UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
-----------------------
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): March 9, 2004
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 5. Other Events and Regulation FD Disclosure.
On March 9, 2004, The Interpublic Group of Companies, Inc. (the
"Company") issued a press release announcing its fourth quarter and full-year
2003 earnings, a copy of which is attached hereto as Exhibit 99.1 and is hereby
incorporated into this report by reference to this exhibit. This press release
is also being furnished pursuant to Item 12.
Item 7. Financial Statements and Exhibits.
(c) Exhibits
Exhibit 99.1: Press Release of the Company, dated March 9, 2004.
Item 12. Results of Operations and Financial Condition.
On March 9, 2004, the Company issued a press release announcing its
fourth quarter and full-year 2003 earnings, a copy of which 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: March 10, 2004 By: /s/ Nicholas J. Camera
------------------------------
Nicholas J. Camera
Senior Vice President, General
Counsel and Secretary
EXHIBIT INDEX
Exhibit No. Description
99.1 Press Release of the Company, dated March 9, 2004.
Exhibit 99.1
THE INTERPUBLIC GROUP OF COMPANIES, INC.
[INTERPUBLIC LOGO]
WORLDWIDE ADVERTISING AND MARKETING COMMUNICATIONS
1271 Avenue of the Americas, New York, N.Y. 10020
FOR IMMEDIATE RELEASE NEW YORK, NY (March 9, 2004)
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INTERPUBLIC REPORTS FOURTH QUARTER RESULTS
Highlights
o Fourth quarter revenue rose to $1.6 billion, a 5.7% increase relative to
the same period in 2002.
o Compared to the same period last year, organic revenue in the fourth
quarter decreased 1.1%, improving sequentially from the prior quarter for
the third consecutive quarter.
o Operating margin for the quarter improved to 9.2%, compared to a like
margin in the previous year's fourth quarter of 6.7%. Excluding
restructuring charges and asset impairment charges, operating margin for
the quarter improved to 14.3%, compared to a like margin of 7.2% in 2002. A
reconciliation of operating margin is included in the schedules that
accompany this release.
o Fourth quarter net loss was $102.5 million or ($0.26) per share, comprised
of:
o Income before taxes of $123.5 million.
o Provision for income taxes of $217.7 million. The company's tax
rate in the fourth quarter was negatively impacted by
restructuring charges, non-deductible impairment charges and poor
international performance which received little or no tax
benefit.
Turnaround Actions
o As part of its turnaround progress, the company continued its restructuring
activities and took other actions that resulted in a number of charges in
the fourth quarter:
o Charges relating to the company's previously announced
restructuring program were $40.6 million, of which $7.4 million
are included in office and general expenses.
o Non-cash investment impairment charges of $42.7 million,
primarily relating to certain international investments in which
the company owns minority interests.
o A non-cash charge of $38 million related to the sale of four
automobile racing tracks in the United Kingdom. These facilities
had been part of the company's Brands Hatch Circuits unit and
Interpublic had previously disclosed the money-losing nature of
these operations. The company sold these assets for approximately
$26 million.
Balance Sheet Management
o During the quarter, Interpublic raised $693 million of net proceeds by
means of concurrent common and mandatory convertible preferred equity
offerings, as well as an additional $99 million through the sale of equity
stakes in Modem Media and Taylor Nelson Sofres.
o Cash and equivalents totaled $2.0 billion at December 31, 2003 compared to
$933.0 million a year earlier. Net debt stood at $469 million, down from
$1.7 billion at the end of last year's fourth quarter.
o The company's debt-to-capital ratio at the end of the fourth quarter was
48.7%, compared to 55.7% at the same time in 2003.
o In January of this year, the company redeemed all of its $244 million of
outstanding convertible subordinated notes due in September of 2004.
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"We continue to move aggressively to eliminate financial and legal issues. The
significant success we've experienced in resolving the company's outstanding
problems, in strengthening the balance sheet and in bolstering margins, makes it
clear that the first phase of our turnaround will soon be behind us.
