The Interpublic Group of Companies Annual Report 2002

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FY2002 Annual Report · The Interpublic Group of Companies

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T H E I N T E R P U B L I C G R O U P O F C O M PA N I E S 2 0 0 2 A N N U A L R E P O R T

A Letter from the Chairman

To Our Shareholders:

Each year brings its own triumphs and challenges. In 2002, Interpublic’s accomplishments—

of which there were many—went largely unheralded. This was attributable to the

intense public focus that we were the subject of, in part due to the recession that once

again battered the advertising industry, but equally because of our own disappointing

earnings, as well as credit and liquidity concerns surrounding the company. We are working

hard and making progress in putting these issues behind us, so as to return attention to

our strengths and accomplishments. Notable among these last year were:

■ The continued vitality and competitive strength of our
agencies in every communications discipline, as evident
in their new business performance. Overall, our compa-
nies won $3.2 billion of net new billings in 2002, from
every region in the world.

■ Major awards and recognition from our peers. This

included coveted “Agency of the Year” honors won in the
United States by Campbell-Ewald, Deutsch and Univer-
sal McCann and outstanding performance by Bozell and

Lowe at Cannes, the industry’s most prestigious creative
competition, where we also won the Media Grand Prix.
Not to mention an additional 22 “Agency of the Year”
awards won in 12 markets around the world, by interna-
tional ofﬁces of FCB, Lowe and McCann on every
continent to specialist agencies ranging from healthcare
communications to interactive digital marketing.

■ The ﬂawless execution of the merger between Weber

Shandwick and BSMG, which created the largest, most

THE INTERPUBLIC GROUP OF COMPANIES ■ 2002 ANNUAL REPORT

C H A I R M A N ’ S M E S S A G E (CONTINUED)

powerful player in public relations and constituent com-
munications—one with dramatically higher proﬁtability
despite the shrinking revenue environment.

value through the aggressive pursuit of margin improve-
ment and organic growth. Of course, we will continue
to provide the ideas and solutions that have always made
us the most client-centric organization in our industry.

■ Finally, strong working capital disciplines and cash man-
agement initiatives that helped reduce our debt by close
to $300 million in 2002.

While we are proud of these accomplishments, it is unde-
niable that our difficulties were what made news last
year. Some of the challenges we faced reflected the harsh
business environment. Some, notably the company’s
unfortunate foray into venue ownership, were the vestige
of acquisitions made in the exuberance of the nineties
boom. Others were self-inflicted, such as the erosion
of cost disciplines at a number of our companies, and the
internal accounting errors at McCann in Europe which
we at Interpublic discovered and forcefully addressed.
All of these contributed to the company’s unacceptable
financial performance.

In February, your Board of Directors elected me Chair-

man and Chief Executive Ofﬁcer. I welcome the challenge,
to which I will bring enthusiasm, energy and the necessary
humility. I feel a deep sense of responsibility to all of our
stakeholders. And I harbor no illusions about the nature of
the task at hand—there is signiﬁcant work to be done.

But there are also signiﬁcant potential rewards.
A strong vision, coupled with a great sense of urgency, will
be required to set Interpublic on the right path. While the
company has experienced recent reversals, I am conﬁdent
that by aligning the needs of our clients, employees and
investors we will, over time, return Interpublic to its
long-standing position as the industry leader in delivering
ﬁnancial returns to its shareholders.

To that end, we are working on an aggressive turn-

around plan built on these key strategic priorities:
strengthening the balance sheet, bolstering ﬁnancial
reliability and accountability, as well as driving shareholder

2002

Results

The challenges of 2002 began with revenue. We started the
year hoping for a recovery in the broader economy and
in our sector. Consequently, we planned for only a modest
revenue decline and budgeted costs accordingly. As the
year progressed and the recovery failed to materialize, rev-
enue fell by 8.7% to $6.2 billion.

Our advertising and media business, particularly
in the United States, suffered declining revenue beginning
in 2001. The trend continued into 2002, with revenue
down 8.9%, as clients curtailed spending and delayed
programs due to their own cost pressures. Client spend-
ing on marketing and communications services, such
as public relations, direct marketing, sales promotion and
event planning, resisted the revenue decline until well
into 2002. This was in part due to the fact that returns
on these efforts are often more immediate, or more
easily assessed. Ultimately, however, continuing economic
malaise and reduced consumer spending prompted
clients to postpone all forms of marketing support, which
caused marketing and communication services revenue
to decline 8.3%.

Our traditional cost discipline dictates that revenue
declines must be matched by commensurate cost reduc-
tions. When signiﬁcant revenue is derived from project
work, as Interpublic’s is, accurate revenue forecasting and
proactive expense controls are imperative. Although many
of our agencies moved aggressively to protect proﬁt

THE INTERPUBLIC GROUP OF COMPANIES ■ 2002 ANNUAL REPORT

margins in 2002, some of our largest operating units
moved too slowly.

between one and four percent in 2003, adjusted for asset
sales or dispositions.

In 2002, salaries and related expenses declined by

6.8%—significantly lagging the rate of our revenue
decline— and our resulting proﬁt margin remained well
below acceptable levels. Operating income was $405.8
million in 2002, compared to a loss of $243.6 million in
2001. Results in 2002 reﬂect the beneﬁt of signiﬁcantly
lower restructuring and asset impairment charges, as well
as the absence of goodwill amortization, in accordance
with new accounting rules. So, although earnings per
share of $.26 cents seemingly compared favorably to last
year’s loss of $1.45 per share, we regard this performance
as a disappointment.

Despite poor earnings performance, Interpublic
generated significant cash flow in 2002. This allowed us
to fund important expenditures related to efficiency
improvements, ﬁnance modest strategic acquisitions that
improved and expanded our service offerings, pay
$145.6 million in cash dividends, and retire $271 million
in debt. Debt reduction continues as a primary goal.

Looking to 2003, it is clear clients remain cautious.

Revenue visibility will therefore be poor. Geopolitical
risks appear to have stalled many sectors of the economy.
As a result, marketers and consumers alike have settled
into a “wait-and-see” attitude. We have limited conﬁdence
that a meaningful economic recovery will develop in
2003 and have built our operating budgets accordingly.
Speciﬁcally, we are estimating that revenue will decline

The Road

Ahead

Our company faces signiﬁcant challenges, stemming from
the past two years of severe weakness in our sector, exacer-
bated by the strategy of acquisition-driven growth that
Interpublic pursued prior to the slowdown. To right the
ship, we will focus on the ﬁnancial fundamentals that pre-
viously made us an industry leader, complemented by a
company-wide commitment to organic growth.

A strong sense of purpose now drives Interpublic. The

management team understands and is responsive to the
needs of clients and shareholders alike. The new vision for
our company is built on four strategic imperatives.

First, we will continue to be relentless in our efforts to
strengthen the balance sheet. We have already made signif-
icant strides in this area. Improvements in cash
management and working capital disciplines have allowed
us to reduce debt signiﬁcantly, from 61.3% of capital
to 55.7% in just one year. Achieving the appropriate debt
level is vital to our organization. As in any service busi-
ness, a flexible balance sheet will give us the ability
to succeed in any economic climate. Equally important,

“ We are working on an aggressive turnaround plan built
on these key strategic priorities: strengthening the balance sheet, bolstering

financial reliability and accountability, as well as driving shareholder value

through the aggressive pursuit of margin improvement and organic growth.”

THE INTERPUBLIC GROUP OF COMPANIES ■ 2002 ANNUAL REPORT

C H A I R M A N ’ S M E S S A G E (CONTINUED)

a strong financial position will allow us to best serve
clients by attracting world-class professional talent.

organic growth is without doubt the most powerful driver
of shareholder value.

Second, we will further upgrade our information sys-
tems, communications and operating-unit ﬁnancial man-
agement to ensure ﬁnancial reliability and accountability.
Third, we will focus on margin improvement. The
exceptional quality of professional service being delivered
by our companies to clients demands that we achieve
margins equal to those of our leading competitors. Our
people and our shareholders deserve this.

This is an area in which a number of our units
lost their way in 2002. Going forward, we will be single-
minded in ensuring that we successfully re-establish the
cost disciplines that historically produced industry-leading
margins at Interpublic. Given the continued challenging
business environment, we must also take a long and hard
look at our infrastructure. We are fully prepared to be
aggressive in taking costs out of the organization to pro-
tect and improve proﬁtability.

Finally, we must achieve improved organic growth.
Our record of winning new business validates our asser-
tion that Interpublic’s agency brands are strong. Internal
tracking shows that we are regularly winning head-to-
head pitches against major competitors, which is the key
to success in the ongoing industry market share battle.

But new business contributes approximately 5% to

revenue in a typical year. So, organic growth is also about
getting new assignments from existing clients. It’s about
collaboration among our varied companies to deliver
complete marketing solutions to clients. And ultimately,
it is about creating a growth culture. Organic growth
flows from a focus at the top that inspires a genuine
company-wide commitment to entrepreneurial, business-
building behavior. Coupled with margin discipline,

An improved balance sheet, increased ﬁnancial relia-

bility, margin improvement and organic growth—these
are the yardsticks we will use to measure our progress and
our success.

In addition to these fundamental drivers, I pledge
to you that a sense of urgency will permeate everything
we do, that we will promote accountability throughout
the organization and that we will remain committed
to aggressively communicating with all internal and exter-
nal constituencies.

A turnaround cannot—and will not—be immediate.

But a turnaround is precisely what’s required. There is
new management in place. We have outlined a decisive
plan of action and indicated a willingness to make the
tough decisions required to see it through. Strong and vital
agency brands continue to be our most important assets,
as are our 50,000 people around the world. Their talent,
commitment, and passion are what will return our overall
performance to best in class.

