-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, VWIw8s8viBCoa1Mme2whz8YVR5bRGestyRk2ZHXCnsaL43mnSIsJ4CApOld/Gqds iNlT8tVl2280C/SgROcMRg== 0000891092-94-000032.txt : 19940516 0000891092-94-000032.hdr.sgml : 19940516 ACCESSION NUMBER: 0000891092-94-000032 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19940331 FILED AS OF DATE: 19940513 FILER: COMPANY DATA: COMPANY CONFORMED NAME: OMNICOM GROUP INC CENTRAL INDEX KEY: 0000029989 STANDARD INDUSTRIAL CLASSIFICATION: 7311 IRS NUMBER: 131514814 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-10551 FILM NUMBER: 94528244 BUSINESS ADDRESS: STREET 1: 437 MADISON AVE CITY: NEW YORK STATE: NY ZIP: 10022 BUSINESS PHONE: 2124153600 MAIL ADDRESS: STREET 1: 437 MADISON AVE CITY: NEW YORK STATE: NY ZIP: 10022 FORMER COMPANY: FORMER CONFORMED NAME: DOYLE DANE BERNBACH GROUP INC DATE OF NAME CHANGE: 19861117 FORMER COMPANY: FORMER CONFORMED NAME: DOYLE DANE BERNBACH INTERNATIONAL INC DATE OF NAME CHANGE: 19850604 FORMER COMPANY: FORMER CONFORMED NAME: DOYLE DANE BERNBACH INC DATE OF NAME CHANGE: 19781226 10-Q 1 QUARTERLY REPORT CONFORMED COPY FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 For Quarter Ended: March 31, 1994 ---------------- Commission file number: 1-10551 --------- Omnicom Group Inc. - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) New York 13-1514814 - -------------------------------------------------------------------------------- (State or other jurisdiction of (IRS Employer incorporation or organization) Identification No.) 437 Madison Avenue, New York, New York 10022 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) (212) 415-3600 - -------------------------------------------------------------------------------- (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- The number of shares of common stock of the Company issued and outstanding at April 30, 1994 is 33,436,400. OMNICOM GROUP INC. AND SUBSIDIARIES INDEX ----------------------------------- Page No. -------- PART I. FINANCIAL INFORMATION Item I. Financial Statements Consolidated Condensed Balance Sheets - March 31, 1994, December 31, 1993 and March 31, 1993 2 Consolidated Condensed Statements of Income - Three Months Ended March 31, 1994 and 1993 3 Consolidated Condensed Statements of Cash Flows - Three Months Ended March 31, 1994 and 1993 4 Notes to Consolidated Condensed Financial Statements 5-7 Item II. Management's Discussion of Financial Condition and Results of Operations 8-11 PART II. OTHER INFORMATION 12 -1-
PART I. FINANCIAL INFORMATION OMNICOM GROUP INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS (Dollars in Thousands) Assets March 31, December 31, March 31, 1994 1993 1993 ----------- ----------- ----------- Current assets: Cash and cash equivalents ............................................ $ 118,324 $ 174,833 $ 85,857 Investments available-for-sale ....................................... 18,620 38,003 17,457 Accounts receivable, less allowance for doubtful accounts of $19,392, $17,298 and $14,370 ................................... 918,615 901,434 861,339 Billable production orders in process ................................ 70,776 59,415 80,310 Prepaid expenses and other current assets ............................ 133,820 100,791 123,122 ----------- ----------- ----------- Total current assets .............................................. 1,260,155 1,274,476 1,168,085 Furniture, equipment and leasehold improvements, less accumulated depreciation and amortization of $195,814, $188,868 and $178,321 ................................................ 163,614 160,543 158,570 Investments in affiliates .............................................. 114,733 112,232 106,621 Intangibles, less amortization of $99,339, $93,105 and $76,806 .......................................................... 626,024 603,494 494,661 Deferred tax benefit ................................................... 17,334 18,522 15,061 Deferred charges and other assets ...................................... 120,000 120,596 100,158 ----------- ----------- ----------- Total assets ...................................................... $ 2,301,860 $ 2,289,863 $ 2,043,156 =========== =========== =========== Liabilities and Shareholders' Equity Current liabilities: Accounts payable ..................................................... $ 926,830 $ 1,058,095 $ 821,946 Payable to banks ..................................................... 87,300 48,047 79,393 Other accrued liabilities ............................................ 350,146 388,102 306,754 Accrued taxes on income .............................................. 19,972 29,974 30,132 ----------- ----------- ----------- Total current liabilities ......................................... 1,384,248 1,524,218 1,238,225 Long term debt ......................................................... 403,827 278,312 382,207 Deferred compensation and other liabilities ............................ 81,713 56,933 64,120 Minority interests ..................................................... 31,399 28,214 55,571 Shareholders' equity: Common stock ......................................................... 17,536 17,536 15,954 Additional paid-in capital ........................................... 253,112 252,408 162,704 Retained earnings .................................................... 268,255 287,416 244,948 Unamortized restricted stock ......................................... (19,806) (21,807) (13,845) Cumulative translation adjustment .................................... (50,731) (65,257) (39,727) Treasury stock ....................................................... (67,693) (68,110) (67,001) ----------- ----------- ----------- Total shareholders' equity ........................................ 400,673 402,186 303,033 ----------- ----------- ----------- Total liabilities and shareholders' equity ........................ $ 2,301,860 $ 2,289,863 $ 2,043,156 =========== =========== ===========
