SEC Filing

================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ----------------- FORM 8-K Current Report Pursuant to Section 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report Commission file number January 5, 2001 1-6686 ----------------- THE INTERPUBLIC GROUP OF COMPANIES, INC. (Exact name of registrant as specified in its charter) Delaware 13-1024020 - ------------------------------- -------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 1271 Avenue of the Americas, New York, New York 10020 - ----------------------------------------------- --------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (212) 399-8000 ---------------- Item 5. OTHER EVENTS In November 2000, the Interpublic Group of Companies, Inc. (the "Company") acquired Deutsch, Inc. and its affiliate companies ("Deutsch") in a transaction accounted for as a pooling of interests. This report on Form 8-K includes the Company's supplemental consolidated financial statements and other financial information restated to reflect the effect of the pooling of Deutsch. These combined results will become the historical results of the Company upon publication of financial results for a period inclusive of at least 30 days of the financial results of Deutsch subsequent to the date of consummation of the Deutsch transaction. This report may be incorporated by reference into other reports or registration statements filed with the Securities and Exchange Commission. In April 2000, the Company acquired NFO Worldwide, Inc. ("NFO") in a transaction accounted for as a pooling of interests. The results of NFO and several other recent acquisitions, all of which have been accounted for as poolings of interests, have been included in previously restated financial statements filed on Form 8-K on September 15, 2000.

Item 7. FINANCIAL STATEMENTS AND EXHIBITS (c) Other Exhibits Exhibit 99 Financial Statements, Financial Information and Exhibits Financial Highlights Management's Discussion and Analysis of Financial Condition and Results of Operations Supplemental Consolidated Financial Statements Report of Independent Accountants - PricewaterhouseCoopers LLP - Arthur Andersen LLP - Soteriou Banerji - Ernst & Young - Ernst & Young LLP - J. H. Cohn LLP Supplemental Consolidated Balance Sheet December 31, 1999 and 1998 Supplemental Consolidated Statement of Income for the Years Ended December 31, 1999, 1998 and 1997 Supplemental Consolidated Statement of Cash Flows for the Years Ended December 31, 1999, 1998 and 1997 Supplemental Consolidated Statement of Stockholders' Equity and Comprehensive Income For the Years Ended December 31, 1999, 1998 and 1997 Notes to Supplemental Consolidated Financial Statements Selected Financial Data For Five Years Results by Quarter (Unaudited) Supplemental Consolidated Financial Statement Schedule Schedule VIII: Valuation and Qualifying Accounts Supplemental Consolidated Financial Statements Supplemental Consolidated Balance Sheet September 30, 2000 (unaudited) and December 31, 1999 Supplemental Consolidated Statement of Income for the Nine Months Ended September 30, 2000 and 1999 (unaudited) Supplemental Consolidated Statement of Comprehensive Income for the Nine Months Ended September 30, 2000 and 1999 (unaudited)

Supplemental Consolidated Statement of Cash Flows for the Nine Months Ended September 30, 2000 and 1999 (unaudited) Notes to Supplemental Consolidated Financial Statements (unaudited) Management's Discussion and Analysis of Financial Condition and Results of Operations (unaudited) Exhibit 11 COMPUTATION OF EARNINGS PER SHARE For the Years Ended December 31, 1995, 1996, 1997, 1998 and 1999 For the Three Months Ended September 30, 2000 and 1999 For the Nine Months Ended September 30, 2000 and 1999 Exhibit 23 CONSENT OF INDEPENDENT ACCOUNTANTS PricewaterhouseCoopers LLP Arthur Andersen LLP Soteriou Banerji Ernst & Young Ernst & Young LLP J. H. Cohn LLP Exhibit 27 RESTATED FINANCIAL DATA SCHEDULE For the Nine Months Ended September 30, 2000 and 1999 For the Years Ended December 31, 1999, 1998 and 1997

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 thereunto duly authorized. THE INTERPUBLIC GROUP OF COMPANIES, INC. (Registrant) Date: January 5, 2001 BY /S/ FREDERICK MOLZ ---------------------- Frederick Molz Vice President and Controller

FINANCIAL HIGHLIGHTS (Amounts in Thousands Except Per Share Data) - -------------------------------------------------------------------------------- December 31 Percent Increase/ 1999 1998 (decrease) - -------------------------------------------------------------------------------- Operating Data Revenue $ 4,977,823 $ 4,218,657 18.0% Net Income $ 331,287 $ 339,907 (2.5%) Net Income Excluding Restructuring(1) $ 382,724 $ 339,907 12.6% Per Share Data(2) Diluted EPS $ 1.07 $ 1.12 (4.5%) Diluted EPS Excluding Restructuring (1) $ 1.24 $ 1.12 10.7% Cash Dividends $ .33 $ .29 13.8% Share Price at December 31 $ 57 11/16 $ 39 7/8 44.7% Weighted-average shares Diluted 308,840 305,134 1.2% Diluted Excluding Restructuring(1) 315,532 305,134 3.4% Financial Position Cash and Cash Equivalents $ 1,029,076 $ 801,207 28.4% Total Assets $ 9,247,044 $ 7,526,563 22.9% Book Value Per Share(2) $ 5.75 $ 4.71 22.1% Return on Average Stockholders' Equity: As Reported 20.7% 26.2% Excluding Restructuring(1) 23.6% 26.2% Revenue 1999 $4,977,823 1998 $4,218,657 1997 $3,610,706 Diluted Earnings Per Share(2) 1999 As Reported $ 1.07 1999 Excluding Restructuring(1) $ 1.24 1998 $ 1.12 1997 $ .76 Cash Dividends Per Share(2) 1999 $ .33 1998 $ .29 1997 $ .25 Return On Average Stockholders' Equity 1999 As Reported 20.7% 1999 Excluding Restructuring(1) 23.6% 1998 26.2% 1997 21.4% All periods have been restated to reflect the aggregate effect of the acquisitions accounted for as poolings of interests. (See Notes 15 and 16). - ----------------- [FN] (1) Excludes the impact of restructuring and other merger-related costs. (2) All share data for 1998 and 1997 has been adjusted to reflect the two- for-one stock split effective July 15, 1999.

THE INTERPUBLIC GROUP OF COMPANIES, INC. AND ITS SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS In November 2000, The Interpublic Group of Companies, Inc. (the "Company") acquired Deutsch, Inc. and its affiliate companies ("Deutsch") in a transaction accounted for as a pooling of interests. Deutsch is a full service advertising agency servicing a broad range of clients. The Company's consolidated financial statements and other financial information have been restated to reflect the effect of the Deutsch pooling. In April 2000, the Company acquired NFO Worldwide, Inc. ("NFO") in a transaction accounted for as a pooling of interests. The results of NFO and several other recent acquisitions, all of which have been accounted for as poolings of interests have been included in previously restated financial statements. The following discussion relates to the combined results of the Company after giving effect to all of the pooled companies. The Company reported net income of $331.3 million or $1.07 diluted earnings per share for the year ended December 31, 1999. Excluding the impact of restructuring and other merger related costs, which are described in a subsequent section of this discussion, net income would have been $382.7 million or $1.24 diluted earnings per share, compared to $339.9 million or $1.12 diluted earnings per share for the year ended December 31, 1998 and $224.2 million or $.76 diluted earnings per share for the year ended December 31, 1997. The following table sets forth net income and earnings per share before and after the restructuring and other merger related costs: (Dollars in thousands) 1999 1998 1997 ---- ---- ---- Net income as reported $ 331,287 $ 339,907 $ 224,184 Earnings per share Basic $ 1.11 $ 1.15 $ .79 Diluted $ 1.07 $ 1.12 $ .76 Net income before restructuring and other merger related costs $ 382,724 $ 339,907 $ 224,184 Earnings per share Basic $ 1.28 $ 1.15 $ .79 Diluted $ 1.24 $ 1.12 $ .76 Revenue - ------- Worldwide revenue for 1999 was $5.0 billion, an increase of $759 million or 18.0% over 1998. Domestic revenue, which represented 51% of worldwide revenue in 1999, increased $401 million or 18.6% over 1998. International revenue, which represented 49% of worldwide revenue in 1999, increased $358 million or 17.4% over 1998. International revenue would have increased 22% excluding the effect of the strengthening of the U.S. dollar against major currencies. The increase in worldwide revenue is a result of both growth from new business gains and growth from acquisitions. Exclusive of acquisitions, worldwide revenue on a constant dollar basis increased 9% over 1998.

Revenue from other specialized marketing services, which include media buying, market research, relationship (direct) marketing, public relations, sports and event marketing, healthcare marketing and e-business consulting and communications, comprised approximately 44% of total worldwide revenue in 1999, compared to 38% in 1998. Worldwide revenue for 1998 was $4.2 billion, an increase of $608 million or 16.8% over 1997. Domestic revenue, which represented 51% of worldwide revenue, increased $306 million or 16.5% over 1997. International revenue increased $302 million or 17.2% over 1997. International revenue would have increased 23% excluding the effect of the strengthening of the U.S. dollar against major currencies. Operating Expenses - ------------------ Worldwide operating expenses for 1999, excluding restructuring and other merger related costs, were $4.3 billion, an increase of 18.4% over 1998. Operating expenses outside the United States increased 16.7%, while domestic operating expenses increased 20.0%. These increases were commensurate with the increases in revenue. Worldwide operating expenses for 1998 were $3.6 billion, an increase of 13.0% over 1997, comprised of an 17.8% increase in international expenses and an 8.5% increase in domestic expenses. Significant portions of the Company's expenses relate to employee compensation and various employee incentive and benefit programs, which are based primarily upon operating results. Salaries and related expenses were $2.7 billion in 1999 or 55.2% of revenue as compared to $2.3 billion in 1998 or 55.4% of revenue and $2.0 billion in 1997 or 56.0% of revenue. The year over year dollar increase is a result of growth from acquisitions and new business gains. In 1997, as part of its continuing cost containment efforts, the Company announced that it was curtailing its domestic pension plan effective April 1, 1998, and recorded pre-tax charges of approximately $16.7 million. The Company continues to sponsor a domestic defined contribution plan. Office and general expenses were $1.5 billion in 1999, $1.2 billion in 1998, and $1.1 billion in 1997. The year over year increase is a result of the continued growth of the Company. In the fourth quarter of 1999, NFO recorded special charges of $22 million as a result of the difficult competitive environment due to client consolidation in the financial services industry. Approximately $16 million of the special charges related to the write-off of intangible assets which were deemed permanently impaired. Income from Operations - ---------------------- Income from operations for 1999 was $578 million. Excluding restructuring and other merger related costs, income from operations for 1999 was $663 million, an increase of $90 million or 16% over 1998. Exclusive of acquisitions, foreign exchange fluctuations and amortization of intangible assets, income from operations increased 16% for 1999 compared to 1998. Income from operations for 1998 was $573 million compared to $383 million in 1997, an increase of 50%. The increase is a result of growth from acquisitions and new business gains. Special Compensation Charges - ---------------------------- During 1997, Hill, Holliday, Connors, Cosmopulos, Inc. ("Hill Holliday"), a company acquired in a pooling of interests transaction in the second quarter of 1998, recorded special compensation charges of approximately $32 million.

Restructuring and Other Merger Related Costs - -------------------------------------------- In October 1999, the Company announced the merger of two of its advertising networks. The networks affected, Lowe & Partners Worldwide and Ammirati Puris Lintas were combined to form a new agency network called Lowe Lintas & Partners Worldwide. The merger involves the consolidation of operations in Lowe Lintas agencies in approximately 24 cities in 22 countries around the world. Once complete, the newly merged agency network will have offices in over 80 countries around the world. During the fourth quarter of 1999, the Company began execution of a comprehensive restructuring plan in connection with the merger. The plan includes headcount reductions, consolidation of real estate and the sale or disposition of certain investments, and is expected to be completed by June 30, 2000. The Company is pleased with the progress of the merger to date and expects the total costs to be in line with its original estimate. The total pre-tax cost of the restructuring plan is expected to be between $170 and $190 million, ($100 to $115 million, net of tax). In the fourth quarter of 1999, the Company recognized pre-tax costs of $84.2 million ($51.4 million, net of tax or $.17 per diluted share), with the remainder expected to be recognized in the first two quarters of 2000. A summary of the components of the total restructuring and other merger related costs, together with an analysis of the cash and non-cash elements, is as follows: (Dollars in millions) 1999 Cash Non-Cash --------------------------------- TOTAL BY TYPE - ------------- Severance and termination costs $44.9 $27.0 $17.9 Fixed asset write-offs 11.1 -- 11.1 Lease termination costs 3.8 3.8 -- Investment write-offs and other 24.4 1.1 23.3 --------------------------------- Total $84.2 $31.9 $52.3 ================================= The severance and termination costs recorded in 1999 relate to approximately 230 employees who have been terminated or notified that they will be terminated. The employee groups affected include executive and regional management, administrative, account management, creative and media production personnel, principally in the U.S. and U.K. The charge related to these individuals includes the cost of voluntary programs in certain locations and includes substantially all senior executives that will be terminated. As of December 31, 1999, the amount accrued related to severance and termination was approximately $42.6 million. During the fourth quarter of 1999, cash payments of $2.3 million were made. The fixed assets write-off relates largely to the abandonment of leasehold improvements as part of the merger. The amount recognized in 1999 relates to fixed asset write-offs in 6 offices principally in the United States. Lease termination costs relate to the offices vacated as part of the merger. The lease terminations are expected to be completed by mid-to-late 2000, with the cash portion to be paid out over a period of up to five years. As of December 31, 1999, the amount accrued related to these termination costs was $3.8 million.

The investment write-offs relate to the loss on sale or closing of certain business units. In 1999, $23 million has been recorded as a result of the decision to sell or abandon 4 European businesses. In the aggregate, the businesses being sold or abandoned represent an immaterial portion of the revenue and operations of Lowe Lintas & Partners. The write-off amount was computed based upon the difference between the estimated sales proceeds (if any) and the carrying value of the related assets. These sales or closures are expected to be completed by mid 2000. The Company expects to benefit from the resulting reduction in employee related costs, compensation, benefits and space occupancy. These benefits will begin to be realized in the second half of 2000. It is anticipated that a significant portion of the savings will be offset by investments in creative talent, technology and other capabilities to support the acceleration of growth in the future. The Company anticipates that beginning 2001 its after-tax results of operations will benefit by between $20 to $25 million. Interest Expense - ---------------- Interest expense was $81 million in 1999, $64 million in 1998 and $60 million in 1997. The increase in 1999 was attributable to the issuance of the 1.87% Convertible Subordinated Notes due 2006, issued in June 1999, in addition to other borrowings to fund a portion of the acquisition of Infratest Burke Aktiengesellschaft Holdings, one of the top custom marketing research firms in Europe, in November 1998. Other Income, Net - ----------------- Other income, net primarily consists of interest income, investment income and net gains from equity investments. Other income, net included gains from the Company's investments in various interactive based companies, including Nicholson NY, Inc., Lycos and USWEB in 1999, gains related to investments in USWEB, CKS Group, Inc. and Lycos in 1998, and gains on the sale of investments, including All American Communications, Inc. and CKS Group, Inc. in 1997. In the aggregate, annual net equity gains remained relatively constant during the three-year period. Other Items - ----------- Income applicable to minority interests increased by $5.5 million in 1999 and by $3.7 million in 1998. The 1999 and 1998 increases were primarily due to the strong performance of companies that were not wholly owned, as well as the acquisition of additional such entities during 1999 and 1998. The Company's effective income tax rate was 40.6% in 1999, 40.5% in 1998 and 44.9% in 1997. The higher rate in 1997 was largely attributable to the special compensation charges recorded by Hill Holliday. As described in Note 4, prior to acquisition, Deutsch had elected to be treated as an "S" Corporation and accordingly, its income tax expense was lower than it would have been had Deutsch been treated as a "C" Corporation. Deutsch became a "C" Corporation upon acquisition. Assuming Deutsch had been a "C" Corporation since 1997, the pro forma effective tax rate of the Company would have been 41.7%, 40.9% and 45.2% respectively for 1999, 1998 and 1997.

Cash Based Earnings - ------------------- Management believes that cash based earnings are a relevant measure of financial performance as it better illustrates the Company's performance and ability to support growth. The Company defines cash based earnings as net income, adjusted to exclude amortization of intangible assets, net of tax where applicable. Cash based earnings are not calculated in the same manner by all companies and are intended to supplement, not replace, the other measures calculated in accordance with generally accepted accounting principles. Cash based earnings for the three years ending December 31, 1999, 1998, and 1997 were as follows: (Amounts in thousands except per share data) 1999 1998 1997 --------------------------------------- Net income as reported $331,287 $339,907 $224,184 Restructuring and other merger related costs, net of tax 51,437 -- -- --------------------------------------- Net income, as adjusted 382,724 339,907 224,184 Add back amortization of intangible assets 99,326 61,396 45,682 Less related tax effect (13,031) (6,146) (5,228) --------------------------------------- Cash based earnings (as defined above) $469,019 $395,157 $264,638 ======================================= Per share amounts (diluted) $1.51 $1.30 $.90 LIQUIDITY AND CAPITAL RESOURCES The Company's financial position remained strong during 1999, with cash and cash equivalents at December 31, 1999, of $1.0 billion, an increase of $227.9 million over the 1998 year-end balance. Working capital at December 31, 1999, was $171.0 million, which was $74.1 million higher than the level at the end of 1998. The increase in working capital was largely attributable to proceeds of approximately $300 million from the 1.87% Convertible Subordinated Notes due 2006 issued in June, 1999. Historically, cash flow from operations has been the primary source of working capital and management believes that it will continue to be so in the future. Net cash provided by operating activities was $610 million, $552 million and $292 million for the years ended December 31, 1999, 1998, and 1997, respectively. The Company's working capital is used primarily to provide for the operating needs of its subsidiaries, which includes payments for space or time purchased from various media on behalf of clients. The Company's practice is to bill and collect from its clients in sufficient time to pay the amounts due for media on a timely basis. Other uses of working capital include the repurchase of the Company's common stock, payment of cash dividends, capital expenditures and acquisitions. The Company acquires shares of its stock on an ongoing basis. During 1999, the Company purchased approximately 6.5 million shares of its common stock, compared to 4.9 million shares in 1998. The Company repurchases its stock for the purpose of fulfilling its obligations under various compensation plans.

