ITEM 1. BUSINESS:
GENERAL
Response to this item is incorporated by reference to the Registrant's Annual Report to shareholders for fiscal year ended December 31, 1993 on page 8.
REVENUES
Response to this item is incorporated by reference to the Registrant's Annual Report to shareholders for fiscal year ended December 31, 1993 on page 8.
CLIENTS
The Registrant and its subsidiaries (the Company) consider their relations with their clients to be satisfactory. Due to the nature of the business, however, any client could at some time in the future reduce its advertising budget, or transfer to another agency all or part of its advertising presently placed through the Company. Representation of a client does not necessarily mean that all advertising for such clients is handled by the Company exclusively. In many cases, the Company handles the advertising of only a portion of a client's products or services or only the advertising in particular geographic areas.
COMPETITION
The advertising agency business is highly competitive, with agencies of all sizes competing primarily on the basis of quality of service to attract and retain clients and personnel. Advertisers are able to move from one agency to another with relative ease, in part because accounts are terminable on short notice, usually90-180 days. Competition for clients by large agencies is limited somewhat because many advertisers prefer not to be represented by an agency which handles competing products or services for other advertisers.
REGULATION
Federal, state and local governments and governmental agencies in recent years have adopted statutes and regulations affecting the advertising activities of advertising agencies and their clients. For example, statutes and regulations have prohibited television advertising for certain products and have regulated the form and content of certain types of advertising for many consumer products. The Federal Trade Commission ("FTC") has also required proof of accuracy of advertising claims with respect to various products and, in its enforcement policies, is seeking to establish more stringent standards with respect to advertising practices. The FTC has the authority to investigate and to institute proceedings against advertisers and their advertising agencies for deceptive advertising. Proposals have also been made for the adoption of additional statutes and regulations which would further restrict the advertising activities of advertising agencies and their clients. The effect on the advertising business of future application of existing statutes or regulations, or the extent, nature or effect of future legislation or regulatory activity with respect to advertising, cannot be predicted.
FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS
Response to this item is incorporated by reference to the Registrant's Annual Report to shareholders for the fiscal year ended December 31, 1993 on page 21.
ITEM 2.


ITEM 2. PROPERTIES
Virtually all of the Company's operations are conducted in leased premises. The Company's physical property consists primarily of leasehold improvements, furniture, fixtures and equipment. However, the Company does own office buildings in Puerto Rico and the Dominican Republic, neither of which are material to the Company's consolidated financial statements.
Further information regarding the Company's leased premises, which it considers to be adequate for its current operations, is contained in note 12 of the Registrant's Annual Report to Shareholders (page 23).
ITEM 3.
ITEM 3. PENDING LEGAL PROCEEDINGS
Response to this item is incorporated by reference to the Registrant's Annual Report to shareholders for the fiscal year ended December 31, 1993 note 5 on page 19.
ITEM 4.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not Applicable.
PART II
ITEM 5.
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK
Response to this item is incorporated by reference to the Registrant's Annual Report to shareholders for the fiscal year ended December 31, 1993 on page 9.
ITEM 6.
ITEM 6. SELECTED FINANCIAL DATA
Response to this item is incorporated by reference to the Registrant's Annual Report to shareholders for the fiscal year ended December 31, 1993 on page 11.
ITEM 7.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Response to this item is incorporated by reference to the Registrant's Annual Report to shareholders for the fiscal year ended December 31, 1993 on pages 10 and 11.
ITEM 8.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA
The following consolidated financial statements of the Registrant and its subsidiaries, included in the Registrant's Annual Report to shareholders for the fiscal year ended December 31, 1993 are incorporated by reference:
Consolidated Balance Sheets--December 31, 1992 and 1993 Consolidated Statements of Income--Years ended December 31, 1991, 1992 and Consolidated Statements of Stockholders' Equity--Years ended December 31, 1991, 1992 and 1993 Consolidated Statements of Cash Flows--Years ended December 31, 1991, 1992 and 1993 Notes to Consolidated Financial Statements--December 31, 1993 Quarterly Financial Data--Years ended December 31, 1992 and 1993
ITEM 9.
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
ITEM 10.


ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information with respect to the Directors of the Registrant is incorporated by reference to the Proxy Statement for the Annual Meeting of Stockholders filed with the Commission prior to April 1, 1994 pursuant to Regulation 14A. Information with respect to executive officers of the Registrant who are not also Directors or nominees to the Board of Directors is included below.
JACK J. BOLAND (37) --Executive Vice President,
North American Finance Director
MARY A. CARRAGHER (34) --Vice President, General Counsel and Assistant Secretary
MICHAEL S. DUFFEY (39) --Vice President, Treasurer and Assistant Secretary
--Vice President, DALE F. PERONA (48) Controller and Secretary
Mr. Duffey and Ms. Carragher joined the Company and became officers during 1992. Previous to that time, Mr. Duffey held various executive positions at Outboard Marine Corporation, and Ms. Carragher held various positions at Sidley & Austin.