Our focus will now move increasingly to addressing the challenges and
opportunities facing Interpublic's operating units. We're pleased to see
improvement in organic revenue for the third consecutive quarter at Interpublic
and early signs of a revenue resurgence at McCann. Our collaboration efforts are
taking root and a firming economy will help, but organic growth is an area in
which we must accelerate progress.
We are introducing new metrics that will allow investors to better measure
progress on the cost initiatives we have previously described as key drivers of
margin improvement. We have identified many areas of opportunity and we are
making headway, but there remains much work ahead of us."
David Bell, Chairman and CEO, The Interpublic Group
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Operating Results
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Fourth Quarter Full Year
2003 2002 Variance 2003 2002 Variance
-------------- -------------- --------------- -------------- -------------- ---------------
Revenue $ 1,629.4 $ 1,541.3 5.7% $ 5,863.4 $ 5,737.5 2.2%
Operating Income 150.6 102.6 46.8% 52.2 359.0 (85.5)%
Net Income (Loss) (102.5) 20.3 (451.7) 99.5
EPS Continuing Ops $ (0.26) $ 0.03 $ (1.43) $ 0.18
EPS Discontinued Ops -- 0.03 0.26 0.08
-------------- -------------- --------------- -------------- -------------- ---------------
EPS (0.26) 0.05* (1.17) 0.26
* Does not foot due to rounding
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Revenue increased 5.7% in the fourth quarter to $1.63 billion and 2.2% for the
year to $5.86 billion, compared with the year-ago periods. These comparisons
were aided by improving market conditions and favorable foreign currency
translations.
On a constant currency basis, revenue in the fourth quarter increased 0.5%,
while revenue for the year decreased 2.4% relative to the same periods in 2002.
Constant currency is defined in the schedules that accompany this release.
Organic revenue is defined as revenue in constant currency adjusted for
acquisitions and dispositions. Additionally, the organic revenue calculation is
adjusted for certain reclassifications principally involving "grossing up" of
revenue and associated expenses, in addition to the deconsolidation of certain
international subsidiaries. These adjustments provide a more accurate reflection
of the company's organic revenue performance, are not material to Interpublic's
results in any prior period and have no effect on operating or net income.
Interpublic has recalculated organic growth for each quarter of 2003 to reflect
these reclassifications, so as to provide information on a consistent basis.
Organic revenue decreased 1.1% in the fourth quarter and 3.6% for the year
compared to the 2002 fourth quarter and full year, respectively.
In the United States, reported revenue for the fourth quarter decreased 3.4%,
while organic revenue decreased 1.2%, in each case compared to the fourth
quarter of 2002. For the year, reported revenue in the United States was down
0.9% and organic revenue decreased 2.1%, compared to 2002.
In international markets, reported revenue rose 18.3% in the fourth quarter and
6.4% for the year. In constant currency, international revenue increased 5.2% in
the fourth quarter, but decreased 4.2% for the year. Internationally, organic
revenue decreased 1.1% in the fourth quarter and 5.4% for the year.
Revenue Analysis
- ------------------------------ --------------------------- ---------------------------- ---------------------------
Worldwide US International
4Q03 2003 4Q03 2003 4Q03 2003
------------- ------------- ------------- -------------- ------------- -------------
Reported Growth 5.7% 2.2% (3.4)% (0.9)% 18.3% 6.4%
Less Currency Translation 5.2% 4.6% -- -- 13.1% 10.6%
------------- ------------- ------------- -------------- ------------- -------------
Constant Dollar 0.5% (2.4)% (3.4)% (0.9)% 5.2% (4.2)%
Less:
Net Acquisition/ Dispositions -- (0.2)% (0.1)% 0.2% 0.2% (0.7)%
Reclassifications 1.6% 1.4% (2.1)% 1.0% 6.1% 1.9%
------------- ------------- ------------- -------------- ------------- -------------
Organic Revenue (1.1)% (3.6)% (1.2)% (2.1)% (1.1)% (5.4)%
============= ============= ============= ============== ============= =============
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A comprehensive analysis of the Interpublic's geographic revenue mix and
performance will be provided on the company's conference call and is available
to investors in the presentation that is posted on the company's web site.