It’s been said that a challenge is just an opportunity

in work clothes. At Interpublic, we’ve already put them on
and begun rolling up our sleeves.

David A. Bell
Chairman and Chief Executive Ofﬁcer

THE INTERPUBLIC GROUP OF COMPANIES ■ 2002 ANNUAL REPORT

BOARD OF DIRECTORS

DAVID A. BELL

FRANK J. BORELLI

REGINALD K. BRACK

JILL M. CONSIDINE

JOHN J. DOONER, JR.

(2003)

(1995) Presiding Director

(1996) 1,2,3,5

(1997) 1,3,4,5

(1995) 3,4

Chairman, President &
Chief Executive Ofﬁcer

Senior Advisor,
Retired Chief Financial Ofﬁcer
& Director, Marsh & McLennan
Companies, Inc.

Former Chairman &
Chief Executive Ofﬁcer,
Time, Inc.

Chairman &
Chief Executive Ofﬁcer,
The Depository Trust
& Clearing Corporation

Chairman &
Chief Executive Ofﬁcer,
McCann-Erickson WorldGroup

RICHARD A. GOLDSTEIN

H. JOHN GREENIAUS

SEAN F. ORR

MICHAEL I. ROTH

J. PHILLIP SAMPER

(2001) 1,5

(2001) 2,4

(2000) 4

(2002) 1,2,4

(1990) 2,5

Chairman &
Chief Executive Ofﬁcer,
International Flavors
& Fragrances Inc.

Former Chairman &
Chief Executive Ofﬁcer,
Nabisco, Inc.

Executive Vice President
& Chief Financial Ofﬁcer

Chairman &
Chief Executive Ofﬁcer,
The MONY Group Inc.

Managing Director,
Gabriel Venture Partners

(Year Elected)

1 Audit Committee

2 Compensation Committee

3 Executive Policy Committee

4 Finance Committee

5 Corporate

Governance Committee

THE INTERPUBLIC GROUP OF COMPANIES ■ 2002 ANNUAL REPORT

EXECUTIVE OFFICERS & SHAREHOLDERS’ INFORMATION

EXECUTIVE OFFICERS

CORPORATE HEADQUARTERS:

FORM 10-K:

DAVID A. BELL
Chairman, President & Chief Executive Ofﬁcer

SEAN F. ORR
Executive Vice President & Chief Financial Ofﬁcer

1271 Avenue of the Americas
New York, NY 10020
(212) 399-8000

BRUCE S. NELSON
Executive Vice President & Chief Marketing Ofﬁcer

TRANSFER AGENT & REGISTRAR
FOR COMMON STOCK:

BRIAN BROOKS
Executive Vice President,
Chief Human Resources Ofﬁcer

BARRY R. LINSKY
Executive Vice President

NICHOLAS J. CAMERA
Senior Vice President, General Counsel & Secretary

ALBERT S. CONTE
Senior Vice President, Financial Services

THOMAS A. DOWLING
Senior Vice President, Chief Risk Ofﬁcer

PHILIPPE KRAKOWSKY
Senior Vice President,
Director of Corporate Communications

SUSAN WATSON
Senior Vice President, Investor Relations

GUNNAR P. WILMOT
Senior Vice President,
Planning & Business Development

STEVEN BERNS
Vice President & Treasurer

RICHARD P. SNEEDER, JR.
Vice President & Controller

Mellon Investor Services, LLC
85 Challenger Road
Ridgeﬁeld Park, NJ 07660
Stock of The Interpublic Group
of Companies, Inc., is traded on
the New York Stock Exchange.
At December 31, 2002, there were
18,823 stockholders of record.

ANNUAL MEETING:

The annual meeting will be held
on Tuesday, May 20, 2003, at
9:30 a.m. in the auditorium of
The Equitable Center,
787 Seventh Avenue
(between 51st and 52nd Streets)
New York, NY 10019.

AUTOMATIC DIVIDEND
REINVESTMENT PLAN:

An Automatic Dividend Reinvestment
Plan is offered to all stockholders of
record. The Plan, which is administered
by Mellon Investor Services, provides
a way to acquire additional shares of Inter-
public Common Stock in a
systematic and convenient manner that
affords savings in commissions for
most stockholders. Those interested in
participating in this plan are invited
to write for details and an authorization
form to:

Mellon Investor Services
44 Wall Street
6th ﬂoor
New York, NY 10005

A copy of the Company’s annual report
(Form 10-K) to the Securities and
Exchange Commission may be obtained
without charge by writing to:

Nicholas J. Camera,
Senior Vice President,
General Counsel & Secretary,
The Interpublic Group of Companies, Inc.
1271 Avenue of the Americas
New York, NY 10020.

Exhibits to the annual report will also be
furnished, but will be sent only upon
payment of the Company’s reasonable
expense in furnishing them.

STOCK OWNER INTERNET
ACCOUNT ACCESS:

Stock owners of record may access their
account via the Internet. By accessing
their account they may view share
balances, obtain current market price of
shares, historical stock prices, and the
total value of their investment. In
addition, they may sell or request
issuance of dividend and cash investment
plan shares.

For information on how to access this
secure site, please call Mellon Investor
Services toll free at (800) 522-6645, or
visit www.melloninvestor.com.

Outside the US, call (201) 329-8660.

For hearing impaired: (800) 231-5469

E-MAIL: shrelations@melloninvestor.com

INTERNET: www.melloninvestor.com

For more information regarding The
Interpublic Group of Companies, visit
its website at www.interpublic.com.

THE INTERPUBLIC GROUP OF COMPANIES ■ 2002 ANNUAL REPORT

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended
December 31, 2002

Commission file number
1-6686

THE INTERPUBLIC GROUP OF COMPANIES, INC.
(Exact name of registrant as specified in its charter)

Delaware
State or other jurisdiction of
incorporation or organization)

1271 Avenue of the Americas, New York, New York
(Address of principal executive offices)

Registrant's telephone number, including area code: (212) 399-8000

Securities registered pursuant to Section 12(b) of the Act:

Title of each class
Common Stock

13-1024020
(I.R.S. Employer
Identification No.)

10020
(Zip Code)

Name of each exchange on
which registered
New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

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____.

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (Section 229.405 of
this chapter) is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K _____.

Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-
2). Yes X No

The aggregate market value of the registrant's voting stock held by non-affiliates of the registrant was
$3,371,048,350 as of March 14, 2003.

Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest
practicable date.

Common Stock outstanding at March 14, 2003: 387,922,710 shares.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Proxy Statement for the 2003 Annual Meeting of Stockholders are incorporated by reference in
Parts I and III.

STATEMENT REGARDING FORWARD LOOKING DISCLOSURE

This Annual Report on Form 10-K, including "Business," "Factors that May Affect the Company's Financial
Condition or Results of Operations" and "Management's Discussion and Analysis of Financial Condition and
Results of Operations," contains forward-looking statements. Statements in this Annual Report that are not historical
facts, including statements about the Company's beliefs and expectations, particularly regarding recent business and
economic trends, the impact of litigation, dispositions, impairment charges, the integration of acquisitions and
restructuring costs, constitute forward-looking statements. These statements are based on current plans, estimates
and projections, and therefore undue reliance should not be placed on them. Forward-looking statements speak only
as of the date they are made, and the Company undertakes no obligation to update publicly any of them in light of
new information or future events.

Forward-looking statements involve inherent risks and uncertainties. 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 effects of global, national and regional economic and political
conditions, the Company's ability to attract new clients and retain existing clients, the financial success of the
Company's clients, developments from changes in the regulatory and legal environment for advertising and
marketing and communications services companies around the world, and the successful completion and integration
of acquisitions which complement and expand the Company's business capabilities.

The Company's liquidity could be adversely affected if it is unable to access capital or to raise proceeds from
asset sales. In addition, the Company could be adversely affected by developments in connection with the purported
class actions and derivative suits that it is defending or the SEC investigation relating to the restatement of the
Company's financial statements. The Company's financial condition and future results of operations could also be
adversely affected if the Company recognizes additional impairment charges due to future events or in the event of
other adverse accounting-related developments.

At any given time the Company may be engaged in a number of preliminary discussions that may result in one
or more acquisitions or dispositions. These opportunities require confidentiality and from time to time give rise to
bidding scenarios that require quick responses by the Company. Although there is uncertainty that any of these
discussions will result in definitive agreements or the completion of any transactions, the announcement of any such
transaction may lead to increased volatility in the trading price of the Company's securities.

The success of recent or contemplated future acquisitions will depend on the effective integration of newly-
acquired businesses into the Company's current operations. Important factors for integration include realization of
anticipated synergies and cost savings and the ability to retain and attract new personnel and clients.

This Annual Report also contains certain financial information calculated on a "pro forma" basis. Because
"pro forma" financial information by its very nature departs from traditional accounting conventions, this
information should not be viewed as a substitute for the information prepared in accordance with GAAP contained
in the Company's financial statements that are contained in this Annual Report and should be read in conjunction
therewith.

Investors should evaluate any statements made by the Company in light of these important factors.

AVAILABLE INFORMATION

Information regarding the Company's annual reports on Form 10-K, quarterly reports on Form 10-Q, current
reports on Form 8-K, and any amendments to these reports, will be made available, free of charge, at the Company's
website at www.interpublic.com, as soon as reasonably practicable after the Company electronically files such
reports with or furnishes them to the Securities and Exchange Commission. Any document that the Company files
with the SEC may also be read and copied at the SEC's public reference room located at Room 1024, Judiciary
Plaza, 450 Fifth Street, N.W., Washington, DC 20549. Please call the SEC at 1-800-SEC-0330 for further
information on the public reference room. The Company's filings are also available to the public from the SEC's
website at http://www.sec.gov/, and at the offices of the New York Stock Exchange. For further information on
obtaining copies of the Company's public filings at the New York Stock Exchange, please call (212) 656-5060.