No officer of the Registrant is related to any other officer. All other officers have been officers of the Registrant or have held senior executive positions with the Company for the past five years, except as otherwise disclosed in Registrant's Proxy Statement.
ITEMS 11. EXECUTIVE COMPENSATION
The Registrant has filed with the Commission, prior to April 1, 1994, a definitive proxy statement pursuant to Regulation 14A. Information required under this item with respect to Directors and Officers is incorporated by reference to said Proxy Statement.
ITEMS 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(a) Persons or "groups" (as that term is used in Section 13(d)(3) of the Securities and Exchange Act of 1934) known by the Registrant to beneficially own more than five percent of any class of the Registrant's voting securities, included in the Proxy Statement for the Annual Meeting of Stockholders, is incorporated herein by reference.
(b) Security ownership of management included in the Proxy Statement for the Annual Meeting of Stockholders is incorporated herein by reference.
(c) There are no arrangements known to the Registrant the operation of which may at a subsequent date result in change in control of the Registrant.
ITEM 13.


ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
For information with respect to certain transactions with directors of the Registrant, see the Proxy Statement for the Annual Meeting of Stockholders which is incorporated herein by reference.
PART IV
ITEM 14.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
FORM 10-K--ITEM 14(A)
FOOTE, CONE & BELDING COMMUNICATIONS, INC. AND SUBSIDIARIES LIST OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
The following consolidated financial statements of Foote, Cone & Belding Communications, Inc. and Subsidiaries, and the Independent Public Accountant's Report covering these financial statements, appearing in the Registrant's Annual Report to shareholders on pages 12 through 26 for the year ended December 31, 1993, are incorporated by reference in Item 8:
Consolidated Balance Sheets--December 31, 1992 and 1993
Consolidated Statements of Income--Years ended December 31, 1991, 1992 and
Consolidated Statements of Stockholders' Equity--Years ended December 31, 1991, 1992 and 1993
Consolidated Statements of Cash Flows--Years ended December 31, 1991, 1992 and 1993
Notes to Consolidated Financial Statements--December 31, 1993
The following consolidated financial statements (numbered in accordance with Regulation S-X) of Publicis Communication (a 26% owned unconsolidated affiliate of the Registrant) and Subsidiaries, and Auditors' Report with respect thereto, are included in this Report.
Consolidated Income Statements--Years ended December 31, 1992 and 1993, page 10 of this Report.
Consolidated Balance Sheet--December 31, 1992 and 1993, page 9 of this Report.
Consolidated Statement of Change in Financial Position--Year ended December 31, 1992 and 1993, pages 11 and 12 of this Report.
Notes to the Consolidated Financial Statements--December 31, 1993, pages 13 through 18 of this Report.
Auditors' Report, page 19 of this Report.
All other schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission are not required under the related instructions, or are inapplicable, or the information called for therein is included elsewhere in the financial statements or related notes thereto contained in or incorporated by reference into this Report. Accordingly, such schedules have been omitted.
Publicis Communication owns 51% of Publicis.FCB BV. Accordingly, the consolidated financial statements of Publicis Communication and Subsidiaries include the results of operations and financial position of Publicis.FCB BV.
These financial statements have been prepared and audited based upon accounting and auditing standards and practices acceptable for external reporting purposes in France. These practices and standards can vary from U.S. accounting practices. Following is a reconciliation, prepared by Registrant, of reported net income to net income which would be reported under U.S. generally accepted accounting principles (amounts in thousands).
- - - - - -------- Notes: (1) Net income as reported was computed using the average exchange rates for the year. (2) Goodwill is charged directly to retained earnings or income in the year it arises for French financial reporting purposes. The goodwill amortization expense adjustment was computed using forty years as the estimated useful life for each of the related goodwill components.
All calculations have been made by Registrant based upon assumptions deemed appropriate by Registrant.
PUBLICIS COMMUNICATION
CONSOLIDATED FINANCIAL
STATEMENTS 31/12/1993
PUBLICIS COMMUNICATION
31/12/1993
PAGE 9: Comparative Consolidated Balance Sheet : Comparative Consolidated Income Statement
PAGES 11-12 : Consolidated Statement of Change in Financial Statements.
PAGES 13-18 : Notes to the Consolidated Financial Statements
PUBLICIS COMMUNICATION GROUP
CONSOLIDATED BALANCE SHEET
(IN THOUSANDS OF FRENCH FRANCS)
PUBLICIS COMMUNICATION GROUP
CONSOLIDATED INCOME STATEMENTS (IN THOUSANDS OF FRENCH FRANCS)
PUBLICIS COMMUNICATION GROUP
CONSOLIDATED STATEMENT OF CHANGE IN FINANCIAL POSITION
(US GAAP--IN THOUSAND FRF)
PUBLICIS COMMUNICATION GROUP
CONSOLIDATED STATEMENT OF CHANGE IN FINANCIAL POSITION (US GAAP--IN THOUSAND FRF)
PUBLICIS COMMUNICATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS OF 31/12/1993.