The Company, excluding pooled entities, paid $90.4 million ($.33 per share) in dividends to stockholders in 1999, as compared to $76.9 million ($.29 per share) paid during 1998. The Company's capital expenditures in 1999 were $186.7 million compared to $159.6 million in 1998 and $123.3 million in 1997. The primary purposes of these expenditures were to upgrade computer and telecommunications systems to better serve clients and to modernize offices. During 1999, the Company paid approximately $559 million in cash and stock for new acquisitions, including a number of marketing communications companies to complement its existing agency systems and to optimally position itself in the ever-broadening communications marketplace. This amount includes the value of stock issued for pooled companies. The Company and its subsidiaries maintain credit facilities in the United States and in countries where they conduct business to manage their future liquidity requirements. The Company's available short-term credit facilities were $510 million, of which $80 million were utilized at December 31, 1999, and $576 million, of which $118 million were utilized at December 31, 1998. Return on average stockholders' equity was 20.7% in 1999 and 26.2% in 1998. Excluding restructuring and other merger related costs, return on average stockholders' equity was 23.6% in 1999. The decline in 1999 was primarily attributable to a $159 million increase in net unrealized holding gains on equity investments, which are included in stockholders' equity. As discussed in Note 12, revenue from international operations was 49% of total revenue in 1999, 1998 and 1997. The Company continuously evaluates and attempts to mitigate its exposure to foreign exchange, economic and political risks. The notional value and fair value of all outstanding forwards and options contracts at the end of the year were not significant. In addition, the economic developments in Brazil, which did not have a significant negative impact on the Company, were partially offset by the favorable impact due to the economic recovery in Japan. The Company is not aware of any significant occurrences that could negatively impact its liquidity. However, should such a trend develop, the Company believes that there are sufficient funds available under its existing lines of credit and from internal cash-generating capabilities to meet future needs. OTHER MATTERS Internet-Services Companies - --------------------------- During 1999, the Company expanded its investment in internet-service and related companies. In December 1999, the Company announced the establishment of Zentropy Partners, a new global internet-services company that integrates the building and marketing of digital businesses. At its formation, Zentropy Partners had annualized revenue exceeding $50 million and was positioned to serve clients out of 11 offices in Europe and North America. In April 1999, the Company invested $20 million for a minority interest in Icon Medialab International AB ("Icon"), a Swedish based internet consultancy. Later in the year, the Company increased its investment in Icon through the contribution of other investments and through additional cash purchases.

On October 19, 1999, NFO announced the formation of InsightExpress, LLC, a new Internet company formed to provide real-time consumer input to the desktops of decision-makers in companies of all sizes worldwide. InsightExpress is a fully automated web-enabled survey system that will allow its customers to test new ideas, screen new concepts, gauge customer satisfaction, survey employees, test advertising, and gather insight into the needs, attitudes, and behaviors of consumers. InsightExpress is designed to provide these capabilities at a fraction of the time and the cost of existing market research methods while leveraging the worldwide client experience and panel expertise of NFO. To fund its development and growth, InsightExpress has raised a total of $25 million in new venture capital from General Atlantic Partners and Engage Technologies. In addition to the above, the Company maintains internet-service and related divisions at several of its major operating divisions and has made strategic investments in fourteen companies whose objectives revolve around consulting on the use of technology to benefit customers. Year 2000 Issue - --------------- Pursuant to the Year 2000 issue, the Company had developed programs to address the possible exposures related to the impact of computer systems incorrectly recognizing the year 2000 or "00" as 1900. As a result of implementation of its programs, the Company did not experience any significant Year 2000 disruptions during the transition from 1999 to 2000, and since entering 2000, the Company has not experienced any significant Year 2000 disruptions to its business. In addition, the Company is not aware of any significant disruptions impacting its customers or suppliers. The Company will continue to monitor its computer systems over the next several months. However, the Company does not anticipate any significant impact related to Year 2000 problems that may affect its internal computer systems. The Company will also continue to monitor the activities of its business partners and critical suppliers and has developed contingency plans should business partners or critical suppliers experience any Year 2000 disruptions in the coming months. Costs incurred to achieve Year 2000 readiness, which included modification to existing systems, replacement of non-compliant systems and consulting resources totaled $73 million. A total of $47 million was capitalized (related primarily to hardware and software that provided both Year 2000 readiness and increased the functionality of certain systems), and $26 million was expensed. Cautionary Statement - -------------------- This Report on Form 8-K (the "Report"), including Management's Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements. Statements that are not historical facts, including statements about Interpublic's beliefs and expectations, are forward-looking statements. These statements are based on current plans, expectations, estimates and projections, and therefore you should not place undue reliance on them. Forward-looking statements speak only as of the date they are made, and Interpublic undertakes no obligation to update publicly any of them in light of new information, future events or otherwise. Forward-looking statements involve inherent risks and uncertainties. Interpublic cautions you that a number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. Such factors include, but are not limited to, those associated with the effect of national and regional economic conditions, the ability of Interpublic to attract new clients and retain existing clients, the financial success and other developments of the clients of Interpublic, developments from changes in the regulatory and legal environment for advertising companies around the world, Interpublic's ability to effectively integrate recent acquisitions and Interpublic's ability to attract and retain key management personnel.

New Accounting Guidance - ----------------------- In June 1998, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities" (SFAS 133), which had an initial adoption date by the Company of January 1, 2000. In June 1999, the FASB postponed the adoption date of SFAS 133 until January 1, 2001. The Company does not believe the effect of adopting SFAS 133 will be material to its financial condition or results of operations. Conversion to the Euro - ---------------------- On January 1, 1999, certain member countries of the European Union established fixed conversion rates between their existing currencies and the European Union's common currency (the "Euro"). The Company conducts business in member countries. The transition period for the introduction of the Euro will be between January 1, 1999, and June 30, 2002. The Company is addressing the issues involved with the introduction of the Euro. The major important issues facing the Company include: converting information technology systems; reassessing currency risk; negotiating and amending contracts; and processing tax and accounting records. Based upon progress to date, the Company believes that use of the Euro will not have a significant impact on the manner in which it conducts its business affairs and processes its business and accounting records. Accordingly, conversion to the Euro has not, and is not expected to have a material effect on the Company's financial condition or results of operations.

REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors and Stockholders of The Interpublic Group of Companies, Inc. In our opinion, based upon our audits and the reports of the other auditors, the accompanying supplemental consolidated balance sheets and the related supplemental consolidated statements of income, of cash flows, and of stockholders' equity and comprehensive income present fairly, in all material respects, the financial position of The Interpublic Group of Companies, Inc. and its subsidiaries (the "Company") at December 31, 1999 and 1998, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 1999, in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements based on our audits. We did not audit the financial statements of International Public Relations plc ("IPR"), a wholly-owned subsidiary, which statements reflect revenues constituting approximately 6% of the related 1997 supplemental consolidated financial statements. We did not audit the financial statements of Hill, Holliday, Connors, Cosmopulos, Inc. ("Hill Holiday"), a wholly-owned subsidiary which statements reflect total net loss constituting approximately 15% of the related 1997 supplemental consolidated financial statements. We did not audit the financial statements of NFO Worldwide, Inc. ("NFO"), a wholly-owned subsidiary, which statements reflect total assets constituting approximately 5% of the related 1999 supplemental consolidated financial statements. Additionally, we did not audit the financial statements of Deutsch, Inc. and Subsidiary and Affiliates ("Deutsch"), a wholly-owned subsidiary, which statements reflect total net income constituting approximately 5% of the related 1999 supplemental consolidated financial statements. Those statements were audited by other auditors whose reports thereon have been furnished to us, and our opinion expressed herein, insofar as it relates to the amounts included for IPR, Hill Holiday, NFO and Deutsch, is based solely on the reports of the other auditors. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits and the reports of other auditors provide a reasonable basis for the opinion expressed above. As described in Note 16, to the supplemental consolidated financial statements, on November 30, 2000, the Company merged with Deutsch in a transaction accounted for as a pooling of interests. The accompanying supplementary consolidated financial statements give retroactive effect of the merger of the Company with Deutsch. Accounting principles generally accepted in the United States of America proscribe giving effect to a consummated business combination accounted for by the pooling of interests method in financial statements that do not include the date of consummation. These financial statements do not extend through the date of consummation; however, they will become the historical consolidated financial statements of the Company and its subsidiaries after financial statements covering the date of consummation of the business combination are issued. PricewaterhouseCoopers LLP New York, New York February 22, 2000, except for Note 15 which is as of July 13, 2000 and Note 16 which is as of December 22,2000

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Board of Directors and Stockholders of NFO Worldwide, Inc.: We have audited the consolidated balance sheets of NFO Worldwide, Inc. (a Delaware corporation) and subsidiaries as of December 31, 1999 and 1998, and the related consolidated statements of income, stockholders' equity, and cash flows for each of the years in the three year period ended December 31, 1999. These financial statements (not presented separately herein) are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We did not audit the 1997 financial statements of The MBL Group plc, included in the consolidated financial statements of NFO Worldwide, Inc., which statements reflect total revenues of 26 percent of the related 1997 consolidated total, after adjustment to reflect translation into U.S. dollars and accounting principles generally accepted in the United States. The financial statements of The MBL Group plc, prior to those adjustments, were audited by other auditors whose report thereon has been furnished to us, and our opinion expressed herein, insofar as it relates to the amounts included for The MBL Group plc, is based solely on the report of the other auditors. We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits and the report of other auditors provide a reasonable basis for our opinion. In our opinion, based on our audits and the report of the other auditors, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of NFO Worldwide, Inc. and subsidiaries as of December 31, 1999 and 1998, and the results of their operations and their cash flows for each of the years in the three year period ended December 31, 1999, in conformity with accounting principles generally accepted in the United States. Our audits were made for the purpose of forming an opinion on the consolidated financial statements taken as a whole. The schedule referred to in Item 14 (not presented separately herein) is presented for the purpose of complying with the Securities and Exchange Commission's rules and is not part of the consolidated financial statements. This schedule has been subjected to the auditing procedures applied in our audits of the consolidated financial statements and, in our opinion, based on our audit and the report of other auditors, fairly states in all material respects the financial data required to be set forth therein in relation to the consolidated financial statements taken as a whole. Arthur Andersen LLP New York, New York, February 25, 2000

REPORT OF THE AUDITORS TO THE SHAREHOLDERS OF THE MBL GROUP plc We have audited the financial statements of The MBL Group plc for the year ended December 31, 1997, which have been prepared under the historical cost convention and in accordance with generally accepted accounting principles applicable in the United Kingdom. Respective Responsibilities of Directors and Auditors The Company's directors are responsible for the preparation of financial statements. It is our responsibility to form an independent opinion, based on our audit, on those statements and to report our opinion to you. Basis of Opinion We conducted our audit in accordance with Auditing Standards issued by the Auditing Practices Board which are substantially the same as those followed in the United States. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes an assessment of the significant estimates and judgements made by the directors in the preparation of the financial statements, and of whether the accounting policies are appropriate to the Company's circumstances, consistently applied and adequately disclosed. We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion, we also evaluated the overall adequacy of the presentation of information in the financial statements. Opinion In our opinion, the financial statements give a true and fair view of the group's profit and cash flows for the year ended December 31, 1997, and have been properly prepared in accordance with generally accepted accounting principles in the United Kingdom. Soteriou Banerji Registered Auditors and Chartered Accountants 253 Gray's Inn Road London, WC1X 8QT Date February 23, 1998

REPORT OF INDEPENDENT AUDITORS TO THE SHAREHOLDERS AND BOARD OF DIRECTORS OF INTERNATIONAL PUBLIC RELATIONS PLC We have audited the consolidated statements of income, shareholders' equity and cash flows of International Public Relations plc and subsidiaries for the fourteen-month period ended 31 December 1997, all expressed in pounds sterling. These financial statements, which are not separately presented herein, are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with United Kingdom auditing standards, which do not differ in any significant respect from United States generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated results of operations and the consolidated cash flows of International Public Relations plc and subsidiaries for the fourteen-month period ended 31 December 1997 in conformity with United States generally accepted accounting principles. Ernst & Young London 3 February 1999

REPORT OF INDEPENDENT AUDITORS Board of Directors Hill, Holliday, Connors, Cosmopulos, Inc. We have audited the consolidated statements of operations, stockholders' equity (deficit) and cash flows of Hill, Holliday, Connors, Cosmopulos, Inc. and Subsidiaries (the Company) for the twelve months ended December 31, 1997, not separately presented herein. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated results of operations and cash flows of Hill, Holliday, Connors, Cosmopulos, Inc. and Subsidiaries for the twelve-month period ended December 31, 1997 in conformity with generally accepted accounting principles. Ernst & Young LLP Boston, Massachusetts March 13, 1998

Report of Independent Public Accountants ---------------------------------------- To the Stockholder Deutsch, Inc. and Subsidiary and Affiliates We have audited the combined balance sheet of Deutsch, Inc. and Subsidiary and Affiliates as of December 31, 1999, and the related combined statements of income, stockholder's equity (deficiency) and cash flows for the year then ended, which financial statements are respectively presented herein. These combined financial statements are not the responsibility of the Company's management. Our responsibility is to express an opinion on these combined financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the combined financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall combined financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the combined financial statements referred to above present fairly, in all material respects, the financial position of Deutsch, Inc. and Subsidiary and Affiliates as of December 31, 1999, and their results of operations and cash flows for the year then ended, in conformity with generally accepted accounting principles. The combined financial statements have been restated to reflect the correct treatment of payments made to the Company's sole stockholder. In financial statements previously issued for the years ended December 31, 1999, 1998 and 1997, certain payments had been classified as bonuses which, it has been determined, should have been reflected as distributions to the Company's sole stockholder. Accordingly, the Company has restated the financial statements to reflect the correct accounting for the payments and the related tax effects. J.H. Cohn LLP Roseland, New Jersey November 28, 2000

FINANCIAL STATEMENTS THE INTERPUBLIC GROUP OF COMPANIES, INC. AND ITS SUBSIDIARIES SUPPLEMENTAL CONSOLIDATED BALANCE SHEET DECEMBER 31 (Dollars in Thousands Except Per Share Data) ASSETS 1999 1998 -------------------------- CURRENT ASSETS: Cash and cash equivalents (includes certificates of deposit: 1999-$150,343; 1998-$152,064) $1,029,076 $ 801,207 Marketable securities 36,765 31,733 Receivables (net of allowance for doubtful accounts: 1999-$60,565; 1998-$54,060) 4,442,229 3,661,076 Expenditures billable to clients 337,769 300,067 Prepaid expenses and other current assets 147,085 156,314 -------------------------- Total current assets 5,992,924 4,950,397 -------------------------- OTHER ASSETS: Investment in unconsolidated affiliates 62,225 62,244 Deferred taxes on income -- 92,756 Other investments and miscellaneous assets 719,024 362,154 -------------------------- Total other assets 781,249 517,154 -------------------------- FIXED ASSETS, AT COST: Land and buildings 164,678 117,105 Furniture and equipment 783,698 742,191 -------------------------- 948,376 859,296 Less: accumulated depreciation (506,975) (440,190) -------------------------- 441,401 419,106 Unamortized leasehold improvements 151,870 119,461 -------------------------- Total fixed assets 593,271 538,567 -------------------------- Intangible assets (net of accumulated amortization: 1999-$607,417; 1998-$525,792) 1,879,600 1,520,445 -------------------------- TOTAL ASSETS $9,247,044 $7,526,563 ==========================

FINANCIAL STATEMENTS THE INTERPUBLIC GROUP OF COMPANIES, INC. AND ITS SUBSIDIARIES SUPPLEMENTAL CONSOLIDATED BALANCE SHEET DECEMBER 31 (Dollars in Thousands Except Per Share Data) LIABILITIES AND STOCKHOLDERS' EQUITY 1999 1998 ---- ---- CURRENT LIABILITIES: Payable to banks $ 262,483 $ 215,078 Accounts payable 4,629,415 3,699,783 Accrued expenses 769,566 720,274 Accrued income taxes 160,484 218,381 --------------------------- Total current liabilities 5,821,948 4,853,516 --------------------------- NONCURRENT LIABILITIES: Long-term debt 530,117 498,517 Convertible subordinated debentures and notes 518,490 207,927 Deferred compensation and reserve for termination allowances 348,172 325,007 Deferred taxes on income 45,888 -- Accrued postretirement benefits 50,226 49,919 Other noncurrent liabilities 86,127 102,000 Minority interests in consolidated subsidiaries 81,612 59,246 --------------------------- Total noncurrent liabilities 1,660,632 1,242,616 --------------------------- STOCKHOLDERS' EQUITY: Preferred Stock, no par value shares authorized: 20,000,000 shares issued: none Common Stock, $.10 par value shares authorized: 550,000,000 shares issued: 1999 - 315,921,839; 1998 - 309,954,039 31,592 30,995 Additional paid-in capital 783,897 574,246 Retained earnings 1,392,224 1,166,785 Accumulated other comprehensive loss, net of tax (76,695) (160,970) -------------------------- 2,131,018 1,611,056 Less: Treasury stock, at cost: 1999 - 8,909,904 shares; 1998 - 6,411,028 shares 289,519 109,277 Unamortized expense of restricted stock grants 77,035 71,348 -------------------------- Total stockholders' equity 1,764,464 1,430,431 -------------------------- Commitments and contingencies TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $9,247,044 $7,526,563 =========================== All periods have been restated to reflect the aggregate effect of the acquisitions accounted for as poolings of interests. (See Notes 15 and 16). All share data for 1998 has been adjusted to reflect the two-for-one stock split effective July 15, 1999. The accompanying notes are an integral part of these financial statements.

FINANCIAL STATEMENTS THE INTERPUBLIC GROUP OF COMPANIES, INC. AND ITS SUBSIDIARIES SUPPLEMENTAL CONSOLIDATED STATEMENT OF INCOME YEAR ENDED DECEMBER 31 (Amounts in Thousands Except Per Share Data) 1999 1998 1997 ----------------------------------------- Revenue $ 4,977,823 $ 4,218,657 $ 3,610,706 Salaries and related expenses 2,745,956 2,339,894 2,020,243 Office and general expenses 1,469,862 1,244,771 1,129,639 Amortization of intangible assets 99,326 61,396 45,682 Special compensation charges -- -- 32,229 Restructuring and other merger related costs 84,183 -- -- ----------------------------------------- Total operating expenses 4,399,327 3,646,061 3,227,793 ----------------------------------------- Income from operations 578,496 572,596 382,913 Interest expense (81,341) (64,296) (59,820) Other income, net 103,562 98,555 117,150 ----------------------------------------- Income before provision for income taxes 600,717 606,855 440,243 Provision for income taxes 243,971 245,636 197,665 ----------------------------------------- Income of consolidated companies 356,746 361,219 242,578 Income applicable to minority interests (33,991) (28,503) (24,759) Equity in net income of unconsolidated affiliates 8,532 7,191 6,365 ----------------------------------------- Net Income $ 331,287 $ 339,907 $ 224,184 ========================================= Per Share Data: Basic EPS $ 1.11 $ 1.15 $ .79 Diluted EPS $ 1.07 $ 1.12 $ .76 Weighted average shares: Basic 297,992 294,756 283,796 Diluted 308,840 305,134 301,602 All periods have been restated to reflect the aggregate effect of the acquisitions accounted for as poolings of interests. (See Notes 15 and 16). All share data for 1998 and 1997 has been adjusted to reflect the two-for-one stock split effective July 15, 1999. The accompanying notes are an integral part of these financial statements.