The accompanying notes to consolidated condensed financial statements are an integral part of these balance sheets. -2- OMNICOM GROUP INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF INCOME (Dollars in Thousands, Except Per Share Data) Three Months Ended March 31, -------------------- 1994 1993 ---- ---- Revenues: Commissions and fees .................... $ 376,538 $ 339,139 Operating expenses: Salaries and related costs .............. 218,395 202,045 Office and general expenses ............. 120,268 105,699 ------- ------- 338,663 307,744 ------- ------- Operating profit .......................... 37,875 31,395 Net interest expense: Interest and dividend income ............ (2,437) (2,982) Interest paid or accrued ................ 8,720 9,639 ------- ------- 6,283 6,657 ------- ------- Income before income taxes and change in accounting principle .................... 31,592 24,738 Income taxes: Federal ................................. 6,898 5,505 State and local ......................... 1,778 1,767 International ........................... 4,487 3,118 ------- ------- 13,163 10,390 ------- ------- Income after income taxes and before change in accounting principle ................. 18,429 14,348 Equity in affiliates ...................... 2,089 1,692 Minority interests ........................ (1,598) (1,584) ------- ------- Income before change in accounting principle ............................... 18,920 14,456 Cumulative effect of change in accounting principle ............................... (28,009) -- ------- ------- Net (loss) income .................. $ (9,089) $ 14,456 ========= ========= Earnings per share Income before change in accounting principle: Primary ............................ $ 0.58 $ 0.50 Fully diluted ...................... $ 0.58 $ 0.49 Cumulative effect of change in accounting principle: Primary ............................ $ (0.85) - Fully diluted ...................... $ (0.85) - Net (loss) income Primary ............................ $ (0.27) $ 0.50 Fully diluted ...................... $ (0.27) $ 0.49 Dividends declared per common share ....... $ 0.31 $ 0.31 The accompanying notes to consolidated condensed financial statements are an integral part of these statements. -3- OMNICOM GROUP INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Dollars in Thousands) Three Months Ended March 31, -------------------- 1994 1993 ---- ---- Cash flows from operating activities: Net income ......................................... $ (9,089) $ 14,456 Adjustments to reconcile net income to net cash used in operating activities: Depreciation and amortization of tangible assets .. 8,923 8,127 Amortization of intangible assets ................. 5,554 4,109 Minority interests ................................ 1,333 1,584 Earnings of affiliates in excess of dividends received ....................................... (439) (431) (Decrease) increase in deferred taxes ............. (8,111) 708 Provision for losses on accounts receivable ....... 1,062 548 Amortization of restricted stock................... 1,873 1,462 Loss on sale of equity interests in subsidiaries and affiliates ................................. - 643 (Increase) decrease in accounts receivable ........ (7,541) 7,977 Increase in billable production ................... (10,768) (17,784) Increase in other current assets .................. (22,004) (4,019) Decrease in accounts payable ...................... (141,549) (164,974) Decrease in other accrued liabilities ............. (41,069) (39,738) (Decrease) increase in accrued income taxes ....... (10,431) 662 Other ............................................. 27,977 6,167 --------- --------- Net cash used in operating activities ............. (204,279) (180,503) --------- --------- Cash flows from investing activities: Capital expenditures ............................... (10,745) (8,113) Cash (used for) acquired through purchases of equity interests in subsidiaries and affiliates ........ (23,064) 3,120 Proceeds from sales of equity interests in subsidiaries and affiliates ..................... 325 522 Purchases of marketable securities ................. (8,210) (6,452) Proceeds from sales of marketable securities ....... 27,689 12,791 --------- --------- Net cash (used in) provided by investing activities (14,005) 1,868 --------- --------- Cash flows from financing activities: Net borrowings under lines of credit ............... 41,364 29,657 Share transactions under employee stock plans ...... 2,149 3,828 Proceeds from issuance of debt obligations ......... 122,851 145,041 Dividends and loans to minority stockholders ....... (128) (1,143) Dividends paid ..................................... (10,133) (8,650) Purchase of treasury shares ........................ (4,238) (16,503) --------- --------- Net cash provided by financing activities .......... 151,865 152,230 --------- --------- Effect of exchange rate changes on cash and cash equivalents ....................................... 9,910 (197) --------- --------- Net decrease in cash and cash equivalents .............. (56,509) (26,602) Cash and cash equivalents at beginning of period ....... 174,833 112,459 --------- --------- Cash and cash equivalents at end of period ............. $ 118,324 $ 85,857 ========= ========= Supplemental Disclosures: Income taxes paid ................................ $ 14,063 $ 9,730 ========= ========= Interest paid .................................... $ 5,969 $ 7,200 ========= ========= The accompanying notes to consolidated condensed financial statements are an integral part of these statements. -4- OMNICOM GROUP INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS ------------------------------------------ 1) The consolidated condensed interim financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. 2) These statements reflect all adjustments consisting of normal recurring accruals which, in the opinion of management, are necessary for a fair presentation of the information contained therein. It is suggested that these consolidated condensed financial statements be read in conjunction with the consolidated financial statements and notes thereto included in the Company's latest annual report on Form 10-K. 3) Results of operations for the interim periods are not necessarily indicative of annual results. -5- NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Continued) ------------------------------------------ 4) Primary earnings per share is based upon the weighted average number of common shares and common share equivalents outstanding during each year. Fully diluted earnings per share is based on the above, and in 1993, adjusted for the assumed conversion of the Company's 6.5% and 7% Convertible Subordinated Debentures and the assumed increase in net income for the after tax interest cost of these debentures. In 1994, the Company's 6.5% and the 4.5%/6.25% Step-Up Convertible Subordinated Debentures were antidilutive and, therefore, were excluded from the calculation of fully diluted earnings per share. The number of shares used in the computations of primary and fully diluted earnings per share were as follows: Three Months Ended March 31, ---------------------------- 1994 1993 ---- ---- Primary EPS computation............................32,796,600 29,165,900 Fully diluted EPS computation......................32,817,700 36,176,600 5) On May 26, 1993, the Company exchanged 1,349,260 shares of Company common stock for all of the outstanding voting shares of TBWA International B.V. The combination was accounted for as a pooling of interests. Accordingly, the March 31, 1993 balance sheet, results of operations and cash flows have been restated to reflect the combination as of January 1, 1993. -6- NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Continued) ------------------------------------------ 6) Effective January 1, 1994, the Company adopted the provisions of Statement of Financial Accounting Standards No. 112 "Employers' Accounting for Postemployment Benefits" ("SFAS 112"). The cumulative after tax effect of the adoption of this Statement decreased net income by $28,009,000. -7- OMNICOM GROUP INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS ------------------------------------------ Results of Operations First Quarter 1994 Compared to First Quarter 1993: Consolidated worldwide revenues from commission and fee income increased 11% to $376,538,000 in the first quarter of 1994 from $339,139,000 in the first quarter of 1993. Consolidated domestic revenues increased 9% to $196,942,000 in 1994 from $179,936,000 in 1993. Consolidated international commission and fee income increased 13% to $179,596,000 in 1994 from $159,203,000 in 1993. Absent the effect of the net acquisitions of subsidiary companies and movements in foreign currency exchange rates, consolidated worldwide commission and fee income increased 7% in the first quarter of 1994 as compared to the same period in 1993. Operating expenses increased 10% in the first quarter of 1994 as compared to the first quarter of 1993. Excluding the effect of the net acquisition activity and movements in foreign currency exchange rates mentioned above, operating expenses increased 7% over 1993 levels. This increase reflects normal salary increases, and growth in client service expenditures to support the increased revenue base. Operating expenses as a percentage of commissions and fees was 89.9% in the first quarter of 1994 and 90.7% in 1993. -8- MANAGEMENT'S DISCUSSION OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) ------------------------------------------ Net interest expense decreased by $374,000 in the first quarter of 1994 as compared to the same period in 1993. The decrease primarily relates to lower average interest rates during the quarter as compared to 1993. Pretax profit margin was 8.4% in the first quarter of 1994 as compared to 7.3% in the same period in 1993. Operating margin, which excludes interest and dividend income and interest expense, was 10.1% in the first quarter of 1994 as compared to 9.3%, in the same period in 1993. The effective income tax rate was 41.7% in