I. CONSOLIDATED PRINCIPLES.
PUBLICIS COMMUNICATION GROUP'S consolidated financial statements as at December 31, 1993 have been prepared in accordance with the French legislation and are in conformity with generally accepted international accounting principles.
The consolidated financial statements include the accounts of the Company's wholly owned and majority owned domestic and international subsidiaries. The subsidiary companies with less than 50% ownership are consolidated on an equity basis.
The company translates the financial statements of its international subsidiaries into French Francs using official exchange rates as of December 31.
II. SUMMARY OF MAJOR ACCOUNTING POLICIES.
Companies Consolidated:
No material changes are noted in the scope of the consolidation as compared to last year. The FCA! Group accounts will only be consolidated within Publicis Communication as at January 1st 1994.
General:
The accounting policies used as at December 31, 1993 are identical to those used in preparing the consolidated financial statements of the Publicis Group.
Tangible and Intangible Assets:
Tangible assets are valued at cost and the depreciation is calculated according to the most suitable method in order to take into account the economical criteria. Listed below are the methods most currently used within the Publicis Communication Group:
Building : 20 years straightline Leasehold property and improvements : 10 years straightline Furniture and Equipment : 5-10 years straightline Motor Vehicles : 4 years straightline
Premiums paid to acquire marketable leasehold property and the cost of acquired goodwill are not amortized except in cases where the estimated market value is considered to be inferior to the acquisition cost. To comply with the regulation, goodwill generated through the legal reevaluation of 1976 have been fully written off against net equity 1993.
Goodwill:
The excess costs over the net book value of subsidiaries, after reallocating potential capital gains to the assets concerned, by their nature, are considered to be intangible assets, justified by elements such as: market shares, trade marks, clients' lists, brands . . . Usually they are not amortized. However, each year, a careful examination is made to determine their market value. If their market value is inferior to their acquisition cost, a provision for depreciation is made.
The excess costs referring to unidentified elements are amortized over a maximum period of 40 years.
In any case, all goodwill of small value are immediately depreciated at 100%.
PUBLICIS COMMUNICATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
As at December 31, 1993, considering the economic background (pooling of interest) of FCA! Group, the goodwill has been exceptionally written off against net equity.
Work in Progress:
Work in progress is valued at the lower of cost and net realisable value.
Billings:
Since March 31, 1993, the Sapin law has been changing the accounting principles applicable to Media Buying activities. In order to be able to show comparable Billings with last year and to be in line with the principles applied by our foreign competitors, our consolidated Media Revenues raised in France have been capitalised using the international multiple of 6,67.
Retirement Indemnities:
French Subsidiaries:
Potential and probable retirement indemnities including social security charges appear either on the Balance Sheet or are shown in the Contingent Liabilities. The criteria for choosing the treatment is the age of the employees concerned.
The yearly movements in the provision for the retirement indemnities shown on the Balance Sheet are accounted for in the expenses of the year.
Foreign Subsidiaries:
Retirement indemnities are accrued for in accordance with the laws and regulations specific to each country.
Statutory Profit Sharing:
The Statutory Profit Sharing related to the 1993 fiscal year and payable to the employees is accounted for on a consistent basis with last year.
Income Tax:
All actual and deferred Income Taxes payable are accounted for. Deferred Income Tax assets or potential fiscal credits are not recognised with the exception of a latent fiscal credit of 33 1/3% calculated on the provision for the French statutory profit sharing.
III. COMMENTS ON THE CONSOLIDATED ACCOUNTS.
Foreign Subsidiaries' Contribution in Group Activities:
Foreign subsidiaries account for 64% of the total billings and 62% of the total consolidated net income.
Intangible Assets:
In addition to lease rights and softwares, intangible assets include KF 21,379 of acquired goodwill and KF 468,409 related to the excess of cost over the underlying book value of subsidiaries.
PUBLICIS COMMUNICATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONCLUDED)
As of December 31, 1993 accumulated depreciation and amortization on Intangible Assets is KF 23,916 versus KF 24,666 as of December 31, 1992.