Organic Revenue Trend
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Q1 2003 -6.0%
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Q2 2003 -4.5%
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Q3 2003 -3.1%
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Q4 2003 -1.1%
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Organic revenue calculations for all periods have been updated to reflect
the effects of reclassifications and discontinued operations
New Business
Significant wins during the fourth quarter included EchoStar Communications'
Dish Network, Quiznos, Sepracor, Best Western, Viagra, XM Satellite Radio, Cisco
Systems, Kaiser Permanente, Tylenol and a number of other major Johnson &
Johnson brands. Important wins already announced in the first quarter of 2004
include the CRM consolidation at Microsoft, Miller Genuine Draft, Allstate
Insurance and the retention of the media agency of record assignment for America
Online.
Collaboration Update
In August of 2003, Interpublic introduced its Organic Growth Initiative (OGI) to
encourage agencies within Interpublic to work together. The plan provides tools
and incentives for collaborative business-building efforts.
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"We continue to change the culture at Interpublic and to drive increased
collaboration.
During the fourth quarter we formally rolled out the Organic Growth Initiative
into Europe and have plans to introduce it in Asia in May of this year. To date,
we have approximately 100 collaborative assignments on-stream in the OGI. These
projects represent an anticipated $40 million to $60 million of annualized
revenue."
David Bell, Chairman and CEO, The Interpublic Group
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Operating Expenses
Compared to the fourth quarter a year ago, salary and related expenses increased
3.6% to $907.8 million, as the benefits of the company's restructuring efforts
were more than offset by the impact of currency translation. On a constant
currency basis, salaries and related expenses decreased 1.5% in the quarter
compared to the year-ago period.
Office and general expenses decreased 10.6% to $493.5 million in the quarter
relative to the same period in 2002. The decrease was primarily due to
reductions in occupancy and overhead costs as a result of the company's
restructuring efforts and a reduction of bad debt expense as a result of
aggressive collection efforts at year-end, partially offset by the impact of
currency translation. Excluding the effects of currency, office and general
expenses decreased 15.6% in the quarter, compared to the fourth quarter of 2002.
Restructuring Program
Continuing the program begun in the second quarter of 2003, the company recorded
a pre-tax restructuring charge of $33.2 million in the fourth quarter, all of
which will be cash. During 2003, the company incurred $175.6 million of
restructuring charges, of which $169.4 million is cash and $96.8 million has
already been paid.
The company expects to generate annualized savings of $170-180 million per year
from actions taken to date.
In the quarter, restructuring charges were applied as follows:
---------------------------- ---------------------
Total
---------------------
Severance $ 22.8
Facilities Costs 10.4
---------------------
Total Restructuring $ 33.2
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The company's restructuring program will continue through the first half of 2004
and is not expected to exceed $250 million, of which a significant portion will
be cash.
Long-Lived Asset Impairment
Long-lived asset impairment charges (non-cash) totaled $42.1 million in the
quarter.
Of these charges, $38 million related to the sale of four automobile racing
tracks in the United Kingdom. These facilities had been part of the company's
Brands Hatch Circuits unit and Interpublic had previously disclosed the
money-losing nature of these operations. The company sold these assets for
approximately $26 million.
Charges related to the remaining motorsports operations (Silverstone Motorsport
Limited) amounted to $2.0 million in the quarter, $1.8 million of which were
capital expenditures that are expensed as incurred. Other impairments, in the
amount of $2.1 million, related primarily to two small operations the company
expects to sell in the first quarter of 2004.
Non-Operating Results and Taxes
Interest expense increased 21.0% to $44.4 million in the fourth quarter compared
to the year-ago period. This increase reflects, in part, the issuance of $800
million 4.5% convertible notes on March 11, 2003, the proceeds of which were
largely used to redeem the company's zero-coupon notes on April 4, 2003. Higher
average cash balances generated interest income of $11.3 million during the
quarter, compared to $8.9 million in the 2002 quarter.
Other income in the quarter amounted to $48.7 million, versus an expense of $1.7
million a year ago. This income reflects the gain on the sale of equity stakes
in Taylor Nelson Sofres and Modem Media.
