Item 1. Business
The Interpublic Group of Companies, Inc. was incorporated in Delaware in September 1930 under the name of McCann-Erickson Incorporated as the successor to the advertising agency businesses founded in 1902 by A.W. Erickson and in 1911 by Harrison K. McCann. It has operated under the Interpublic name since January 1961. As used in this Annual Report, the "Registrant" or "Interpublic" refers to The Interpublic Group of Companies, Inc. while the "Company" refers to Interpublic and its subsidiaries.
The advertising agency business is the primary business of the Company. This business is carried on throughout the world through three advertising agency systems, McCann-Erickson Worldwide, Lintas Worldwide and The Lowe Group. The Company also offers advertising agency services through association arrangements with local agencies in various parts of the world. Other activities conducted by the Company within the area of "marketing communications" include market research, sales promotion, product development, direct marketing, telemarketing and other related services.
The principal functions of an advertising agency are to plan and create advertising programs for its clients and to place advertising in various media such as television, cable, radio, magazines, newspapers, transit, direct response media and outdoor. The planning function involves analysis of the market for the particular product or service, evaluation of alternative methods of distribution and choice of the appropriate media to reach the desired market most efficiently. The advertising agency then creates an advertising program, within the limits imposed by the client's advertising budget, and places orders for space or time with the media that have been selected.
The principal advertising agency subsidiaries of Interpublic operating within the United States directly or through subsidiaries and the locations of their respective corporate headquarters are:
McCann-Erickson USA, Inc.......... New York, New York
Lintas Campbell-Ewald Company.......................... Detroit (Warren), Michigan
Lintas, Inc....................... New York, New York
Dailey & Associates............... Los Angeles, California
Lowe & Partners Inc............... New York, New York
Ammirati & Puris, Inc............. New York, New York PAGE
In addition to domestic operations, the Company provides advertising services for clients whose business is international in scope as well as for clients whose business is restricted to a single country or a small number of countries. It has offices in Canada as well as in one or more cities in each of the following countries:
EUROPE, AFRICA AND THE MIDDLE EAST
Austria Germany Namibia South Africa Belgium Greece Netherlands Spain Croatia Hungary Norway Sweden Czech Republic Ireland Poland Switzerland Denmark Italy Portugal Turkey Finland Ivory Coast Romania United Arab Emirates France Kenya Russia United Kingdom Slovakia Zimbabwe Slovenia
LATIN AMERICA AND THE CARIBBEAN
Argentina Costa Rica Honduras Peru Barbados Dominican Republic Jamaica Puerto Rico Bermuda Ecuador Mexico Trinidad Brazil El Salvador Panama Uruguay Chile Guatemala Paraguay Venezuela Colombia
ASIA AND THE PACIFIC
Australia Japan People's Republic South Korea Hong Kong Malaysia of China Taiwan India Nepal Philippines Thailand New Zealand Singapore
Operations in the foregoing countries are carried on by one or more operating companies, at least one of which is either wholly owned by Interpublic or a subsidiary or is a company in which Interpublic or a subsidiary owns a 51% interest or more, except in India and Nepal, where Interpublic or a subsidiary holds a minority interest.
The Company also offers advertising agency services in Aruba, the Bahamas, Bahrain, Belize, Bolivia, Cambodia, Cameroon, Egypt, Gabon, Ghana, Grand Cayman, Guadeloupe, Guyana, Haiti, Reunion, Indonesia, Iran, Israel, Ivory Coast, Kuwait, Lebanon, Martinique, Mauritius, Morocco, Nicaragua, Nigeria, Oman, Pakistan, Paraguay, Saudi Arabia, Senegal, Slovakia, Slovenia, Sri Lanka, Surinam, Tunisia, Uganda, United Arab Emirates (Dubai), Venezuela, VietNam and Zaire through association arrangements with local agencies operating in those countries. PAGE
For information concerning revenues, operating profits and identifiable assets on a geographical basis for each of the last three years, reference is made to Note 13: Geographic Areas of the Notes to the Consolidated Financial Statements in the Company's Annual Report to Stockholders for the year ended December 31, 1994, which Note is hereby incorporated by reference.
Developments in 1994
The Company completed several acquisitions and divestitures within the United States and abroad in 1994.
Effective as of August 11, 1994, Ammirati & Puris Holdings, Inc., a holding company, and its subsidiaries, Ammirati & Puris, Inc. and Ammirati & Puris, Ltd. were acquired. Ammirati & Puris, Inc. is an advertising agency with headquarters in New York City, while Ammirati & Puris, Ltd. is based in Canada.
As of November 28, 1994, the Company acquired Western International Media Corporation ("Western") and approximately eighteen affiliated sub-chapter S corporations. Western is in the business of media buying and placement, and is based in Los Angeles.
Income from Commissions, Fees and Publications
The Company generates income from planning, creating and placing advertising in various media. Historically, the commission customary in the industry was 15% of the gross charge ("billings") for advertising space or time; more recently lower commissions have frequently been negotiated, but often with additional incentives for better performance. For example, an incentive component is frequently included in arrangements with clients based on increases in a client's sales of the products or services being advertised. Under commission arrangements, media bill the Company at their gross rates. The Company bills these amounts to its clients, remits the net charges to the media and retains the balance as its commission. Some clients, however, prefer to compensate the Company on a fee basis, under which the Company bills its client for the net charges billed by the media plus an agreed-upon fee. These fees usually are calculated to reflect the Company's salary costs and out-of-pocket expenses incurred on the client's behalf, plus proportional overhead and a profit mark-up.