Variation in Stockholders' Equity:
The variation of the stockholders' equity between December 31, 1992 and December 31, 1993 is as follows: (in thousands of FF)
NET EQUITY OF THE GROUP
The Net Equity of the Group is as follows: (in thousands of FF)
- - - - - -------- (1) After a deduction of the excess of cost over the underlying book value of subsidiaries amounting to KF 569 961
CONSOLIDATED CASH FLOW
CONTINGENT LIABILITIES
PRINCIPALES SOCIETES CONSOLIDEES AU 31 DECEMBRE 1993
A/ SOCIETES CONSOLIDEES PAR INTEGRATION GLOBALE
CABINET ROBERT MAZARS
We have examined the consolidated balance sheet of PUBLICIS COMMUNICATION and Subsidiaries as of December 31, 1993 and the related consolidated statements of income, stockholders' equity and changes in financial position for the year in the period ended December 31, 1993. These statements present a net equity (group share) of 369,647,000 FF and a net income (group share) of 131,659,000 FF. Our examination was made in accordance with generally accepted auditing standards and, accordingly, include such test of the accounting records and other auditing procedures that we considered necessary in the circumstances.
In our opinion, the financial statements referred to above present fairly the financial position of PUBLICIS COMMUNICATION and Subsidiaries as of December 31, 1993, and the result of their operations and the changes in their financial position for the year in the period ended December 31, 1993, in conformity with generally accepted accounting principles applied on a consistent basis.
Paris, 16th March 1994
Frederic ALLILAIRE Jose MARETTE
(This page left blank intentionally)
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON SUPPLEMENTAL NOTES
We have audited in accordance with generally accepted auditing standards, the consolidated financial statements included in Foote, Cone & Belding Communications, Inc.'s Annual Report to Shareholders incorporated by reference in this Form 10-K, and have issued our report thereon dated February 15, 1994 (except with respect to the matter discussed in Note 10, as to which the date is March 16, 1994). Our report on the consolidated financial statements includes an explanatory paragraph with respect to the change in the method of accounting for income taxes, effective January 1, 1992, as discussed in Note 1 to the consolidated financial statements, and the change in the method of accounting for post-retirement benefits other than pensions, effective January 1, 1993, as discussed in Note 4 to the consolidated financial statements. Our audits were made for the purpose of forming an opinion on those financial statements taken as a whole. Supplemental Notes A through C are the responsibility of the Company's management and are presented for purposes of complying with the Securities and Exchange Commission's rules and are not part of the basic consolidated financial statements. The Supplemental Notes have been subjected to the auditing procedures applied in the audits of the basic consolidated financial statements and, in our opinion, fairly state in all material respects the financial data required to be set forth therein in relation to the basic consolidated financial statements taken as a whole.
Arthur Andersen & Co.
Chicago, Illinois, February 15, 1994.
FORM 10-K -- ITEM 14(A)(1)
NOTE A--VALUATION ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1991, 1992, AND 1993
- - - - - -------- NOTES: (1) Account consists of currency translation adjustment and adjustments made as a result of subsidiaries acquired and sold during the year.
NOTE B--SHORT-TERM BORROWINGS
FOR THE YEARS ENDED DECEMBER 31, 1991, 1992, AND 1993
- - - - - -------- NOTES: (1) The average amount outstanding during the period was computed by dividing the total of month-end outstanding principal balances by 12. (2) The weighted average interest rate during the period was computed by dividing the actual interest expense by average short-term debt outstanding.
NOTE C--AMOUNTS RECEIVABLE FROM RELATED PARTIES AND UNDERWRITERS, PROMOTERS AND EMPLOYEES OTHER THAN RELATED PARTIES
- - - - - -------- (1) Note (represents relocation loan) due on demand.
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934 AND TO THE POWER OF ATTORNEY FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, THIS REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS (CONSTITUTING, AMONG OTHERS, A MAJORITY OF THE MEMBERS OF THE BOARD OF DIRECTORS OF THE REGISTRANT) ON BEHALF OF THE REGISTRANT.
/s/ Bruce Mason By: _________________________________ Bruce Mason as Attorney-in-Fact
/s/ Terry M. Ashwill By: _________________________________ Terry M. Ashwill as Attorney-in-Fact Date: March 29, 1994
PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED.
Date: March 29, 1994
Foote, Cone & Belding Communications, Inc.
/s/ Bruce Mason By: _________________________________ Bruce Mason Chairman of the Board of Directors and Chief Executive Officer (Principal Executive Officer)
/s/ Terry M. Ashwill By: _________________________________ Terry M. Ashwill Executive Vice President, Chief Financial Officer and Director
FORM 10-K--ITEM 14(a)(3)
INDEX OF EXHIBITS
EXHIBIT NO. DESCRIPTION Page - - - - - ----------- ----------- ----
3(i) Amended Certificate of Incorporation. 28-35
11 Summary of Calculations of Earnings Per Share. 36
13 Portions of the Company's 1993 Annual Report to Shareholders Incorporated by Reference to this Form 10-K. 37-55
21 Parent and Significant Subsidiaries of Registrant. 56
23 Consent of Independent Public Accountants 57
24 Power of Attorney 58