-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, P0mcZ7UeNTxELh1OVUqvvpDIjOWUsuquqzTH7sG8n65NxsHoB9iZWJMQp32FAbIA SdIM4fVNokBin9wfO0ZqBA== 0000891092-96-000087.txt : 19960515 0000891092-96-000087.hdr.sgml : 19960515 ACCESSION NUMBER: 0000891092-96-000087 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960514 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: 96563847 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 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, 1996 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, 1996 is 74,841,000. OMNICOM GROUP INC. AND SUBSIDIARIES INDEX Page No. PART I. FINANCIAL INFORMATION Item 1. Financial Statements: Consolidated Condensed Balance Sheets - March 31, 1996, December 31, 1995 and March 31, 1995 2 Consolidated Condensed Statements of Income - Three Months Ended March 31, 1996 and 1995 3 Consolidated Condensed Statements of Cash Flows - Three Months Ended March 31, 1996 and 1995 4 Notes to Consolidated Condensed Financial Statements 5-6 Item 2. Management's Discussion of Financial Condition and Results of Operations 7-10 PART II. OTHER INFORMATION Item 6. Exhibits 11 -1- 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, 1996 1995 1995 Assets ----------- ----------- ----------- Current assets: Cash and cash equivalents $ 193,842 $ 313,999 $ 195,480 Investments available-for-sale, at market, which approximates cost 26,941 21,474 19,650 Accounts receivable, less allowance for doubtful accounts of $24,269, $23,352 and $24,211 1,572,293 1,503,212 1,265,429 Billable production orders in process 140,505 106,115 138,084 Prepaid expenses and other current assets 198,002 161,235 164,509 ----------- ----------- ----------- Total current assets 2,131,583 2,106,035 1,783,152 Furniture, equipment and leasehold improvements, less accumulated depreciation and amortization of $262,124, $259,664 and $245,354 201,782 200,473 195,334 Investments in affiliates 212,141 200,216 174,247 Intangibles, less amortization of $163,293, $157,863 and $144,875 829,366 832,698 794,463 Deferred tax benefits 69,839 70,242 75,347 Deferred charges and other assets 119,390 118,013 153,492 ----------- ----------- ----------- Total assets $ 3,564,101 $ 3,527,677 $ 3,176,035 =========== =========== =========== Liabilities and Shareholders' Equity Current liabilities: Accounts payable $ 1,455,609 $ 1,734,500 $ 1,305,541 Payable to banks 150,613 21,031 125,041 Other accrued liabilities 673,517 705,157 598,942 Accrued taxes on income 49,989 41,756 45,671 ----------- ----------- ----------- Total current liabilities 2,329,728 2,502,444 2,075,195 Long term debt 523,300 290,379 415,933 Deferred compensation and other liabilities 106,412 122,623 129,276 Minority interests 60,002 60,724 50,655 Shareholders' equity: Common stock 39,921 39,921 39,870 Additional paid-in capital 391,176 390,984 384,988 Retained earnings 317,376 299,704 221,647 Unamortized restricted stock (27,424) (30,739) (23,233) Cumulative translation adjustment (33,058) (26,641) (11,519) Treasury stock (143,332) (121,722) (106,777) ----------- ----------- ----------- Total shareholders' equity 544,659 551,507 504,976 ----------- ----------- ----------- Total liabilities and shareholders' equity $ 3,564,101 $ 3,527,677 $ 3,176,035 =========== =========== ===========
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, ---------------------------- 1996 1995 --------- --------- Revenues: Commissions and fees $ 566,978 $ 499,086 Operating expenses: Salaries and related costs 340,441 294,661 Office and general expenses 166,976 152,916 --------- --------- 507,417 447,577 --------- --------- Operating profit 59,561 51,509 Net interest expense: Interest and dividend income (3,172) (4,078) Interest paid or accrued 8,946 11,603 --------- --------- 5,774 7,525 --------- --------- Income before income taxes 53,787 43,984 Income taxes: Federal 9,946 7,927 State and local 2,734 1,965 International 9,037 8,136 --------- --------- 21,717 18,028 --------- --------- Income after income taxes 32,070 25,956 Equity in affiliates 3,053 2,213 Minority interests (4,651) (2,984) --------- --------- Net income $ 30,472 $ 25,185 ========= ========= Earnings per share: Primary $ 0.41 $ 0.34 Fully diluted $ 0.41 $ 0.34 Dividends declared per common share $ 0.175 $ 0.155 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, ---------------------- 1996 1995 --------- --------- Cash flows from operating activities: Net income $ 30,472 $ 25,185 Adjustments to