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Normally, the Company, like other advertising agencies, is primarily responsible for paying the media with respect to firm contracts for advertising time or space. This is a problem only if the client is unable to pay the Company because of insolvency or bankruptcy. The Company makes serious efforts to reduce the risk from a client's insolvency, including (1) carrying out credit clearances, (2) requiring in some cases payment of media in advance, or (3) agreeing with the media that the Company will be solely liable to pay the media only after the client has paid the Company for the media charges.
The Company also receives commissions from clients for planning and supervising work done by outside contractors in the physical preparation of finished print advertisements and the production of television and radio commercials and infomercials. This commission is customarily 17.65% of the outside contractor's net charge, which is the same as 15% of the outside contractor's total charges including commission. With the spread of negotiated fees, the terms on which outstanding contractors' charges are billed are subject to wide variations and even include in some instances the elimination of commissions entirely provided that there are adequate negotiated fees.
The Company derives income in many other ways, including the planning and placement in media of advertising produced by unrelated advertising agencies; the maintenance of specialized media placement facilities; the creation and publication of brochures, billboards, point of sale materials and direct marketing pieces for clients; the planning and carrying out of specialized marketing research; managing special events at which clients' products are featured; and designing and carrying out interactive programs for special uses.
The five clients of the Company that made the largest contribution in 1994 to income from commissions and fees accounted individually for 2% to 10% of such income and in the aggregate accounted for over 31% of such income. Twenty clients of the Company accounted for approximately 44% of such income. Based on income from commissions and fees, the three largest clients of the Company are General Motors Corporation, Unilever and The Coca-Cola Company. General Motors Corporation first became a client of one of the Company's agencies in 1916 in the United States. Predecessors of several of the Lintas agencies have supplied advertising services to Unilever since 1893. The client relationship with The Coca-Cola Company began in 1942 in Brazil and in 1955 in the United States. While the loss of the entire business of one of the Company's three largest clients might have a material adverse effect upon the business of the Company, the Company believes that it is very unlikely that the entire business of any of these clients would be lost at the same time, because it represents several different brands or divisions of each of these clients in a number of geographical markets - in each case through more than one of the Company's agency systems.
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Representation of a client rarely means that the Company handles advertising for all brands or product lines of the client in all geographical locations. Any client may transfer its business from an advertising agency within the Company to a competing agency, and a client may reduce its advertising budget at any time. The Company's advertising agencies in many instances have written contracts with their clients.
As is customary in the industry, these contracts provide for termination by either party on relatively short notice, usually 90 days but sometimes shorter or longer. In 1994, however, [43%] of income from commissions and fees was derived from clients that had been associated with one or more of the Company's agencies or their predecessors for 20 or more years.
Personnel
As of January 1, 1995, the Company employed approximately 18,200 persons, of whom approximately 5,400 were employed in the United States. Because of the personal service character of the marketing communications business, the quality of personnel is of crucial importance to continuing success. There is keen competition for qualified employees. Interpublic considers its employee relations to be satisfactory.
The Company has an active program for training personnel. The program includes meetings and seminars throughout the world. It also involves training personnel in its offices in New York and in its larger offices worldwide.
Competition and Other Factors
The advertising agency and other marketing communications businesses are highly competitive. The Company's agencies and media services must compete with other agencies, both large and small, and also with other providers of creative or media services which are not themselves advertising agencies, in order to maintain existing client relationships and to obtain new clients. Competition in the advertising agency business depends to a large extent on the client's perception of the quality of an agency's "creative product". An agency's ability to serve clients, particularly large international clients, on a broad geographic basis is also an important competitive consideration. On the other hand, because an advertising agency's principal asset is its people, freedom of entry into the business is almost unlimited and quite small agencies are, on occasion, able to take all or some portion of a client's account from a much larger competitor.
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Moreover, increasing size brings limitations to an agency's potential for securing new business, because many clients prefer not to be represented by an agency that represents a competitor. Also, clients frequently wish to have different products represented by different agencies. The fact that the Company owns three separate worldwide agency systems and interests in other advertising agencies gives it additional competitive opportunities.
The advertising business is subject to government regulation, both domestic and foreign. There has been an increasing tendency in the United States on the part of advertisers to resort to the courts to challenge comparative advertising on the grounds that the advertising is false and deceptive. Through the years, there has been a continuing expansion of specific rules, prohibitions, media restrictions, labeling disclosures and warning requirements with respect to the advertising for certain products. Representatives within state governments and the federal government as well as foreign governments continue to initiate proposals to ban the advertising of specific products and to impose taxes on or deny deductions for advertising which, if successful, may have an adverse effect on advertising expenditures.
Some countries are relaxing commercial restrictions as part of their efforts to attract foreign investment. However, with respect to other nations, the international operations of the Company still remain exposed to certain risks which affect foreign operations of all kinds, such as local legislation, monetary devaluation, exchange control restrictions and unstable political conditions. In addition, international advertising agencies are from time to time exposed to the threat of forced divestment in favor of local investors because they are considered an integral factor in the communications process. A provision of the present constitution in the Philippines is an example.
Item 2.
Item 2. Properties
Most of the advertising operations of the Company are carried on in leased premises, and its physical property consists primarily of leasehold improvements, furniture, fixtures and equipment. These facilities are located in various cities in which the Company does business throughout the world. However, subsidiaries of the Company own office buildings in Louisville, Kentucky; Warren, Michigan; Frankfurt, Germany; Sao Paulo, Brazil; Lima, Peru; and Brussels, Belgium and own office condominiums in Buenos Aires, Argentina; Bogota, Colombia; Manila, the Philippines; in England, subsidiaries of the Company own office buildings in London, Manchester, Birmingham and Stoke- on-Trent.