Item 1. Business

PART I

The Interpublic Group of Companies, Inc. was incorporated in Delaware in September 1930 under the name
of McCann-Erickson Incorporated as the successor to the advertising agency businesses founded in 1902 by A.W.
Erickson and in 1911 by Harrison K. McCann. It has operated under the Interpublic name since January 1961. As
used in this Annual Report, the "Registrant" or "Interpublic" refers to The Interpublic Group of Companies, Inc.
while the "Company" refers to Interpublic and its subsidiaries.

The Company is a group of advertising and specialized marketing and communication services companies that
together represent one of the largest resources of advertising and marketing expertise in the world. With offices and
other affiliations in more than 130 countries, the Company had revenues of approximately $6.2 billion and net
income of approximately $99.5 million for 2002.

Advertising and Specialized Marketing and Communications Services Businesses

In the last five years, the Company has grown to become one of the world's largest groups of global marketing
services companies, providing its clients with communications expertise in four broad areas:

* Advertising, which includes advertising and media management;

* Marketing Communications, which includes direct marketing and customer relationship management, public

relations, sales promotion, event marketing, on-line marketing, corporate and brand identity and healthcare
marketing;

* Marketing Intelligence, which includes market research, brand consultancy and database management; and

* Marketing Services, which includes sports and entertainment marketing, corporate meetings and events,

retail marketing and other marketing and business services.

The Company seeks to be the best in quality and a leading competitor in all of these areas.

The Company is currently organized into five global operating groups. Three of these groups, McCann-
Erickson WorldGroup ("McCann"), The FCB Group and The Partnership, provide a comprehensive array of global
communications services. Each offers a distinctive range of marketing solutions for the Company's clients. The
fourth global operating group, The Interpublic Sports & Entertainment Group, focuses on sports marketing and
event planning activities. The Company's fifth global operating group, Advanced Marketing Services ("AMS"),
provides specialized and advanced marketing services and marketing intelligence services. In addition to these
groups, Interpublic also includes a group of leading stand-alone domestic agencies that provide their clients with a
full range of advertising and marketing communications services.

The Company is exploring options for the disposition of NFO WorldGroup, a major component of AMS. In
the event of a successful sale of NFO, the Company will reorganize its operations following the sale. As part of that
reorganization, the remaining components of AMS will be realigned with the Company's other operating groups.

The Company believes this organizational structure allows it to provide comprehensive solutions for clients,
enables stronger organic growth among all its operating companies and allows it to bring improved operating
efficiencies to its organization.

A brief description of Interpublic's current five global operating groups follows:

McCann-Erickson WorldGroup was founded on the global strength and quality of McCann-Erickson, one
of the world's leading advertising agencies. It includes companies spanning advertising, media, customer
relationship management, events, sales promotion, public relations, brand equity, on-line marketing communications
and healthcare communications. Launched in late 1997, McCann-Erickson WorldGroup has expanded rapidly to
become one of the world's leading networked marketing communications groups, now working with more than 25
key worldwide clients in three or more disciplines and with more than 40 US clients in two or more disciplines.
McCann-Erickson WorldGroup includes the following companies:

* McCann-Erickson Worldwide (advertising),

* Universal McCann Worldwide (media planning and buying),

* MRM Partners Worldwide (direct marketing and customer relationship management),

* Momentum Worldwide (entertainment, event and promotional marketing),

Torre Lazur McCann Healthcare Worldwide (healthcare advertising and marketing), and

* Nationwide Advertising Services (recruitment advertising).

The FCB Group is a single global integrated network centered on Foote, Cone & Belding Worldwide and its
advertising, direct marketing and sales promotion capabilities. This group also includes the following specialized
services:

FCBi (direct and digital marketing),

* Marketing Drive Worldwide (integrated promotional marketing),

R/GA (web design and development),

The Hacker Group (customer acquisition direct marketing), and

FCB HealthCare (healthcare marketing).

The Partnership, a global, client-driven creative leader, is anchored on the quality advertising reputation of
Lowe & Partners Worldwide. The Partnership provides collaboration across a global group of independently
managed networks with creative and executional capabilities across all disciplines. The partners seek to preserve
their uniqueness while creating the ability to interconnect seamlessly to better service clients. Partner companies
include:

Lowe & Partners Worldwide (advertising),

Lowe Healthcare Worldwide (healthcare marketing),

* Draft Worldwide (direct and promotional marketing), and

Zipatoni (promotional marketing).

The Interpublic Sports & Entertainment Group focuses on sports marketing and event planning activities.
IPG Sports & Entertainment was formed during the second quarter of 2002 through a carve-out from the Company's
other operating groups of certain related operations. It includes:

* Octagon,

Jack Morton Worldwide,

Entertainment PR (Bragman Nyman Cafarelli and PMK/HBH), and

* Amster Yard.

Advanced Marketing Services (AMS) is the management center for the Company's specialized and
advanced marketing services including:

* MAGNA Global (advertising media negotiations and television program development),

* Weber Shandwick Worldwide, Golin/Harris International and DeVries Public Relations (public relations),

and

Initiative Media (media planning and buying).

Each of the companies in AMS is linked to one or more of the other four operating groups through affiliate
relationships, ensuring access to the best, most innovative ideas and solutions for client communications needs.
AMS also includes NFO WorldGroup, a provider of marketing intelligence services. Interpublic is exploring options
for the disposition of NFO. In the event of a successful sale of NFO, the Company will reorganize its operations. As
part of that reorganization, the remaining components of AMS will be realigned with the Company's other operating
groups.

Independent Agencies. Interpublic also includes a group of leading stand-alone domestic agencies that
provide their clients with a full range of advertising and marketing communications services and partner with the
Company's global operating groups as needed. These include:

Campbell Ewald,

* Deutsch,

* Hill Holliday,

* Mullen,

* Dailey & Associates,

The Martin Agency,

Carmichael-Lynch, and

* Gotham.

In addition to domestic operations, the Company provides services for clients whose business is international
in scope, as well as for clients whose business is restricted to a single country or a small number of countries. The
Company has offices in Canada as well as in one or more cities in each of the following countries and territories:

EUROPE, AFRICA AND THE MIDDLE EAST

Austria
Azerbaijan
Bahrain
Belgium
Bulgaria
Cameroon
Croatia
Czech Republic
Denmark
Egypt
Estonia
Finland
France
Germany

Greece
Hungary
Iceland
Israel
Ireland
Italy
Ivory Coast
Jordan
Kazakhstan
Kenya
Kuwait
Latvia
Lebanon
Malawi
Mauritius

Morocco
Namibia
Netherlands
Nigeria
Norway
Oman
Pakistan
Poland
Portugal
Qatar
Romania
Russia
Saudi Arabia
Senegal

Slovakia
Slovenia
South Africa
Spain
Sweden
Switzerland
Tunisia
Turkey
Ukraine
United Arab Emirates
United Kingdom
Uzbekistan
Zambia
Zimbabwe

LATIN AMERICA AND THE CARIBBEAN

Argentina
Barbados
Bermuda
Brazil
Chile

Colombia
Costa Rica
Dominican Republic
Ecuador
El Salvador

Peru
Puerto Rico
Trinidad
Uruguay
Venezuela

Guatemala
Honduras
Jamaica
Mexico
Panama

Australia
Cambodia
Hong Kong
India
Indonesia

Japan
Malaysia
Nepal
New Zealand
People's Republic
of China

ASIA AND THE PACIFIC

Philippines
Singapore
Sri Lanka
South Korea

Taiwan
Thailand
Vietnam

Operations in the foregoing countries are carried on by one or more operating companies, at least one of
which is either wholly owned by Interpublic or a subsidiary or is a company in which Interpublic or a subsidiary
owns a 50% interest or more, except in Cambodia, Malawi and Nepal, where Interpublic or a subsidiary hold a
minority interest.

Interpublic also offers services in Albania, Aruba, the Bahamas, Belize, Bolivia, Gabon, Ghana, Grand
Cayman, Guadeloupe, Guam, Guyana, Haiti, Reunion, Ivory Coast, Martinique, Nicaragua, Nigeria, Paraguay,
Surinam, Uganda and Zaire through association arrangements with local agencies operating in those countries or
territories.

For information concerning revenues and long-lived assets on a geographical basis for each of the last three
years, see "Notes to the Consolidated Financial Statements - Note 14: Segment Information." included in this
Annual Report under Item 8.

Recent Developments

Restatements

During 2002 the Company identified charges that related to prior periods and restated its financial statements.
See "Management's Discussion and Analysis of Financial Condition and Results of Operations - Overview of
Significant Events" for further discussion.

SEC Investigation

The Company has been advised by the Securities and Exchange Commission staff that it has issued a formal
order of investigation in connection with the Company's restatement of earnings for the periods from 1997. The
Company is cooperating fully with the SEC. See "Item 3. Legal Proceedings" for further discussion.

Management Changes

In February 2003, the Board of Directors announced significant changes in the top management of the
Company and its largest agency, McCann. The Company's Chairman and CEO, John J. Dooner, Jr. has assumed an
active operating role as Chairman and CEO of McCann, replacing James R. Heekin, who has left the Company.
David A. Bell, Vice Chairman and former CEO of True North Communications, Inc. ("True North"), has assumed
the role of Chairman and CEO of the Company.

Financing Activities

In March 2003, the Company completed the issuance and sale of $800.0 of aggregate principal amount of
4.5% Convertible Senior Notes due 2023. See "Notes to the Consolidated Financial Statements - Note 8: Debt" for
further discussion.