reconcile net income to net cash used for operating activities: Depreciation and amortization of tangible assets 10,845 10,650 Amortization of intangible assets 6,924 6,574 Minority interests 4,651 2,984 Earnings of affiliates in excess of dividends received (2,186) (1,396) Increase(decrease)in deferred tax benefits 391 (8,801) Provision for losses on accounts receivable 942 1,020 Amortization of restricted shares 2,766 2,367 Increase in accounts receivable (83,871) (17,136) Increase in billable production (34,984) (53,241) Increase in other current assets (40,112) (5,607) Decrease in accounts payable (263,966) (250,111) (Decrease)increase in other accrued liabilities (22,363) 3,610 Increase(decrease) in accrued income taxes 8,154 (8,916) Other (16,605) (22,032) --------- --------- Net cash used for operating activities (398,942) (314,850) --------- --------- Cash flows from investing activities: Capital expenditures (13,560) (9,216) Payments for purchases of equity interests in subsidiaries and affiliates, net of cash acquired (28,542) (29,314) Proceeds from sales of equity interests in subsidiaries and affiliates 2,136 2,744 Payments for purchases of investments available-for-sale and other investments (6,253) (8,393) Proceeds from sales of investments available-for-sale and other investments 863 17,972 --------- --------- Net cash used for investing activities (45,356) (26,207) --------- --------- Cash flows from financing activities: Net borrowings under lines of credit 129,781 77,209 Share transactions under employee stock plans 5,631 26 Proceeds from issuance of principal of debt obligations 231,340 225,517 Dividends and loans to minority stockholders (3,696) (554) Dividends paid (12,825) (11,133) Purchase of treasury shares (26,499) -- --------- --------- Net cash provided by financing activities 323,732 291,065 --------- --------- Effect of exchange rate changes on cash and cash equivalents 409 3,675 --------- --------- Net decrease in cash and cash equivalents (120,157) (46,317) Cash and cash equivalents at beginning of period 313,999 241,797 --------- --------- Cash and cash equivalents at end of period $ 193,842 $ 195,480 ========= ========= Supplemental Disclosures: Income taxes paid $ 13,081 $ 25,969 ========= ========= Interest paid $ 6,171 $ 8,510 ========= =========
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, 1995 reported amounts to conform them with the March 31, 1996 and December 31, 1995 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 annual report on Form 10-K for the year ended December 31, 1995. 3) Results of operations for the interim periods are not necessarily indicative of annual results. -5- OMNICOM GROUP INC. AND SUBSIDIARIES 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, 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. The number of shares used in the computations of primary and fully diluted earnings per share were as follows: Three Months Ended March 31, --------------- 1996 1995 ---- ---- Primary EPS computation 73,985,400 73,548,300 Fully diluted EPS computation 79,490,500 78,901,300 Share amounts for 1995 have been adjusted to reflect a two-for-one stock split in the form of a 100% stock dividend effective December 15, 1995. 5) On March 1, 1996, the Company issued Deutsche Mark 100 million Floating Rate Bonds (approximately $68 million at the March 1, 1996 exchange rate). The bonds are unsecured, unsubordinated obligations of the Company and bear interest at a per annum rate equal to Deutsche Mark three month LIBOR plus 0.375%. The bonds will mature on March 1, 1999 and will be repaid at par. -6- Item 2. MANAGEMENT'S DISCUSSION OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations First Quarter 1996 Compared to First Quarter 1995 Consolidated worldwide revenues from commission and fee income increased 13.6% from $499.1 million in the first quarter of 1995 to $567.0 million in the first quarter of 1996. Consolidated domestic revenues increased 15.8% from $258.7 million in 1995 to $299.6 million in 1996. Consolidated international revenues increased 11.2% from $240.4 million in 1995 to $267.4 million in 1996. Absent the effect of the net acquisitions of subsidiary companies and movements in international currency exchange rates, consolidated worldwide revenues increased 13.1% in the first quarter of 1996 as compared to the same period in 1995. Operating expenses increased 13.4% in the first quarter of 1996 as compared to the first quarter of 1995. Excluding