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The office building located in Warren, Michigan is held by the Company subject to a mortgage which will terminate in April, 2000. The Company's ownership of the office building in Frankfurt is subject to three mortgages which became effective on or about February 1993. These mortgages terminate at different dates, with the last to expire in February 2003. Reference is made to Note 14 - Commitments and Contingent Liabilities - of the Notes to the Consolidated Financial Statements in the Company's Annual Report to Stockholders for the year ended December 31, 1994, which Note is hereby incorporated by reference.
Item 3.
Item 3. Legal Proceedings
Neither the Company nor any of its subsidiaries are subject to any pending material legal proceedings.
Item 4.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable.
Executive Officers of the Registrant
There follows the information disclosed in accordance with Item 401 of Regulation S-K of the Securities and Exchange Commission (the "Commission") as required by Item 10 of Form 10-K with respect to executive officers of the Registrant.
Name Age Office
Philip H. Geier, Jr. (1) 60 Chairman of the Board, President and Chief Executive Officer
Eugene P. Beard (1) 59 Executive Vice President-Finance and Operations and Chief Financial Officer
Frank B. Lowe (1) 53 Chairman of The Lowe Group
Kenneth L. Robbins (1)(2) 59 Chairman of the Board and Chief Executive Officer of Lintas Worldwide
C. Kent Kroeber 56 Senior Vice President-Human Resources
Christopher Rudge 57 Senior Vice President, General Counsel and Secretary
Thomas J. Volpe 59 Senior Vice President-Financial Operations
Joseph M. Studley 42 Vice President and Controller
(1) Also a Director (2) Through July 1, 1995
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There is no family relationship among any of the executive officers.
The employment histories for the past five years of Messrs. Geier, Beard and Lowe are incorporated by reference to the Proxy Statement for Interpublic's 1995 Annual Meeting of Stockholders.
Mr. Kroeber joined Interpublic in January 1966 as Manager of Compensation and Training. He was elected a Vice President in 1970 and Senior Vice President in May 1980. Mr. Robbins has been a director of Interpublic since 1991. He directed the international operations of Lintas:Worldwide as Chairman of Lintas International from 1985 and became Chairman of the Board and Chief Executive Officer of Lintas:Worldwide on September 1, 1991.
Mr. Rudge has been associated with Interpublic since January 1, 1973, when he joined it as an Attorney in its Law Department. He was elected Vice President and Assistant General Counsel on May 15, 1984 and was elected to the additional office of Assistant Secretary on May 20, 1986. Effective January 1, 1989, he was elected General Counsel and Secretary. On May 15, 1990, Mr. Rudge was elected a Senior Vice President of Interpublic.
Mr. Volpe joined Interpublic on March 3, 1986. He was appointed Senior Vice President-Financial Operations on March 18, 1986. He served as Treasurer from January 1, 1987 through May 17, 1988 and the Treasurer's office continues to report to him. He was Vice President and Treasurer of Colgate-Palmolive Company from February 1981 to February 1986 and Assistant Corporate Controller prior thereto.
Mr. Studley, who has been elected as Vice President and Controller of Interpublic effective as of April 1, 1994, had been Senior Vice President and Chief Financial Officer of E.C. Television, a division of Interpublic, since January 1, 1990. He was a Vice President of Lintas New York, a division of one of Interpublic's subsidiaries, from August 1, 1987 until December 31, 1989.
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PART II
Item 5.
Item 5. Market for the Registrant's Common Equity and Related Stockholder Matters
The response to this Item is incorporated by reference to the Registrant's Annual Report to Stockholders for the year ended December 31, 1994. See Note 12: Results by Quarter (Unaudited), of the Notes to the Consolidated Financial Statements and information under the heading Transfer Agent and Registrar for Common Stock.
Item 6.
Item 6. Selected Financial Data
The response to this Item is incorporated by reference to the Registrant's Annual Report to Stockholders for the year ended December 31, 1994 under the heading Selected Financial Data for Five Years.
Item 7.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
The response to this Item is incorporated by reference to the Registrant's Annual Report to Stockholders for the year ended December 31, 1994 under the heading Management's Discussion and Analysis of Financial Condition and Results of Operations.
Item 8.
Item 8. Financial Statements and Supplementary Data
The response to this Item is incorporated in part by reference to the Registrant's Annual Report to Stockholders for the year ended December 31, 1994 under the headings Financial Statements and Notes to the Consolidated Financial Statements. Reference is also made to the Financial Statement Schedules listed under Item 14(a) of this Report on Form 10-K.
Item 9.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Not applicable.
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PART III
Item 10.
Item 10. Directors and Executive Officers of the Registrant
The information required by this Item is incorporated by reference to the Registrant's Proxy Statement for its 1995 Annual Meeting of Stockholders (the "Proxy Statement"), to be filed not later than 120 days after the end of the 1994 calendar year, except for the description of Interpublic's Executive Officers which appears in Part I of this Report on Form 10-K under the heading Executive Officers of the Registrant.
Item 11.
Item 11. Executive Compensation
The information required by this Item is incorporated by reference to the Proxy Statement. Such incorporation by reference shall not be deemed to incorporate specifically by reference the information referred to in Item 402(a)(8) of Regulation S-K.
Item 12.
Item 12. Security Ownership of Certain Beneficial Owners and Management
The information required by this Item is incorporated by reference to the Proxy Statement.
Item 13.
Item 13. Certain Relationships and Related Transactions
The information required by this Item is incorporated by reference to the Proxy Statement. Such incorporation by reference shall not be deemed to incorporate specifically by reference the information referred to in Item 402(a)(8) of Regulation S-K.
PART IV
Item 14.
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a) Listed below are all financial statements, financial statement schedules and exhibits filed as part of this Report on Form 10-K.
1. Financial Statements:
See the Index to Financial Statements on page.