In its fourth quarter review, Interpublic determined that the carrying value of
certain minority owned equity investments primarily in international markets had
become impaired and incurred a non-cash charge of $42.7 million.
The provision for income taxes of $217.7 million was negatively impacted by
restructuring charges, non-deductible long-lived asset impairment charges,
non-deductible investment impairment charges principally relating to
unconsolidated affiliates, as well as the impact of the establishment of
valuation allowances on certain deferred tax assets and losses incurred in
non-US jurisdictions with tax benefits at rates lower than the US statutory
rates.
Debt and Liquidity
At December 31, Interpublic's net debt (total debt less cash and cash
equivalents) was $469 million, compared to $1.7 billion a year earlier. Cash and
equivalents totaled $2.0 billion at December 31, 2003 compared to $933.0 million
a year earlier.
The company's debt-to-capital ratio (debt divided by the total of debt plus
stockholder's equity) at the end of the fourth quarter was 48.7%, compared to
55.7% at the same time in 2002.
Total Debt
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As of December 31, $ MM
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2001 $2,909
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2002 $2,638
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2003 $2,474
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Conference Call
Management will host a conference call today at 8:30AM (EDT) to discuss fourth
quarter results and recent developments. The program and a discussion outline
can be accessed at the Financial section of the company's website,
www.interpublic.com. An audio archive of the discussion will remain available at
the site for 30 days.
About Interpublic
Interpublic is one of the world's leading organizations of advertising agencies
and marketing services companies. Major global brands include Draft, Foote, Cone
& Belding Worldwide, Golin/Harris International, Initiative Media, Jack Morton
Worldwide, Lowe & Partners Worldwide, McCann-Erickson, Octagon, Universal McCann
and Weber Shandwick Worldwide.
Contact Information
Press: General Inquiries: Analysts:
Philippe Krakowsky Julie Tu Dan Leib
(212) 399-8088 (212) 445-8456 (212) 621-5767
Cautionary Statement
This press release 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 impact of litigation, the SEC
investigation, dispositions, impairment charges, and the integration of
acquisitions and restructuring costs, constitute forward-looking statements.
These statements are based on current plans, estimates and projections, and are
subject to change based on a number of factors, including those outlined in this
section. 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 risk factors include, but are
not limited to, the following:
o risks associated with the effects of global, national and regional economic
and political conditions;
o Interpublic's ability to attract new clients and retain existing clients;
o the financial success of Interpublic's clients;
o Interpublic's ability to retain and attract key employees;
o developments from changes in the regulatory and legal environment for
advertising and marketing and communications services companies around the
world;
o potential adverse effects if Interpublic is required to recognize
additional impairment charges or other adverse accounting related
developments;
o potential adverse developments in connection with the SEC investigation;
o risks associated with Interpublic's remaining motorsports commitments;
o potential downgrades in the credit ratings of Interpublic's securities; and
o the successful completion and integration of acquisitions which complement
and expand Interpublic's business capabilities.
Investors should carefully consider these risk factors and the additional risk
factors outlined in more detail in Interpublic's Form 10-K and other SEC
filings.