the first quarter of 1994 and 42.0% in the first quarter of 1993. The increase in equity in affiliates is indicative of greater profits earned by companies in which the Company owns less than a 50% equity interest. Minority interests of $1,598,000 is comparable with the first quarter of 1993. -9- MANAGEMENT'S DISCUSSION OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) ------------------------------------------ Net income before the cumulative effect of the adoption of SFAS 112, increased 31% to $18,920,000 in the first quarter of 1994 as compared to $14,456,000 in the same period in 1993. Absent the effect of net acquisitions of subsidiary companies and movements in foreign currency exchange rates, net income increased 20% in the first quarter of 1994 as compared to the first quarter of 1993. Effective January 1, 1994, the Company adopted the provisions of Statement of Financial Accounting Standards No. 112 "Employers' Accounting for Postemployment Benefits." The cumulative after-tax effect of this onetime non-cash charge was $28,009,000. Capital Resources and Liquidity Cash and cash equivalents at March 31, 1994 decreased to $118,324,000 from $174,833,000 at December 31, 1993. This decline is due to the paydown of year-end accrued liabilities and payments to media and other suppliers exceeding collections from clients. Both events are normal recurring seasonal industry patterns. The relationship between payables to the media and suppliers and receivables from clients, at March 31, 1994, compares favorably to customary industry practices. -10- MANAGEMENT'S DISCUSSION OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) ------------------------------------------ The Company maintains relationships with a number of banks worldwide, which have extended unsecured committed lines of credit in amounts sufficient to meet the Company's cash needs. At March 31, 1994, the Company had $346,106,000 in committed lines of credit, comprised of $200,000,000 under a revolving credit agreement expiring June 30, 1995, and $146,106,000 in unsecured committed lines of credit, principally outside of the United States. Of the $346,106,000 in committed lines, $147,548,000 remained available at March 31, 1994. Management believes the aggregate lines of credit available to the Company are adequate to support its short term cash requirements for dividends, capital expenditures and maintenance of working capital. The Company has no present plans to introduce incremental additional issues of long term debt. The Company anticipates that future cash flows from operations plus funds available under line of credit facilities will be adequate to support its long term cash requirements as presently contemplated. -11- OMNICOM GROUP INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF INCOME (Dollars in Thousands, Except Per Share Data) Three Months Ended March 31, 1994 1993 Revenues: Commissions and fees .................... $ 376,538 $ 339,139 Operating expenses: Salaries and related costs .............. 218,395 202,045 Office and general expenses ............. 120,268 105,699 ------- ------- 338,663 307,744 ------- ------- Operating profit .......................... 37,875 31,395 Net interest expense: Interest and dividend income ............ (2,437) (2,982) Interest paid or accrued ................ 8,720 9,639 ------- ------- 6,283 6,657 ------- ------- Income before income taxes and change in accounting principle .................... 31,592 24,738 Income taxes: Federal ................................. 6,898 5,505 State and local ......................... 1,778 1,767 International ........................... 4,487 3,118 ------- ------- 13,163 10,390 ------- ------- Income after income taxes and before change in accounting principle ................. 18,429 14,348 Equity in affiliates ...................... 2,089 1,692 Minority interests ........................ (1,598) (1,584) ------- ------- Income before change in accounting principle ............................... 18,920 14,456 Cumulative effect of change in accounting principle ............................... (28,009) -- ------- ------- Net (loss) income .................. $ (9,089) $ 14,456 ========= ========= Earnings per share Income before change in accounting principle: Primary ............................ $ 0.58 $ 0.50 Fully diluted ...................... $ 0.58 $ 0.49 Cumulative effect of change in accounting principle: Primary ............................ $ (0.85) - Fully diluted ...................... $ (0.85) - Net (loss) income Primary ............................ $ (0.27) $ 0.50 Fully diluted ...................... $ (0.27) $ 0.49 Dividends declared per common share ....... $ 0.31 $ 0.31 The accompanying notes to consolidated condensed financial statements are an integral part of these statements. -3- PART II. OTHER INFORMATION There have been no applicable transactions or occurrences during the quarter. 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. Omnicom Group Inc. (Registrant) ------------------------ Date May 12, 1994 /s/ Fred J. Meyer ---------------- ----------------- Fred J. Meyer Chief Financial Officer and Director (Principal Financial Officer) Date May 12, 1994 /s/ Dale A. Adams ---------------- ----------------- Dale A. Adams Controller (Principal Accounting Officer) -12- -----END PRIVACY-ENHANCED MESSAGE-----