2. Financial Statement Schedules:
See the Index to Financial Statement Schedules on page. PAGE
3. Exhibits:
(Numbers used are the numbers assigned in Item 601 of Regulation S-K and the EDGAR Filer Manual. An additional copy of this exhibit index immediately precedes the exhibits filed with this Report on Form 10-K and the exhibits transmitted to the Commission as part of the electronic filing of the Report.)
Exhibit No. Description
3 (i) The Restated Certificate of Incorporation of the Registrant, as amended is incorporated by reference to its Report on Form 10-K for the year ended December 31, 1992. See Commission file number 1-6686.
(ii) The By-Laws of the Registrant, amended as of February 19, 1991, are incorporated by reference to its Report on Form 10-K for the year ended December 31, 1990. See Commission file number 1-6686.
4 Instruments Defining the Rights of Security Holders.
Indenture, dated as of April 1, 1992, between Interpublic and Morgan Guaranty Trust Company of New York is not included as an Exhibit to this Report but will be furnished to the Commission upon its request.
10 Material Contracts.
(a) Underwriting Agreement, dated March 30, 1992, by and between Interpublic and Goldman Sachs International Limited is incorporated by reference to Registrant's Report on Form 10-K for the year ended December 31, 1992. See Commission file number 1-6686.
(b) Employment, Consultancy and other Compensatory Arrangements with Management.
Employment and Consultancy Agreements and any amendments or supplements thereto and other compensatory arrangements filed with the Registrant's Reports on Form 10-K for the years ended December 31, 1980 through December 31, 1993, inclusive, are incorporated by reference in this Report on Form 10-K. See Commission file number 1-6686. Listed below are agreements or amendments to agreements between the Registrant and its executive officers which remain in effect on and after the date hereof or were executed during the year ended December 31, 1994 and thereafter, which are filed as exhibits to this Report on Form 10- K.
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(i) Eugene P. Beard
Supplemental Agreement made as of January 1, 1995 to an Employment Agreement made as of January 1, 1983.
(c) Executive Compensation Plans.
(i) Trust Agreement, dated as of June 1, 1990 between The Interpublic Group of Companies, Inc., Lintas Campbell-Ewald Company, McCann-Erickson USA, Inc., McCann-Erickson Marketing, Inc., Lintas, Inc. and Manufacturers Hanover Trust Company, as Trustee, is incorporated by reference to Registrant's Annual Report on Form 10-K for the year ended December 31, 1990. See Commission file number 1- 6686.
(ii) The Stock Option Plan (1988) and the Achievement Stock Award Plan of the Registrant are incorporated by reference to Appendices C and D of the Prospectus dated May 4, 1989 forming part of its Registration Statement on Form S-8 (No. 33- 28143).
(iii) The Management Incentive Compensation Plan of the Registrant is incorporated by reference to the Appendix of the Prospectus dated March 21, 1988 forming part of its Registration Statement on Form S-8 (No. 33-20291).
(iv) The 1986 Stock Incentive Plan of the Registrant is incorporated by reference to Registrant's Annual Report on Form 10-K for the year ended December 31, 1993. See Commission file number 1-6686.
(v) The 1986 United Kingdom Stock Option Plan of the Registrant is incorporated by reference to Registrant's Annual Report on Form 10-K for the year ended December 31, 1992. See Commission file number 1-6686.
(vi) The Employee Stock Purchase Plan (1985) of the Registrant, as amended, is incorporated by reference to Registrant's Annual Report on Form 10-K for the year ended December 31, 1993. See Commission file number 1-6686.
(vii) The Long-Term Performance Incentive Plan of the Registrant is incorporated by reference to Appendix A of the Prospectus dated December 12, 1988 forming part of its Registration Statement on Form S-8 (No. 33-25555).
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(viii) Resolution of the Board of Directors adopted on February 16, 1993, amending the Long-Term Performance Incentive Plan is incorporated by reference to Registrant's Annual Report on Form 10-K for the year ended December 31, 1992. See Commission file number 1-6686.
(ix) Resolution of the Board of Directors adopted on May 16, 1989 amending the Long-Term Performance Incentive Plan is incorporated by reference to Registrant's Report on Form 10-K for the year ended December 31, 1989. See Commission file number 1-6686.
(d) Loan Agreements.
(i) Amendment, No. 4, dated as of December 1, 1994 to the Credit Agreement, dated as of September 30, 1992, and effective as of December 30, 1992, between Interpublic and Citibank.
(ii) Amendment, No. 4, dated as of December 1, 1994 to the Credit Agreement, dated as of September 30, 1992, and effective as of December 23, 1992, between Interpublic and NBD.
(iii) Amendment, No. 4, dated as of December 1, 1994 to the Credit Agreement, dated as of September 30, 1992, and effective as of December 30, 1992, between Interpublic and Trust Company Bank.
(iv) Amendment, No. 4, dated as of December 1, 1994 to the Credit Agreement, dated as of September 30, 1992, and effective as of December 30, 1992, between Interpublic and Swiss Bank.
(v) Amendment, No. 4, dated as of December 2, 1994 to a Guarantee, dated as of December 17, 1991, between Interpublic and Lloyds Bank.
(vi) Amendment, No. 4, dated as of December 1, 1994 to the Credit Agreement, dated as of September 30, 1992, and effective as of December 30, 1992, between Interpublic and Fuji Bank.
(vii) Amendment, No. 4, dated as of December 1, 1994 to the Credit Agreement, dated as of September 30, 1992 and effective as of December 30, 1992, between Interpublic and Chemical.
(viii) Amendment, No. 4, dated as of December 1, 1994 to the Credit Agreement, dated as of September 30, 1992 and effective as of December 30, 1992, between Interpublic and UBS.
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(ix) Credit Agreement, dated as of December 1, 1994 between Interpublic and Bank of America National Trust and Savings Association.