THE INTERPUBLIC GROUP OF COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED SUMMARY OF EARNINGS
FOURTH QUARTER REPORT 2003 AND 2002 (UNAUDITED)
(Amounts in Millions except Per Share Data)
Three Months Ended December 31, Fav (Unfav)
2003 2002 % Variance
------------------------ ----------------------- -----------------------
Revenue
United States $ 861.0 $ 891.5 (3.4)
International 768.4 649.8 18.3
------------------------ ----------------------- -----------------------
Total Revenue 1,629.4 1,541.3 5.7
------------------------ ----------------------- -----------------------
Operating Expenses
Salaries and Related Expenses 907.8 875.9 (3.6)
Office and General Expenses 493.5 552.0 10.6
Amortization of Intangible Assets 2.2 2.4 8.3
Restructuring Charges 33.2 -- --
Long-Lived Asset Impairment 42.1 8.4 (401.2)
------------------------ ----------------------- -----------------------
Total Operating Expenses 1,478.8 1,438.7 (2.8)
------------------------ ----------------------- -----------------------
Operating Income 150.6 102.6 46.8
------------------------ ----------------------- -----------------------
Other Income (Expense)
Interest Expense (44.4) (36.7)
Interest Income 11.3 8.9
Other Income 48.7 (1.7)
Investment Impairment (42.7) (18.6)
------------------------ -----------------------
Total Other Income (Expense) (27.1) (48.1)
------------------------ -----------------------
Income before Income Taxes 123.5 54.5
Provision for Income Taxes 217.7 38.3
Income Applicable to Minority Interests (11.5) (8.4)
Equity in Net Income of Unconsolidated Affiliates 3.2 1.9
------------------------ -----------------------
Income (Loss) from Continuing Operations (102.5) 9.7
Income from Discontinued Operations -- 10.6
------------------------ -----------------------
Net Income (Loss) $ (102.5) $20.3
======================== =======================
Per Share Data:
Basic EPS
Continuing Operations $ (0.26) $ 0.03
Discontinued Operations -- 0.03
------------------------ -----------------------
Total $ (0.26) $0.05*
======================== =======================
Diluted EPS
Continuing Operations $(0.26) $ 0.03
Discontinued Operations -- 0.03
------------------------ -----------------------
Total $(0.26) $0.05*
======================== =======================
* Does not foot due to rounding
Dividend per Share -- $ 0.095
Weighted Average Shares:
Basic 390.3 378.3
Diluted 390.3 381.8
THE INTERPUBLIC GROUP OF COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED SUMMARY OF EARNINGS
FOURTH QUARTER REPORT 2003 AND 2002 (UNAUDITED)
(Amounts in Millions except Per Share Data)
Twelve Months Ended December 31, Fav (Unfav)
2003 2002 % Variance
------------------------ ----------------------- -----------------------
Revenue
United States $ 3,284.2 $ 3,313.6 (0.9)
International 2,579.2 2,423.9 6.4
------------------------ ----------------------- -----------------------
Total Revenue 5,863.4 5,737.5 2.2
------------------------ ----------------------- -----------------------
Operating Expenses
Salaries and Related Expenses 3,451.8 3,350.0 (3.0)
Office and General Expenses 1,885.6 1,880.4 (0.3)
Amortization of Intangible Assets 11.3 8.9 (27.0)
Restructuring Charges 175.6 12.1 (1,351.2)
Long-Lived Asset Impairment 286.9 127.1 (125.7)
------------------------ ----------------------- -----------------------
Total Operating Expenses 5,811.2 5,378.5 (8.0)
------------------------ ----------------------- -----------------------
Operating Income 52.2 359.0 (85.5)
------------------------ ----------------------- -----------------------
Other Income (Expense)
Interest Expense (172.8) (145.6)
Debt Prepayment Penalty (24.8) --
Interest Income 38.9 29.8
Other Income 50.0 7.9
Investment Impairment (84.9) (39.7)
Litigation Charges (127.6) --
------------------------ -----------------------
Total Other Income (Expense) (321.2) (147.6)
------------------------ -----------------------
Income (Loss) before Income Taxes (269.0) 211.4
Provision for Income Taxes 254.0 117.9
Income Applicable to Minority Interests (30.9) (30.5)
Equity in Net Income of Unconsolidated Affiliates 1.0 5.0
------------------------ -----------------------
Income (Loss) from Continuing Operations (552.9) 68.0
Income from Discontinued Operations 12.1 31.5
Gain on Disposal of Discontinued Operations 89.1 --
------------------------ -----------------------
Net Income (Loss) $(451.7) $ 99.5
======================== =======================
Per Share Data:
Basic EPS
Continuing Operations $ (1.43) $ 0.18
Discontinued Operations 0.26 0.08
------------------------ -----------------------
Total $ (1.17) $ 0.26
======================== =======================
Diluted EPS
Continuing Operations $ (1.43) $ 0.18
Discontinued Operations 0.26 0.08
------------------------ -----------------------
Total $ (1.17) $ 0.26
======================== =======================
Dividend per Share -- $ 0.380
Weighted Average Shares:
Basic 385.5 376.1
Diluted 385.5 381.3
THE INTERPUBLIC GROUP OF COMPANIES, INC.