Octagon Motor Sports

The Company has retained independent advisors to evaluate exit strategies for its Octagon Motor Sports
business. The remaining book value of long-lived assets relating to Octagon Motor Sports is approximately
$70 million at December 31, 2002. This amount, as well as other substantial contractual obligations for future
capital expenditures, may not be fully recoverable depending on the exit strategy that the Company ultimately
chooses to pursue. See Note 5 to the consolidated financial statements.

NFO Disposition

On January 15, 2003, the Company announced that it had hired outside advisors to help it explore strategic
alternatives regarding NFO, and is currently in discussions concerning a possible sale.

Merger of Lowe and Bozell

On February 14, 2003, the Company announced that it will merge the operations of its Bozell unit and the
New York office of Lowe & Partners Worldwide. The resulting agency will be known as Lowe New York and the
Company will cease to use the Bozell brand.

Revenue

The Company generates revenue from planning, creating and placing advertising in various media and from
planning and executing other communications or marketing programs. Historically, the commission customary in
the industry was 15% of the gross charge ("billings") for advertising space or time; more recently, lower
commissions have been negotiated, but often with additional incentives paid for better performance. For example, an
incentive component is frequently included in arrangements with clients based on improvements in an advertised
brand's awareness or image, or increases in a client's sales or market share of the products or services being
advertised. Under commission arrangements, media bill the Company at their gross rates. The Company bills these
amounts to its clients, remits the net charges to media and retains the balance as its commission. Many clients,
however, prefer to compensate the Company on a fee basis, under which the Company bills its client for the net
charges billed by the media plus an agreed-upon fee. These fees usually are calculated to reflect the Company's
hourly rates and out-of-pocket expenses incurred on behalf of clients, plus proportional overhead and a profit mark-
up.

Like other agencies, the Company is primarily responsible for paying media with respect to firm contracts for
advertising time or space placed on behalf of its clients. The Company's practice generally is to pay media charges
only once it has received funds from its clients, and in some instances the Company agrees with the media that it
will be solely liable to pay the media only after the client has paid the Company for the media charges. The
Company makes serious efforts to reduce the risk from a client's nonpayment, including by generally carrying out
credit clearances and requiring in some cases payment of media in advance.

The Company also receives commissions from clients for planning and supervising work done by outside
contractors in connection with the physical preparation of finished print advertisements and the production of
television and radio commercials and other forms of advertising. This commission is customarily 17.65% of the
outside contractor's net charge, which is equal to 15.0% of the outside contractor's total charges including
commission. With the increasing use of negotiated fees, the terms on which outstanding contractors' charges are
billed are subject to wide variations and even include, in some instances, the replacement of commissions with
negotiated flat fees.

The Company also derives revenue from other activities, including the planning and placement in media of
advertising produced by unrelated advertising agencies; the maintenance of specialized media placement facilities;
the creation and publication of brochures, billboards, point of sale materials and direct marketing pieces for clients;
the planning and carrying out of specialized marketing research; the management of public relations campaigns; the
creation and management of special events, meetings and shows at which clients' products are featured; and the
design and implementation of interactive programs for special marketing needs.

Clients

The five clients that made the largest revenue contribution in 2002 accounted individually for approximately
1.7% to 7.5% of the Company's revenue and in the aggregate accounted for approximately 15.5% of the Company's
revenue. Twenty of the Company's clients accounted for approximately 27% of its revenue. Based on 2002 revenue,
the Company's largest clients currently include Coca-Cola, General Motors Corporation, Johnson & Johnson, Nestle
and Unilever. While the loss of the entire business of one of the Company's largest clients might have a material
adverse effect upon the business of the Company, the Company believes that it is very unlikely that the entire
business of any of these clients would be lost at the same time, because it represents several different brands or
divisions of each of these clients in a number of geographical markets, in each case through more than one of the
Company's agency systems.

Representation of a client rarely means that the Company handles advertising for all brands or product lines of
the client in all geographical locations. Any client may transfer its business from an agency within the Company to a
competing agency, and a client may reduce its marketing budget at any time.

The Company's agencies have written contracts with many of their clients. As is customary in the industry,
these contracts typically provide for termination by either party on relatively short notice, usually 90 days but
sometimes shorter or longer. In 2002, however, 21% of revenue was derived from clients that had been associated
with one or more of the Company's agencies or their predecessors for 20 or more years.

Personnel

As of January 1, 2003, the Company employed approximately 50,800 persons, of whom 19,500 were
employed in the United States. Because of the personal service character of the marketing communications
business, the quality of personnel is of crucial importance to the Company's continuing success. There is keen
competition for qualified employees. Interpublic considers its employee relations to be satisfactory overall.

The Comp any has several active programs for training personnel. These programs include meetings and
seminars throughout the world.

Factors that May Affect the Company's Financial Condition or Results of Operations

The following factors could adversely affect the Company's revenues, results of operations or financial
condition. See also "Statement Regarding Forward-Looking Disclosure."

Adverse economic and political developments

An unfavorable economic and uncertain global political environment has resulted in reduced demand for the
Company's services. In 2002, worldwide revenues of the Company declined 8.7% as compared with 2001. The
Company anticipates continued weakness in demand for advertising and marketing services in 2003. If the
economy remains weak, or weakens further, or in the event of further adverse political developments, including in
connection with the hostilities in the Middle East or elsewhere or terrorist attacks, the results of operations of the
Company are likely to be further adversely affected.

Ratings downgrades

The Company's current long-term debt credit ratings are BB+ with negative outlook, BBB- with negative outlook
and Baa3 with stable outlook, as reported by Standard & Poor's Ratings Services, Fitch Ratings and Moody's
Investors Services, Inc., respectively. Although a ratings downgrade by any of the ratings agencies will not trigger
any acceleration of the Company's indebtedness, such an event may adversely affect the Company's ability to
access capital and would likely result in an increase in the interest rates payable under its two revolving credit
facilities and any future indebtedness.

Factors affecting the Company's liquidity

The Company's $500 million revolving credit facility provided by a syndicate of banks is subject to an agreement
by the lenders to a one-year extension by May of 2003. If the lenders under that credit facility fail to extend their
commitments on a renewal date, there could be an adverse affect on the Company's liquidity.

If the Company were to lose all or a substantial portion of its uncommitted lines of credit, it would be required to
seek other sources of liquidity. If it were unable to replace these sources of liquidity, the Company's ability to fund
its working capital needs will be adversely affected.

If a substantial portion of the Zero-Coupon Notes remain outstanding following the completion of the tender offer
for those notes, or if the tender offer is terminated due to a failure to satisfy a closing condition and the Company
does not use the proceeds of the offering of its 4.5% Notes to otherwise reduce its indebtedness, its higher debt
levels could adversely affect its credit ratings and could trigger a default under the financial covenants of the
Company's two revolving credit facilities with a syndicate of banks and its note purchase agreements with
Prudential if the Company is unable to negotiate amendments to those agreements. In addition, the holders of any
Zero-Coupon Notes not tendered under the Company's tender offer will retain an option to require the Company
to purchase their Zero-Coupon Notes on December 14, 2003 at a price of $835.64 per $1,000 principal amount at
maturity of notes, plus accrued and unpaid interest, if any.

SEC investigation

Following Interpublic's announcement in August 2002 of a restatement of its financial results for the periods from
1997 to June 2002, it was informed by the SEC that the SEC was conducting an informal inquiry into the matters

surrounding the restatement. In January 2003 the Company was informed by the SEC that it had issued a formal
order of investigation with respect to these matters. While the Company is cooperating fully with the investigation,
adverse developments in connection with the investigation, including any expansion of the scope of the
investigation, could negatively impact the Company and could divert the efforts and attention of its management
team from the Company's ordinary business operations.

Further impairment charges

The Company recorded significant long-lived asset impairment charges during 2002. As of December 31, 2002
there was approximately $5 billion of long-lived assets on the balance sheet of the Company. The Company
periodically evaluates the realizability of all of its long-lived assets, including an annual evaluation of goodwill.
Future events, including strategic decisions of the Company, could cause the Company to conclude that
impairment indicators exist and that the asset values associated with a given operation have become impaired. Any
resulting impairment loss would have an adverse impact on the Company's reported earnings in the period of such
charge. The effect of any future substantial impairment charge could adversely affect the financial condition of
the Company and otherwise result in a violation of the Company's financial covenants under its revolving credit
facilities and note purchase agreements which could trigger a default under those agreements and adversely affect
the liquidity of the Company.

Continuing implementation of the plan to improve internal controls

The Company has identified various changes to its accounting and internal control structure that it believes are
necessary to help ensure that accounting errors do not arise in the future. Although the Company has implemented
many of these changes and has concluded that, taking into account these changes, its disclosure controls and
procedures are effective in all material respects, some of the measures are still in the process of being
implemented. See Item 14 "Controls and Procedures" below. Therefore, there can be no assurance that these
changes to the accounting and internal controls will be sufficient. If further restatements were ever to occur or
other accounting-related problems emerge, the Company could face additional litigation exposure and greater
scrutiny from the SEC investigation currently taking place. Any future restatements or other accounting-related
problems could also adversely affect the financial condition of the Company.

Effects of acquisitions

The success of acquisitions depends on the effective integration of newly-acquired businesses into the current
operations of the Company. Important factors for integration include realization of anticipated synergies and cost
savings and the ability to retain and attract personnel and clients. There can be no assurance that the Company
will realize all the benefits it expects from its recent or future acquisitions.