(x) Other Loan and Guaranty Agreements filed with the Registrant's Annual Report on Form 10-K for the years ended December 31, 1988 and December 31, 1986 are incorporated by reference in this Report on Form 10-K. Other Credit Agreements, amendments to various Credit Agreements, Termination Agreements, Loan Agreements, a Note Purchase Agreement, dated August 20, 1991, Guarantee, dated December 17, 1991, Notification dated March 14, 1991 by Registrant and Intercreditor Agreements filed with the Registrant's Report on Form 10-K for the years ended December 31, 1989 through December 31, 1993, inclusive and filed with Registrant's Reports on Form 10-Q for the periods ended March 31, 1994 and June 30, 1994 are incorporated by reference into this Report on Form 10-K. See Commission file number 1-6686.
(e) Leases.
Material leases of premises are incorporated by reference to the Registrant's Annual Report on Form 10-K for the years ended December 31, 1980 and December 31, 1988. See Commission file number 1-6686.
(f) Acquisition Agreement for Purchase of Real Estate.
(i) Acquisition Agreement (in German) between Treuhandelsgesellschaft Aktiengesellschaft & Co. Grundbesitz OHG and McCann-Erickson Deutschland GmbH & Co. Management Property KG ("McCann- Erickson Deutschland") and the English translation of the Acquisition Agreement are incorporated by reference to Registrant's Annual Report on Form 10-K for the year ended December 31, 1992. See Commission file number 1-6686.
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(g) Mortgage Agreements and Encumbrances.
(i) Summaries In German and English of Mortgage Agreements between McCann-Erickson Deutschland and Frankfurter Hypothekenbank Aktiengesellschaft ("Frankfurter Hypothekenbank"), Mortgage Agreement, dated January 22, 1993, between McCann- Erickson Deutschland and Frankfurter Hypothekenbank, Mortgage Agreement, dated January 22, 1993, between McCann-Erickson Deutschland and Hypothekenbank are incorporated by reference to Registrant's Annual Report on Form 10-K for the year ended December 31, 1993. See Commission file number 1-6686. Summaries In German and English of Mortgage Agreement, between McCann-Erickson Deutschland and Frankfurter Sparkasse and Mortgage Agreement, dated January 7, 1993, between McCann- Erickson Deutschland and Frankfurter Sparkasse are incorporated by reference to Registrant's Annual Report on Form 10-K for the year ended December 31, 1992. See Commission file number 1-6686.
(ii) Summaries In German and English of Documents Creating Encumbrances In Favor of Frankfurter Hypothekenbank and Frankfurter Sparkasse In Connection With the Aforementioned Mortgage Agreements, Encumbrance, dated January 15, 1993, In Favor Of Frankfurter Hypothekenbank, and Encumbrance, dated January 15, 1993, In Favor of Frankfurter Sparkasse are incorporated by reference to Registrant's Annual Report on Form 10-K for the year ended December 31, 1992. See Commission file number 1-6686.
(iii) Loan Agreement (in English and German), dated January 29, 1993 between Lintas Deutschland GmbH and McCann-Erickson Deutschland is incorporated by reference to Registrant's Annual Report on Form 10-K for the year ended December 31, 1992. See Commission file number 1-6686.
11 Computation of Earnings Per Share.
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13 This Exhibit includes: (a) those portions of the Annual Report to Stockholders for the year ended December 31, 1994 which are included therein under the following headings: Financial Highlights; Management's Discussion and Analysis of Financial Condition and Results Of Operations; Consolidated Balance Sheet; Consolidated Statement of Income; Consolidated Statement of Cash Flows; Consolidated Statement of Stockholders' Equity; Notes to Consolidated Financial Statements (the aforementioned consolidated financial statements together with the Notes to Consolidated Financial Statements hereinafter shall be referred to as the "Consolidated Financial Statements"); Report of Independent Accountants; Selected Financial Data For Five Years; Report of Management; and Stockholders' Information; and (b) Appendix to Exhibit 13.
21 Subsidiaries of the Registrant.
23 Consent of Independent Accountants.
24 Power of Attorney to sign Form 10-K and resolution of Board of Directors re Power of Attorney.
29 (a) Supplemental Agreements filed with Registrant's Annual Report on Form 10-K for the year ended December 31, 1990 are incorporated by reference into this Report on Form 10-K. See Commission file number 1-6686.
(b) The Preferred Share Purchase Rights Plan as adopted on July 18, 1989 is incorporated by reference to Registrant's Registration Statement on Form 8-A dated August 1, 1989 (No. 00017904) and, as amended, by reference to Registrant's Registration Statement on Form 8 dated October 3, 1989 (No. 00106686). SIGNATURES
Pursuant to the requirements of Section 13 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.