RECONCILIATION OF OPERATING MARGIN
(Dollars in Millions)
Fourth Quarter Full Year
2003 2002 2003 2002
---------- ----------- ----------- -----------
Revenue $1,629.4 $ 1,541.3 $ 5,863.4 $ 5,737.5
---------- ----------- ----------- -----------
Operating Expenses
Salaries and Related Expenses 907.8 875.9 3,451.8 3,350.0
Office and General Expenses 493.5 552.0 1,885.6 1,880.4
Amortization of Intangible Assets 2.2 2.4 11.3 8.9
Restructuring Charges 33.2 -- 175.6 12.1
Long-Lived Asset Impairment 42.1 8.4 286.9 127.1
---------- ----------- ----------- -----------
Total Operating Expenses 1,478.8 1,438.7 5,881.2 5,378.5
---------- ----------- ----------- -----------
Operating Income - As Reported $150.6 $102.6 $ 52.2 $359.0
Operating Margin - As Reported 9.2% 6.7% 0.9% 6.3%
Add Back:
Restructuring Charges $ 33.2 $ -- $175.6 $ 12.1
Restructuring Program Charges in Office and General Expenses 7.4 -- 16.5 --
Long-Lived Asset Impairment 42.1 8.4 286.9 127.1
---------- ----------- ----------- -----------
Total Restructuring Program Charges and Long-Lived Asset Impairment 82.7 8.4 479.0 139.2
---------- ----------- ----------- -----------
Excluding Restructuring Program Charges and
Long-Lived Asset Impairment:
Operating Income $233.3 $111.0 $531.2 $498.2
Operating Margin 14.3% 7.2% 9.1% 8.7%
In comparing performance for 2003 with 2002, the company has excluded
restructuring program and long-lived asset impairment charges because management
believes the resulting comparison better reflects the company's ongoing
operations. By excluding them, we can focus our comparison on the trends that
have a continuing effect on the company's operations. The company expects to
incur further charges relating to its restructuring program in 2004, and may
incur future long-lived asset impairment charges as well.
CERTAIN NON-GAAP FINANCIAL MEASURES
Organic Revenue. We derive organic revenue by adjusting reported revenue in
respect of any given period by:
o excluding the impact of foreign currency effects over the course of the
period to provide revenues on a constant currency basis; and
o excluding the impact on reported revenue resulting from acquisitions and
dispositions that were consummated after the first day of the year prior to
the given period.
Additionally, organic revenue calculations for the year ended, and each quarter
of, 2003 have been adjusted to make 2003 organic revenue principally arising
from public relations and sporting event arrangements more directly comparable
to organic revenue arising from public relations and sporting event arrangements
in periods preceding January 1, 2003, in addition to the deconsolidation of
certain international subsidiaries. If these adjustments had been made to
revenue for prior periods, there would have been neither a material effect on
results in prior periods nor any effect whatsoever on operating or net income.
These adjustments relate to "grossing up" revenues and expenses by the same
amount in connection with the reimbursement of certain out of pocket expenses
relating to public relations and sporting event arrangements.
Management believes that discussing organic revenue, giving effect to the above
factors, provides a better understanding of the Company's revenue performance
and trends than reported revenue because it allows for more meaningful
comparisons of current-period revenue to that of prior periods. Management also
believes that organic revenue determined on a generally comparable basis is a
common measure of performance in the businesses in which it operates.
Constant Currency. When the Company discusses amounts on a constant currency
basis, the prior period results are adjusted to remove the impact of changes in
foreign currency exchange rates during the current period that is being compared
to the prior period. The impact of changes in foreign currency exchange rates on
prior period results is removed by converting the prior period results into U.S.
dollars at the average exchange rate for the current period. Management believes
that discussing results on a constant currency basis allows for a more
meaningful comparison of current-period results to such prior-period results.
Net Debt. Net debt as of any given date is total debt as reported at that date
less total cash and cash equivalents as of that date. Management believes that
discussing net debt is useful because it provides a more complete picture of the
Company's liquidity position.