Competition for clients in a highly competitive industry

The advertising agency and other marketing communications and marketing services businesses are highly
competitive. The Company's agencies and media services must compete with other agencies and with other
providers of creative or media services which are not themselves advertising agencies, in order to maintain
existing client relationships and to obtain new clients. The client's perception of the quality of an agency's
"creative product," the Company's reputation and the agency's reputation are, to a large extent, factors in
determining the competitive position of the Company in the advertising agency business. An agency's ability to
serve clients, particularly large international clients, on a broad geographic basis is also an important competitive
consideration. On the other hand, because an agency's principal asset is its people, freedom of entry into the
business is almost unlimited and quite small agencies are, on occasion, able to take all or some portion of a client's
account from a much larger competitor.

Size may limit an agency's potential for securing new business, because many clients prefer not to be represented
by an agency that represents a competitor. Also, clients frequently wish to have different products represented by
different agencies. The Company's ability to retain existing clients and to attract new clients may, in some cases,
be limited by clients' policies on or perceptions of conflicts of interest. These policies can, in some cases, prevent
one agency and, in limited circumstances, different agencies within the same holding company, from performing
similar services for competing products or companies. In addition, these perceived conflicts, following an
acquisition by the Company of an agency or company, can result in clients terminating their relationship with the
Company or reducing the number or scope of projects for which they retain those agencies. Moreover, as a result
of the True North acquisition and the resulting larger number of clients, the Company faces a greater likelihood of
conflicts with potential new clients in the future.

If the Company fails to maintain existing clients or attract new clients, the Company may be adversely impacted.

Loss or failure to attract key employees

Employees, including creative, research, media, account and practice group specialists, and their skills and
relationships with clients, are among the Company's most important assets. An important aspect of the Company's
competitiveness is its ability to retain key employee and management personnel. Compensation for these key
personnel is an essential factor in attracting and retaining them and there can be no assurances that the Company
will offer a level of compensation sufficient to attract and retain these key personnel. If the Company fails to hire
and retain a sufficient number of these key employees, the Company may not be able to compete effectively.

Regulations

Advertising and marketing communications businesses are subject to government regulation, both domestic and
foreign. There has been an increasing tendency in the United States on the part of advertisers to resort to the courts
and industry and self-regulatory bodies to challenge comparative advertising on the grounds that the advertising is
false and deceptive. Through the years, there has been a continuing expansion of specific rules, prohibitions,
media restrictions, labeling disclosures and warning requirements with respect to the advertising for certain
products. Representatives within government bodies, both domestic and foreign, continue to initiate proposals to
ban the advertising of specific products and to impose taxes on or deny deductions for advertising which, if
successful, may have an adverse effect on advertising expenditures and consequently the Company's revenues.

International business risks

International revenues represented 44% of the Company's total revenues in 2002. The Company's international
operations are exposed to risks, which affect foreign operations of all kinds, such as local legislation, monetary
devaluation, exchange control restrictions and unstable political conditions. In addition, international advertising
agencies are subject to ownership restrictions in some countries because they are considered an integral factor in
the communications process. These restrictions may limit the Company's ability to grow the its business and
effectively manage its operations in those countries.

Item 2. Properties

Most of the operations of the Company are conducted in leased premises, and its physical property consists
primarily of leasehold improvements, furniture, fixtures and equipment. These facilities are located in various cities
in which the Company does business throughout the world. However, subsidiaries of the Company own office
buildings in Toledo, Ohio; Blair, Nebraska; Warren, Michigan; England (in London, Manchester, Birmingham and
Stoke-on-Trent); Frankfurt, Germany; Sao Paulo, Brazil; Lima, Peru; Mexico City, Mexico; and Santiago, Chile and
own office condominiums in Buenos Aires, Argentina; Bogota, Colombia; and Manila, the Philippines. Facilities
owned or occupied by the Company and its subsidiaries are believed to be adequate for the purposes for which they
are currently used and are well maintained.

In connection with the restructuring plan announced in 2001, the Company incurred charges related to
downsizing or vacating approximately 180 offices. As of December 31, 2002, the Company has terminated or
subleased a majority of the relevant leases and is continuing its efforts to terminate or sublease the remaining leases.
Approximately half of these lease terminations and subleases relate to operations in the United States, one-third
relate to operations in Europe (principally in the UK, France and Germany), and the remainder relate to operations
in Latin America and Asia Pacific. The cash portion of the restructuring charge will be paid out over a period of up
to five years. Lease termination and related costs include write-offs related to the abandonment of leasehold
improvements as part of the office vacancies. The Company believes that its remaining facilities are adequate to
meet the needs of the Company.

Item 3. Legal Proceedings

Federal Securities Class Actions

Thirteen federal securities purported class actions were filed against Interpublic and certain of its present and
former directors and officers by a purported class of purchasers of Interpublic stock shortly after the Company's
August 13, 2002 announcement regarding the restatement of its previously reported earnings for the periods January
1, 1997 through March 31, 2002. These actions, which were all filed in the United States District Court for the
Southern District of New York, were consolidated by the Court and lead counsel appointed for all plaintiffs, on
November 8, 2002. A consolidated amended complaint was filed thereafter on January 10, 2003. The purported
classes consist of Interpublic shareholders who purchased Interpublic stock in the period from October 1997 to
October 2002. Specifically, the consolidated amended complaint alleges that Interpublic and certain of its present
and former directors and officers allegedly made misleading statements to its shareholders between October 1997
and October 2002, including the alleged failure to disclose the existence of additional charges that would need to be
expensed and the lack of adequate internal financial controls, which allegedly resulted in an overstatement of
Interpublic's financial results during those periods. The consolidated amended complaint alleges that such false and
misleading statements constitute violations of Sections 10(b) and 20(a) of the Exchange Act and Rule 10b-5
promulgated thereunder. The consolidated amended complaint also alleges violations of Sections 11 and 15 of the
Securities Act of 1933 in connection with Interpublic's acquisition of True North. No amount of damages is
specified in the consolidated amended complaint. On February 6, 2003, defendants filed a motion to dismiss the
consolidated amended complaint in its entirety. On February 28, 2003, plaintiffs filed their opposition to
defendants' motion, and on March 14, 2003, defendants filed their reply to plaintiffs' opposition to defendants'
motion. The motion is currently pending.

State Securities Class Actions

Two state securities purported class actions were filed against the Company and certain of its present and
former directors and officers by a purported class of purchasers of Interpublic stock shortly after the Company's
November 13, 2002 announcement regarding the restatement of its previously reported earnings for the periods
January 1, 1997 through March 31, 2002. The purported classes consist of Interpublic shareholders who acquired
Interpublic stock on or about June 25, 2001 in connection with Interpublic's acquisition of True North. These
lawsuits allege that Interpublic and certain of its present and former directors and officers allegedly made misleading
statements in connection with the filing of a registration statement on May 9, 2001 in which Interpublic issued
67,644,272 shares of its common stock for the purpose of acquiring True North, including the alleged failure to
disclose the existence of additional charges that would need to be expensed and the lack of adequate internal
financial controls, which allegedly resulted in an overstatement of Interpublic's financial results at that time. The
suits allege that such misleading statements constitute violations of Sections 11 and 15 of the Securities Act of 1933.
No amount of damages is specified in the complaints. These actions were filed in the Circuit Court of Cook County,
Illinois. On December 18, 2002, defendants removed these actions from Illinois state court to the United States
District Court for the Northern District of Illinois. Thereafter, on January 10, 2003, defendants moved to transfer
these two actions to the Southern District of New York. Plaintiffs have moved to remand the actions to Illinois state
court, and have opposed defendants' motion to transfer. Those motions are now pending.

State Derivative Actions

In addition to the federal lawsuits, several shareholder derivative suits have been filed. On October 24, 2002,
a shareholder derivative suit was filed in Delaware Court of Chancery, New Castle County, by a single shareholder
acting on behalf of the Company against the Board of Directors. The suit alleges a breach of fiduciary duties to
Interpublic's shareholders. On November 15, 2002, another suit was filed in Delaware Court of Chancery, New
Castle County, by a single shareholder acting on behalf of the Company against the Board of Directors. On
December 18, 2002, defendants moved to dismiss these actions. In lieu of a response, plaintiffs consolidated the
actions and filed an Amended Consolidated Complaint on January 10, 2003, again alleging breach of fiduciary
duties to Interpublic's shareholders. The Amended Consolidated Complaint does not state a specific amount of
damages. On January 27, 2003, defendants filed motions to dismiss the Consolidated Amended Complaint, and
those motions are currently pending.

Derivative Complaint without prejudice. On February 24, 2003, plaintiffs also filed a Shareholders' Derivative
Complaint in the United States District Court for the Southern District of New York. This action alleges the same
breach of fiduciary duties claim as the state court actions, and adds a claim for contribution and forfeiture against
two of the individual defendants pursuant to Section 21D of the Exchange Act and Section 304 of the Sarbanes-
Oxley Act. The complaint does not state a specific amount of damages. Defendants intend to move to dismiss this
federal derivative action.

The Company intends to vigorously defend the actions discussed above. While the proceedings are in the
early stages and contain an element of uncertainty, the Company has no reason to believe that the final resolution of
the actions will have a material adverse effect on the Company's financial position, cash flow or results of
operations.

SEC Investigation

The Company was informed in January 2003 by the Securities and Exchange Commission staff that the SEC
has issued a formal order of investigation related to the Company's restatements of earnings for periods dating back
to 1997. The matters had previously been the subject of an informal inquiry. The Company is cooperating fully
with the investigation.

The Company is involved in other legal and administrative proceedings of various types, including the above.
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 financial condition of the Company.

Item 4. Submission of Matters to a Vote of Security Holders

Not applicable.