FINANCIAL STATEMENTS THE INTERPUBLIC GROUP OF COMPANIES, INC. AND ITS SUBSIDIARIES SUPPLEMENTAL CONSOLIDATED STATEMENT OF CASH FLOWS YEAR ENDED DECEMBER 31 (Dollars in Thousands) 1999 1998 1997 ------------------------------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 331,287 $ 339,907 $ 224,184 Adjustments to reconcile net income to cash provided by operating activities: Depreciation and amortization of fixed assets 128,302 110,086 88,847 Amortization of intangible assets 99,326 61,396 45,682 Amortization of restricted stock awards 25,926 20,272 16,222 Stock bonus plans/ESOP -- -- 1,389 Provision for (benefit of) deferred income taxes 9,316 (11,972) 7,432 Noncash pension plan charges -- -- 16,700 Equity in net income of unconsolidated affiliates (8,533) (7,191) (6,366) Income applicable to minority interests 33,991 28,503 24,759 Translation losses/(gains) 690 1,034 (319) Special compensation charges -- -- 31,553 Net gain on investments (43,390) (40,465) (44,626) Restructuring costs, non-cash 52,264 -- -- Other (5,197) 12,667 (10,467) Change in assets and liabilities, net of acquisitions: Receivables (820,510) (269,536) (357,380) Expenditures billable to clients (24,413) (31,199) (51,247) Prepaid expenses and other assets (121,945) (39,790) (30,892) Accounts payable and accrued expenses 996,630 336,799 317,165 Accrued income taxes (64,423) 26,870 435 Deferred compensation and reserve for termination allowances 20,496 14,537 18,571 ------------------------------------ Net cash provided by operating activities 609,817 551,918 291,642 ------------------------------------ CASH FLOWS FROM INVESTING ACTIVITIES: Acquisitions, net (248,406) (255,995) (110,317) Capital expenditures (186,669) (159,596) (123,275) Proceeds from sales of assets 72,542 28,346 114,494 Net (purchases of) proceeds from marketable securities (9,114) 3,934 324 Other investments and miscellaneous assets (150) -- -- Investment in unconsolidated affiliates (10,531) (16,725) (9,191) ------------------------------------- Net cash used in investing activities (382,328) (400,036) (127,965) ------------------------------------- CASH FLOWS FROM FINANCING ACTIVITIES: Increase in short-term borrowings 47,592 15,304 31,188 Proceeds from long-term debt 405,927 220,494 280,847 Payments of long-term debt (70,126) (98,294) (36,404) Proceeds from ESOP -- 7,420 -- Treasury stock acquired (300,524) (164,928) (144,094) Issuance of common stock 66,130 35,239 38,664 Cash dividends - Interpublic (90,424) (76,894) (61,242) Cash dividends - pooled companies (14,643) (16,461) (19,519) ------------------------------------ Net cash provided by (used in) financing activities 43,932 (78,120) 89,440 ------------------------------------ Effect of exchange rates on cash and cash equivalents (43,552) 10,998 (43,279) ------------------------------------ Increase in cash and cash equivalents 227,869 84,760 209,838 Cash and cash equivalents at beginning of year 801,207 716,447 506,609 ----------------------------------- Cash and cash equivalents at end of year $1,029,076 $ 801,207 $ 716,447 ==================================== All periods have been restated to reflect the aggregate effect of the acquisitions accounted for as poolings of interests. (See Notes 15 and 16). The accompanying notes are an integral part of these financial statements.

FINANCIAL STATEMENTS THE INTERPUBLIC GROUP OF COMPANIES, INC. AND ITS SUBSIDIARIES SUPPLEMENTAL CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY AND COMPREHENSIVE INCOME FOR THE THREE-YEAR PERIOD ENDED DECEMBER 31, 1999 (Dollars in Thousands) Accumulated Unamortized Common Additional Other Expense Unearned Stock Paid-In Retained Comprehensive Treasury of Restricted ESOP (par value $.10) Capital Earnings Income (loss) Stock Stock Grants Plan Total - ------------------------------------------------------------------------------------------------------------------------------------ BALANCES, DECEMBER 31, 1998 $30,995 $574,246 $1,166,785 $(160,970) $(109,277) $(71,348) $ -- $1,430,431 Comprehensive income: Net income $ 331,287 $ 331,287 Adjustment for minimum pension liability 18,596 18,596 Change in market value of securities available-for-sale 158,607 158,607 Foreign currency translation adjustment (92,928) (92,928) - ----------------------------------------------------------------------------------------------------------------------------------- Total comprehensive income $415,562 Cash dividends - IPG (90,424) (90,424) Cash dividends - pooled companies (14,643) (14,643) Equity adjustments - pooled companies (594) (594) Awards of stock under Company plans: Achievement stock and incentive awards 198 333 531 Restricted stock, net of forfeitures 66 36,902 (7,927) (5,687) 23,354 Employee stock purchases 40 19,068 19,108 Exercise of stock options, including tax benefit 276 81,539 81,815 Purchase of Company's own stock (300,524) (300,524) Issuance of shares for acquisitions 63,447 127,876 191,323 Par value of shares issued for two-for-one stock split 187 (187) -- Other issuances 28 8,497 8,525 - ------------------------------------------------------------------------------------------------------------------------------------ BALANCES, DECEMBER 31, 1999 $31,592 $783,897 $1,392,224 $ (76,695) $(289,519) $(77,035) $ -- $1,764,464 - ------------------------------------------------------------------------------------------------------------------------------------

FINANCIAL STATEMENTS THE INTERPUBLIC GROUP OF COMPANIES, INC. AND ITS SUBSIDIARIES SUPPLEMENTAL CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY AND COMPREHENSIVE INCOME FOR THE THREE-YEAR PERIOD ENDED DECEMBER 31, 1999 (Dollars in Thousands) Accumulated Unamortized Common Additional Other Expense Unearned Stock Paid-In Retained Comprehensive Treasury of Restricted ESOP (par value $.10) Capital Earnings Income (loss) Stock Stock Grants Plan Total - ------------------------------------------------------------------------------------------------------------------------------------ BALANCES, DECEMBER 31, 1997 $30,564 $431,872 $920,448 $(159,064) $ -- $(56,634) $(7,420) $1,159,766 Comprehensive income: Net income $339,907 $ 339,907 Adjustment for minimum pension liability (24,013) (24,013) Change in market value of securities available-for-sale (2,576) (2,576) Foreign currency translation adjustment 24,683 24,683 - ----------------------------------------------------------------------------------------------------------------------------------- Total comprehensive income $ 338,001 Cash dividends - IPG (76,894) (76,894) Cash dividends - pooled companies (16,461) (16,461) Awards of stock under Company plans: Achievement stock and incentive awards 274 110 384 Restricted stock, net of forfeitures 63 36,619 (2,406) (14,714) 19,562 Employee stock purchases 26 13,325 13,351 Exercise of stock options, including tax benefit 123 42,518 42,641 Purchase of Company's own stock (164,928) (164,928) Issuance of shares for acquisitions 36,714 57,947 94,661 Conversion of convertible debentures 3 1,002 1,005 Payments from ESOP 7,420 7,420 Par value of shares issued for two-for-one stock split 215 (215) -- Other issuances 1 11,922 11,923 - ----------------------------------------------------------------------------------------------------------------------------------- BALANCES, DECEMBER 31, 1998 $30,995 $ 574,246 $1,166,785 $(160,970) $(109,277) $(71,348) $ -- $1,430,431 - -----------------------------------------------------------------------------------------------------------------------------------

FINANCIAL STATEMENTS THE INTERPUBLIC GROUP OF COMPANIES, INC. AND ITS SUBSIDIARIES SUPPLEMENTAL CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY AND COMPREHENSIVE INCOME FOR THE THREE-YEAR PERIOD ENDED DECEMBER 31, 1999 (Dollars in Thousands) Accumulated Unamortized Common Additional Other Expense Unearned Stock Paid-In Retained Comprehensive Treasury of Restricted ESOP (par value $.10) Capital Earnings Income (loss) Stock Stock Grants Plan Total - ------------------------------------------------------------------------------------------------------------------------------------ BALANCES, DECEMBER 31, 1996 $15,501 $272,790 $791,383 $ (93,572) $ -- $(47,350) $(7,800) $ 930,952 Comprehensive income: Net income $224,184 $ 224,184 Adjustment for minimum pension liability 72 72 Change in market value of securities available-for-sale 12,465 12,465 Foreign currency translation adjustment (78,029) (78,029) - ----------------------------------------------------------------------------------------------------------------------------------- Total comprehensive income $158,692 Cash dividends - IPG (61,242) (61,242) Cash dividends - pooled companies (19,519) (19,519) Awards of stock under Company plans: Achievement stock and incentive awards 787 175 962 Restricted stock, net of forfeitures 53 27,821 (3,664) (9,284) 14,926 Employee stock purchases 23 9,684 9,707 Exercise of stock options, including tax benefit 126 40,855 40,981 Purchase of Company's own stock (144,094) (144,094) Issuance of shares for acquisitions (72,129) 147,583 75,454 Conversion of convertible debentures 443 118,357 118,800 Par value of shares issued for three-for-two stock split 59 59 Payments from ESOP 380 380 Special compensation charges 27,324 27,324 Deferred stock bonus charges (4,876) (4,876) Par value of shares issued for two-for-one stock split 14,358 (14,358) -- Other issuances 1 11,259 11,260 - ----------------------------------------------------------------------------------------------------------------------------------- BALANCES, DECEMBER 31, 1997 $30,564 $431,872 $920,448 $(159,064) $ -- $(56,634) $(7,420) $1,159,766 - ----------------------------------------------------------------------------------------------------------------------------------- The accompanying notes are an integral part of these financial statements. All periods have been restated to reflect the aggregate effect of the acquisitions accounted for as poolings of interests. (See Notes 15 and 16). All share data for 1999, 1998 and 1997 has been adjusted to reflect the two-for-one stock split effective July 15, 1999.

NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of Operations The Company is a worldwide provider of advertising agency and related services. The Company conducts business through the following subsidiaries: McCann-Erickson WorldGroup, The Lowe Group, DraftWorldwide, Initiative Media Worldwide, International Public Relations, Octagon, Zentropy Partners, NFO Worldwide, Allied Communications Group, Deutsch, Inc. and other related companies. The Company also has arrangements through association with local agencies in various parts of the world. Other specialized marketing services conducted by the Company include media buying, market research, relationship (direct) marketing, public relations, sports and event marketing, healthcare marketing and e-business consulting and communications. Principles of Consolidation The consolidated financial statements include the accounts of the Company and its subsidiaries, most of which are wholly owned. The Company also has certain investments in unconsolidated affiliates that are carried on the equity basis. The Company's consolidated financial statements, including the related notes, have been restated as of the earliest period presented to include the results of operations, financial position and cash flows of the 2000 pooled entities in addition to all prior pooled entities. The accompanying income statements have been prepared in a format different than that used in the originally filed Form 10-K for the three years ended December 31, 1999. The changes made principally relate to the introduction of a new line item - "Income from operations". Amounts previously included in "Other income, net" as part of "Gross Income" are now included elsewhere in the Consolidated Statement of Income. Short-term and Long-term Investments The Company's investments in marketable and equity securities are categorized as available-for-sale securities, as defined by Statement of Financial Accounting Standards No. 115 (SFAS 115), "Accounting for Certain Investments in Debt and Equity Securities". Unrealized holding gains and losses are reflected as a net amount within stockholders' equity until realized. The cost of securities sold is based on the average cost of securities when computing realized gains and losses. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Translation of Foreign Currencies Balance sheet accounts are translated principally at rates of exchange prevailing at the end of the year except for fixed assets and related depreciation in countries with highly inflationary economies which are translated at rates in effect on dates of acquisition. Revenue and expense accounts are translated at average rates of exchange in effect during each year. Translation adjustments are included within stockholders' equity except for countries with highly inflationary economies, in which case they are included in current operations.

Revenues and Agency Costs Revenues are generally recognized when media placements appear and production costs are incurred. Salaries and other agency costs are generally expensed as incurred. Depreciation and Amortization Depreciation is computed principally using the straight-line method over estimated useful lives of the related assets, ranging generally from 3 to 20 years for furniture and equipment and from 10 to 45 years for various component parts of buildings. Leasehold improvements and rights are amortized over the terms of related leases. Company policy provides for the capitalization of all major expenditures for renewal and improvements and for current charges to income for repairs and maintenance. Long-lived Assets The excess of purchase price over the fair value of net tangible assets acquired is amortized on a straight-line basis over periods not exceeding 40 years. Customer lists are amortized on a straight-line basis over the expected useful life of the customer lists (generally 5 to 40 years). The Company evaluates the recoverability of the carrying value of long-lived assets whenever events or changes in circumstances indicate that the net book value of an operation may not be recoverable. If the sum of projected future undiscounted cash flows of an operation is less than its carrying value, an impairment loss is recognized. The impairment loss is measured by the excess of the carrying value over fair value based on estimated discounted future cash flows or other valuation measures. During 1999, the Company recorded a pre-tax charge of $16 million related to the write-off of goodwill and customer lists within NFO's North American financial services division. Cash flow analyses were performed, resulting in the determination by management that the intangible assets within this division were deemed to be permanently impaired. Income Taxes Deferred income taxes reflect the impact of temporary differences between the amount of assets and liabilities recognized for financial reporting purposes and such amounts recognized for income tax purposes. Earnings per Common and Common Equivalent Share The Company applies the principles of Statement of Financial Accounting Standards No. 128 (SFAS 128), "Earnings Per Share". Basic earnings per share is based on the weighted-average number of common shares outstanding during each year. Diluted earnings per share also includes common equivalent shares applicable to grants under the stock incentive and stock option plans and the assumed conversion of convertible subordinated debentures and notes, if they are determined to be dilutive. Treasury Stock Treasury stock is acquired at market value and is recorded at cost. Issuances are accounted for on a first-in, first-out basis. Concentrations of Credit Risk The Company's clients are in various businesses, located primarily in North America, Latin America, Europe and the Asia Pacific Region. The Company performs ongoing credit evaluations of its clients. Reserves for credit losses are maintained at levels considered adequate by management. The Company invests its excess cash in deposits with major banks and in money market securities. These securities typically mature within 90 days and bear minimal risk.

Segment Reporting The Company provides advertising and many other closely related specialized marketing services. All of these services fall within one reportable segment as defined in Statement of Financial Accounting Standards No. 131 (SFAS 131), "Disclosures about Segments of an Enterprise and Related Information." Accounting for Derivative Instruments and Hedging Activities In June 1998, the FASB issued Statement of Financial Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities" (SFAS 133), which had an initial adoption date by the Company of January 1, 2000. In June 1999, the FASB postponed the adoption date of SFAS 133 until January 1, 2001. SFAS 133 will require the Company to record all derivatives on the balance sheet at fair value. Changes in derivative fair values will either be recognized in earnings as offsets to the changes in fair value of related hedged assets, liabilities and firm commitments or for forecasted transactions, deferred and later recognized in earnings at the same time as the related hedged transactions. The impact of SFAS 133 on the Company's financial statements will depend on a variety of factors, including the future level of forecasted and actual foreign currency transactions, the extent of the Company's hedging activities, the type of hedging instruments used and the effectiveness of such instruments. However, the Company does not believe the effect of adopting SFAS 133 will be material to its financial condition or results of operations. Reclassifications Certain amounts for prior years have been reclassified to conform to current year presentation. NOTE 2: STOCKHOLDERS' EQUITY On July 15, 1999, the stockholders approved a two-for-one stock split, effected in the form of a payment of a 100 percent stock dividend to stockholders of record on June 29, 1999. The number of shares of common stock reserved for issuance pursuant to various plans under which stock is issued was increased by 100 percent. The two-for-one stock split has been reflected retroactively in the consolidated financial statements and all per share data, shares, and market prices of the Company's common stock included in the consolidated financial statements and notes thereto have been adjusted to give effect to the stock split.

Comprehensive Income Accumulated other comprehensive income (loss) amounts are reflected net of tax in the consolidated financial statements as follows: (Dollars in thousands) Total Accumulated Foreign Unrealized Minimum Other Currency Holding Pension Comprehensive Translation Gains/ Liability Income/ Adjustment (Losses) Adjustment (Loss) ------------------------------------------------- Balances, December 31, 1996 $ (80,270) $ -- $(13,302) $ (93,572) Current-period change (78,029) 12,465 72 (65,492) ----------------------------------------------- Balances, December 31, 1997 $(158,299) $ 12,465 $(13,230) $(159,064) Current-period change 24,683 (2,576) (24,013) (1,906) ----------------------------------------------- Balances, December 31, 1998 $(133,616) $ 9,889 $(37,243) $(160,970) Current-period change (92,928) 158,607 18,596 84,275 ----------------------------------------------- Balances, December 31, 1999 $(226,544) $168,496 $(18,647) $ (76,695) =============================================== The foreign currency translation adjustments are not tax-effected. See Note 13 for additional discussion of unrealized holding gains on investments.

NOTE 3: EARNINGS PER SHARE In accordance with SFAS 128, the following is a reconciliation of the components of the basic and diluted EPS computations for income available to common stockholders for the year ended December 31: (Dollars in Thousands Except Per Share Data) 1999 1998 1997 ----------------------------------------------------------------------------------------------------- Per Per Per Share Share Share Income Shares Amount Income Shares Amount Income Shares Amount ----------------------------------------------------------------------------------------------------- BASIC EPS Income available to common stockholders $331,287 297,992 $1.11 $339,907 294,756 $1.15 $224,184 283,796 $.79 Effect of Dilutive Securities: Options 7,311 6,924 6,508 Restricted stock 631 3,537 541 3,454 447 3,277 3 3/4% Convertible subordinated debentures -- -- -- -- 5,929 8,021 DILUTED EPS $331,918 308,840 $1.07 $340,448 305,134 $1.12 $230,560 301,602 $.76 ----------------------------------------------------------------------------------------------------- The computation of diluted EPS for 1999, 1998, and 1997 excludes the assumed conversion of the 1.80% Convertible Subordinated Notes and the 1999 computation also excludes the 1.87% Convertible Subordinated Notes (See Note 10) because they were antidilutive. In the fourth quarter of 1997, the Company redeemed substantially all its 3 3/4% Convertible Subordinated Debentures due 2002. All data for 1999, 1998, and 1997 has been restated to reflect the aggregate effect of the acquisitions accounted for as poolings of interests. (See Notes 15 and 16). All share data for 1998 and 1997 has been adjusted to reflect the two-for-one stock split effective July 15, 1999. NOTE 4: ACQUISITIONS The Company acquired a number of advertising and communications companies during the three-year period ended December 31, 1999. The aggregate purchase price, including cash and stock payments for new acquisitions (including pooled entities), was $559 million, $820 million and $378 million in 1999, 1998 and 1997, respectively. The aggregate purchase price for new acquisitions accounted for as purchases and equity investments was $293 million, $405 million, and $144 million in 1999, 1998, and 1997, respectively.