THE INTERPUBLIC GROUP OF COMPANIES, INC. (Registrant)
March 28, 1995 BY: Philip H. Geier, Jr. Philip H. Geier, Jr., Chairman of the Board, President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
Name Title Date
Chairman of the Board, March 28, 1995 President and Chief Executive Philip H. Geier, Jr. Officer (Principal Executive Philip H. Geier, Jr. Officer) and Director
Executive Vice President March 28, 1995 -Finance and Operations Eugene P. Beard (Principal Financial Eugene P. Beard Officer) and Director
*Lynne V. Cheney Director March 28, 1995 Lynne V. Cheney
*Frank B. Lowe Director March 28, 1995 Frank B. Lowe
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*Kenneth L. Robbins Director March 28, 1995 Kenneth L. Robbins
*Leif H. Olsen Director March 28, 1995 Leif H. Olsen
*J. Phillip Samper Director March 28, 1995 J. Phillip Samper
*Joseph J. Sisco Director March 28, 1995 Joseph J. Sisco
*Frank Stanton Director March 28, 1995 Frank Stanton
Joseph M. Studley Joseph M. Studley Vice President and March 28, 1995 Controller (Principal Accounting Officer)
*Jacqueline G. Wexler Director March 28, 1995 Jacqueline G. Wexler
*By Philip H. Geier, Jr. Philip H. Geier, Jr. Attorney-in-fact
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The Financial statements appearing under the headings: Financial Highlights, Management Discussion and Analysis of Financial Condition and Results of Operations, Consolidated Financial Statements, Notes to Consolidated Financial Statements, Report of Independent Accountants, Selected Financial Data for Five Years and Report of Management accompanying Annual Report to Stockholders for the year ended December 31, 1994, together with the report thereon of Price Waterhouse dated February 13, 1995 appearing on page 35 thereof, are incorporated by reference in this report on Form 10-K. With the exception of the aforementioned information and the information incorporated in Items 5, 6 and 7, no other data appearing in the Annual Report to Stockholders for the year ended December 31, 1994 is deemed to be filed as part of this report on Form 10-K.
The following financial statements schedules should be read in conjunction with the financial statements in such Annual Report to Stockholders for the year ended December 31, 1994. Financial statement schedules not included in this report on Form 10-K have been omitted because they are not applicable or the required information is shown in the financial statements or the notes thereto.
Separate financial statements for the companies which are 50% or less owned and accounted for by the equity method have been omitted because, considered in the aggregate as a single subsidiary, they do not constitute a significant subsidiary.
INDEX TO FINANCIAL STATEMENT SCHEDULES
Page Report of Independent Accountants on Financial Statement Schedules
Consent of Independent Accountants
Financial Statement Schedules Required to be Filed by Item 8 of this form:
II Amounts Receivable from Related Parties and Underwriters, Promoters, and Employees Other than Related Parties
VIII Valuation and Qualifying Accounts
IX Short-Term Borrowings
X Supplementary Income Statement Information
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REPORT OF INDEPENDENT ACCOUNTANTS ON FINANCIAL STATEMENT SCHEDULES
To the Board of Directors of The Interpublic Group of Companies, Inc.
Our audits of the consolidated financial statements referred to in our report dated February 13, 1995 appearing in the 1994 Annual Report to Stockholders of The Interpublic Group of Companies, Inc. (which report and consolidated financial statements are incorporated by reference in this Annual Report on Form 10-K) also included an audit of the Financial Statement Schedules listed in Item 14 (a) of this Form 10-K. In our opinion, these Financial Statement Schedules present fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements.
PRICE WATERHOUSE, LLP New York, New York February 13, 1995
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 of The Interpublic Group of Companies, Inc. (the "Company"), of our report dated February 13, 1995, appearing in the 1994 Annual Report to Stockholders which is incorporated in this Annual Report on Form 10-K: Registration Statements No. 2-79071; No. 2-43811; No. 2- 56269; No. 2-61346; No. 2-64338; No. 2-67560; No. 2-72093; No. 2-88165; No. 2-90878, No. 2-97440 and No. 33-28143, relating variously to the Stock Option Plan (1971), the Stock Option Plan (1981), the Stock Option Plan (1988) and the Achievement Stock Award Plan of the Company; Registration Statements No. 2-53544; No. 2-91564, No. 2-98324, No. 33- 22008 and No. 33-64062, relating variously to the Employee Stock Purchase Plan (1975) and the Employee Stock Purchase Plan (1985) of the Company; Registration Statements No. 33-20291 and No. 33-2830 relating to the Management Incentive Compensation Plan of the Company; Registration Statement No. 33-5352 and No. 33-21605 relating to the 1986 Stock Incentive Plan and 1986 United Kingdom Stock Option Plan of the Company; and Registration Statement No. 33-10087 and No. 33-25555 relating to the Long-Term Performance Incentive Plan of the Company. We also consent to the incorporation by reference of our report on the Financial Statement Schedules, which appears on this Form of the 10-K. We hereby consent to the incorporation by reference in the Prospectus constituting part of the Registration Statement on Form S-3 (No. 33-37346) of the Interpublic Group of Companies, Inc. of our report dated February 13, 1995, appearing in the 1994 Annual Report to Stockholders which is incorporated in this Annual Report on Form 10-K. We also consent to the incorporation by reference of our report on the Financial Statement Schedules, which appears above.
PRICE WATERHOUSE, LLP New York, New York March 24, 1995
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SCHEDULE II
THE INTERPUBLIC GROUP OF COMPANIES, INC. AND ITS SUBSIDIARIES AMOUNTS RECEIVABLE FROM RELATED PARTIES AND UNDERWRITERS, PROMOTERS, AND EMPLOYEES OTHER THAN RELATED PARTIES.
For the Years Ended December 31, 1994, 1993 and 1992
(Dollars in Thousands)
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
Balance at Deductions - Balance Beginning Amounts at End Name of Debtor of Period Additions Collected Other of Period
1994:
A. Gomes $ 68 $ 0 $ 68 $ 0 $ 0 D. Holt 12,000 700 100 0 12,600
1993:
A. Gomes $ 137 $ 0 $ (45) $ (24) $ 68 G. Bowen 300 0 (300) 0 0
1992: A. Gomes $ 0 $ 137 $ 0 $ 0 $ 137 G. Bowen 0 300 0 0 300
[FN]
Effect of currency translation.
Resulting from 1994 acquisitions.