Executive Officers of Interpublic

Below follows the information disclosed in accordance with Item 401 of Regulation S-K of the Securities and
Exchange Commission (the "Commission") as required by Item 10 of Form 10-K with respect to Interpublic's
executive officers.

Name

Age

Office

David A. Bell (1)

Sean F. Orr (1)

Barry R. Linsky

Bruce S. Nelson

Brian Brooks

Nicholas J. Camera

Albert Conte

Thomas J. Dowling

C. Kent Kroeber

Philippe Krakowsky

Chairman of the Board, President and
Chief Executive Officer

Executive Vice President and Chief Financial Officer

Executive Vice President

Executive Vice President and Chief Marketing Officer

Executive Vice President-Chief Human Resources
Officer

Senior Vice President, General Counsel and Secretary

Senior Vice President-Financial Services

Senior Vice President-Chief Risk Officer

Senior Vice President-Human Resources

Senior Vice President, Director of Corporate
Communications

Susan V. Watson

Gunnar Wilmot

Steven Berns

Richard P. Sneeder, Jr.

(1) Also a Director

Senior Vice President-Investor Relations

Senior Vice President-Planning and
Business Development

Vice President and Treasurer

Vice President and Controller

On February 27, 2003, Interpublic announced that David Bell, would succeed John J. Dooner Jr., as Chairman
and CEO. Mr. Bell had been a Vice Chairman at Interpublic since True North Communications, Inc., the holding
company he previously headed, was acquired by Interpublic in 2001. Interpublic also announced that Mr. Dooner
would assume an active operating role as Chairman and CEO of McCann, replacing James R. Heekin, and that Mr.
Dooner would retain his seat on Interpublic's board of directors.

There is no family relationship among any of the executive officers.

The employment histories for the past five years of Messrs. Bell and Orr are incorporated by reference to the
Proxy Statement for Interpublic's 2002 Annual Meeting of Stockholders (the "Proxy Statement").

Mr. Linsky joined Interpublic in January 1991, when he was elected Senior Vice President-Planning and
Business Development. Prior to that time, he was Executive Vice President, Account Management of Lowe &
Partners, Inc. Mr. Linsky was elected to that position in July 1980, when the corporation was known as The
Marschalk Company and was a subsidiary of Interpublic. Mr. Linsky was elected Executive Vice President of
Interpublic in February 2001.

Mr. Nelson joined Interpublic in September 2000 as Executive Vice President, Chief Marketing Officer. Prior
to that he had pursued a multi-disciplinary career with McCann-Erickson for 19 years before leaving as Executive
Vice President, Director of Worldwide Accounts to serve as Vice Chairman, Chief Knowledge Officer at Young &
Rubicam Inc.

Mr. Brooks joined Interpublic in November 2002 as Executive Vice President-Chief Human Resources
Officer. Prior to joining Interpublic, he served as Chief Human Resources Officer for WPP Group plc from
September 1992 to August 2002 and was a member of the board of directors of WPP Group during such period.

Mr. Camera joined Interpublic in May 1993. He was elected Vice President, Assistant General Counsel and
Assistant Secretary in June, 1994, Vice President, General Counsel and Secretary in December 1995, and Senior
Vice President, General Counsel and Secretary in February 2000.

Mr. Conte joined Interpublic in March 2000 as Vice President-Taxes & General Tax Counsel. Prior to joining
Interpublic, he served as Vice President-Senior Tax Counsel for Revlon Consumer Products Corporation from
September 1987 to February 2000. Mr. Conte was elected Senior Vice President-Financial Services in December
2001.

Mr. Dowling was elected Senior Vice President-Financial Administration of Interpublic in February 2001. He
joined Interpublic in January 2000 as Vice President and General Auditor. Mr. Dowling was elected Senior Vice
President-Chief Risk Officer in November 2002. Prior to joining Interpublic, Mr. Dowling served as Vice President
and General Auditor for Avon Products, Inc. from April 1992 to December 1999.

Mr. Kroeber joined Interpublic in January 1966 as Manager of Compensation and Training. He was elected
Vice President in 1970 and Senior Vice President in May 1980.

Mr. Krakowsky joined Interpublic in January 2002 as Senior Vice President, Director of Corporate
Communications. Prior to joining Interpublic, he served as Senior Vice President - Communications Director for
Young & Rubicam from August 1996 to December 2000. During 2001, Mr. Krakowsky was complying with the
terms of a non-competition agreement entered into with Young and Rubicam

Ms. Watson joined Interpublic in October 2000 as Senior Vice President-Investor Relations. Prior to joining

Interpublic, she was Vice President, Investor Relations at PepsiCo, Inc. and previously was employed by Nielsen
Media Research and Gannett Co. in a similar capacity.

Mr. Wilmot joined Interpublic in January 2002 as Senior Vice President-Planning and Business Development.
Prior to that time, he served as Executive Vice President-Director of Worldwide Accounts for McCann-Erickson
Worldwide, Inc, from March 2000 to January 2001. Mr. Wilmot served as Executive Vice President for McCann
Erickson Worldwide, Inc. in its Detroit office from January 1997 to March 2000. Prior to that time, he served in a
number of management positions for McCann-Erickson Worldwide, Inc.

Mr. Berns joined Interpublic in August 1999 as Vice President and Treasurer. Prior to that time, he was
Senior Vice President and Treasurer of Revlon, Inc. where he served in that position from January 1996 to July
1999.

Mr. Sneeder, as a result of the True North acquisition, joined Interpublic in June 2001. Prior to that he was
with True North where he served as Vice President and Controller from January 1999 to June 2001. Prior to True
North, he served as Vice President and Controller of Alexander & Alexander from 1994 to 1997. Mr. Sneeder was
elected Vice President and Controller of Interpublic in December 2001.

PART II

Item 5. Market for Registrant's Common Equity and Related Stockholder Matters

Price Range of Common Stock

Our common stock is listed and traded on the New York Stock Exchange ("NYSE") under the symbol "IPG." The
following table provides, for the calendar quarters indicated, the high and low closing sales prices per share on the
NYSE for the periods shown below as reported on the NYSE and dividends per share paid during those periods. At
March 14, 2003, there were 21,650 registered holders of Interpublic common stock.

Period

2001:
First Quarter ...................................................................
Second Quarter ..............................................................
Third Quarter .................................................................
Fourth Quarter ...............................................................

2002:
First Quarter ...................................................................
Second Quarter ..............................................................
Third Quarter .................................................................
Fourth Quarter ...............................................................

NYSE Sale Price

High

Low

47.19
38.85
30.46
31.00

34.56
34.89
24.67
17.05

32.50
27.79
19.30
19.50

27.20
23.51
13.40
11.25

Dividends
on
Common
Stock

$.095
.095
.095
.095

.095
.095
.095
.095 (1)

(1) Dividend declared on November 1, 2002 in respect of third quarter results. No dividend in respect of

fourth quarter results was declared.

Dividend Policy

On February 10, 2003, the Company announced that no dividend would be paid on March 15, 2003. The
Company's future dividend policy, which will be determined on a quarter-by-quarter basis, will depend on earnings,
financial condition, capital requirements and other factors and will remain subject to the restrictions under the
Company's amended revolving credit facilities with a syndicate of banks and its note purchase agreements with the
Prudential Insurance Company of America. See "Management's Discussion and Analysis of Financial Condition

and Results of Operations - Liquidity and Capital Resources - Financing Activities" below.

Transfer Agent and Registrar for Common Stock

The transfer agent and Registrar for the Company's common stock is:

Mellon Investor Services, Inc.
44 Wall Street, 6th Floor
New York, NY 10005

Securities Authorized for Issuance under Equity Compensation Plans

The following table provides information regarding the shares of common stock to be issued or which may be issued
under the equity compensation plans of the Company.

Equity Compensation Plan Information
Number of shares of
Common Stock to be Weighted-Average
Exercise Price of
Outstanding Stock
Options
(b)

Issued Upon Exercise of
Outstanding Stock
Options
(a)

Number of Securities Remaining
Available for Future Issuance
Under Equity Compensation
Plans (Excluding Securities
Reflected in Column (a))
(c)

41,324,575

$29.39

11,461,701

1,016,500

$27.53

Plan Category

Equity Compensation Plans
Approved by Holders

Equity Compensation Plans Not (1)
Approved by Security Holders

(1) Special Stock Option Grants awarded to certain True North executives following Interpublic's acquisition of
True North (the "True North Options") . The stock options were granted at the fair market value of Interpublic's
common stock on the date of grant. The terms and conditions of these stock option awards are governed by
Interpublic's 1997 Performance Incentive Plan which provides that stock options are exercisable as determined by
the Compensation Committee of the Board of Directors. Generally, options become exercisable between two and
five years after the date of grant and expire ten years from the grant date. The True North Options generally will vest
40% on August 23, 2005, 30% on August 23, 2005 and 30 on August 23, 2006.

Sales of Unregistered Securities

The Company has made the following acquisitions in the fourth quarter of 2002 involving the issuance of
Interpublic Stock:

(i) On December 5, 2002, the Registrant issued 188,112 shares of Interpublic Stock to the 6 former
shareholders of a foreign company that was acquired by the Registrant in the 2nd Qtr. of 1997. This represented a
deferred payment of the purchase price. The shares of Interpublic Stock had a market value of $2,737,033 as of the
date of issuance. The shares of Interpublic Stock were issued by the Registrant without registration in an "offshore
transaction" and solely to "non-U.S. persons in reliance on Rule 903(b)(3) of Regulation S under the Securities Act.