1999 In 1999, the Company paid $189 million in cash and issued 8,393,893 shares of its common stock to acquire 56 companies. Of the acquisitions, 52 were accounted for under the purchase method of accounting and 4 were accounted for under the pooling of interests method. The Company also recorded a liability for acquisition related deferred payments of $28 million, for cases where contingencies related to acquisitions have been resolved. For those entities accounted for as purchase transactions, the purchase price of the acquisitions has been allocated to assets acquired and liabilities assumed based on estimated fair values. The results of operations of the acquired companies were included in the consolidated results of the Company from their respective acquisition dates which occurred throughout the year. The companies acquired in transactions accounted for as purchases included The Cassidy Companies, Inc., Spedic France S.A., Mullen Advertising, Inc., and PDP Promotions UK Ltd. None of the acquisitions was significant on an individual basis. In connection with the 1999 purchase transactions, goodwill of approximately $254 million was recorded. The purchase price allocations made in 1999 are preliminary and subject to adjustment. Goodwill related to the acquisitions is being amortized on a straight-line basis over their estimated useful lives. On December 1, 1999, the Company acquired Brands Hatch Leisure Plc. for 5,158,122 shares of stock. The acquisition has been accounted for as a pooling of interests. Additionally, during 1999 the Company issued 641,596 shares to acquire 3 other companies which have been accounted for as poolings of interests. The following unaudited pro forma data summarize the results of operations for the periods indicated as if the 1999 purchase acquisitions had been completed as of January 1, 1998. The pro forma data give effect to actual operating results prior to the acquisition, adjusted to include the estimated pro forma effect of interest expense, amortization of intangibles and income taxes. These pro forma amounts do not purport to be indicative of the results that would have actually been obtained if the acquisitions occurred as of the beginning of the periods presented or that may be obtained in the future. For the year ended December 31, 1999 (Amounts in thousands except per share data) Pre- Pro forma IPG acquisition with 1999 IPG results acquisitions (as reported) (unaudited) (unaudited) ------------- ----------- ----------- Revenues $4,977,823 $104,529 $5,082,352 Net income 331,287 7,101 338,388 Earnings per share: Basic 1.11 1.14 Diluted 1.07 1.10 Net income amounts shown in the table above include restructuring and other merger related costs of $51.4 million, net of tax.

For the year ended December 31, 1998 (Amounts in thousands except per share data) Results Pro forma IPG of 1999 with 1999 IPG acquisitions acquisitions (as reported) (unaudited) (unaudited) ------------- ----------- ----------- Revenues $4,218,657 $446,833 $4,665,490 Net income 339,907 15,819 355,726 Earnings per share: Basic 1.15 1.21 Diluted 1.12 1.17 Unaudited pro forma consolidated results after giving effect to business acquired in purchase transactions during 1998 would not have been materially different from the reported amounts for 1998. 1998 In 1998, 14,956,534 shares of the Company's common stock were issued for acquisitions accounted for as poolings of interests. The companies pooled and the respective shares of the Company's common stock issued were: International Public Relations Plc. - 5,280,346 shares, Hill Holliday - 4,124,868 shares, The Jack Morton Company - 4,271,992 shares, Carmichael Lynch, Inc. - 973,808 shares and KBA Marketing - 305,520 shares. In 1998, the Company paid $282 million in cash and issued 2,718,504 shares of its common stock to acquire 77 companies, all of which have been accounted for as purchases. These acquisitions included Gillespie, Ryan McGinn, CSI, Flammini, Gingko, Defederico, Herrero Y Ochoa, Infratest Burke AG, CF Group, MarketMind Technologies, and Ross-Cooper-Lund. The Company also recorded a liability for acquisition related deferred payments of $24 million. 1997 In 1997, the Company issued 10,789,079 shares of its common stock for acquisitions accounted for as poolings of interests. Some of the companies pooled and the respective shares of the Company's common stock issued were: Complete Medical Group - 1,417,578 shares, The MBL Group plc - 1,126,114 shares, Prognostics - 1,425,123 shares, Integrated Communications Corporation- 1,170,108 shares, Advantage International - 1,158,412 shares and Ludgate - 1,078,918 shares. Additional companies accounted for as poolings of interests include Adler Boschetto Peebles, Barnett Fletcher, Davies Baron, Diefenbach Elkins, D.L. Blair, Rubin Barney & Birger, Inc. and Technology Solutions Inc. In 1997, the Company also paid $101.1 million in cash and issued 2,792,950 shares of its common stock for acquisitions accounted for as purchases and equity investments. These acquisitions included Marketing Corporation of America, Medialog, The Sponsorship Group, Kaleidoscope and Addis Wechsler (51% interest). The Company increased its interest in Campbell Mithun Esty by 25%. The Company also recorded a liability for acquisition related deferred payments of $38 million. Deferred Payments Certain of the Company's acquisition agreements provide for deferred payments by the Company, contingent upon future revenues or profits of the companies acquired. Deferred payments of both cash and shares of the Company's common stock for prior years' acquisitions were $210 million, $84 million, and $51 million in 1999, 1998 and 1997, respectively. Such payments are capitalized and recorded as goodwill.

Investments During 1999, the Company sold a portion of its investments in Lycos and USWEB for combined proceeds of approximately $56 million. Additionally, the Company sold its minority investment in Nicholson NY, Inc. to Icon for $19 million in shares of Icon's common stock. During 1998, the Company sold a portion of its investments in USWEB, CKS Group, Inc. and Lycos with combined proceeds of approximately $20 million. These investments are being accounted for as available-for-sale securities, pursuant to the requirements of SFAS 115. During 1997, the Company sold its investment in All American Communications, Inc. for approximately $77 million. Restatement As discussed in Note 16, the Company acquired Deutsch in November 2000 in a transaction which was accounted for as a pooling of interests. The accompanying consolidated financial statements, including the related notes, have been restated as of the earliest period presented to include the results of operations, financial position and cash flows of Deutsch. In April 2000, the Company acquired NFO in a transaction accounted for as a pooling of interests. The results of NFO and several other recent acquisitions accounted for as poolings of interests have been included in previously restated financial statements. Revenue and net income for Deutsch included in the supplemental consolidated statement of income for the years ending December 31, 1999, 1998 and 1997 are summarized below. Net Income/ Revenue (Loss) ---------- ----------- For the year ended December 31, 1999: As Previously Restated $4,892,912 $315,243 Deutsch 84,911 16,044 As Restated $4,977,823 $331,287 For the year ended December 31, 1998: As Previously Restated $4,167,788 $333,593 Deutsch 50,869 6,314 As Restated $4,218,657 $339,907 For the year ended December 31, 1997: As Previously Restated $3,582,601 $220,211 Deutsch 28,105 3,973 As Restated $3,610,706 $224,184 Prior to its acquisition by the Company, Deutsch elected to be treated as an "S" Corporation under applicable sections of the Internal Revenue Code as well as for state income tax purposes. Accordingly, income tax expense was lower than would have been the case had Deutsch been treated as a "C" Corporation. Deutsch became a "C" Corporation upon its acquisition by the Company. On a pro forma basis, assuming "C" Corporation status, net income for Deutsch and the Company would have been as follows:

(Dollars in thousands) 1999 1998 1997 ------------------------------- Deutsch, as reported $ 16,044 $ 6,314 $ 3,973 Deutsch, pro forma 9,518 3,833 2,431 ------------------------------- Pro forma tax adjustment (6,526) (2,481) (1,542) ------------------------------- IPG, as restated 331,287 339,907 224,184 ------------------------------- IPG, pro forma $324,761 $337,426 $222,642 =============================== NOTE 5: PROVISION FOR INCOME TAXES The Company accounts for income taxes under Statement of Financial Accounting Standards No. 109 (SFAS 109), "Accounting for Income Taxes". SFAS 109 applies an asset and liability approach that requires the recognition of deferred tax assets and liabilities with respect to the expected future tax consequences of events that have been recognized in the consolidated financial statements and tax returns. The components of income before provision for income taxes are as follows: (Dollars in thousands) 1999 1998 1997 ------ ---- ---- Domestic $365,118 $322,651 $201,359 Foreign 235,599 284,204 238,884 --------------------------------------- Total $600,717 $606,855 $440,243 ======================================= The provision for income taxes consisted of: Federal Income Taxes (Including Foreign Withholding Taxes): Current $ 92,018 $110,226 $ 75,736 Deferred 19,891 4,335 3,683 --------------------------------------- 111,909 114,561 79,419 --------------------------------------- State and Local Income Taxes: Current 23,168 23,713 24,384 Deferred 4,252 802 286 --------------------------------------- 27,420 24,515 24,670 --------------------------------------- Foreign Income Taxes: Current 119,469 123,669 90,113 Deferred (14,827) (17,109) 3,463 --------------------------------------- 104,642 106,560 93,576 --------------------------------------- Total $243,971 $245,636 $197,665 =======================================

At December 31, 1999 and 1998 the deferred tax assets/(liabilities) consisted of the following items: (Dollars in thousands) 1999 1998 ---- ---- Postretirement/postemployment benefits $ 52,317 $ 49,207 Deferred compensation 4,940 34,285 Pension costs 10,036 13,715 Depreciation (8,537) (10,953) Rent (8,674) (6,424) Interest 4,100 4,598 Accrued reserves 9,399 9,155 Investments in equity securities (140,320) (10,677) Tax loss/tax credit carryforwards 47,783 47,293 Restructuring and other merger related costs 9,497 -- Other (196) (6,032) ----------------------- Total deferred tax assets / (liabilities) (19,655) 124,167 Deferred tax valuation allowance 26,233 31,411 ----------------------- Net deferred tax assets / (liabilities) $(45,888) $ 92,756 ======================= The valuation allowance of $26.2 million and $31.4 million at December 31, 1999 and 1998, respectively, represents a provision for uncertainty as to the realization of certain deferred tax assets, including U.S. tax credits and net operating loss carryforwards in certain jurisdictions. The change during 1999 in the deferred tax valuation allowance primarily relates to changes in the deferred compensation tax item, net operating loss carryforwards and tax credits. At December 31, 1999, there were $9.7 million of tax credit carryforwards with expiration periods through 2004 and net operating loss carryforwards with a tax effect of $38.1 million with various expiration periods. A reconciliation of the effective income tax rate as shown in the consolidated statement of income to the federal statutory rate is as follows: 1999 1998 1997 ---- ---- ---- Statutory federal income tax rate 35.0% 35.0% 35.0% State and local income taxes, net of federal income tax benefit 2.8 3.7 4.1 Impact of foreign operations, including withholding taxes 0.8 0.4 0.3 Goodwill and intangible assets 3.6 2.8 2.7 Effect of pooled companies 0.3 (0.8) 2.7 Other (1.9) (0.6) 0.1 ------------------------ Effective tax rate 40.6% 40.5% 44.9% ======================== The Company's effective income tax rate was 40.6% in 1999, 40.5% in 1998 and 44.9% in 1997. The higher rate in 1997 was largely attributable to the special compensation charges recorded by Hill Holliday.

As described in Note 4, prior to its acquisition by the Company, Deutsch had elected to be treated as an "S" Corporation and accordingly, its income tax expense was lower than it would have been had Deutsch been treated as an "S" Corporation. Deutsch became a "C" Corporation upon its acquisition by the Company. Assuming Deutsch had been a "C" Corporation since 1997, the pro forma effective tax rate for the Company would have been 41.7%, 40.9% and 45.2% respectively for 1999, 1998 and 1997. The total amount of undistributed earnings of foreign subsidiaries for income tax purposes was approximately $585 million at December 31, 1999. It is the Company's intention to reinvest undistributed earnings of its foreign subsidiaries and thereby indefinitely postpone their remittance. Accordingly, no provision has been made for foreign withholding taxes or United States income taxes which may become payable if undistributed earnings of foreign subsidiaries were paid as dividends to the Company. The additional taxes on that portion of undistributed earnings which is available for dividends are not practicably determinable. NOTE 6: SUPPLEMENTAL CASH FLOW INFORMATION Cash and Cash Equivalents For purposes of the consolidated statement of cash flows, the Company considers all highly liquid investments with a maturity of three months or less to be cash equivalents. Income Tax and Interest Payments Cash paid for income taxes was approximately $186 million, $200 million and $133 million in 1999, 1998 and 1997, respectively. Interest payments were approximately $57 million, $40 million and $32 million in 1999, 1998, and 1997, respectively. Noncash Financing Activity During 1997, the Company redeemed all outstanding issues under the 3 3/4% Convertible Subordinated Debentures due 2002. Substantially all of the outstanding debentures were converted into approximately 8.6 million shares of the Company's common stock. Acquisitions As more fully described in Note 4, the Company issued 8,393,893 shares, 17,942,578 shares, and 10,518,628 shares of the Company's common stock in connection with acquisitions during 1999, 1998 and 1997, respectively. Details of businesses acquired in transactions accounted for as purchases were as follows: (Dollars in thousands) 1999 1998 1997 ---- ---- ---- Fair value of assets acquired $627,005 $726,601 $303,969 Liabilities assumed 148,637 319,676 90,303 ----------------------------------- Net assets acquired 478,368 406,925 213,666 Less: noncash consideration 186,210 91,077 96,814 Less: cash acquired 43,752 59,853 6,535 ----------------------------------- Net cash paid for acquisitions $248,406 $255,995 $110,317 ===================================

The amounts shown above exclude future deferred payments due in subsequent years, but include cash deferred payments of $120 million, $55 million and $30 million made during 1999, 1998 and 1997, respectively. NOTE 7: INCENTIVE PLANS The 1997 Performance Incentive Plan ("1997 PIP Plan") was approved by the Company's stockholders in May 1997 and includes both stock and cash based incentive awards. The maximum number of shares of the Company's common stock which may be granted in any year under the 1997 PIP Plan is equal to 1.85% of the total number of shares of the Company's common stock outstanding on the first day of the year adjusted for additional shares as defined in the 1997 PIP Plan document (excluding management incentive compensation performance awards). The 1997 PIP Plan also limits the number of shares available with respect to awards made to any one participant as well as limiting the number of shares available under certain awards. Awards made prior to the 1997 PIP Plan remain subject to the respective terms and conditions of the predecessor plans. Except as otherwise noted, awards under the 1997 PIP Plan have terms similar to awards made under the respective predecessor plans. Stock Options Outstanding options are generally granted at the fair market value of the Company's common stock on the date of grant and are exercisable as determined by the Compensation Committee of the Board of Directors (the "Committee"). Generally, options become exercisable between two and five years after the date of grant and expire ten years from the grant date. Following is a summary of stock option transactions during the three-year period ended December 31: 1999 1998 1997 -------------------------------------------------------- Weighted Weighted Weighted Average Average Average Exercise Exercise Exercise (Shares in thousands) Shares Price Shares Price Shares Price -------------------------------------------------------- Shares under option, beginning of year 29,505 $ 19 25,466 $ 13 25,230 $ 11 Options granted 4,743 39 8,399 32 4,830 19 Options exercised (4,497) 11 (3,108) 8 (3,549) 8 Options cancelled (2,124) 25 (1,252) 15 (1,045) 12 ------ ------ ------ Shares under option, end of year 27,627 $ 23 29,505 $ 19 25,466 $ 13 ====== ====== ====== Options exercisable at year-end 7,955 $ 13 6,954 $ 11 9,158 $ 9

The following table summarizes information about stock options outstanding and exercisable at December 31, 1999: (Shares in thousands) Weighted- Average Weighted- Weighted- Number Remaining Average Number Average Range of Outstanding Contractual Exercise Exercisable Exercise Exercise Prices at 12/31/99 Life Price at 12/31/99 Price - ------------------------------------------------------------------------------- $ 4.33 to $9.99 2,990 2 $ 7 2,865 $ 8 10.00 to 14.99 3,422 5 11 3,093 11 15.00 to 24.99 9,996 7 17 1,666 20 25.00 to 56.28 11,220 9 36 612 30 Employee Stock Purchase Plan Under the Employee Stock Purchase Plan (ESPP), employees may purchase common stock of the Company through payroll deductions not exceeding 10% of their compensation. The price an employee pays for a share of stock is 85% of the market price on the last business day of the month. The Company issued approximately .5 million shares in 1999, 1998, and 1997, respectively, under the ESPP. An additional 15.5 million shares were reserved for issuance at December 31, 1999. SFAS 123 Disclosures The Company applies the disclosure principles of Statement of Financial Accounting Standards No. 123 (SFAS 123), "Accounting for Stock-Based Compensation". As permitted by the provisions of SFAS 123, the Company applies APB Opinion 25, "Accounting for Stock Issued to Employees", and related interpretations in accounting for its stock-based employee compensation plans. If compensation cost for the Company's stock option plans and its ESPP had been determined based on the fair value at the grant dates as defined by SFAS 123, the Company's pro forma net income and earnings per share would have been as follows: (Dollars in Thousands Except Per Share Data) 1999 1998 1997 ---- ---- ---- Net Income As reported $331,287 $339,907 $224,184 Pro forma $303,645 $322,084 $211,223 Earnings Per Share Basic As reported $ 1.11 $ 1.15 $ .79 Pro forma $ 1.02 $ 1.09 $ .74 Diluted As reported $ 1.07 $ 1.12 $ .76 Pro forma $ 0.99 $ 1.06 $ .72 For purposes of this pro forma information, the fair value of shares issued under the ESPP was based on the 15% discount received by employees. The weighted-average fair value (discount) on the date of purchase for stock purchased under this plan was $5.28, $3.82, and $2.68 in 1999, 1998, and 1997, respectively.

The weighted average fair value of options granted during 1999, 1998, and 1997 was $12.94, $8.85, and $5.91, respectively. The fair value of each option grant has been estimated on the date of grant using the Black-Scholes option-pricing model with the following assumptions: 1999 1998 1997 ---- ---- ---- Expected option lives 6 years 6 years 6 years Risk free interest rate 5.72% 4.87% 6.51% Expected volatility 19.73% 19.17% 19.17% Dividend yield .81% .95% 1.3% As required by SFAS 123, this pro forma information is based on stock awards beginning in 1995 and accordingly is not likely to be representative of the pro forma effects in future years because options vest over several years and additional awards generally are made each year. Restricted Stock Restricted stock issuances are subject to certain restrictions and vesting requirements as determined by the Committee. The vesting period is generally five to seven years. No monetary consideration is paid by a recipient for a restricted stock award and the grant date fair value of these shares is amortized over the restriction periods. At December 31, 1999, there was a total of 7.0 million shares of restricted stock outstanding. During 1999, 1998 and 1997, the Company awarded .9 million shares, 1.3 million shares and 1.4 million shares of restricted stock with a weighted-average grant date fair value of $40.03, $28.99 and $19.48, respectively. The cost recorded for restricted stock awards in 1999, 1998 and 1997 was $25.9 million, $20.3 million, and $16.2 million, respectively. Performance Units Performance units have been awarded to certain key employees of the Company and its subsidiaries. The ultimate value of these performance units is contingent upon the annual growth in profits (as defined) of the Company, its operating components or both, over the performance periods. The awards are generally paid in cash. The projected value of these units is accrued by the Company and charged to expense over the performance period. The Company expensed approximately $27 million, $20 million and $20 million in 1999, 1998, and 1997, respectively. Hill Holliday Due to the merger of Hill Holliday and the Company, Hill Holliday recognized a one-time compensation charge of approximately $32 million in 1997. Hill Holliday had an Equity Participation Plan and certain other agreements for various members of management, which provided for participants to receive a portion of the proceeds in the event of the sale or merger of Hill Holliday. Also included in the charge were costs primarily relating to consulting and supplemental retirement agreements. NOTE 8: RETIREMENT PLANS Defined Benefit Pension Plans Through March 31, 1998 the Company and certain of its domestic subsidiaries had a defined benefit plan ("Domestic IPG Plan") which covered substantially all regular domestic employees. Effective April 1, 1998 this Plan was curtailed, and participants with five or less years of service became fully vested in the Domestic Plan. Participants with five or more years of service as of March 31, 1998 retain their vested balances and participate in a new compensation plan.

