-----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, onYZPRfkxr0r1PI0Q8Zys9s4l66mz29vX03RU8unN69ok1mKyeBtsycLI+EmJ2AI QR3B4ily+jr8Kki676A1OQ== 0000891092-95-000053.txt : 19950517 0000891092-95-000053.hdr.sgml : 19950516 ACCESSION NUMBER: 0000891092-95-000053 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950331 FILED AS OF DATE: 19950512 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: OMNICOM GROUP INC CENTRAL INDEX KEY: 0000029989 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-ADVERTISING AGENCIES [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: 95537987 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 FORM 10-Q QUARTERLY REPORT 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, 1995 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, 1995 is 36,369,000. OMNICOM GROUP INC. AND SUBSIDIARIES INDEX Page No. -------- PART I. FINANCIAL INFORMATION Item I. Financial Statements Consolidated Condensed Balance Sheets -- March 31, 1995, December 31, 1994 and March 31, 1994 2 Consolidated Condensed Statements of Income -- Three Months Ended March 31, 1995 and 1994 3 Consolidated Condensed Statements of Cash Flows -- Three Months Ended March 31, 1995 and 1994 4 Notes to Consolidated Condensed Financial Statements 5-8 Item II. Management's Discussion of Financial Condition and Results of Operations 9-12 PART II. OTHER INFORMATION Item 6 Exhibits 13 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS OMNICOM GROUP INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS (Dollars in Thousands)
March 31, December 31, March 31, 1995 1994 1994 ------------ ------------ ------------ Assets Current assets: Cash and cash equivalents $ 168,391 $ 228,251 $ 118,324 Investments available-for-sale, at market, which approximates cost 19,609 28,383 18,620 Accounts receivable, less allowance for doubtful accounts of $20,339, $19,278 and $19,392 1,182,052 1,139,882 918,615 Billable production orders in process 119,623 65,115 70,776 Prepaid expenses and other current assets 157,638 140,304 133,820 ------------ ------------ ------------ Total current assets 1,647,313 1,601,935 1,260,155 Furniture, equipment and leasehold improvements, less accumulated depreciation and amortization of $227,800, $221,491 and $195,814 175,400 172,153 163,614 Investments in affiliates 174,247 164,524 114,733 Intangibles, less amortization of $144,605, $133,572 and $99,339 793,999 758,460 626,024 Deferred tax benefits 29,046 21,104 17,334 Deferred charges and other assets 141,565 134,028 120,000 ------------ ------------ ------------ Total assets $ 2,961,570 $ 2,852,204 $ 2,301,860 ============ ============ ============ Liabilities and Shareholders' Equity Current liabilities: Accounts payable $ 1,220,581 $ 1,425,829 $ 926,830 Payable to banks 89,796 12,515 87,300 Other accrued liabilities 503,961 496,631 350,146 Accrued taxes on income 44,283 51,667 19,972 ------------ ------------ ------------ Total current liabilities 1,858,621 1,986,642 1,384,248 Long term debt 403,882 187,338 403,827 Deferred compensation and other liabilities 76,577 95,973 81,713 Minority interests 49,371 41,549 31,399 Shareholders' equity: Common stock 19,322 19,322 17,536 Additional paid-in capital 356,133 356,199 253,112 Retained earnings 338,436 325,321 268,255 Unamortized restricted stock (23,233) (25,631) (19,806) Cumulative translation adjustment (10,762) (27,671) (50,731) Treasury stock (106,777) (106,838) (67,693) ------------ ------------ ------------ Total shareholders' equity 573,119 540,702 400,673 ------------ ------------ ------------ Total liabilities and shareholders' equity $ 2,961,570 $ 2,852,204 $ 2,301,860 ============ ============ ============
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, ---------------------- 1995 1994 --------- --------- Revenues: Commissions and fees $ 459,882 $ 376,538 Operating expenses: Salaries and related costs 271,406 218,395 Office and general expenses 140,724 120,268 --------- --------- 412,130 338,663 --------- --------- Operating profit 47,752 37,875 Net interest expense: Interest and dividend income (3,790) (2,437) Interest paid or accrued 10,166 8,720 --------- --------- 6,376 6,283 --------- --------- Income before income taxes and change in accounting principle 41,376 31,592 Income taxes: Federal 6,985 6,898 State and local 1,709 1,778 International 7,861 4,487 --------- --------- 16,555 13,163 --------- --------- Income after income taxes and before change in accounting principle 24,821 18,429 Equity in affiliates 2,213 2,089 Minority interests (2,892) (1,598) --------- --------- Income before change in accounting principle 24,142 18,920 Cumulative effect of change in accounting principle -- (28,009) --------- --------- Net income (loss) $ 24,142 $ (9,089) ========= ========= Earnings per share Income before change in accounting principle: Primary $ 0.68 $ 0.58 Fully diluted $ 0.68 $ 0.58 Cumulative effect of change in accounting principle: Primary -- $ (0.85) Fully diluted -- $ (0.85) Net income (loss): Primary $ 0.68 $ (0.27) Fully diluted $ 0.68 $ (0.27) 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, 1995 1994 --------- --------- Cash flows from operating activities: Net income (loss) $ 24,142 $ (9,089) Adjustments to reconcile net income (loss) to net cash used in operating activities: Depreciation and amortization of tangible assets 9,878 8,923 Amortization of intangible assets 6,570 5,554 Minority interests 2,892 1,333 Earnings of affiliates in excess of dividends received (1,396) (439) Increase in deferred tax benefits (9,610) (8,111) Provision for losses on accounts receivable 992 1,062 Amortization of restricted stock 2,367 1,873 Increase in accounts receivable (6,349) (7,541) Increase in billable production (52,022) (10,768) Increase in other current assets (4,239) (22,004) Decrease in accounts payable (249,290) (141,549) Decrease in other accrued liabilities (7,250) (41,069) Decrease in accrued income taxes (8,983) (10,431) Other (16,878) 28,302 --------- --------- Net cash used in operating activities (309,176) (203,954) --------- --------- Cash flows from investing activities: Capital expenditures (8,843) (10,745) Payments for purchases of equity interests in subsidiaries and affiliates, net of cash acquired (32,881) (23,064) Payments for purchases of investments available- for-sale and other investments (8,393) (8,210) Proceeds from sales of investments available-for- sale and other investments 17,972 27,689 --------- --------- Net cash used in investing activities (32,145) (14,330) --------- --------- Cash flows from financing activities: Net borrowings under lines of credit 75,609 41,364 Share transactions under employee stock plans 26 2,149 Proceeds from issuance of debt obligations 213,631 122,851 Dividends and loans to minority stockholders (557) (128) Dividends paid (11,133) (10,133) Purchase of treasury shares -- (4,238) --------- --------- Net cash provided by financing activities 277,576 151,865 --------- --------- Effect of exchange rate changes on cash and cash equivalents 3,885 9,910 --------- --------- Net decrease in cash and cash equivalents (59,860) (56,509) Cash and cash equivalents at beginning of period 228,251 174,833 --------- --------- Cash and cash equivalents at end of period $ 168,391 $ 118,324 ========= ========= Supplemental Disclosures: Income taxes paid $ 23,957 $ 14,063 ========= ========= Interest paid $ 7,203 $ 5,969 ========= =========
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. Certain reclassifications have been made to the March 31, 1994 reported amounts to conform them with the March 31, 1995 and December 31, 1994 presentation. 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 indica- tive 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 period. Fully diluted earnings per share is based on the above, and if dilutive, adjusted for the assumed conversion of the Company's Convertible Subordinated Debentures and the assumed increase in net income for the after tax interest cost of these debentures. At March 31, 1995, the 4.5%/6.25% Step-Up Convertible Subordinated Debentures were outstanding. At March 31, 1994, the 6.5% Convertible Subordinated Debentures and the 4.5%/6.25% Step-Up Convertible Subordinated Debentures were outstanding. The number of shares used in the computations of primary and fully diluted earnings per share were as follows: Three Months Ended March 31, ---------------------------- 1995 1994 ---------- ---------- Primary EPS computation 35,726,600 32,796,600 Fully diluted EPS computation 35,783,800 32,817,700 For purposes of computing fully diluted earnings per share on net income and the cumulative effect of the change in accounting principle for the three months ended March 31, 1995 and 1994, the Company's Convertible Subordinated Debentures were not reflected in the computations as their inclusion would have been anti-dilutive. -6- NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Continued) 5) On January 4, 1995, an indirect wholly-owned subsidiary of the Company issued Deutsche Mark 200 million Floating Rate Bonds (approximately $130 million at the January 4, 1995 exchange rate). The bonds are unsecured, unsubordinated obligations of the issuer and are unconditionally and irrevocably guaranteed by the Company. The bonds bear interest at a per annum rate equal to Deutsche Mark three month LIBOR plus 0.65% and may be redeemed at the option of the issuer on January 5, 1997 or any interest payment date thereafter at their principal amount plus any accrued but unpaid interest. Unless redeemed earlier, the bonds will mature on January 5, 2000 and will be repaid at par. 6) On June 1, 1994, the Company issued a Notice of Redemption for its $100 million 6.5% Convertible Subordinated Debentures with a scheduled maturity in 2004. Prior to the July 27, 1994 redemption date, debenture holders elected to convert all of their outstanding debentures into common stock of the Company at a conversion price of $28.00 per common share. -7- NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Continued) 7) 