dilutive for the three and nine month periods ended September 30, 2003 and 2002.

The 4.5% Convertible Senior Notes would have added 5.6 and 1.9 shares to the diluted shares for the three and nine month periods ended September 30, 2003, respectively, had they been dilutive.

(b)

Does not total due to rounding.

3.

Stock - Based Compensation Plans
The Company has various stock-based compensation plans. The stock-based compensation plans are accounted for under the intrinsic value recognition and measurement principles of APB Opinion 25, "Accounting for Stock Issued to Employees" and related interpretations. Generally, all employee stock options are issued with the exercise price equal to the market price of the underlying shares at the grant date and therefore, no compensation expense is recorded. The intrinsic value of restricted stock grants and certain other stock-based compensation issued to employees as of the date of grant is amortized to compensation expense over the vesting period.

If compensation cost for the Company's stock option plans and its Employee Stock Purchase Plan ("ESPP") had been determined based on the fair value at the grant dates as defined by SFAS 123, the Company's pro forma net income (loss) and earnings (loss) per share for the three months ended and nine months ended September 30 would have been as follows:

Three Months Ended September 30,

2003

2002

Loss from Continuing Operations

As reported, loss from continuing operations

$(416.2)      

$(96.4)        

Add back:

       Stock-based employee compensation expense included in

         reported net income, net of tax

5.5       

9.6         

Deduct:

       Total fair value of stock based employee

         compensation expense, net of tax

  (14.0)      

  (18.7)       

Pro forma loss from continuing operations

$(424.7)      

$(105.5)       

Loss Per Share From Continuing Operations

Basic loss per share

       As reported

$(1.08)      

$(0.26)       

       Pro forma

$(1.10)      

$(0.28)       

Diluted loss per share

       As reported

$(1.08)      

$(0.26)       

       Pro forma

$(1.10)      

$(0.28)       

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in Millions, Except Per Share Amounts)
(Unaudited)

For purposes of this pro forma information, the fair value of shares under the ESPP was based on the 15% discount received by employees. The weighted-average fair value (discount) on the date of purchase for stock purchased under this plan was $2.14 and $2.76 for the three months ended September 30, 2003 and 2002, respectively.

The weighted-average fair value of options granted during the three months ended September 30, 2003 and 2002 was $6.30 and $6.20, respectively. The fair value of each option grant has been estimated on the date of grant using the Black-Scholes option-pricing model with the following assumptions:

Three Months Ended September 30,

2003

2002

Expected option lives

6 years       

6 years      

Risk free interest rate

3.06%       

3.70%      

Expected volatility

44.72%       

38.58%      

Dividend yield

--       

2.13%      

Nine Months Ended September 30,

2003

2002

Income (Loss) from Continuing Operations

As reported, income (loss) from continuing operations

$(450.4)     

$58.3         

Add back:

   Stock-based employee compensation expense included in

     reported net income, net of tax

16.9      

22.8         

Deduct:

   Total fair value of stock based employee

     compensation expense, net of tax

    (44.3)     

(50.5)        

Pro forma income (loss) from continuing operations

$(477.8)     

$30.6         

Earnings (Loss) Per Share From Continuing Operations

Basic earnings (loss) per share

As reported

$(1.17)     

$0.16         

Pro forma

$(1.24)     

$0.08         

Diluted earnings (loss) per share

As reported

$(1.17)     

$0.15         

Pro forma

$(1.24)     

$0.08         

For purposes of this pro forma information, the fair value of shares under the ESPP was based on the 15% discount received by employees. The weighted-average fair value (discount) on the date of purchase for stock purchased under this plan was $1.80 and $3.73 for the nine months ended September 30, 2003 and 2002, respectively.

The weighted-average fair value of options granted during the nine months ended September 30, 2003 and 2002 was $4.83 and $11.01, respectively. The fair value of each option grant has been estimated on the date of grant using the Black-Scholes option-pricing model with the following assumptions:

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in Millions, Except Per Share Amounts)
(Unaudited)

Nine Months Ended September 30,

2003

2002

Expected option lives

6 years       

6 years    

Risk free interest rate

3.30%       

4.94%    

Expected volatility

43.78%       

34.49%    

Dividend yield

--       

1.31%    

4.