Under the new plan, each participant's account is credited with an annual allocation, equal to the projected discounted pension benefit accrual plus interest, while they continue to work for the Company. Participants in active service are eligible to receive up to ten years of allocations coinciding with the number of years of service with the Company after March 31, 1998. As a result of the change in the Domestic Plan, the Company recorded charges of approximately $16.7 million in the fourth quarter of 1997. Net periodic pension costs for the Domestic IPG Plan for 1999, 1998 and 1997 were $1.3 million, $.9 million and $15.0 million, respectively. The 1997 net periodic pension cost included a $10 million curtailment charge and $4 million of service costs. Additionally, NFO maintains a defined benefit plan ("NFO Plan") covering approximately one half of NFO's U.S. employees. The periodic pension costs for this plan for 1999, 1998, and 1997 were $.8 million, $.6 million and $.6 million, respectively. The Company's stockholders' equity balance includes a minimum pension liability of $18.6 million, $37.2 million and $13.2 million at December 31, 1999, 1998 and 1997, respectively. The Company also has several foreign pension plans in which benefits are based primarily on years of service and employee compensation. It is the Company's policy to fund these plans in accordance with local laws and income tax regulations. Net periodic pension costs for foreign pension plans for 1999, 1998 and 1997 included the following components: (Dollars in thousands) 1999 1998 1997 ---- ---- ---- Service cost $ 9,619 $ 6,847 $ 5,460 Interest cost 11,759 10,908 10,633 Expected return on plan assets (9,380) (9,437) (10,537) Amortization of unrecognized transition obligation 390 373 324 Amortization of prior service cost 833 482 552 Recognized actuarial loss / (gain) 508 (70) (1,440) Other (9) -- -- -------------------------------- Net periodic pension cost $ 13,720 $ 9,103 $ 4,992 ================================

The following table sets forth the change in the benefit obligation, the change in plan assets, the funded status and amounts recognized for the pension plans in the Company's consolidated balance sheet at December 31, 1999, and 1998: (Dollars in thousands) Domestic Foreign Pension Plans Pension Plans ------------------------------------------------ 1999 1998 1999 1998 ------------------------------------------------ Change in benefit obligation Beginning obligation $ 166,538 $ 141,376 $ 220,964 $ 179,016 Service cost 768 627 9,619 6,847 Interest cost 9,869 10,367 11,759 10,908 Benefits paid (12,671) (12,899) (12,777) (9,447) Participant contributions - - 2,410 1,606 Actuarial (gains) / losses (12,626) 27,067 (7,264) 29,882 Currency effect -- -- 1,440 5,245 Other -- -- 352 (3,093) ------------------------------------------------ Ending obligation 151,878 166,538 226,503 220,964 ------------------------------------------------ Change in plan assets Beginning fair value 129,755 122,157 161,975 145,942 Actual return on plan assets 15,354 12,292 30,651 17,363 Employer contributions 3,072 8,205 7,887 2,473 Participant contributions -- -- 2,410 1,606 Benefits paid (12,671) (12,899) (12,777) (9,447) Currency effect -- -- 156 1,300 Other -- -- 2,437 2,738 ------------------------------------------------ Ending fair value 135,510 129,755 192,739 161,975 ------------------------------------------------ Funded status of the plans (16,368) (36,783) (33,764) (58,989) Unrecognized net actuarial loss/(gain) 18,927 38,439 (18,163) 11,536 Unrecognized prior service cost (13) (20) 3,704 2,921 Unrecognized transition cost -- -- 1,838 3,796 ------------------------------------------------ Net asset/(liability) recognized $ 2,546 $ 1,636 $ (46,385) $ (40,736) ================================================ At December 31, 1999 and 1998, the assets of the Domestic Plan and the foreign pension plans were primarily invested in fixed income and equity securities. For the Domestic Plans, discount rates of 7.75% in 1999, 6.75% to 7% in 1998 and 7.25% to 7.5% in 1997 and salary increase assumptions of 4.5% in 1999 (the NFO Plan) 4.5% to 6% in 1998 and 4.75% to 6% in 1997 were used in determining the actuarial present value of the projected benefit obligation. The expected return of Domestic Plan assets was 9% to 9.5% in 1999 and 9% to 10% in each of 1998 and 1997. For the foreign pension plans, discount rates ranging from 3.75% to 14% in 1999, 4% to 14% in 1998, and 3.5% to 14% in 1997 and salary increase assumptions ranging from 3% to 10% in 1999 and 2% to 10% in both 1998 and 1997 were used in determining the actuarial present value of the projected benefit obligation. The expected rates of return on the assets of the foreign pension plans ranged from 2% to 14% in 1999, 2% to 14% in 1998 and 3.5% to 14% in 1997.

The projected benefit obligation, accumulated benefit obligation and fair value of plan assets for the Domestic Plan were $152 million, $152 million and $136 million, respectively, as of December 31, 1999, and $167 million, $167 million, and $130 million, respectively, as of December 31, 1998. The projected benefit obligation, accumulated benefit obligation, and fair value of plan assets for the foreign pension plans with accumulated benefit obligations in excess of plan assets were $90 million, $72 million and $9 million respectively, as of December 31, 1999, and $81 million, $74 million and $3 million respectively, as of December 31, 1998. Other Benefit Arrangements The Company also has special unqualified deferred benefit arrangements with certain key employees. Vesting is based upon the age of the employee and the terms of the employee's contract. Life insurance contracts have been purchased in amounts which may be used to fund these arrangements. In addition to the defined benefit plans described above, the Company also sponsors other defined contribution plans ("Savings Plan") that covers substantially all domestic employees of the Company and participating subsidiaries. The Savings Plan permits participants to make contributions on a pre-tax and/or after-tax basis. The Savings Plan allows participants to choose among several investment alternatives. The Company matches a portion of participants' contributions based upon the number of years of service. The Company contributed $12 million, $9.3 million and $7.2 million to the Savings Plan in 1999, 1998 and 1997, respectively. Postretirement Benefit Plans The Company and its subsidiaries provide certain postretirement health care benefits for employees who were in the employ of the Company as of January 1, 1988, and life insurance benefits for employees who were in the employ of the Company as of December 1, 1961. The plans cover certain domestic employees and certain key employees in foreign countries. Effective January 1, 1993, the Company's plan covering postretirement medical benefits was amended to place a cap on annual benefits payable to retirees. The coverage is self-insured, but is administered by an insurance company. The Company accrues the expected cost of postretirement benefits other than pensions over the period in which the active employees become eligible for such postretirement benefits. The net periodic expense for these postretirement benefits for 1999, 1998 and 1997 was $2.2 million, $3 million and $2.8 million, respectively.

The following table sets forth the change in benefit obligation, change in plan assets, funded status and amounts recognized for the Company's postretirement benefit plans in the consolidated balance sheet at December 31, 1999 and 1998: (Dollars in thousands) 1999 1998 --------------------- Change in benefit obligation Beginning obligation $ 41,793 $ 42,863 Service cost 477 785 Interest cost 2,795 3,154 Participant contributions 90 77 Benefits paid (2,020) (1,722) Plan amendments -- (68) Actuarial gain (4,300) (3,296) -------------------- Ending obligation 38,835 41,793 -------------------- Change in plan assets Beginning fair value -- -- Actual return on plan assets -- -- Employer contributions 1,930 1,645 Participant contributions 90 77 Benefits paid (2,020) (1,722) -------------------- Ending fair value -- -- -------------------- Funded status of the plans (38,835) (41,793) Unrecognized net actuarial gain (9,440) (5,234) Unrecognized prior service cost (1,951) (2,892) -------------------- Net amount recognized $(50,226) $(49,919) ==================== Discount rates of 7.5% to 7.75% in 1999, 6.75% in 1998 and 7.25% in 1997 and salary increase assumption of 4% to 6% in 1999 and 1998, and 4.75% to 6% in 1997 were used in determining the accumulated postretirement benefit obligation. A 7% to 7.4% and an 8% increase in the cost of covered health care benefits were assumed for 1999 and 1998, respectively. This rate is assumed to decrease incrementally to approximately 5.5% in the year 2002 and remain at that level thereafter. The health care cost trend rate assumption does not have a significant effect on the amounts reported. Postemployment Benefits In accordance with SFAS 112 "Employers' Accounting for Postemployment Benefits", the Company accrues costs relating to certain benefits including severance, worker's compensation and health care coverage over an employee's service life. The Company's liability for postemployment benefits totaled approximately $64 million and $50 million at December 31, 1999 and 1998, respectively, and is included in deferred compensation and reserve for termination allowances. The net periodic expense recognized in 1999, 1998 and 1997 was approximately $34 million, $32 million and $31 million, respectively.

NOTE 9: SHORT-TERM BORROWINGS The Company and its domestic subsidiaries have lines of credit with various banks. These credit lines permit borrowings at fluctuating interest rates determined by the banks. Short-term borrowings by subsidiaries outside the United States principally consist of drawings against bank overdraft facilities and lines of credit. These borrowings bear interest at the prevailing local rates. Where required, the Company has guaranteed the repayment of these borrowings. Unused lines of credit by the Company and its subsidiaries at December 31, 1999 and 1998 aggregated $430 million and $458 million, respectively. The weighted-average interest rate on outstanding balances at December 31, 1999 was approximately 5.8%. Current maturities of long-term debt are included in the payable to banks balance. NOTE 10: LONG-TERM DEBT Long-term debt at December 31 consisted of the following: (Dollars in thousands) 1999 1998 --------------------- Convertible Subordinated Notes - 1.87% $ 304,076 $ -- Convertible Subordinated Notes - 1.80% 214,414 207,927 Term loans - 4.20% to 7.91% (6.45% to 7.91% in 1998) 289,621 280,320 Senior Notes Payable to Banks under a Revolving Credit Agreement Due March 2003 - 4.3% to 6.9% 35,603 53,045 Senior Notes Payable - 6.83% to 7.52% 102,000 95,000 Subordinated Notes - 9.84% 25,000 17,000 Germany mortgage note payable - 7.64% 26,779 31,680 Other mortgage notes payable and long-term loans - 2.80% to 9.84% 75,026 44,370 --------------------- 1,072,519 729,342 Less: current portion 23,912 22,898 --------------------- Long-term debt $1,048,607 $706,444 ===================== On June 1, 1999, the Company issued $361 million face amount of Convertible Subordinated Notes due 2006. The 2006 notes were issued at an original price of 83% of the face amount, generating proceeds of approximately $300 million. The notes are convertible into 6.4 million shares of the Company's common stock at a conversion rate of 17.616 shares per $1,000 face amount. The fair value of the 2006 notes as of December 31, 1999, was approximately $416 million and was determined by obtaining quotes from brokers. On September 16, 1997, the Company issued $250 million face amount of Convertible Subordinated Notes due 2004 ("2004 Notes") with a coupon rate of 1.80%. The 2004 Notes were issued at an original price of 80% of the face amount, generating proceeds of approximately $200 million. The notes are convertible into 6.7 million shares of the Company's common stock at a conversion rate of 26.772 shares per $1,000 face amount. The fair value of the 2004 Notes as of December 31, 1999 was approximately $392 million and was determined by obtaining quotes from brokers. On March 9, 1998, the Company entered into a $75 million revolving credit agreement. The $75 million revolving credit facility has an ultimate maturity date of March 2003 and enables the Company to borrow in multiple currencies at interest rates tied to LIBOR or the prime rate, at its option.

In conjunction with the Infratest Burke acquisition and the financing thereof, the Company amended its $75 million revolving credit facility and its $40 million Senior Notes, each originally dated March 9, 1998. The amendments provide, among other things, that the Company obligations will be guaranteed by certain subsidiaries of the Company. In addition, the amendments increased the rates at which interest annually accrues under the obligations from 6.43% to 6.83%. The Senior Notes Payable consist of four private placements of $40 million Senior Notes both dated March 9, 1998 due March 1, 2008, $17 million Series A Senior Notes and $38 million Series B Senior Notes dated November 20, 1998 due November 15, 2005 and November 15, 2008, respectively, and $7 million Series B Senior Notes dated March 26 due November 15, 2008. The Subordinated Notes consist of the private placement of $8 million on March 26, 1999, and $17 million on November 20, 1998. The Subordinated Notes bear interest at the fixed annual rate of 9.84%, mature November 15, 2008, and are repayable in equal annual installments of $8.3 million beginning in 2006. Under various loan agreements, the Company must maintain specified levels of net worth and meet certain cash flow requirements and is limited in the level of indebtedness. The Company has complied with the limitations under the terms of these loan agreements. Long-term debt maturing over the next five years and thereafter is as follows: 2000-$24 million; 2001-$44.8 million; 2002-$113.8 million; 2003-$83.4 million; 2004-$277.9 million, and $528.6 million thereafter. See Note 13 for discussion of fair market value of the Company's long-term debt. NOTE 11: RESTRUCTURING AND OTHER MERGER RELATED COSTS In October 1999, the Company announced the merger of two of its advertising networks. The networks affected, Lowe & Partners Worldwide and Ammirati Puris Lintas were combined to form a new agency network called Lowe Lintas & Partners Worldwide. The merger involves the consolidation of operations in Lowe Lintas agencies in approximately 24 cities in 22 countries around the world. Once complete, the newly merged agency network will have offices in over 80 countries around the world. During the fourth quarter of 1999, the Company began execution of a comprehensive restructuring plan in connection with the merger. The plan includes headcount reductions, consolidation of real estate and the sale or disposition of certain investments, and is expected to be completed by June 30, 2000. The Company is pleased with the progress of the merger to date and expects the total costs to be in line with its original estimate. The total pre-tax cost of the restructuring plan is expected to be between $170 and $190 million, ($100 to $115 million, net of tax). In the fourth quarter of 1999, the Company recognized pre-tax costs of $84.2 million ($51.4 million, net of tax or $.17 per diluted share), with the remainder expected to be recognized in the first two quarters of 2000.

A summary of the components of the total restructuring and other merger related costs, together with an analysis of the cash and non-cash elements, is as follows: (Dollars in millions) 1999 Cash Non-Cash ---------------------------------- TOTAL BY TYPE - ------------- Severance and termination costs $44.9 $27.0 $17.9 Fixed asset write-offs 11.1 -- 11.1 Lease termination costs 3.8 3.8 -- Investment write-offs and other 24.4 1.1 23.3 ---------------------------------- Total $84.2 $31.9 $52.3 ================================== The severance and termination costs recorded in 1999 relate to approximately 230 employees who have been terminated or notified that they will be terminated. The employee groups affected include executive and regional management, administrative, account management, creative and media production personnel, principally in the U.S. and U.K. The charge related to these individuals includes the cost of voluntary programs in certain locations and includes substantially all senior executives that will be terminated. As of December 31, 1999, the amount accrued related to severance and termination was approximately $42.6 million. During the fourth quarter of 1999, cash payments of $2.3 million were made. The fixed assets write-off relates largely to the abandonment of leasehold improvements as part of the merger. The amount recognized in 1999 relates to fixed asset write-offs in 6 offices principally in the United States. Lease termination costs relate to the offices vacated as part of the merger. The lease terminations are expected to be completed by mid-to-late 2000, with the cash portion to be paid out over a period of up to five years. As of December 31, 1999, the amount accrued related to these termination costs was $3.8 million. The investment write-offs relate to the loss on sale or closing of certain business units. In 1999, $23 million has been recorded as a result of the decision to sell or abandon 4 European businesses. In the aggregate, the businesses being sold or abandoned represent an immaterial portion of the revenue and operations of Lowe Lintas & Partners. The write-off amount was computed based upon the difference between the estimated sales proceeds (if any) and the carrying value of the related assets. These sales or closures are expected to be completed by mid 2000.

NOTE 12: GEOGRAPHIC AREAS Long-lived assets and revenue are presented below by major geographic area: (Dollars in thousands) 1999 1998 1997 ----------------------------------- Long-Lived Assets: United States $1,784,072 $1,198,067 $ 918,674 ----------------------------------- International United Kingdom 477,774 393,348 215,963 All other Europe 685,521 641,895 505,797 Asia Pacific 151,083 141,113 94,432 Latin America 79,401 58,134 51,790 Other 76,269 50,853 42,041 ----------------------------------- Total International 1,470,048 1,285,343 910,023 ----------------------------------- Total Consolidated $3,254,120 $2,483,410 $1,828,697 =================================== Revenue: United States $2,560,161 $2,158,777 $1,852,959 ----------------------------------- International United Kingdom 527,250 450,103 353,086 All other Europe 1,140,532 902,602 748,720 Asia Pacific 346,205 325,758 348,707 Latin America 213,260 232,940 204,894 Other 190,415 148,477 102,340 ----------------------------------- Total International 2,417,662 2,059,880 1,757,747 ----------------------------------- Total Consolidated $4,977,823 $4,218,657 $3,610,706 =================================== Revenue is attributed to geographic areas based on where the services are performed. Property and equipment is allocated based upon physical location. Intangible assets, other assets, and investments are allocated based on the location of the related operation. The largest client of the Company contributed approximately 7% in 1999, 7% in 1998 and 9% in 1997 to revenue. The Company's second largest client contributed approximately 4% in 1999, 4% in 1998 and 4% in 1997 to revenue. Dividends received from foreign subsidiaries were approximately $47 million in 1999, $51 million in 1998 and $41 million in 1997. Consolidated net income includes losses from exchange and translation of foreign currencies of $5.6 million, $3.2 million and $5.6 million in 1999, 1998 and 1997, respectively.

NOTE 13: FINANCIAL INSTRUMENTS Financial assets, which include cash and cash equivalents, marketable securities and receivables, have carrying values which approximate fair value. Long-term equity securities, included in other investments and miscellaneous assets in the Consolidated Balance Sheet, are deemed to be available-for-sale as defined by SFAS 115 and accordingly are reported at fair value, with net unrealized gains and losses reported within stockholders' equity. The following table summarizes net unrealized gains and losses before taxes at December 31: (Dollars in millions) 1999 1998 1997 --------------------------- Cost $172.3 $121.3 $61.1 Unrealized gains / (losses) - gains 302.3 20.2 22.0 - losses (12.2) (1.5) -- --------------------------- Net unrealized gains 290.1 18.7 22.0 --------------------------- Fair market value $462.4 $140.0 $83.1 =========================== Net of tax, net unrealized holding gains were $168 million, $10 million and $12 million at December 31, 1999, 1998 and 1997, respectively. The above pre-tax gain amounts are net of reclassifications of $13.1 million and $6.5 million in 1999 and 1998, which represent amounts previously recorded in other comprehensive income. During 1999, the Company expanded its investment in internet-service and related companies. In April 1999, the Company invested $20 million for a minority interest in Icon, a Swedish based internet consultancy. Subsequently, the Company increased its investment through the contribution of other investments and through additional cash purchases. At December 31, 1999, the fair market value of the Company's investment in Icon was $322 million. Financial liabilities with carrying values approximating fair value include accounts payable and accrued expenses, as well as payable to banks and long-term debt. As of December 31, 1999, the 1.87% Convertible Subordinated Notes due 2006 had a cost basis of $304 million with a market value of $416 million. As of December 31, 1999, the 1.80% Convertible Subordinated Notes due 2004 had a cost basis of $214 million with a market value of $392 million. As of December 31, 1998, the cost basis of the 1.80% Convertible Subordinated Notes were $208 million with a market value of $283 million. The fair values were determined by obtaining quotes from brokers (refer to Note 10 for additional information on long-term debt). As of December 31, 1999, the 6.83% to 7.52% Notes Payable had a total cost basis of $102 million with a market value of $88 million. As of December 31, 1998, the 4.3% to 7.52% Notes Payable had a total cost basis approximately the same as the market value. The fair value was determined by using the expected future cash flows discounted at market interest rates as adjusted for conversion privileges.