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SCHEDULE VIII
THE INTERPUBLIC GROUP OF COMPANIES, INC. AND ITS SUBSIDIARIES VALUATION AND QUALIFYING ACCOUNTS
For the Years Ended December 31, 1994, 1993 and 1992
(Dollars in Thousands)
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
Additions (1) (2) Balance Charged Charged at to to Other Balance Beginning Costs & Accounts- Deductions- at End Description of Period Expenses Describe Describe Period
Allowance for Doubtful Accounts - deducted from Receivables in the Consolidated Balance Sheet:
1994 $16,834 $6,522 $4,097 $6,109 $22,656
1993 $15,559 $5,600 $ 764 $3,823 $16,834 898 2,360
1992 $18,553 $4,320 $ 449 $5,497 $15,559 2,266
[FN]
Allowance for doubtful accounts of acquired and newly consolidated companies. Foreign currency translation adjustment. Principally amounts written off. Reversal of previously written off accounts. Miscellaneous.
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SCHEDULE X
THE INTERPUBLIC GROUP OF COMPANIES, INC. AND ITS SUBSIDIARIES SUPPLEMENTARY INCOME STATEMENT INFORMATION
For the Years Ended December 31, 1994, 1993 and 1992
(Dollars in Thousands)
COLUMN A COLUMN B
Item Charged to Costs and Expenses
1994 1993 1992
Maintenance and repairs $20,822 $20,127 $22,196
Amortization of $18,335 $18,730 $19,573 Intangible Assets
Taxes Other Than Payroll $19,128 $16,561 $18,519 and Income Taxes
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INDEX TO DOCUMENTS
Exhibit No. Description
3 (i) The Restated Certificate of Incorporation of the Registrant, as amended is incorporated by reference to its Report on Form 10-K for the year ended December 31, 1992. See Commission file number 1-6686.
(ii) The By-Laws of the Registrant, amended as of February 19, 1991, are incorporated by reference to its Report on Form 10-K for the year ended December 31, 1990. See Commission file number 1-6686.
4 Instruments Defining the Rights of Security Holders.
Indenture, dated as of April 1, 1992, between Interpublic and Morgan Guaranty Trust Company of New York is not included as an Exhibit to this Report but will be furnished to the Commission upon its request.
10 Material Contracts.
(a) Underwriting Agreement, dated March 30, 1992, by and between Interpublic and Goldman Sachs International Limited is incorporated by reference to Registrant's Report on Form 10-K for the year ended December 31, 1992. See Commission file number 1-6686.
(b) Employment, Consultancy and other Compensatory Arrangements with Management.
Employment and Consultancy Agreements and any amendments or supplements thereto and other compensatory arrangements filed with the Registrant's Reports on Form 10-K for the years ended December 31, 1980 through December 31, 1993, inclusive, are incorporated by reference in this Report on Form 10-K. See Commission file number 1-6686. Listed below are agreements or amendments to agreements between the Registrant and its executive officers which remain in effect on and after the date hereof or were executed during the year ended December 31, 1994 and thereafter, which are filed as exhibits to this Report on Form 10-K.
(i) Eugene P. Beard
Supplemental Agreement made as of January 1, 1995 to an Employment Agreement made as of January 1, 1983.
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(c) Executive Compensation Plans.
(i) Trust Agreement, dated as of June 1, 1990 between The Interpublic Group of Companies, Inc., Lintas Campbell-Ewald Company, McCann- Erickson USA, Inc., McCann-Erickson Marketing, Inc., Lintas, Inc. and Manufacturers Hanover Trust Company, as Trustee, is incorporated by reference to Registrant's Annual Report on Form 10-K for the year ended December 31, 1990. See Commission file number 1-6686.
(ii) The Stock Option Plan (1988) and the Achievement Stock Award Plan of the Registrant are incorporated by reference to Appendices C and D of the Prospectus dated May 4, 1989 forming part of its Registration Statement on Form S-8 (No. 33-28143).
(iii) The Management Incentive Compensation Plan of the Registrant is incorporated by reference to the Appendix of the Prospectus dated March 21, 1988 forming part of its Registration Statement on Form S-8 (No. 33-20291).
(iv) The 1986 Stock Incentive Plan of the Registrant is incorporated by reference to Registrant's Annual Report on Form 10-K for the year ended December 31, 1993. See Commission file number 1-6686.
(v) The 1986 United Kingdom Stock Option Plan of the Registrant is incorporated by reference to Registrant's Annual Report on Form 10-K for the year ended December 31, 1992. See Commission file number 1-6686.
(vi) The Employee Stock Purchase Plan (1985) of the Registrant, as amended, is incorporated by reference to Registrant's Annual Report on Form 10-K for the year ended December 31, 1993. See Commission file number 1-6686.
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(vii) The Long-Term Performance Incentive Plan of the Registrant is incorporated by reference to Appendix A of the Prospectus dated December 12, 1988 forming part of its Registration Statement on Form S-8 (No. 33-25555).
(viii) Resolution of the Board of Directors adopted on February 16, 1993, amending the Long-Term Performance Incentive Plan is incorporated by reference to Registrant's Annual Report on Form 10-K for the year ended December 31, 1992. See Commission file number 1-6686.
(ix) Resolution of the Board of Directors adopted on May 16, 1989 amending the Long-Term Performance Incentive Plan is incorporated by reference to Registrant's Report on Form 10-K for the year ended December 31, 1989. See Commission file number 1-6686.
(d) Loan Agreements.
(i) Amendment, No. 4, dated as of December 1, 1994 to the Credit Agreement, dated as of September 30, 1992, and effective as of December 30, 1992, between Interpublic and Citibank.
(ii) Amendment, No. 4, dated as of December 1, 1994 to the Credit Agreement, dated as of September 30, 1992, and effective as of December 23, 1992, between Interpublic and NBD.
(iii) Amendment, No. 4, dated as of December 1, 1994 to the Credit Agreement, dated as of September 30, 1992, and effective as of December 30, 1992, between Interpublic and Trust Company Bank.