Restructuring Charges
During the three and nine months ended September 30, 2003, the Company recorded restructuring charges of $48.0 and $142.4, respectively, in connection with the 2003 and 2001 restructuring programs as discussed below. During the three months ended September 30, 2002, the Company recorded restructuring charges of $12.1 in connection with the 2001 restructuring program.

The Company expects that the restructuring charges recorded to date will result in cash payments of $136.2 to be paid in 2003 ($101.1), 2004 ($22.4) and 2005 and thereafter ($12.7). Further actions in the 2003 restructuring program will be undertaken in the fourth quarter of 2003 and the first half of 2004.

2003 Program
During the second quarter of 2003, the Company announced that it would undertake restructuring initiatives in response to softness in demand for advertising and marketing services. The restructuring initiatives include severance and lease terminations. The total amount of pre-tax charges the Company expects to incur, through the first half of 2004, is up to approximately $250.0.

During the nine months ended September 30, 2003, the Company recorded pre-tax restructuring charges of $142.4 ($95.4 after tax). The pre-tax restructuring charge was composed of severance costs of $103.4 and lease terminations costs of $39.0. Included in the $39.0 of lease termination costs was $4.8 related to the write-off of leasehold improvements on vacated properties and $12.4 related to additional losses on properties vacated as part of the 2001 restructuring program. See below for further discussion of the 2001 restructuring program. The charges related to leases terminated as part of the 2003 program are recorded at net present value and are net of estimated sublease income amounts. In addition, a charge of $9.1 has been incurred in the three months ended September 30, 2003 related to acceleration of amortization of leasehold improvements on premises which are to be vacated in the future. The charge related to such amortization is included in office and general expenses in the accompanying consolidate d statement of operations.

A summary of the remaining liability for restructuring charges related to the 2003 restructuring plan is as follows:

Second
Quarter
Charges

Third Quarter Charges

Non-cash
Charges

2003 Cash
Payments

Ending
Balance at
September
30, 2003

TOTAL BY TYPE

Severance and termination costs

$66.0        

$ 37.4        

$1.4        

$54.5       

$47.5        

Lease terminations and other exit costs

    16.0        

  10.6        

  4.8        

    2.4       

  19.4        

          Total

$82.0        

$48.0        

$6.2        

$56.9       

$66.9        

The severance and termination costs recorded to date relate to a reduction in workforce of approximately 2,200 employees worldwide. The employee groups affected include all levels and functions across the Company: executive, regional and account management and administrative, creative and media production personnel. Approximately 35% of the charge relates to severance in the US, 15% to severance in the UK, 10% to severance in France with the remainder largely relating to the rest of Europe, Asia and Latin America.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in Millions, Except Per Share Amounts)
(Unaudited)

Lease termination costs, net of estimated sublease income, relate to the offices that have been or will be vacated as part of the restructuring. Approximately 35 locations are to be vacated with substantially all actions to be completed by March 31, 2004; however, the cash portion of the charge will be paid out over a period of several years. The majority of the offices to be vacated are located in the US, with approximately one third in overseas markets, principally in Europe.

2001 Program
Following the completion of the True North acquisition in June 2001, the Company executed a wide-ranging restructuring plan that included severance, lease terminations and other actions. The total amount of the charges incurred in 2001 in connection with the plan was $634.5.

A summary of the remaining liability for restructuring and other merger related costs related to the 2001 restructuring plan is as follows:

Liability at
December
31, 2002

2003
Charge

Cash paid
through
September
30, 2003

Liability at
September
30, 2003

TOTAL BY TYPE

Severance and termination costs

$  15.9          

$     --        

$12.0       

$  3.9      

Lease terminations and other exit costs

    94.6          

  12.4        

  24.9       

82.1      

          Total

$110.5          

$12.4        

$36.9       

$86.0      

5.