The Company occasionally uses forwards and options to hedge a portion of its net investment in foreign subsidiaries and certain intercompany transactions in order to mitigate the impact of changes in foreign exchange rates on working capital. The notional value and fair value of all outstanding forwards and options contracts at the end of the year as well as the net cost of all settled contracts during the year were not significant. The Company's management continuously evaluates and attempts to mitigate its exposure to foreign exchange, economic and political risks. The economic developments in Brazil did not have a significant negative impact on the Company, and were partially offset by a favorable impact due to the economic recovery in Japan. NOTE 14: COMMITMENTS AND CONTINGENCIES At December 31, 1999 the Company's subsidiaries operating primarily outside the United States were contingently liable for discounted notes receivable of $7.4 million. The Company and its subsidiaries lease certain facilities and equipment. Gross rental expense amounted to approximately $293 million for 1999, $257 million for 1998 and $225 million for 1997, which was reduced by sublease income of $17.2 million in 1999, $16.4 million in 1998 and $30.7 million in 1997. Minimum rental commitments for the rental of office premises and equipment under noncancellable leases, some of which provide for rental adjustments due to increased property taxes and operating costs for 2000 and thereafter, are as follows: (Dollars in thousands) Gross Rental Sublease Commitment Income ---------- ------ Period 2000 $198,255 $17,745 2001 174,910 15,180 2002 146,225 10,224 2003 116,207 6,335 2004 98,444 1,390 2005 and thereafter 391,697 2,014 Certain of the Company's acquisition agreements provide for deferred payments by the Company, contingent upon future revenues or profits of the companies acquired. Such contingent amounts would not be material taking into account the future revenues or profits of the companies acquired. The Company and certain of its subsidiaries are party to various tax examinations, some of which have resulted in assessments. The Company intends to vigorously defend any and all assessments and believes that additional taxes (if any) that may ultimately result from the settlement of such assessments or open examinations would not have a material adverse effect on the consolidated financial statements. The Company is involved in legal and administrative proceedings of various types. While any litigation contains an element of uncertainty, the Company believes that the outcome of such proceedings or claims will not have a material adverse effect on the Company.

NOTE 15: NFO ACQUISITION In April 2000, the Company acquired NFO in a transaction accounted for as a pooling of interests. The results of NFO and several other recent acquisitions have been included in previously restated financial statements. NOTE 16: RECENT EVENTS In November 2000, the Company acquired Deutsch in a transaction accounted for as a pooling of interests. Approximately 6 million shares were issued to acquire Deutsch. The Company's consolidated financial statements have been restated as of the earliest period presented to include the results of operations, financial position and cash flows of Deutsch.

SELECTED FINANCIAL DATA FOR FIVE YEARS (Amounts in Thousands Except Per Share Data) 1999 1998 1997 1996 1995 ---- ---- ---- ---- ---- OPERATING DATA Revenue $ 4,977,823 $ 4,218,657 $ 3,610,706 $ 3,053,926 $ 2,650,192 Operating expenses 4,315,144 3,646,061 3,195,564 2,695,038 2,353,970 Restructuring and other merger related costs 84,183 -- -- -- -- Write-down of goodwill and other related assets -- -- -- -- 38,687 Special compensation charge -- -- 32,229 -- -- Interest expense 81,341 64,296 59,820 53,321 49,105 Provision for income taxes 243,971 245,636 197,665 166,244 133,941 Net Income $ 331,287 $ 339,907 $ 224,184 $ 228,914 $ 145,975 PER SHARE DATA Basic Net Income $ 1.11 $ 1.15 $ .79 $ .81 $ .52 Weighted-average shares 297,992 294,756 283,796 284,219 278,303 Diluted Net Income $ 1.07 $ 1.12 $ .76 $ .78 $ .51 Weighted-average shares 308,840 305,134 301,602 300,802 286,307 FINANCIAL POSITION Working capital $ 170,976 $ 96,881 $ 244,361 $ 149,919 $ 118,147 Total assets $ 9,247,044 $ 7,526,563 $ 6,254,577 $ 5,253,456 $ 4,721,440 Total long-term debt $ 1,048,607 $ 706,444 $ 554,550 $ 423,459 $ 363,966 Book value per share $ 5.75 $ 4.71 $ 3.79 $ 3.34 $ 2.79 OTHER DATA Cash dividends - Interpublic $ 90,424 $ 76,894 $ 61,242 $ 51,786 $ 46,124 Cash dividends per share - Interpublic $ .33 $ .29 $ .25 $ .22 $ .20 Number of employees 42,400 38,100 33,000 27,000 25,200 ---------------------------------------------------------------- All data has been restated to reflect the aggregate effect of the acquisitions accounted for as poolings of interests. (See Notes 15 and 16). All share data for prior periods have been adjusted to reflect the two-for-one stock split effective July 15, 1999.

RESULTS BY QUARTER (UNAUDITED) (Amounts in Thousands Except Per Share Data) 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter 1999 1998 1999 1998 1999 1998 1999 1998 ------------------------------------------------------------------------------------------------------------- Revenue $1,037,860 $ 883,615 $1,249,641 $1,094,214 $1,172,875 $ 983,263 $1,517,447 $1,257,565 Operating expenses 944,013 810,382 995,159 876,417 1,038,041 878,462 1,337,931 1,080,800 Restructuring and other merger related charges -- -- -- -- -- -- 84,183 -- Income from operations 93,847 73,233 254,482 217,797 134,834 104,801 95,333 176,765 Interest expense (17,475) (13,524) (20,591) (15,809) (21,714) (17,175) (21,561) (17,788) Other income, net 12,884 11,048 29,213 24,391 15,151 15,173 46,314 47,943 Income before provision for income taxes 89,256 70,757 263,104 226,379 128,271 102,799 120,086 206,920 Provision for income taxes 35,765 26,663 104,208 91,345 52,295 42,407 51,703 85,221 Net equity interests (2,386) (2,405) (6,203) (5,231) (4,364) (4,072) (12,506) (9,604) ------------------------------------------------------------------------------------------------------------- Net income $ 51,105 $ 41,689 $ 152,693 $ 129,803 $ 71,612 $ 56,320 $ 55,877 $ 112,095 ============================================================================================================ Per share data: Basic EPS $ .17 $ .14 $ .51 $ .44 $ .24 $ .19 $ .19 $ .38 Diluted EPS $ .17 $ .14 $ .49 $ .42 $ .23 $ .19 $ .18 $ .37 Cash dividends per share - Interpublic $ .075 $ .065 $ .085 $ .075 $ .085 $ .075 $ .085 $ .075 Weighted-Average Shares: Basic 296,457 293,959 298,126 295,248 298,688 294,766 298,698 295,051 Diluted 307,701 304,461 317,381 313,057 309,298 304,497 309,790 311,926 Stock price: High $40 $31 5/16 $43 5/16 $32 1/4 $44 1/16 $32 7/16 $58 1/16 $39 7/8 Low $34 7/8 $23 27/32 $34 19/32 $ 27 21/32 $36 1/2 $26 3/32 $35 3/4 $23 1/2 ------------------------------------------------------------------------------------------------------------ All data has been restated to reflect the aggregate effect of the acquisitions accounted for as poolings of interests. (See Notes 15 and 16). All share data for 1998 has been adjusted to reflect the two-for-one stock split effective July 15, 1999.

SCHEDULE VIII THE INTERPUBLIC GROUP OF COMPANIES, INC. AND ITS SUBSIDIARIES VALUATION AND QUALIFYING ACCOUNTS For the Years Ended December 31, 1999, 1998 and 1997 ================================================================================ (Dollars in thousands) COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F - -------------------------------------------------------------------------------- Additions/(Deductions) ---------------------- Charged Balance at Charged to to Other Balance Beginning Costs & Accounts- Deductions- at End Description of Period Expenses Describe Describe of Period - -------------------------------------------------------------------------------- Allowance for Doubtful Accounts - deducted from Receivables in the Consolidated Balance Sheet: 1999 $54,060 $24,013 $5,148(1) $(23,765)(3) $60,565 2,934(5) (1,215)(2) (610)(4) 1998 $44,581 $20,421 $6,699(1) $(17,038)(3) $54,060 2,111(5) (3,310)(4) 596(2) 1997 $37,496 $16,904 $2,256(1) $ (2,680)(2) $44,581 848(5) (7,869)(3) (2,374)(4) - ------------------- [FN] (1) Allowance for doubtful accounts of acquired and newly consolidated companies. (2) Foreign currency translation adjustment. (3) Principally amounts written off. (4) Reversal of previously recorded allowances on accounts receivable. (5) Miscellaneous.

THE INTERPUBLIC GROUP OF COMPANIES, INC. AND ITS SUBSIDIARIES SUPPLEMENTAL CONSOLIDATED BALANCE SHEET (Dollars in Thousands) ASSETS September 30, December 31, 2000 1999 (unaudited) ------------ ------------ CURRENT ASSETS: Cash and cash equivalents (includes certificates of deposit: 2000-$72,593; 1999-$150,343) $ 587,916 $1,029,076 Marketable securities 42,893 36,765 Receivables (net of allowance for doubtful accounts: 2000-$68,536; 1999-$60,565) 4,443,452 4,442,229 Expenditures billable to clients 457,838 337,769 Prepaid expenses and other current assets 195,738 147,085 -------------------------- Total current assets 5,727,837 5,992,924 -------------------------- OTHER ASSETS: Investment in unconsolidated affiliates 87,101 62,225 Deferred taxes on income 76,185 -- Other investments and miscellaneous assets 607,739 719,024 -------------------------- Total other assets 771,025 781,249 -------------------------- FIXED ASSETS, at cost: Land and buildings 151,787 164,678 Furniture and equipment 855,691 783,698 -------------------------- 1,007,478 948,376 Less: accumulated depreciation (556,058) (506,975) -------------------------- 451,420 441,401 Unamortized leasehold improvements 172,907 151,870 -------------------------- Total fixed assets 624,327 593,271 -------------------------- INTANGIBLE ASSETS (net of accumulated amortization: 2000-$684,892; 1999-$607,417) 2,536,326 1,879,600 -------------------------- TOTAL ASSETS $9,659,515 $9,247,044 ==========================

THE INTERPUBLIC GROUP OF COMPANIES, INC. AND ITS SUBSIDIARIES SUPPLEMENTAL CONSOLIDATED BALANCE SHEET (Dollars in Thousands Except Per Share Data) LIABILITIES AND STOCKHOLDERS' EQUITY September 30, December 31, 2000 1999 (unaudited) ------------ ------------ CURRENT LIABILITIES: Payable to banks $ 445,800 $ 262,483 Accounts payable 4,212,458 4,629,415 Accrued expenses 727,990 769,566 Accrued income taxes 156,457 160,484 -------------------------- Total current liabilities 5,542,705 5,821,948 -------------------------- NONCURRENT LIABILITIES: Long-term debt 1,128,326 530,117 Convertible subordinated debentures and notes 529,375 518,490 Deferred compensation and reserve for termination allowances 373,109 348,172 Deferred taxes on income -- 45,888 Accrued postretirement benefits 50,701 50,226 Other noncurrent liabilities 80,066 86,127 Minority interests in consolidated subsidiaries 77,397 81,612 -------------------------- Total noncurrent liabilities 2,238,974 1,660,632 -------------------------- STOCKHOLDERS' EQUITY: Preferred Stock, no par value shares authorized: 20,000,000 shares issued: none Common Stock, $.10 par value shares authorized: 550,000,000 shares issued: 2000 - 318,990,931; 1999 - 315,921,839 31,899 31,592 Additional paid-in capital 907,547 783,897 Retained earnings 1,555,818 1,392,224 Accumulated other comprehensive loss, net of tax (331,853) (76,695) -------------------------- 2,163,411 2,131,018 Less: Treasury stock, at cost: 2000 - 5,593,450 shares; 1999 - 8,909,904 shares 177,670 289,519 Unamortized expense of restricted stock grants 107,905 77,035 -------------------------- Total stockholders' equity 1,877,836 1,764,464 -------------------------- Commitments and contingencies TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $9,659,515 $9,247,044 =========================== All prior periods have been restated to reflect the aggregate effect of acquisitions accounted for as poolings of interests. (See Note (a)) The accompanying notes are an integral part of these consolidated financial statements.

THE INTERPUBLIC GROUP OF COMPANIES, INC. AND ITS SUBSIDIARIES SUPPLEMENTAL CONSOLIDATED STATEMENT OF INCOME THREE MONTHS ENDED SEPTEMBER 30 (Amounts in Thousands Except Per Share Data) (unaudited) 2000 1999 ---- ---- Revenue $ 1,353,081 $ 1,172,875 ----------- ----------- Salaries and related expenses 767,575 670,517 Office and general expenses 380,905 346,240 Amortization of intangible assets 30,101 21,284 Restructuring and other merger related costs 27,305 - ----------- ----------- Total operating expenses 1,205,886 1,038,041 ----------- ----------- Income from operations 147,195 134,834 Interest expense (32,339) (21,714) Other income, net 16,676 15,151 ----------- ----------- Income before provision for income taxes 131,532 128,271 Provision for income taxes 53,298 52,295 ----------- ----------- Income of consolidated companies 78,234 75,976 Income applicable to minority interests (10,012) (6,288) Equity in net income of unconsolidated affiliates 1,856 1,924 ----------- ----------- Net income $ 70,078 $ 71,612 =========== =========== Weighted average shares: Basic 305,929 298,688 Diluted 314,958 309,298 Earnings Per Share: Basic $ .23 $ .24 Diluted $ .22 $ .23 Dividends per share $ .095 $ .085 All prior periods have been restated to reflect the aggregate effect of acquisitions accounted for as poolings of interests. (See Note (a)) The accompanying notes are an integral part of these consolidated financial statements.

THE INTERPUBLIC GROUP OF COMPANIES, INC. AND ITS SUBSIDIARIES SUPPLEMENTAL CONSOLIDATED INCOME STATEMENT NINE MONTHS ENDED SEPTEMBER 30 (Dollars in Thousands Except Per Share Data) (unaudited) 2000 1999 ---- ---- Revenue $ 4,024,984 $ 3,460,376 ----------- ----------- Salaries and related expenses 2,207,549 1,898,437 Office and general expenses 1,148,757 1,021,174 Amortization of intangible assets 77,475 57,602 Restructuring and other merger related costs 116,131 - ----------- ----------- Total operating expenses 3,549,912 2,977,213 ----------- ----------- Income from operations 475,072 483,163 Interest expense (74,835) (59,780) Other income, net 62,961 57,248 ----------- ----------- Income before provision for income taxes 463,198 480,631 Provision for income taxes 190,245 192,268 ----------- ----------- Income of consolidated companies 272,953 288,363 Income applicable to minority interests (25,721) (19,044) Equity in net income of unconsolidated affiliates 8,242 6,091 ----------- ----------- Net income $ 255,474 $ 275,410 =========== =========== Weighted average shares: Basic 302,038 297,757 Diluted 311,863 315,215 Earnings Per Share: Basic $ .85 $ .92 Diluted $ .82 $ .89 Dividends per share $ .275 $ .245 All prior periods have been restated to reflect the aggregate effect of acquisitions accounted for as poolings of interests. (See Note (a)) The accompanying notes are an integral part of these consolidated financial statements.

THE INTERPUBLIC GROUP OF COMPANIES, INC. AND ITS SUBSIDIARIES SUPPLEMENTAL CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (LOSS) THREE MONTHS ENDED SEPTEMBER 30 (Dollars in Thousands) (unaudited) 2000 1999 ---- ---- Net Income $ 70,078 $ 71,612 -------- -------- Other Comprehensive Income (Loss), net of tax: Foreign Currency Translation Adjustments (36,296) 15,908 Net Unrealized Gain on Securities 2,305 25,293 -------- -------- Other Comprehensive Income (Loss) (33,991) 41,201 -------- -------- Comprehensive Income $ 36,087 $112,813 ======== ======== All prior periods have been restated to reflect the aggregate effect of acquisitions accounted for as poolings of interests. (See Note (a)) The accompanying notes are an integral part of these consolidated financial statements.

THE INTERPUBLIC GROUP OF COMPANIES, INC. AND ITS SUBSIDIARIES SUPPLEMENTAL CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (LOSS) NINE MONTHS ENDED SEPTEMBER 30 (Dollars in Thousands) (unaudited) 2000 1999 ---- ---- Net Income $255,474 $275,410 -------- -------- Other Comprehensive Income (Loss), net of tax: Foreign Currency Translation Adjustments (112,039) (70,154) Net Unrealized Gain (Loss) on Securities (143,119) 24,614 -------- -------- Other Comprehensive Loss (255,158) (45,540) -------- -------- Comprehensive Income (Loss) $ 316 $ 229,870 ========= ======== All prior periods have been restated to reflect the aggregate effect of acquisitions accounted for as poolings of interests. (See Note (a)) The accompanying notes are an integral part of these consolidated financial statements.

THE INTERPUBLIC GROUP OF COMPANIES, INC. AND ITS SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS NINE MONTHS ENDED SEPTEMBER 30 (Dollars in Thousands) (unaudited) 2000 1999 ---- ---- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 255,474 $ 275,410 Adjustments to reconcile net income to cash (used in) provided by operating activities: Depreciation and amortization of fixed assets 111,733 88,092 Amortization of intangible assets 77,475 57,601 Amortization of restricted stock awards 27,197 19,067 Equity in net income of unconsolidated affiliates (8,241) (6,091) Income applicable to minority interests 25,721 19,044 Translation losses 1,326 1,183 Net gain from sale of investments (12,275) (21,734) Restructuring charges, non cash 32,100 -- Miscellaneous other (grouped into "Accounts Payable and Other Liabilities") (19,812) (17,384) Changes in assets and liabilities, net of acquisitions: Receivables (84,688) (393,235) Expenditures billable to clients (111,236) (94,711) Prepaid expenses and other assets (50,854) (21,300) Accounts payable and other liabilities (419,751) 165,310 Accrued income taxes 3,856 7,570 Deferred income taxes (20,813) (7,881) Deferred compensation and reserve for termination allowances 34,391 11,202 ---------- --------- Net cash (used in) provided by operating activities (158,397) 82,143 ---------- --------- CASH FLOWS FROM INVESTING ACTIVITIES: Acquisitions (439,229) (182,206) Proceeds from sale of investments/assets 14,142 39,738 Capital expenditures (153,906) (110,068) Net purchases of marketable securities (10,630) (17,174) Dividends received from investments 44 -- Other investments and miscellaneous assets (163,141) 10,358 Investments in unconsolidated affiliates (29,444) (8,251) ---------- --------- Net cash used in investing activities (782,164) (267,603) ---------- --------- CASH FLOWS FROM FINANCING ACTIVITIES: Increase in short-term borrowings 159,570 41,488 Proceeds from long-term debt 859,850 405,412 Payments of long-term debt (228,301) (56,873) Treasury stock acquired (182,040) (209,024) Issuance of common stock 36,192 54,295 Cash dividends - pooled (11,424) (7,550) Cash dividends - Interpublic (80,436) (67,534) ---------- --------- Net cash provided by financing activities 553,411 160,214 ---------- --------- Effect of exchange rates on cash and cash equivalents (54,010) (31,183) ---------- --------- Decrease in cash and cash equivalents (441,160) (56,429) Cash and cash equivalents at beginning of year 1,029,076 801,207 ---------- --------- Cash and cash equivalents at end of period $ 587,916 $ 744,778 ========== ========= All prior periods have been restated to reflect the aggregate effect of acquisitions accounted for as poolings of interests. (See Note (a)) The accompanying notes are an integral part of these consolidated financial statements.