(iv) Amendment, No. 4, dated as of December 1, 1994 to the Credit Agreement, dated as of September 30, 1992, and effective as of December 30, 1992, between Interpublic and Swiss Bank.
(v) Amendment, No. 4, dated as of December 2, 1994 to a Guarantee, dated as of December 17, 1991, between Interpublic and Lloyds Bank.
(vi) Amendment, No. 4, dated as of December 1, 1994 to the Credit Agreement, dated as of September 30, 1992, and effective as of December 30, 1992, between Interpublic and Fuji Bank.
(vii) Amendment, No. 4, dated as of December 1, 1994 to the Credit Agreement, dated as of September 30, 1992 and effective as of December 30, 1992, between Interpublic and Chemical. PAGE
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(viii) Amendment, No. 4, dated as of December 1, 1994 to the Credit Agreement, dated as of September 30, 1992 and effective as of December 30, 1992, between Interpublic and UBS.
(ix) Credit Agreement, dated as of December 1, 1994 between Interpublic and Bank of America National Trust and Savings Association.
(x) Other Loan and Guaranty Agreements filed with the Registrant's Annual Report on Form 10-K for the years ended December 31, 1988 and December 31, 1986 are incorporated by reference in this Report on Form 10-K. Other Credit Agreements, amendments to various Credit Agreements, Termination Agreements, Loan Agreements, a Note Purchase Agreement, dated August 20, 1991, Guarantee, dated December 17, 1991, Notification dated March 14, 1991 by Registrant and Intercreditor Agreements filed with the Registrant's Report on Form 10-K for the years ended December 31, 1989 through December 31, 1993, inclusive and filed with Registrant's Reports on Form 10-Q for the periods ended March 31, 1994 and June 30, 1994 are incorporated by reference into this Report on Form 10-K. See Commission file number 1-6686.
(e) Leases.
Material leases of premises are incorporated by reference to the Registrant's Annual Report on Form 10-K for the years ended December 31, 1980 and December 31, 1988. See Commission file number 1-6686.
(f) Acquisition Agreement for Purchase of Real Estate.
(i) Acquisition Agreement (in German) between Treuhandelsgesellschaft Aktiengesellschaft & Co. Grundbesitz OHG and McCann-Erickson Deutschland GmbH & Co. Management Property KG ("McCann-Erickson Deutschland") and the English translation of the Acquisition Agreement are incorporated by reference to Registrant's Annual Report on Form 10-K for the year ended December 31, 1992. See Commission file number 1-6686.
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INDEX - 4
(g) Mortgage Agreements and Encumbrances.
(i) Summaries In German and English of Mortgage Agreements between McCann-Erickson Deutschland and Frankfurter Hypothekenbank Aktiengesellschaft ("Frankfurter Hypothekenbank"), Mortgage Agreement, dated January 22, 1993, between McCann-Erickson Deutschland and Frankfurter Hypothekenbank, Mortgage Agreement, dated January 22, 1993, between McCann-Erickson Deutschland and Hypothekenbank are incorporated by reference to Registrant's Annual Report on Form 10-K for the year ended December 31, 1993. See Commission file number 1-6686. Summaries In German and English of Mortgage Agreement, between McCann-Erickson Deutschland and Frankfurter Sparkasse and Mortgage Agreement, dated January 7, 1993, between McCann-Erickson Deutschland and Frankfurter Sparkasse are incorporated by reference to Registrant's Annual Report on Form 10-K for the year ended December 31, 1992. See Commission file number 1-6686.
(ii) Summaries In German and English of Documents Creating Encumbrances In Favor of Frankfurter Hypothekenbank and Frankfurter Sparkasse In Connection With the Aforementioned Mortgage Agreements, Encumbrance, dated January 15, 1993, In Favor Of Frankfurter Hypothekenbank, and Encumbrance, dated January 15, 1993, In Favor of Frankfurter Sparkasse are incorporated by reference to Registrant's Annual Report on Form 10-K for the year ended December 31, 1992. See Commission file number 1-6686.
(iii) Loan Agreement (in English and German), dated January 29, 1993 between Lintas Deutschland GmbH and McCann-Erickson Deutschland is incorporated by reference to Registrant's Annual Report on Form 10-K for the year ended December 31, 1992. See Commission file number 1-6686.
11 Computation of Earnings Per Share.
13 This Exhibit includes: (a) those portions of the Annual Report to Stockholders for the year ended December 31, 1994 which are included therein under the following headings: Financial Highlights; Management's Discussion and Analysis of Financial Condition and Results Of Operations; Consolidated Balance Sheet; Consolidated Statement of Income; Consolidated Statement of Cash Flows; Consolidated Statement of Stockholders' Equity; Notes to Consolidated Financial Statements (the aforementioned consolidated financial statements together
INDEX - 5PAGE
with the Notes to Consolidated Financial Statements hereinafter shall be referred to as the "Consolidated Financial Statements"); Report of Independent Accountants; Selected Financial Data For Five Years; Report of Management; and Stockholders' Information; and (b) Appendix to Exhibit 13.
21 Subsidiaries of the Registrant.
23 Consent of Independent Accountants.
24 Power of Attorney to sign Form 10-K and resolution of Board of Directors re Power of Attorney.
29 (a) Supplemental Agreements filed with Registrant's Annual Report on Form 10-K for the year ended December 31, 1990 are incorporated by reference into this Report on Form 10- K. See Commission file number 1-6686.
(b) The Preferred Share Purchase Rights Plan as adopted on July 18, 1989 is incorporated by reference to Registrant's Registration Statement on Form 8-A dated August 1, 1989 (No. 00017904) and, as amended, by reference to Registrant's Registration Statement on Form 8 dated October 3, 1989 (No. 00106686).
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