Long-Lived Asset Impairment
During the three and nine months ended September 30, 2003, the Company recorded charges of $222.7 and $244.8, respectively, related to the impairment of long-lived assets at both its Octagon Worldwide ("OWW") and Motorsports businesses. These amounts include $1.7 and $14.4, respectively, of current capital expenditure outlays that the Company is contractually required to spend to upgrade and maintain certain of its existing Motorsports racing facilities, as well as an impairment of assets at other Motorsports entities.

During the third quarter of 2003, the Company performed its annual impairment review for goodwill and other intangible assets and recorded a non-cash charge of $221.0, which is reflected as a component of "Long-lived asset impairment" in the accompanying consolidated statement of operations. The charge was required to reduce the carrying value of goodwill at the Company's OWW reporting unit. OWW is separate from Motorsports and offers a variety of sports marketing services including athlete representation, TV rights distribution and other marketing and consulting services.

The OWW charges reflect the reporting unit's lower than expected performance in 2003 and revised future projections indicating that the factors behind the poor 2003 performance are likely to persist. Specifically, during 2003 it became apparent that there was significant pricing pressure in both overseas and domestic TV rights distribution. Further, declining athlete pay scales are expected to result in significantly lower fees from athlete representation, and proceeds from events (including ticket revenue and sponsorship) to which the Company is committed will be lower than amounts that had been anticipated when the event rights were acquired. Various factors, including the operating loss incurred at OWW in 2003, have indicated that lower revised growth projections are required, reflecting lower projected gross margins than OWW has earned historically.

In 2002, the Motorsports businesses experienced significant operational difficulties, including significantly lower than anticipated attendance at the marquee British Grand Prix race in July 2002. These events and a change in management at Motorsports in the third quarter of 2002 led the Company to begin assessing its long-term strategy for Motorsports. Based on valuations of the Motorsports businesses, the Company determined that the goodwill and the book value of certain asset groupings at Motorsports were significantly higher than their expected future cash flows and that an impairment had occurred.

Accordingly, the Company recognized a non-cash impairment loss and related charge of $118.7 ($83.8, net of tax) as of September 30, 2002. The charges included $82.1 of goodwill impairment, $24.6 of fixed asset write-offs, and $12.0 to record the fair value of an associated put option.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in Millions, Except Per Share Amounts)
(Unaudited)

6.

Investment Impairment
During the three and nine months ended September 30, 2003, the Company recorded investment impairment charges of $29.7 and $42.2, respectively, relating primarily to international investments that had been determined to have incurred an "other than temporary" impairment.

During the third quarter of 2002, the Company recorded investment impairment charges of $4.9, primarily related to European marketable securities and certain venture funds that had been determined to have incurred an "other than temporary" impairment. During the second quarter of 2002, the Company recorded investment impairment charges of $16.2, primarily relating to certain investments of OWW.

The determination as to impairment was largely based on the entity's current and projected operating results.

7.

New Accounting Standards
In December 2002, SFAS 148, "Accounting for Stock-Based Compensation --- Transition and Disclosure (an Amendment of SFAS 123)" ("SFAS 148") was issued. SFAS 148 provides alternative methods of transition for making a voluntary change to fair value-based accounting for stock-based compensation. The Company continues to account for its stock option plans under the intrinsic value recognition and measurement principles of APB 25, "Accounting for Stock Issued to Employees" and related interpretations. Effective for interim periods beginning after December 15, 2002, SFAS 148 also requires disclosure of pro forma results on a quarterly basis as if the Company had applied the fair value recognition provisions of SFAS No. 123. This disclosure requirement did not have an impact on our consolidated results of operations or financial position. The FASB recently indicated that they will issue a new accounting standard that will require stock-based employee compensation to be recorded as a charge to earnin gs.