THE INTERPUBLIC GROUP OF COMPANIES, INC. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. Consolidated Financial Statements (a) In the opinion of management, the consolidated balance sheet as of September 30, 2000, the consolidated income statements for the three months and nine months ended September 30, 2000 and 1999, the consolidated statement of comprehensive income for the three months and nine months ended September 30, 2000 and 1999, and the consolidated statement of cash flows for the nine months ended September 30, 2000 and 1999, contain all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations and cash flows at September 30, 2000 and for all periods presented. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been omitted. It is suggested that these consolidated financial statements be read in conjunction with the consolidated financial statements and notes thereto included in The Interpublic Group of Companies, Inc.'s (the "Company") December 31, 1999 annual report to stockholders and the consolidated financial statements and notes thereto included in the Company's Current Report on Form 8-K dated September 15, 2000. The Company's consolidated financial statements, including the related notes, have been restated for the prior periods presented to include the results of operations, financial position and cash flows of Deutsch, Inc. and affiliate companies ("Deutsch"). (See Note (b)). Additionally, the results of several other recent acquisitions, including NFO Worldwide, Inc. ("NFO"), all of which have been accounted for as poolings of interests, have been included in previously restated financial statements. Other than Deutsch and NFO, none of the acquisitions was individually, or in aggregate, material. The accompanying income statements have been prepared in a format different than that used in the originally filed Form 10-Q for the quarterly period ended September 30, 1999. The accompanying financial statements include the line - "Income from operations". Amounts previously included in "Other income, net" as part of "Gross Income" are now included elsewhere in the Consolidated Statement of Income. (b) In November 2000, the Company issued approximately 6 million shares of its common stock in connection with the acquisition of Deutsch. In April 2000, the Company issued approximately 12.6 million shares of its common stock in connection with the acquisition of NFO. Both of these acquisitions have been accounted for as poolings of interests. (c) During the third quarter, the Company recorded pre-tax restructuring and other merger related costs of $27.3 million ($17.2 million net of tax). For the nine months ended September 30, 2000, the Company recorded pre-tax restructuring and other merger related costs of $116.1 million ($72.9 million net of tax). Of the total pre-tax restructuring and other merger related costs, cash charges represented $14.8 million and $84 million for the three months and nine months ended September 30, 2000, respectively. The key components of the charge were the costs associated with the restructuring of Lowe Lintas & Partners Worldwide. The remaining costs relate principally to transaction and other merger related costs arising from the previously announced merger with NFO.

Lowe Lintas & Partners ----------------------- In October 1999, the Company announced the merger of two of its advertising networks. The networks affected, Lowe & Partners Worldwide and Ammirati Puris Lintas, were combined to form a new agency network called Lowe Lintas & Partners Worldwide. The merger involved the consolidation of operations in Lowe Lintas agencies in approximately 24 cities in 22 countries around the world. The newly merged agency network has offices in over 80 countries around the world. As of September 30, 2000, all restructuring activities have been completed. A summary of the components of the reserve for restructuring and other merger related costs for Lowe Lintas is as follows: (Dollars in millions) Year to Date September 30, 2000 --------------------------------- Balance Expense Cash Asset Balance at 12/31/99 recognized Paid Write-offs at 9/30/00 ----------- ------------- ---- ---------- ---------- TOTAL BY TYPE Severance and termination costs $43.6 $32.0 $24.6 -- $51.0 Fixed asset write-offs 11.1 14.2 -- 25.3 -- Lease termination costs 3.8 21.1 7.6 -- 17.3 Investment write-offs and other 23.4 20.5 6.4 37.5 -- ---------------------------------------------------------- Total $81.9 $87.8 $38.6 $62.8 $68.3 ========================================================== The severance and termination costs recorded in 2000 relate to approximately 360 employees who have been terminated or notified that they will be terminated. The employee groups affected include management, administrative, account management, creative and media production personnel, principally in the U.S. and several European countries. The fixed asset write-offs relate largely to the abandonment of leasehold improvements as part of the merger. The amount recognized in 2000 relates to fixed asset write-offs in 4 offices, the largest of which is in the U.K. Lease termination costs relate to the offices vacated as part of the merger. The lease terminations are substantially complete, with the cash portion to be paid out over a period of up to five years. The investment write-offs relate to the loss on sale or closing of certain business units. In 2000, $12.7 million of investment write-offs has been recorded, the majority of which results from the decision to sell or abandon 3 businesses located in Asia and Europe. In the aggregate, the businesses being sold or abandoned represent an immaterial portion of the revenue and operations of Lowe Lintas & Partners. The write-off amount was computed based upon the difference between the estimated sales proceeds (if any) and the carrying value of the related assets.

NFO and Other Merger Related Costs ---------------------------------- In addition to the restructuring and other merger related costs noted above, additional charges, substantially all of which were cash costs, were recorded through September 30, 2000. These costs relate principally to the non-recurring transaction and other merger related costs arising from the recently completed acquisition of NFO. (See Note (b)). (d) In addition to the acquisition mentioned in (b), the Company has made several other acquisitions in 2000, including Nationwide Advertising Services, Waylon Promotions, Inc. and substantial assets of the Communications Division of Caribiner International, Inc. The acquisitions have been accounted for as purchases. (e) On June 27, 2000, the Company entered into a syndicated multi-currency credit agreement under which a total of $750 million may be borrowed; $375 million may be borrowed under a 364-day facility and $375 million under a five-year facility. The facilities bear interest at variable rates based on either LIBOR or a bank's base rates, at the Company's option. As of September 30, 2000, approximately $534 million had been borrowed under the facilities. The weighted-average interest rate on the borrowings at September 30, 2000 was 6.4%. The proceeds from the syndicated credit agreement were used to refinance borrowings and for general corporate purposes including acquisitions and other inv- estments. Some of the pre-existing borrowing facilities were subsequently terminated. On August 25, 2000, the Company entered into a revolving credit facility under which up to $250 million may be borrowed. The facility expires on November 30, 2000, and bears interest at variable rates based on either LIBOR, a bank's base rates or money market rates, at the Company's option. The Company used the proceeds to refinance borrowings and for general corporate purposes, including acquisitions and other investments. On October 20, 2000, the Company completed the issuance and sale of $500 million principal amount of senior unsecured notes due 2005. The notes bear an interest rate of 7.875% per annum. The Company used the net proceeds of approximately $496 million from the sale of the notes to repay outstanding indebtedness under its credit facilities. Accordingly, certain short-term borrowings have been reclassified as long-term. (f) In June 1998, the Financial Accounting Standards Board issued Statement No. 133, "Accounting for Derivative Instruments and Hedging Activities" ("SFAS No. 133"), which sets out the required accounting treatment for derivatives and hedging activities. In June 1999, the Financial Accounting Standards Board issued Statement No. 137, "Accounting for Derivative Instruments and Hedging Activities - Deferral of the Effective Date of FASB Statement No. 133", which delays implementation of SFAS No. 133 until fiscal years beginning after June 15, 2000. In June 2000, the Financial Accounting Standards Board issued Statement No. 138, "Accounting for Certain Derivative Instruments and Certain Hedging Activities", which provides additional guidance related to accounting for derivative instruments and hedging activities as addressed by SFAS No. 133. The Company does not believe that the effect of adopting SFAS No. 133 and SFAS No. 138 will be material to its financial condition or results of operations.

Item 2 THE INTERPUBLIC GROUP OF COMPANIES, INC. AND ITS SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS As discussed in Note (b), the Company acquired Deutsch in a transaction accounted for as a pooling of interests. Deutsch is a full service advertising agency servicing a broad range of clients. The Company's consolidated financial statements and other financial information for prior periods have been restated to reflect the effect of the Deutsch pooling. In April 2000, the Company acquired NFO Worldwide, Inc. ("NFO") in a transaction accounted for as a pooling of interest. Results of NFO and several other recent acquisitions, all of which have been accounted for as poolings of interests have been included in previously restated financial statements. The following discussion relates to the combined results of the Company after giving effect to all of the pooled companies. Three Months Ended September 30, 2000 Compared to Three Months Ended September - ------------------------------------------------------------------------------ 30, 1999 - -------- The Company reported net income of $70.1 million or $.22 diluted earnings per share for the three months ended September 30, 2000. Excluding the impact of restructuring and other merger related costs, which are discussed below, net income was $87.2 million or $.28 diluted earnings per share, compared to $71.6 million or $.23 diluted earnings per share for the three months ended September 30, 1999. The following table sets forth net income and earnings per share before and after restructuring and other merger related costs: (Dollars in thousands, except per share data) 2000 1999 ---- ---- Net income as reported $ 70,078 $ 71,612 Earnings per share: Basic .23 .24 Diluted .22 .23 Net income before restructuring and other merger related costs $ 87,243 $ 71,612 Earnings per share: Basic .29 .24 Diluted .28 .23 Worldwide revenue for the three months ended September 30, 2000 increased $180 million, or 15%, to $1.4 billion compared to the same period in 1999. Domestic revenue increased $153 million or 25% from 1999 levels. International revenue increased $27 million or 5% during the third quarter of 2000 compared to 1999. International revenue would have increased 18%, excluding the effect of the strengthening of the U.S. dollar. The increase in worldwide revenue is a result of both new business growth and growth from acquisitions. Organic revenue growth, exclusive of acquisitions and currency effects, was 15% for the third quarter of 2000 compared to the prior year quarter.

Revenue from specialized marketing communications services, which include media buying, market research, sales promotion, direct marketing, public relations, sports and event marketing, healthcare marketing and e-business consulting and communications, comprised approximately 48% of the total worldwide revenue for the three months ended September 30, 2000, compared to 45% for the prior year quarter. Income from operations was $147 million for the third quarter of 2000. Excluding restructuring and other merger related costs, income from operations was $175 million for the third quarter of 2000, compared to $135 million for the third quarter of 1999, an increase of 30%. Exclusive of acquisitions, currency effects, and amortization of intangible assets, income from operations increased 24% for the third quarter of 2000 compared to the third quarter of 1999. Worldwide operating expenses for the third quarter 2000, excluding restructuring and other merger related costs were $1.2 billion, an increase of 14% over the prior year quarter. Salaries and related expenses were $768 million or 57% of revenue for the third quarter of 2000 as compared to $671 million or 57% of revenue for the third quarter of 1999. Office and general expenses were $381 million for the third quarter of 2000 compared to $346 million for the third quarter of 1999. Interest expense was $32 million for the three months ended September 30, 2000, compared to $22 million for the prior year quarter. The increase is primarily a result of higher debt levels and higher interest rates in 2000. Other income, net, which consists of interest income, investment income and net gains from equity investments, increased slightly to $17 million for the third quarter of 2000 as compared to $15 million for the third quarter of 1999. The effective tax rate for the three months ended September 30, 2000 was 40.5%, compared to 40.8% in 1999. The difference between the effective and statutory rates is primarily due to state and local taxes, foreign withholding taxes on dividends and nondeductible goodwill expense. Nine Months Ended September 30, 2000 Compared to Nine Months Ended September 30, - ------------------------------------------------------------------------------- 1999 - ---- Net income was $255 million or $.82 diluted earnings per share for the nine months ended September 30, 2000. Excluding the impact of restructuring and other merger related costs, which are discussed below, net income was $328.4 million or $1.05 diluted earnings per share, compared to $275.4 million or $.89 diluted earnings per share for the nine months ended September 30, 1999. The following table sets forth net income and earnings per share before and after restructuring and other merger related costs: (Dollars in thousands, except per share data) 2000 1999 ----- ---- Net income as reported $255,474 $275,410 Earnings per share: Basic .85 .92 Diluted .82 .89 Net income before restructuring and other merger related costs $328,409 $275,410 Earnings per share: Basic 1.09 .92 Diluted 1.05 .89

Worldwide revenue for the nine months ended September 30, 2000, increased $565 million, or 16%, to $4.0 billion compared to the same period in 1999. Domestic revenue increased $438 million or 24% during the first nine months of 2000 compared to 1999. International revenue increased $126 million or 8% during the first nine months of 2000 compared to 1999. International revenue would have increased 16%, excluding the effect of the strengthening of the U.S. dollar. The increase in worldwide revenue is a result of both new business growth and growth from acquisitions. Organic revenue growth, exclusive of acquisitions and currency effects, was 14% for the first nine months of 2000 compared to the prior year period. Revenue from specialized marketing communications services, which include media buying, market research, promotion sales, direct marketing, public relations, sports and event marketing, healthcare marketing and e-business consulting and communications, comprised approximately 46% of the total worldwide revenue for the nine months ended September 30, 2000, compared to 44% for the first nine months of 1999. Income from operations was $475 million for the nine months ended September 30, 2000. Excluding restructuring and other merger related costs, income from operations was $591 million for the first nine months of 2000, compared to $483 million for the first nine months of 1999, an increase of 22%. Exclusive of acquisitions, currency effects and amortization of intangible assets, income from operations increased 19% for the first nine months of 2000 compared to the first nine months of 1999. Worldwide operating expenses for the nine months ended September 30, 2000, excluding restructuring and other merger related costs were $3.4 billion, an increase of 15% over the prior year period. Salaries and related expenses were $2.2 billion or 55% of revenue for the first nine months of 2000 as compared to $1.9 billion or 55% of revenue for the first nine months of 1999. Office and general expenses were $1.1 billion for the first nine months of 2000 compared to $1.0 billion for the first nine months of 1999. Interest expense was $74.8 million for the nine months ended September 30, 2000, compared to $59.8 million for the prior year. The increase is primarily a result of higher debt levels and higher interest rates in 2000. Other income, net, which consists of interest income, investment income and net gains from equity investments, was $63.0 million for the nine months ended September 30, 2000, as compared to $57.2 million for the nine months ended September 30, 1999, an increase of 10%. The effective tax rate for the nine months ended September 30, 2000 was 41.1%, compared to 40.0% in 1999. The difference between the effective and statutory rates is primarily due to state and local taxes, foreign withholding taxes on dividends and nondeductible goodwill expense. Restructuring and Other Merger Related Costs - -------------------------------------------- During the third quarter, the Company recorded pre-tax restructuring and other merger related costs of $27.3 million ($17.2 million net of tax). For the nine months ended September 30, 2000, the Company recorded pre-tax restructuring and other merger related costs of $116.1 million ($72.9 million net of tax). Of the total pre-tax restructuring and other merger related costs, cash charges represented $14.8 million and $84 million for the three months and nine months ended September 30, 2000, respectively. The key components of the charge were the costs associated with the restructuring of Lowe Lintas & Partners Worldwide. The remaining costs relate principally to transaction and merger related costs arising from the previously announced merger with NFO.

Lowe Lintas & Partners - ---------------------- In October 1999, the Company announced the merger of two of its advertising networks. The networks affected, Lowe & Partners Worldwide and Ammirati Puris Lintas, were combined to form a new agency network called Lowe Lintas & Partners Worldwide. The merger involved the consolidation of operations in Lowe Lintas agencies in approximately 24 cities in 22 countries around the world. The newly merged agency network has offices in over 80 countries around the world. As of September 30,2000, all restructuring activities have been completed. The restructuring and other merger related costs for Lowe Lintas included $31 million in severance and termination costs, $14.2 million in fixed asset write-offs, $21.1 million in lease termination costs and $21.5 million in investment write-offs and other costs. The severance and termination costs recorded 2000 relate to approximately 360 employees who have been terminated or notified that they will be terminated. The employee groups affected include management, administrative, account management, creative and media production personnel, principally in the U.S. and several European countries. The fixed asset write-offs relate largely to the abandonment of leasehold improvements as part of the merger. The amount recognized in 2000 relates to fixed asset write-offs in 4 offices, the largest of which is in the U.K. Lease termination costs relate to the offices vacated as part of the merger. The investment write-offs relate to the loss on sale or closing of certain business units. In 2000, $12.7 million of investment write-offs has been recorded, the majority of which results from the decision to sell or abandon 3 businesses located in Asia and Europe. NFO and Other Merger Related Costs In addition to the restructuring and other merger related costs noted above, additional charges, substantially all of which were cash costs, were recorded through September 30, 2000. These costs relate principally to the non-recurring transaction and other merger related costs arising from the recently completed acquisition of NFO. (See Note (b)). LIQUIDITY AND CAPITAL RESOURCES The ratio of current assets to current liabilities was approximately 1 to 1 at September 30, 2000. Working capital increased by $14 million from December 31, 1999 to September 30, 2000. Total debt at September 30, 2000 was $2.1 billion, an increase of $792 million from December 31, 1999. The increase in debt is primarily attributable to the net effect of payments made for acquisitions and other investments. Cash flow from operations and availability under existing credit facilities will be the Company's primary source of working capital. On June 27, 2000, the Company entered into a syndicated multi-currency credit agreement under which a total of $750 million may be borrowed; $375 million may be borrowed under a 364-day facility and $375 million under a five-year facility. The facilities bear interest at variable rates based on either LIBOR or a bank's base rates, at the Company's option. As of September 30, 2000, approximately $534 million had been borrowed under the facilities. The weighted-average interest rate on the borrowings at September 30, 2000 was 6.4%. The proceeds from the syndicated credit agreement were used to refinance borrowings and for general corporate purposes including acquisitions and other investments. Some of the pre-existing borrowing facilities were subsequently terminated.

On August 25, 2000, the Company entered into a revolving credit facility under which up to $250 million may be borrowed. The facility expires on November 30, 2000, and bears interest at variable rates based on either LIBOR, a bank's base rates or money market rates, at the Company's option. The Company used the proceeds to refinance borrowings and for general corporate purposes, including acquisitions and other investments. On October 20, 2000, the Company completed the issuance and sale of $500 million principal amount of senior unsecured notes due 2005. The notes bear an interest rate of 7.875% per annum. The Company used the net proceeds of approximately $496 million from the sale of the notes to repay outstanding indebtedness under its credit facilities. Accordingly, certain short-term borrowings have been reclassified as long-term. Net cash used in operating activities was $158 million for the nine months ended September 30, 2000. Net cash provided by operations was $82 million for the nine months ended September 30, 1999. The principal use of the Company's working capital is to provide for the operating needs of its advertising agencies, which include payments for space or time purchased from various media on behalf of its clients. The Company's practice is to bill and collect from its clients in sufficient time to pay the amounts due media. Other uses of working capital include the payment of cash dividends, acquisitions and capital expenditures. In addition, during the first nine months of 2000, the Company acquired 3.5 million shares of its own stock for the purpose of fulfilling the Company's obligations under its various compensation plans. OTHER MATTERS Acquisitions - ------------ In connection with the NFO acquisition completed on April 20, 2000, the Company assumed approximately $180 million in debt. Additionally, the Company has made several other acquisitions, including Nationwide Advertising Services, Waylon Promotions, Inc. and substantial assets of the Communications Division of Caribiner International, Inc. The acquisitions have been accounted for as purchases. Cautionary Statement - -------------------- This Report on Form 8-K (the "Report"), including Management's Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements. Statements that are not historical facts, including statements about Interpublic's beliefs and expectations, are forward-looking statements. These statements are based on current plans, expectations, estimates and projections, and therefore you should not place undue reliance on them. Forward-looking statements speak only as of the date they are made, and Interpublic undertakes no obligation to update publicly any of them in light of new information, future events or otherwise. Forward-looking statements involve inherent risks and uncertainties. Interpublic cautions you that a number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. Such factors include, but are not limited to, those associated with the effect of national and regional economic conditions, the ability of Interpublic to attract new clients and retain existing clients, the financial success and other developments of the clients of Interpublic, developments from changes in the regulatory and legal environment for advertising companies around the world, Interpublic's ability to effectively integrate recent acquisitions and Interpublic's ability to attract and retain key management personnel.