THE INTERPUBLIC GROUP OF COMPANIES, INC.
RECONCILIATION OF ORGANIC REVENUE
FOURTH QUARTER 2003 AND 2002
(Amounts in Millions except Percentage Variance)
Worldwide US International
4Q03 4Q02 Var 4Q03 4Q02 Var 4Q03 4Q02 Var
--------------------------------- ------------------------------- ---------------------------------
Reported Revenue $1,629.4 $1,541.3 5.7% $ 861.0 $ 891.5 (3.4)% $ 768.4 $649.8 18.3%
Effects of Currency Translation 80.7 -- -- -- 80.7
--------------------------------- ------------------------------- ---------------------------------
Constant Dollar 1,629.4 1,622.0 0.5% 861.0 891.5 (3.4)% 768.4 730.5 5.2%
Effects of Acquisitions/
Dispositions (15.1) (15.1) (10.0) (11.4) (5.1) (3.7)
Reclassified Amounts (64.5) (39.5) (42.4) (62.1) (22.1) 22.6
--------------------------------- ------------------------------- ---------------------------------
Organic Revenue $1,549.8 $1,567.4 (1.1)% $ 808.6 $ 818.0 (1.2)% $ 741.2 $ 749.4 (1.1)%
================================= ===================== ========== =================================
FULL YEAR 2003 AND 2002
(Amounts in Millions except Percentage Variance)
Worldwide US International
2003 2002 Var 2003 2002 Var 2003 2002 Var
--------------------------------- ------------------------------- ---------------------------------
Reported Revenue $5,863.4 $5,737.5 2.2% $3,284.2 $3,313.6 (0.9)% $2,579.2 $2,423.9 6.4%
Effects of Currency Translation 269.3 -- -- -- 269.3
--------------------------------- ------------------------------- ---------------------------------
Constant Dollar 5,863.4 6,006.8 (2.4)% 3,284.2 3,313.6 (0.9)% 2,579.2 2,693.2 (4.2)%
Effects of Acquisitions/
Dispositions (63.6) (77.5) (38.7) (32.0) (24.9) (45.5)
Reclassified Amounts (172.2) (91.5) (108.5) (76.1) (63.7) (15.4)
--------------------------------- ------------------------------- ---------------------------------
Organic Revenue $5,627.6 $5,837.8 (3.6)% $3,137.0 $3,205.5 (2.1)% $2,490.6 $2,632.3 (5.4)%
================================= ================================ =================================
THE INTERPUBLIC GROUP OF COMPANIES, INC.
RECONCILIATION OF ORGANIC REVENUE BY REGION
FOURTH QUARTER 2003 AND 2002
Organic Foreign Exchange Acquisitions/ Reclassifications Reported
Impact Dispositions
--------------------- ---------------------- --------------------- --------------------- ----------------------
US (1.2)% 0.0% (0.1)% (2.1)% (3.4)%
Europe (2.5)% 16.7% 0.4% 2.6% 17.2%
Asia/Other 3.0% 10.4% 0.1% 13.1% 26.6%
Latin America (1.0)% (11.9)% (0.9)% 19.0% 5.2%
Canada 0.8% 15.7% (0.1)% 9.7% 26.1%
--------------------- ---------------------- --------------------- --------------------- ----------------------
Worldwide (1.1)% 5.2% 0.0% 1.6% 5.7%
FOURTH QUARTER 2003 AND 2002
Organic Foreign Exchange Acquisitions/ Reclassifications Reported
Impact Dispositions
--------------------- ---------------------- --------------------- --------------------- ----------------------
US (2.1)% 0.0% 0.2% 1.0% (0.9)%
Europe (8.2)% 14.1% (0.8)% 2.7% 7.8%
Asia/Other 1.4% 8.8% 0.0% 0.2% 10.4%
Latin America (3.8)% (8.4)% (0.6)% 0.6% (12.2)%
Canada 2.3% 12.3% (2.3)% 0.5% 12.8%
--------------------- ---------------------- --------------------- --------------------- ----------------------
Worldwide (3.6)% 4.6% (0.2)% 1.4% 2.2%