the effect of the net acquisition activity and movements in international currency exchange rates mentioned above, operating expenses increased 12.3% over 1995 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 89.5% in the first quarter of 1996 as compared to 89.7% in the first quarter of 1995. -7- MANAGEMENT'S DISCUSSION OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) Net interest expense decreased by $1.8 million in the first quarter of 1996 as compared to the same period in 1995. This decrease primarily reflects lower average interest rates on borrowings. Pretax profit margin was 9.5% in the first quarter of 1996 as compared to 8.8% in the same period in 1995. Operating margin, which excludes interest and dividend income and interest expense, was 10.5% in the first quarter of 1996 as compared to 10.3% in the same period in 1995. The effective income tax rate was 40.4% in the first quarter of 1996 as compared to 41.0% in the first quarter of 1995. The decrease primarily reflects a reduction in the effect of nondeductible goodwill and a lower effective international tax rate. 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. The increase in minority interest expense is primarily due to greater earnings by companies where minority interests exist and additional minority interests resulting from acquisitions. -8- MANAGEMENT'S DISCUSSION OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) Net income increased 21.0% to $30.5 million in the first quarter of 1996 as compared to $25.2 million in the same period in 1995. Absent the effect of net acquisitions and movements in international currency exchange rates, net income increased 22.3% in the first quarter of 1996 as compared to the first quarter of 1995. Capital Resources and Liquidity Cash and cash equivalents at March 31, 1996 decreased to $193.8 million from $314.0 million at December 31, 1995. The relationship between payables to the media and suppliers and receivables from clients, at March 31, 1996, is consistent with industry norms. 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, 1996, the Company had $503.3 million in committed lines of credit, comprised of a $250.0 million revolving credit agreement expiring June 30, 1997, and $253.3 million in unsecured committed lines of credit, principally outside of the United States. Of the $503.3 million in committed lines, $206.2 million remained available at March 31, 1996. -9- MANAGEMENT'S DISCUSSION OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) On May 10, 1996, the Company completed a new $360 million revolving credit agreement, expiring June 30, 2001, to replace the existing $250 million revolving credit agreement. Management believes the aggregate lines of credit available to the Company (including the new $360 million revolving credit agreement) are adequate to support its short term cash requirements for dividends, capital expenditures, repayment of debt and maintenance of working capital. The Company anticipates that future cash flows from operations plus funds available under existing line of credit facilities will be adequate to support the long term cash requirements as presently contemplated. On March 1, 1996, the Company issued Deutsche Mark 100 million Floating Rate Bonds (approximately $68 million at the March 1, 1996 exchange rate). The bonds are unsecured, unsubordinated obligations of the Company and bear interest at a per annum rate equal to Deutsche Mark three month LIBOR plus 0.375%. The bonds will mature on March 1, 1999 and will be repaid at par. -10- 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-X (filed in electronic format only) 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 13, 1996 /s/ Fred J. Meyer ---------------------------------------- ------------------ Fred J. Meyer Chief Financial Officer and Director (Principal Financial Officer) Date May 13, 1996 /s/ Dale A. Adams ---------------------------------------- ------------------ Dale A. Adams Controller (Principal Accounting Officer) -11- EX-27 2 FDS ON FORM 10-Q
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS OF OMNICOM GROUP INC. AND SUBSIDIARIES AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS DEC-31-1996 JAN-01-1996 MAR-31-1996 193,842 26,941 1,596,562 24,269 0 2,131,583 463,906 262,124 3,564,101 2,329,728 523,300 0 0 39,921 504,738 3,564,101 0 566,978 0 340,441 166,976 942 8,946 53,787 21,717 30,472 0 0 0 30,472 0.41 0.41
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