New Accounting Guidance - ----------------------- In June 1998, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities" (SFAS No. 133), which had an initial adoption date of January 1, 2000. In June 1999, the FASB postponed the adoption date of SFAS No. 133 until January 1, 2001. In June 2000, the FASB issued SFAS No. 138 which provides additional guidance on SFAS No. 133. The Company does not believe the effect of adopting SFAS No. 133 and SFAS No. 138 will be material to its financial condition or results of operations. Conversion to the Euro - ---------------------- On January 1, 1999, certain member countries of the European Union established fixed conversion rates between their existing currencies and the European Union's common currency (the "Euro"). The Company conducts business in member countries. The transition period for the introduction of the Euro is between January 1, 1999, and June 30, 2002. The Company is addressing the issues involved with the introduction of the Euro. The major important issues facing the Company include: converting information technology systems; reassessing currency risk; negotiating and amending contracts; and processing tax and accounting records. Based upon progress to date, the Company believes that use of the Euro will not have a significant impact on the manner in which it conducts its business affairs and processes its business and accounting records. Accordingly, conversion to the Euro has not, and is not expected to have a material effect on the Company's financial condition or results of operations. Item 3. Quantitative and Qualitative Disclosures about Market Risk The Company's financial market risk arises from fluctuations in interest rates and foreign currencies. Most of the Company's debt obligations are at fixed interest rates. A 10% change in market interest rates would not have a material effect on the Company's pre-tax earnings, cash flows or fair value. At September 30, 2000, the Company had an insignificant amount of foreign currency derivative financial instruments in place. The Company does not hold any financial instrument for trading purposes.

EXHIBIT 11 Page 1 of 3 THE INTERPUBLIC GROUP OF COMPANIES, INC. COMPUTATION OF EARNINGS PER SHARE (Dollars in Thousands Except Per Share Data) Year Ended December 31 1999 1998 1997 1996 1995 ------------------------------------------------------------------- BASIC: Net income $331,287 $339,907 $224,184 $228,914 $145,975 Weighted average number of common shares outstanding 297,992,048 294,755,783 283,795,670 284,219,045 278,303,418 Net income per share - Basic $1.11 $1.15 $ .79 $ .81 $ .52 DILUTED: Net income $331,287 $339,907 $224,184 $228,914 $145,975 After tax interest savings on assumed conversion of subordinated debentures(1)(2) -- -- 5,929 6,410 -- Add: Dividends paid net of related income tax applicable to the Restricted Stock Plan 631 541 447 384 461 ------------------------------------------------------------------- Net income, as adjusted $331,918 $340,448 $230,560 $235,708 $146,436 =================================================================== Weighted average number of common shares outstanding 297,992,048 294,755,783 283,795,670 284,219,933 278,303,418 Assumed conversion of subordinated debentures(1)(2) -- -- 8,020,582 8,933,004 -- Weighted average number of incremental shares in connection with assumed exercise of stock options 7,310,525 6,923,813 6,508,296 4,438,746 3,843,846 Weighted average number of incremental shares in connection with the Restricted Stock Plan 3,536,805 3,453,838 3,277,294 3,211,128 4,160,134 ------------------------------------------------------------------- Total 308,839,378 305,133,434 301,601,842 300,802,811 286,307,398 =================================================================== Diluted Earnings Per Share Data: Net Income $1.07 $1.12 $ .76 $ .78 $ .51 All share data for prior periods have been adjusted the two-for-one stock split effective July 15, 1999. - ----------------- [FN] (1) The computation of diluted EPS for 1999 excludes the assumed conversion of the 1.87% and 1.80% Convertible Subordinated Notes due 2006 and 2004, respectively, because they were antidilutive. (2) The computation of diluted EPS for 1998 and 1997 excludes the assumed conversion of the 1.80% Convertible Subordinated Notes due 2004 because they were antidilutive. Similarly, the computation of diluted EPS for 1995 excludes the assumed conversion of the 3 3/4% Convertible Subordinated Debentures due 2002 as they were antidilutive.

EXHIBIT 11 Page 2 of 3 THE INTERPUBLIC GROUP OF COMPANIES, INC. AND ITS SUBSIDIARIES COMPUTATION OF EARNINGS PER SHARE (Amounts in Thousands Except Per Share Data) Three Months Ended September 30 ------------------------------- Basic 2000 1999 ------------ ------------ Net income $ 70,078 $ 71,612 Weighted average number of common shares outstanding 305,929 298,688 ============ ============ Earnings per common share $ .23 $ .24 ============ ============ Three Months Ended September 30 ------------------------------- Diluted 2000 1999 ------------ ------------ Net income $ 70,078 $ 71,612 Add: After tax savings on assumed conversion of subordinated debentures and notes -- -- Dividends paid net of related income tax applicable to restricted stock 183 163 ------------ ------------ Net income, as adjusted $ 70,261 $ 71,775 ============ ============ Weighted average number of common shares outstanding 305,929 298,688 Weighted average number of incremental shares in connection with restricted stock and assumed exercise of stock options 9,029 10,610 Assumed conversion of subordinated debentures and notes -- -- ------------ ------------ Weighted average common and common equivalent share 314,958 309,298 ============ ============ Earnings per common and common equivalent share $ .22 $ .23 ============ ============ Note: The computation of diluted EPS for 2000 and 1999 excludes the assumed conversion of the 1.87% and 1.8% Convertible Subordinated Notes because they were anti-dilutive.

EXHIBIT 11 Page 3 of 3 THE INTERPUBLIC GROUP OF COMPANIES, INC. AND ITS SUBSIDIARIES COMPUTATION OF EARNINGS PER SHARE (Amounts in Thousands Except Per Share Data) Nine Months Ended September 30 ------------------------------ Basic 2000 1999 ----------- ----------- Net income $ 255,474 $ 275,410 Weighted average number of common shares outstanding 302,038 297,757 =========== =========== Earnings per common share $ .85 $ .92 =========== =========== Nine Months Ended September 30 ------------------------------ Diluted 2000 1999 ----------- ----------- Net income $ 255,474 $ 275,410 Add: After tax interest savings on assumed conversion of subordinated debentures and notes -- 5,862 Dividends paid net of related income tax applicable to restricted stock 518 466 ----------- ----------- Net income, as adjusted $ 255,992 $ 281,738 =========== =========== Weighted average number of common shares outstanding 302,038 297,757 Weighted average number of incremental shares in connection with restricted stock and assumed exercise of stock options 9,825 10,765 Assumed conversion of subordinated debentures and notes -- 6,693 ----------- ----------- Weighted average common and common equivalent share 311,863 315,215 =========== =========== Earnings per common and common equivalent share $ .82 $ .89 =========== =========== Note: The computation of diluted EPS for 2000 excludes the assumed conversion of the 1.87% and 1.8% Convertible Subordinated Notes and for 1999 excludes the assumed conversion of the 1.87% Convertible Subordinated Notes, respectively, because they were anti-dilutive.

REPORT OF INDEPENDENT ACCOUNTANTS ON SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENT SCHEDULE To the Board of Directors and Stockholders of The Interpublic Group of Companies, Inc. Our audits of the Supplemental Consolidated Financial Statements referred to in our report dated February 22, 2000 except for Note 15 which is as of July 13, 2000 and Note 16 which is as of December 22, 2000, which appears in this Current Report on Form 8-K also included an audit of the Supplemental Consolidated Financial Statement Schedule listed in Item 7 of this Form 8-K. In our opinion, this Supplemental Consolidated Financial Statement Schedule presents fairly, in all material respects, the information set forth therein when read in conjunction with the related Supplemental Consolidated Financial Statements. PricewaterhouseCoopers LLP New York, New York February 22, 2000 except for Note 15 which is as of July 13, 2000 and Note 16 which is as of December 22, 2000

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 22, 2000, except for Note 15, which is as of July 13, 2000 and Note 16 which is as of December 22, 2000 which appears in this Current Report on Form 8-K; Registration Statements on Form S-8 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 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 on Form 8-S No. 2-53544; No. 2-91564; No. 2-98324; No. 33-22008; No. 33-64062; and No. 33-61371, relating to the Employee Stock Purchase Plan (1975), the Employee Stock Purchase Plan (1985) and the Employee Stock Purchase Plan of the Company (1995); Registration Statements on Form S-8 No. 33-20291 and No. 33-2830 relating to the Management Incentive Compensation Plan of the Company; Registration Statements on Form S-8 No. 33-5352; No. 33-21605; No. 333-4747; and No. 333-23603 relating to the 1986 Stock Incentive Plan, the 1986 United Kingdom Stock Option Plan and the 1996 Stock Incentive Plan of the Company; Registration Statements No. 33-10087 and No. 33-25555 relating to the Long-Term Performance Incentive Plan of the Company; Registration Statement on Form 8-S No. 333-28029 relating to The Interpublic Outside Directors' Stock Incentive Plan of the Company; and Registration Statement No. 33-42675 relating to the 1997 Performance Incentive Plan of the Company. We also consent to the incorporation by reference of our report on the Supplemental Consolidated Financial Statement Schedule, which appears in this Current Report on Form 8-K. PricewaterhouseCoopers LLP New York, New York January 5, 2001

CONSENT OF INDEPENDENT ACCOUNTANTS As independent public 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 reports dated February 25, 2000, with respect to the consolidated financial statements of NFO Worldwide, Inc. and subsidiaries as of December 31, 1999 and 1998, and for each of the years in the three-year period ended December 31, 1999, which appears in this Current Report on Form 8-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; No. 33-64062 and No. 33-61371, relating variously to the Employee Stock Purchase Plan (1975), the Employee Stock Purchase Plan (1985) and the Employee Stock Purchase Plan of the Company (1995); Registration Statements No. 33-20291 and No. 33-2830 relating to the Management Incentive Compensation Plan of the Company; Registration Statements No. 33-5352; No. 33-21605; No. 333-4747 and No. 333-23603 relating to the 1986 Stock Incentive Plan, the 1986 United Kingdom Stock Option Plan and the 1996 Stock Incentive Plan, of the Company; Registration Statements No. 33-10087 and No. 33-25555 relating to the Long-Term Performance Incentive Plan of the Company; Registration Statement No. 333-28029 relating to The Interpublic Outside Directors' Stock Incentive Plan of the Company; and Registration Statement No. 33-42675 relating to the 1997 Performance Incentive Plan of the Company. It should be noted that we have not audited any financial statements of NFO Worldwide, Inc. subsequent to December 31, 1999 or performed any audit procedures subsequent to the date of our report. Arthur Andersen LLP New York, New York January 5, 2001

CONSENT OF INDEPENDENT AUDITORS We consent to the incorporation by reference in the following Registration Statements on Form S-8 of The Interpublic Group of Companies, Inc. ("IPG" or the "Company"), of our report dated February 23, 1998, included in this Current Report on Form 8-K, with respect to the consolidated financial statements of the MBL Group PLC for the year ended December 31, 1997, which statements are included in the supplemental consolidated financial statements of IPG,: 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; No. 33-64062 and No. 33-61371, relating variously to the Employee Stock Purchase Plan (1975), the Employee Stock Purchase Plan (1985) and the Employee Stock Purchase Plan, of the Company (1995); Registration Statements No. 33-20291 and No. 33-2830 relating to the Management Incentive Compensation Plan, of the Company; Registration Statements No. 33-5352; No. 33-21605; No. 333-4747 and No. 333-23603 relating to the 1986 Stock Incentive Plan, the 1986 United Kingdom Stock Option Plan and the 1996 Stock Incentive Plan, of the Company; Registration Statements No. 33-10087 and No. 33-25555 relating to the Long-Term Performance Incentive Plan, of the Company; Registration Statement No. 333-28029 relating to The Interpublic Outside Directors' Stock Incentive Plan, of the Company; and Registration Statement No. 33-42675 relating to the 1997 Performance Incentive Plan, of the Company. Soteriou Banerji London, England January 5, 2001

CONSENT OF INDEPENDENT AUDITORS We consent to the incorporation by reference in the following Registration Statements on Form S-8 of the Interpublic Group of Companies, Inc. ("IPG" or the "Company") of our report dated February 3, 1999, which appears in this Current Report on Form 8-K with respect to the consolidated statements of operations, stockholders' equity (deficit) and cash flows of International Public Relations plc and subsidiaries for the fourteen-month period ended December 31, 1997 (not separately presented) which statements are included in the consolidated financial statements of IPG in its Annual Report on Form 10-K for the year ended December 31, 1999; Registration Statements No. 2-79071, 2-43811, 2-56269, 2-61346, 2-64338, 2-67560, 2-72093, 2-88165, 2-90878, 2-97440 and 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, 2-91564, 2-98324, 33-22008, 33-64062, and 33-61371 relating variously to the Employee Stock Purchase Plan (1975), the Employee Stock Purchase Plan (1985) and the Employee Stock Purchase Plan (1995) of The Company, Registration Statements No. 33-20291 and 33-2830 relating to the Management Incentive Compensation Plan of The Company, Registration Statements No. 33-5352, 33-21605, 333-4747 and 333-23603 relating to the 1986 Stock Incentive Plan, the 1986 United Kingdom Stock Option Plan and the 1996 Stock Incentive Plan, of The Company, Registration Statements No. 33-10087 and No. 33-25555 relating to the Long-Term Performance Incentive Plan of The Company, Inc., Registration Statement No. 333-28029 relating to The Interpublic Outside Directors' Stock Incentive Plan of The Company, and Registration Statement No. 33-42675 relating to the 1997 Performance Incentive Plan of The Company. Ernst & Young London, England January 5, 2001

CONSENT OF INDEPENDENT AUDITORS We consent to the incorporation by reference in the following Registration Statements on Form S-8 of The Interpublic Group of Companies, Inc. ("IPG" or the "Company"), of our report dated March 13, 1998, with respect to the consolidated statements of operations, stockholders' equity (deficit) and cash flows of Hill, Holliday, Connors, Cosmopulos, Inc. for the twelve-month period ended December 31, 1997 (not presented separately herein), included in this Current Report of the Company on Form 8-K filed with the Securities and Exchange Commission: 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; No. 33-64062 and No. 33-61371, relating variously to the Employee Stock Purchase Plan (1975), the Employee Stock Purchase Plan (1985) and the Employee Stock Purchase Plan (1995) of the Company; Registration Statements No. 33-20291 and No. 33-2830 relating to the Management Incentive Compensation Plan of the Company; Registration Statements No. 33-5352; No. 33-21605; No. 333-4747 and No. 333-23603 relating to the 1986 Stock Incentive Plan, the 1986 United Kingdom Stock Option Plan and the 1996 Stock Incentive Plan of the Company; Registration Statements No. 33-10087 and No. 33-25555 relating to the Long-Term Performance Incentive Plan of the Company; Registration Statement No. 333-28029 relating to The Interpublic Outside Directors' Stock Incentive Plan of the Company; and Registration Statement No. 33-42675 relating to the 1997 Performance Incentive Plan of the Company. Ernst & Young LLP Boston, Massachusetts January 5, 2001

Consent of Independent Public Accountants ----------------------------------------- We 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 November 28, 2000, which appears in this Current Report on Form 8-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; No. 33-64062; and No. 33-61371, relating variously to the Employee Stock Purchase Plan (1975), the Employee Stock Purchase Plan (1985) and the Employee Stock Purchase Plan of the Company (1995); Registration Statements No. 33-20291 and No. 33-2830 relating to the Management Incentive Compensation Plan of the Company; Registration Statements No. 33-5352; No. 33-21605; No. 333-4747; and No. 333-23603 relating to the 1986 Stock Incentive Plan, the 1986 United Kingdom Stock Option Plan and the 1996 Stock Incentive Plan of the Company; Registration Statements No. 33-10087 and No. 33-25555 relating to the Long-Term Performance Incentive Plan of the Company; Registration Statement No. 333-28029 relating to The Interpublic Outside Directors' Stock Incentive Plan of the Company; Registration Statement No. 33-42675 relating to the 1997 Performance Incentive Plan of the Company. J.H. Cohn LLP Roseland, New Jersey January 5, 2001

5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE SHEET AND THE INCOME STATEMENT AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. THE EPS PRIMARY NUMBER BELOW REFLECTS THE BASIC EARNINGS PER SHARE AS REQUIRED BY FINANCIAL ACCOUNTING STANDARDS NUMBER 128. 1,000 9-MOS 9-MOS DEC-31-2000 DEC-31-1999 SEP-30-2000 SEP-30-1999 587,916 798,631 42,893 46,408 4,511,988 4,099,844 68,536 47,871 0 0 5,727,837 5,479,306 1,007,478 899,499 556,058 463,623 9,659,515 8,286,030 5,542,705 5,105,687 529,375 514,940 0 0 0 0 31,899 31,479 1,845,937 1,539,599 9,659,515 8,286,030 0 0 4,024,984 3,460,376 0 0 3,549,912 2,977,213 0 0 0 0 74,835 59,780 463,198 480,631 190,245 192,268 255,474 275,410 0 0 0 0 0 0 255,474 275,410 85 .92 .82 .89

5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE SHEET AND THE INCOME STATEMENT AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. THE EPS PRIMARY NUMBER BELOW REFLECTS THE BASIC EARNINGS PER SHARE AS REQUIRED BY FINANCIAL ACCOUNTING STANDARDS NUMBER 128. 1,000 12-MOS 12-MOS 12-MOS DEC-31-1999 DEC-31-1998 DEC-31-1997 DEC-31-1999 DEC-31-1998 DEC-31-1997 1,029,076 801,207 757,652 36,765 31,733 31,944 4,502,794 3,715,136 3,219,752 60,565 54,060 44,581 0 0 0 5,992,924 4,950,397 4,346,106 948,376 859,296 717,598 506,975 440,191 379,651 9,247,044 7,526,563 6,254,577 5,821,948 4,853,516 4,101,745 518,490 207,927 201,768 0 0 0 0 0 0 31,592 30,995 30,564 1,732,872 1,399,436 1,129,202 9,247,044 7,526,563 6,254,577 0 0 0 4,977,823 4,218,657 3,610,706 0 0 0 4,399,327 3,646,061 3,227,793 0 0 0 0 0 0 81,341 64,296 59,820 600,717 606,855 440,243 243,971 245,636 197,665 331,287 339,907 224,184 0 0 0 0 0 0 0 0 0 331,287 339,907 224,184 1.11 1.15 0.79 1.07 1.12 0.76