(ii) On December 3, 2002, the Registrant paid $7,366,077 in cash and issued 184,001 shares of Interpublic
Stock to the 5 former shareholders of a company which was acquired by a subsidiary of the Registrant in the 4th Qtr.
Of 1999. This represented a deferred payment of the purchase price. The shares of Interpublic Stock had a market
value of $2,455,359 as of the date of issuance. The shares of Interpublic Stock were issued by the Registrant without
registration in an "offshore transaction" and solely to "non-U.S. persons in reliance on Rule 903(b)(3) of Regulation
S under the Securities Act.

(iii) On November 25, 2002, the Registrant issued 5,052 shares of Interpublic Stock, and on December 2,
2002 paid $196,476.41 in cash to the eighteen former shareholders of a company which was acquired in the Fourth
Quarter of 1999. This represented a deferred payment of the purchase price. The shares of Interpublic Stock had a
market value of $75,607.41 as of the date of issuance. The shares of Interpublic Stock were issued by the Registrant
without registration in an "offshore transaction" and solely to "non-U.S. persons" in reliance on Rule 903(b)(3) of
Regulation S under the Securities Act.

(iv) On November 4, 2002, the Registrant paid $432,428 in cash and issued 5,698 shares of Interpublic Stock
to the 2 former shareholders of a foreign company that was acquired by the Registrant in the 2nd Qtr. of 1999. This
represented a deferred payment of the purchase price. The shares of Interpublic Stock had a market value of
$70,940 as of the date of issuance. The shares of Interpublic Stock were issued by the Registrant without registration
in an "offshore transaction" and solely to "non-U.S. persons in reliance on Rule 903(b)(3) of Regulation S under the
Securities Act.

(v) On November 4, 2002, the Registrant paid $655,031 in cash and issued 6,684 shares of Interpublic Stock
to the 2 former shareholders of a foreign company that was acquired by the Registrant in the 2nd Qtr. of 2000. This
represented a deferred payment of the purchase price. The shares of Interpublic Stock had a market value of
$83,216 as of the date of issuance. The shares of Interpublic Stock were issued by the Registrant without registration
in an "offshore transaction" and solely to "non-U.S. persons in reliance on Rule 903(b)(3) of Regulation S under the
Securities Act.

(vi) On November 4, 2002, the Registrant issued 5,692 shares of Interpublic Stock to the two former
stockholders of a company that was acquired in the first quarter of 1998. This represented a deferred payment of the
purchase price. The shares of Interpublic Stock had a market value of approximately $74,000 as of the date of
issuance.

The shares of Interpublic Stock were issued by the Registrant without registration in reliance on Section 4(2)
under the Securities Act, based on the sophistication of the acquired company's former stockholders. The former
stockholders had access to all the documents filed by the Registrant with the SEC, including the Registrant's (i)
Annual Report and Form 10-K/A for the year ended 2001, (ii) Quarterly Report on Form 10-Q/A for June 30, 2002,
(iii) Reports on Form 8-K for 2002, and (iv) Proxy Statement for the Annual Meeting of Stockholders held on May
20, 2002.

(vii) On October 7, 2002 the Registrant issued 162,396 shares of Interpublic Stock and paid UK 1,775,285
Pound Sterling in cash to 5 former shareholders of a company as an interim payment for 100% of the shares of the
company which was acquired in the third quarter 2000. The shares of Interpublic Stock were valued at US$
2,726,800 at the date of issuance. The shares of Interpublic Stock were issued by the Registrant without registration
in an "off shore transaction" and solely to "non US persons" in reliance on Rule 903(b)(3) of the Regulation S under
the Securities Act.

THE INTERPUBLIC GROUP OF COMPANIES, INC. AND SUBSIDIARIES
(Dollars in Millions, Except Per Share Amounts)

Item 6. Selected Financial Data

PART II

The following tables set forth selected financial data concerning the Company for each of the last five years. The
following selected financial data, which reflect the adjustments to prior years described below under
"Management's Discussion and Analysis of Financial Condition and Results of Operations" (the "MD&A"), should
be read in conjunction with the consolidated financial statements and notes thereto and the MD&A included
elsewhere herein.

SELECTED FINANCIAL DATA FOR FIVE YEARS
(Amounts in Millions, Except Per Share Amounts and Number of Employees)

2002

2001

2000

1999

1998

OPERATING DATA

Revenue

Salaries and related expenses

Office and general expenses

Amortization of intangible assets

Restructuring and other merger-related costs
Long-lived asset impairment and
other charges

Investment impairment

Interest expense

Provision for (benefit of) income taxes

$ 6,203.6

$ 6,791.2

$ 7,182.7

$ 6,417.2

$ 5,492.9

3,549.0

2,096.6

13.0

12.1

127.1

39.7

145.6

140.3

3,809.2

2,103.8

173.1

645.6

303.1

210.8

164.6

(55.3)

4,056.4

1,986.6

144.4

177.7

126.3

340.2

3,635.9

1,871.5

128.6

159.5

99.5

279.6

3,158.9

1,592.0

84.0

3.3

86.5

298.1

Net income (loss)

$ 99.5

$ (534.5)

$ 392.8

$ 336.6

$ 360.0

PER SHARE DATA

Basic

Net income (loss)

Weighted-average shares

Diluted

Net income (loss)

$ 0.26

$ (1.45)

$ 1.09

$ 0.96

$ 1.04

376.1

369.0

359.6

352.0

346.9

$ 0.26

$ (1.45)

$ 1.06

$ 0.92

$ 1.00

Weighted-average shares

381.3

369.0

370.6

364.6

359.4

FINANCIAL POSITION

Working capital

Total assets

Total long-term debt

Book value per share

OTHER DATA

Cash dividends

Cash dividends per share

Number of employees

$ (767.5)

$ (78.3)

$ (421.7)

$ (82.6)

$ (151.3)

$11,793.7

$11,375.3

$12,253.6

$11,148.9

$9,295.2

$ 1,817.7

$ 2,480.6

$ 1,531.8

$ 1,085.2

$ 5.44

$ 4.86

$ 6.38

$ 5.63

$ 145.6

$ 129.2

$ 109.1

$ 90.4

$ .38

$ .37

$ .33

50,800

54,100

62,000

54,800

$ 721.7

$ 4.74

$ 76.9

$ .29

49,500

THE INTERPUBLIC GROUP OF COMPANIES, INC. AND ITS SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Dollars in Millions, Except Per Share Amounts)

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations

OVERVIEW OF SIGNIFICANT EVENTS

The year 2002 was a difficult one for the Company in which operating results were negatively impacted by
continued softness in worldwide demand for advertising and marketing communications services. Also, during the
year the Company identified charges that were related to prior periods that required restatements of previously filed
financial statements. Subsequent to the end of 2002, the Company made certain management changes (including
naming a new Chairman and CEO) and entered into new financing arrangements.

A discussion of the significant events is as follows:

Economic conditions
The year 2002 reflected continued softness in demand for all advertising and marketing communications
services. Revenue dropped approximately 9% from 2001 to 2002. The drop in demand was not limited to any
one of the Company's service offerings nor to any geographical region; however, there was a more widespread
decline in project-based business. In addition, the unstable geopolitical environment had an impact on client
spending, particularly toward the latter part of the year.

* Restatements

During 2002 the Company identified charges that related to prior periods and restated its financial statements
in previously amended SEC filings. The restatements included $181.3 ($135.9, net of tax) of charges that
related largely to McCann-Erickson WorldGroup ("McCann") intracompany and other charges. The
restatements also included $118.7 ($83.8, net of tax) of long-lived asset impairment and other charges that
were required to be restated in the third quarter 2002 financial statements. Additionally, $47.0 ($35.3, net of
tax) in other adjustments was identified. See Note 16 to the consolidated financial statements for further
discussion, including the period to which these charges relate.

* Management Changes

In February 2003, the Board of Directors announced significant changes in the top management of the
Company and its largest agency, McCann. The Company's Chairman and CEO, John J. Dooner, Jr. has
assumed an active operating role as Chairman and CEO of McCann, replacing James R. Heekin, who has left
the Company. David A. Bell, Vice Chairman and former CEO of True North, has assumed the role of
Chairman and CEO of the Company.

Financing Activities
As a result principally of the restatements discussed above, the Company required and received waivers and
amendments related to certain borrowing arrangements. In connection with these amendments and waivers, the
Company agreed to revised financial covenant levels and to restrictions on dividends, cash acquisitions, capital
expenditures, prepayment of long-term debt and additional borrowings by subsidiaries. As of December 31,
2002, the Company was in compliance with the terms of all of its borrowing arrangements.

As discussed in Note 8 to the consolidated financial statements, in March 2003, the Company completed the
issuance and sale of $800.0 of aggregate principal amount of 4.5% Convertible Senior Notes due 2023. The
Company intends to use the net proceeds of approximately $778 from the sale of the notes to fund a concurrent
offer to purchase (for up to $582.5) its outstanding Zero-Coupon Convertible Senior Notes due 2021. Any
funds raised in the offering but not used in the offer to purchase will be used for the repayment of other
indebtedness, general corporate purposes and for working capital requirements.

On October 25, 2002, Moody's Investors Services, Inc. downgraded the Company's credit rating to Baa3. On
March 7, 2003, Standard and Poor's downgraded the Company's credit rating to BB+.

See "Liquidity and Capital Resources" for further discussion.

THE INTERPUBLIC GROUP OF COMPANIES, INC. AND ITS SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Dollars in Millions, Except Per Share Amounts)

OUTLOOK

The Company's results of operations are dependent upon: a) maintaining and growing its revenue, b) the ability to
retain and gain new clients, c) the continuous alignment of its costs to its revenue and d) retaining and attracting key
personnel. Revenue is also highly dependent on overall economic and political conditions. For a discussion of these
and other factors that could affect the Company's results of operations and financial conditions, see "Statement
Regarding Forward-Looking Disclosure" and "Factors that May Affect the Company's Financial Condition and
Results of Operations" above. As discussed above, 2002 was a difficult year for the Company, reflecting a continued
softness in worldwide demand for advertising and marketing services. The uncertain economic and geopolitical
environment results in a lack of visibility in the demand for advertising and marketing services for 2003. The
Company continues to align its costs to its revenue, including a reduction in the Company's headcount to
approximately 50,800 at December 31, 2002 from 54,100 the year before.