During 2003, FIN 46, "Consolidation of Variable Interest Entities - An Interpretation of ARB No. 51" ("FIN 46") was issued. FIN 46 addresses the consolidation by business enterprises of variable interest entities, as defined in FIN 46 and is based on the concept that companies that control another entity through interests other than voting interests should consolidate the controlled entity. The consolidation requirements apply immediately to FIN 46 interests held in variable interest entities created after January 31, 2003 and to interests held in variable interest entities that existed prior to February 1, 2003 and remain in existence as of July 1, 2003. On October 9, 2003, the FASB released FASB Staff Position 46-6, which deferred the effective date for the consolidation guidance of FIN 46 from July 1, 2003 to December 31, 2003 for variable interest entities existing prior to February 1, 2003. Pursuant to the transition requirements of FSP 46-6, the Company will adopt the consolidation guidance as of Decem ber 31, 2003. As a result of the emerging interpretations of and amendments to FIN 46, the Company is continuing to evaluate the impact of FIN 46 and its related guidance. Their application, however, is not expected to have an impact on, or result in additional disclosure in, the Company's consolidated results of operations or financial position.

During 2003, SFAS 150, "Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity" ("SFAS 150") was issued. SFAS 150 establishes standards for classification and measurement of certain financial instruments with characteristics of both liabilities and equity. It requires that an issuer classify a financial instrument that is within its scope as a liability (or an asset in certain cases). The provisions of SFAS 150 are effective for instruments entered into or modified after May 31, 2003 and pre-existing instruments as of July 1, 2003. On October 29, 2003, the FASB voted to indefinitely defer the effective date of SFAS 150 for mandatorily redeemable instruments as they relate to minority interests in consolidated finite-lived entities through the issuance of FASB Staff Position 150-3. The standard was adopted effective the third quarter of 2003, as modified by FSP 150-3, and did not have a material impact on its consolidated results of operations or f inancial position.

In April 2003, SFAS 149, "Amendment of Statement 133 on Derivative Instruments and Hedging Activities" ("SFAS 149") was issued. SFAS 149 amends and clarifies financial accounting and reporting for derivative instruments, including certain derivative instruments embedded in other contracts (collectively referred to as derivatives) and for hedging activities under FASB Statement No. 133 ("SFAS 133"), "Accounting for Derivative Instruments and Hedging Activities". This statement is effective for contracts entered into or modified after June 30, 2003. The adoption of this statement did not have a material impact on the Company's consolidated financial statements.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in Millions, Except Per Share Amounts)
(Unaudited)

8.

Derivative and Hedging Instruments
Hedges of Net Investments
On August 15, 2003, the Company repaid approximately $36.5 in the Yen borrowings under its $375.0 Five-Year Revolving Credit Facility that had been designated as a hedge of a net investment.

Forward Contracts
As of September 30, 2003, the Company had short-term contracts covering approximately $7.5 of notional amount of currency. As of September 30, 2003, the fair value of the forward contracts was negligible.

Other
The Company has two embedded derivative instruments under the terms of the 4.5% Convertible Senior Notes due 2023 ("the 4.5% Notes") issued in March 2003. At September 30, 2003, the fair value of these derivatives was negligible.

9.

Segment Information
The Company is organized into four global operating groups together with several stand-alone agencies. The four global operating groups are: a) McCann-Erickson WorldGroup ("McCann"), b) the FCB Group ("FCB"), c) The Partnership and d) Interpublic Sports and Entertainment Group ("SEG"). Each of the four groups and the stand-alone agencies has its own management structure and reports to senior management of the Company on the basis of this structure. McCann, FCB, The Partnership and the stand-alone agencies provide a full complement of global marketing services including advertising and media management, marketing communications including direct marketing, public relations, sales promotion, event marketing, on-line marketing and healthcare marketing in addition to specialized marketing services. SEG includes OWW (for sports marketing), Motorsports (for its motorsports business), and Jack Morton Worldwide (for specialized marketing services including corporate events, meetings and training/learning) .

Prior to the second quarter of 2003, the Company had maintained a fifth global operating group, Advanced Marketing Services ("AMS"). In connection with the disposal of NFO (see Note 10), AMS was disbanded and its remaining components became stand-alone agencies.