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. -8- OMNICOM GROUP INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations First Quarter 1995 Compared to First Quarter 1994: Consolidated worldwide revenues from commission and fee income increased 22% to $459,882,000 in the first quarter of 1995 from $376,538,000 in the first quarter of 1994. Consolidated domestic revenues increased 14% to $224,340,000 in 1995 from $196,942,000 in 1994. Consolidated international revenues increased 31% to $235,542,000 in 1995 from $179,596,000 in 1994. Absent the effect of the net acquisitions of subsidiary companies and movements in foreign currency exchange rates, consolidated worldwide revenues increased 11% in the first quarter of 1995 as compared to the same period in 1994. Operating expenses increased 22% in the first quarter of 1995 as compared to the first quarter of 1994. Excluding the effect of the net acquisition activity and movements in foreign currency exchange rates mentioned above, operating expenses increased 12% over 1994 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 were 89.6% in the first quarter of 1995 and 89.9% in 1994. -9- MANAGEMENT'S DISCUSSION OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) Net interest expense is comparable with the first quarter of 1994. Pretax profit margin was 9.0% in the first quarter of 1995 as compared to 8.4% in the same period in 1994. Operating margin, which excludes interest and dividend income and interest expense, was 10.4% in the first quarter of 1995 as compared to 10.1%, in the same period in 1994. The effective income tax rate was 40.0% in the first quarter of 1995 and 41.7% in the first quarter of 1994. The decrease reflects a lower international effective tax rate primarily caused by fewer international operating losses with no associated tax benefit and tax planning strategies implemented in certain non-U.S. countries. Equity in affiliate income is comparable with the first quarter of 1994. The increase in minority interest expense is primarily due to greater earnings by companies where minority interests exist; additional minority interests resulting from acquisitions; and the acquisition of a majority interest in several companies which were previously less than 50% owned. -10- MANAGEMENT'S DISCUSSION OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) Net income increased 28% to $24,142,000 in the first quarter of 1995 as compared to $18,920,000, before the cumulative effect of the adoption of SFAS 112, in the first quarter of 1994. Absent the effect of net acquisitions of subsidiary companies and movements in foreign currency exchange rates, net income increased 7% in the first quarter of 1995 as compared to the first quarter of 1994. 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, 1995 decreased to $168,391,000 from $228,251,000 at December 31, 1994. 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, 1995, compares favorably to customary industry practices. -11- 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, 1995, the Company had $427,688,000 in committed lines of credit, comprised of a $250,000,000 revolving credit agreement expiring on June 30, 1997, and $177,688,000 in unsecured credit lines, principally outside of the United States. Of the $427,688,000 in committed lines, $236,564,000 remained available at March 31, 1995. 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. On January 4, 1995, an indirect wholly-owned subsidiary of the Company issued Deutsche Mark 200 million Floating Rate Bonds (approximately $130 million at the January 4, 1995 exchange rate), due January 5, 2000. The bonds bear interest at a per annum rate equal to Deutsche Mark three month LIBOR plus 0.65%. 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 existing credit facilities will be adequate to support its long term cash requirements as presently contemplated. -12- PART II. OTHER INFORMATION Item 6. Exhibits Exhibit Number Description of Exhibit 27 Appendix A to Item 601(C) of Regulation S-K Commercial and Industrial Companies - Article 5 of Regulation S-K (filed in electronic format only) -13- 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) Dated: May 12, 1995 /s/ Fred J. Meyer -------------------- Fred J. Meyer Chief Financial Officer and Director (Principal Financial Officer) Dated: May 12, 1995 /s/ Dale A. Adams -------------------- Dale A. Adams Controller (Principal Accounting Officer) -14- EX-27 2 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS OF OMNICOM GROUP INC. AND SUBSIDIARIES FOR THE THREE MONTHS ENDED MARCH 31, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. Appendix A to Item 601(c) of Regulation S-K Commercial and Industrial Companies Article 5 of Regulation S-X (Dollars in thousands, except per share amounts) 1,000 3-MOS DEC-31-1995 MAR-31-1995 168,391 19,609 1,202,391 20,339 0 1,647,313 403,200 227,800 2,961,570 1,858,621 403,882 19,322 0 0 553,797 2,961,570 0 459,882 0 271,406 140,724 992 10,166 41,376 16,555 24,142 0 0 0 24,142 .68 .68
-----END PRIVACY-ENHANCED MESSAGE-----