Each of McCann, FCB, The Partnership, SEG and the various stand-alone agencies operates with the same business objective, which is to provide clients with a wide variety of services that contribute to the delivery of a message and to the maintenance or creation of a brand. However, the Partnership and the entities included in the former AMS historically have had lower gross margins than the Company average. The four global operating groups share numerous clients, have similar cost structures, provide services in a similar fashion and draw their employee base from the same sources. The annual margins of each of the four groups may vary due to global economic conditions, client spending and specific circumstances such as the Company's restructuring activities. However, based on the respective future prospects of McCann, FCB, The Partnership and the entities included in the former AMS, the Company believes that the long-term average gross margin of each of these agencies will converge over time and, given the s imilarity of their operations, these entities have been aggregated.

SEG revenue is not material to the Company as a whole. However, due to the recording of long-lived asset impairment charges, operating difficulties and resulting higher costs principally from its Motorsports business, SEG has incurred significant operating losses. Based on the fact that the book value of long-lived assets relating to Motorsports and other substantial contractual obligations may not be fully recoverable and revised projections for OWW, the Company no longer expects that margins of SEG will converge with those of the rest of the Company and accordingly, reports SEG as a separate reportable segment. Other than the impairment charges discussed in Note 5 above and the commitments discussed under Note 13 below, the operating results of SEG are not material to those of the Company, and therefore are not discussed in detail below. The Company is currently evaluating the manner in which SEG and its component parts are managed and reported.

In accordance with SFAS 131, "Disclosures about Segments of an Enterprise and Related Information", the Company has two reportable segments. The accounting policies of the reportable segments are the same as those described in the summary of significant accounting policies. Management evaluates performance based upon operating earnings before interest and income taxes.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in Millions, Except Per Share Amounts)
(Unaudited)

At September 30, 2003 the assets of the reportable segments have not changed materially from those levels reported at December 31, 2002. Summary financial information concerning the Company's reportable segments for the three months ended and nine months ended September 30 is shown in the following table:

IPG

(Excl.

Consolidated

SEG)

SEG

Total

Three Months Ended September 30, 2003

Revenue

$1,297.3      

$121.6      

$1,418.9       

Operating income (loss)

74.6      

(245.7)     

(171.1)       

Depreciation and amortization of fixed assets

48.5      

3.0      

51.5       

Capital expenditures

$     64.5      

$   1.8      

$    66.3       

Three Months Ended September 30, 2002

Revenue

$1,277.4      

$109.4      

$1,386.8       

Operating income (loss)

78.8      

(157.1)     

(78.3)      

Depreciation and amortization of fixed assets

44.1      

3.9      

48.0       

Capital expenditures

$     26.6      

$  12.2      

$    38.8       

A reconciliation of information between reportable segments and the Company's consolidated pre-tax earnings is shown in the following table:

Three Months Ended September 30,

2003

2002

Total operating loss for reportable segments

$(171.1)

$(78.3)

Interest expense

(43.5)

(36.7)

Debt prepayment penalty

(24.8)

-- 

Interest income

9.5 

5.9 

Other income

1.2 

2.7 

Investment impairment

    (29.7)

  (4.9)

Litigation charges

  (127.6)

          -- 

Loss before income taxes

$(386.0)

$(111.3)

IPG

(Excl.

Consolidated

SEG)

SEG

Total

Nine Months Ended September 30, 2003

Revenue

$3,925.3 

$308.7 

$4,234.0     

Operating income (loss)

190.5 

(288.9)

(98.4)    

Depreciation and amortization of fixed assets

129.1 

9.3 

138.4     

Capital expenditures

$   119.4 

$  19.0 

$   138.4     

Nine Months Ended September 30, 2002

Revenue

$3,898.9 

$297.3 

$4,196.2     

Operating income (loss)

415.1 

(158.7)

256.4     

Depreciation and amortization of fixed assets

128.2 

11.9 

140.1     

Capital expenditures

$     84.6 

$  32.0 

$   116.6