Barring a further economic downturn or further adverse effects of the unstable geopolitical environment, the
Company expects that 2003 revenue will decline between 1% to 4% from 2002 on an organic basis.

On January 15, 2003, the Company announced that it had hired outside advisors to help explore strategic alternatives
regarding NFO, its custom marketing research operation, and is currently in discussions concerning a possible sale.
In addition, the Company is evaluating exit strategies relative to its motorsports business.

RESULTS OF OPERATIONS

The following discussion relates to the results of the Company after giving effect to the adjustments for the
restatements described above in "Overview of Significant Events".

All amounts discussed below are reported in accordance with generally accepted accounting principles ("GAAP").
When comparing performance between years, the Company discusses the impact that foreign currency rate changes,
acquisitions/dispositions and organic growth have on reported results. As the Company derives significant revenue
from international operations, changes in foreign currency rates between the years may have significant impact on
reported results. Reported results are also impacted by the Company's acquisition and disposition activity.
Management believes that discussing the impact of currency fluctuations and acquisitions/dispositions provides a
better understanding of the reported results.

The Company also discusses the impact of the loss of the Chrysler account in the fourth quarter of 2000 (revenue
and operating expenses related to which continued through the second quarter of 2001). Chrysler was a major client
of True North Communications, Inc. ("True North"), which the Company acquired in a transaction accounted for as
a pooling of interests in June 2001. In addition, as a result of the acquisition of True North, the Company lost
accounts of Pepsi-owned brands due to client conflicts within the combined company. Management believes that
discussing the impact of these significant client losses is relevant when comparing performance between years.

The Company reported net income of $99.5 or $0.26 diluted earnings per share, net loss of $534.5 or $1.45 diluted
loss per share and net income of $392.8 or $1.06 diluted earnings per share for the years ended December 31, 2002,
2001 and 2000, respectively. Net income in 2002 includes $127.1 of long-lived asset impairment and other charges
related to its motorsports business. Net income in 2001 includes $645.6 of restructuring and other merger-related
costs in connection with the acquisition of True North and subsequent realignment of certain of its businesses and
$303.1 of long-lived asset impairment and other charges related to goodwill associated with the Company's internet
services businesses and several other offices in Europe and Asia Pacific. Net income in 2000 includes restructuring
and other merger-related costs of $177.7 related to the merger of two of its advertising networks, costs associated
with the loss of the Chrysler account, and other transaction costs primarily related to the Company's mergers with
Deutsch and NFO.

As discussed in Note 14 to the consolidated financial statements, the Company is comprised of two reportable
segments: the Interpublic Sports and Entertainment Group ("SEG"), and IPG excluding SEG. SEG was formed
during the second quarter of 2002 through a carve-out from the Company's other operating groups and is primarily
comprised of the operations of Octagon, which is the Company's sports marketing business and includes the
Company's motorsports business, and Jack Morton Worldwide, which is the Company's event planning business.

THE INTERPUBLIC GROUP OF COMPANIES, INC. AND ITS SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Dollars in Millions, Except Per Share Amounts)

SEG revenue is not material to the Company as a whole. However, in 2002 due to the recording of long-lived asset
impairment charges, the operating difficulties and resulting higher costs from its motorsports business, SEG incurred
a significant operating loss. Based on the fact that the book value of long-lived assets relating to OMS and other
substantial contractual obligations may not be fully recoverable, the Company no longer expects that margins of
SEG will converge with those of the rest of IPG and accordingly has begun to report SEG as a separate reportable
segment. Other than the impairment charges which are discussed below, the operating results of SEG are not
material to those of the Company, and therefore are not discussed in detail below.

The following summarizes certain financial information for purposes of management's discussion and analysis:

2002
IPG
(excl.
SEG)
SEG
$5,834.9 $ 368.7 $6,203.6
181.7 3,549.0
247.6 2,096.6
13.0

3,367.3
1,849.0
10.3

Total
IPG

2.7

2001
IPG
(excl.
SEG)
$6,365.7
3,608.9
1,917.3
161.0

SEG
$ 425.5 $6,791.2
3,809.2
2,103.8
173.1

200.3
186.5
12.1

Total
IPG

2000
IPG
(excl.
SEG)
SEG
$6,785.1 $397.6 $7,182.7
4,056.4
197.0
1,986.6
122.8
144.4
8.8

3,859.4
1,863.8
135.6

Total
IPG

12.1

616.1

29.5

645.6

174.7

3.0

177.7

--
127.1
127.1
$ 596.2 $(190.4) $ 405.8

293.2
$(230.8)

9.9
303.1
$(12.8) $(243.6)

--
$ 751.6 $ 66.0

--
$817.6

Revenue
Salaries and related
Office and general
Amortization of intangibles
Restructuring and
other merger-related
Long-lived asset impairment
and other charges
Operating income (loss)

Some of the key factors driving the financial results in 2002 were:

Revenue declines as a result of the continued softness in demand for the Company's services;

Reduction in salaries and related expenses as a result of headcount reductions from the Company's 2001
restructuring initiatives;

Higher bad debt expense and additional professional fees resulting from the restatement and related litigation
and the SEC investigation previously described and the higher costs related to the Company's motorsports
business within SEG; and

Reduced amortization of intangible assets as a result of adopting the accounting standard related to goodwill
amortization.

REVENUE
The Company is a worldwide global marketing services company, providing clients with communications expertise
in four broad areas: a) advertising and media management, b) marketing communications, which includes direct
marketing and customer relationship management, public relations, sales promotion, event marketing, on-line
marketing, corporate and brand identity and healthcare marketing, c) marketing intelligence, which includes
marketing research, brand consultancy and database management and d) specialized marketing services, which
includes sports and entertainment marketing, corporate meetings and events, retail marketing and other marketing
and business services.

Worldwide revenue for 2002 was $6,203.6, a decrease of $587.6 or 8.7% from 2001. Domestic revenue, which
represented 56% of revenue in 2002, decreased $390.5 or 10.1% from 2001. International revenue, which
represented 44% of revenue in 2002, decreased $197.1 or 6.8% from 2001. International revenue would have
decreased 7.5% excluding the effects of changes in foreign currency. The decrease in worldwide revenue was
primarily the result of the continued softness in the demand for advertising and marketing services by current clients

THE INTERPUBLIC GROUP OF COMPANIES, INC. AND ITS SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Dollars in Millions, Except Per Share Amounts)

due to the weak economy, the impact of the loss of the Chrysler account in the fourth quarter of 2000 and the
merger-related loss of accounts of Pepsi owned brands. The components of the total revenue change of (8.7)% were:
net acquisitions/divestitures (0.6)%, impact of foreign currency changes 0.3%, impact of the loss of the Chrysler
account and loss of accounts of Pepsi owned brands (0.7)% and organic revenue decline (7.7)%. Organic changes in
revenue are based on increases or decreases in net new business activity and increases or decreases in activity from
existing client accounts.

Worldwide revenue for 2001 was $6,791.2, a decrease of $391.5 or 5.5% from 2000. Domestic revenue, which
represented 57% of revenue in 2001, decreased $364.5 or 8.6% from 2000. International revenue, which represented
43% of revenue in 2001, decreased $27.0 or 0.9% from 2000. International revenue would have increased 5.1%
excluding the effects of changes in foreign currency. The decrease in worldwide revenue was a result of reduced
demand for advertising and marketing services due to the weak economy, particularly in the United States, the
negative impact of the events of September 11 and the impact of the loss of the Chrysler account in the fourth
quarter of 2000. The components of the total revenue change of (5.5)% were: net acquisitions/divestitures 0.9%,
impact of foreign currency changes (2.2)%, impact of the loss of the Chrysler account (1.6)%, the estimated impact
of the events of September 11 (0.5)% and organic revenue decline (2.1)%. Organic changes in revenue are based on
increases or decreases in net new business activity and increases or decreases in activity from existing client
accounts.

OPERATING EXPENSES

Worldwide operating expenses for 2002 decreased $1,237.0, or 17.6% to $5,797.8. Worldwide operating expenses
for 2001 increased $669.7 or 10.5% to $7,034.8.

Salaries and Related Expenses
In 2002, the Company's expenses related to employee compensation and various employee incentive and benefit
programs amount to approximately 57% of revenue. The employee incentive programs are based primarily upon
operating results. Salaries and related expenses in all periods were also impacted by normal salary progression.
Salaries and related expenses were $3,549.0 for 2002 and $3,809.2 in 2001, a decrease of $260.2 or 6.8%. The
decrease is a result of lower headcount, which was reduced by 6.1% to 50,800 at December 31, 2002 from 54,100 at
December 31, 2001. This was partially offset by a benefit of $50.0 recorded in 2001 resulting from a reduction in
severance reserves related to significant headcount reductions. The components of the total change of (6.8)% were:
net acquisitions/divestitures (1.0)%, impact of foreign currency changes 0.4%, impact of the loss of the Chrysler
account and loss of accounts of Pepsi owned brands (0.5)% and reductions in salaries and related expenses from
existing operations (5.7)%.

Salaries and related expenses were $3,809.2 in 2001 and $4,056.4 in 2000, a decrease of $247.2 or 6.1%. The
decrease was a result of lower headcount, which was reduced by 12.7% to 54,100 at December 31, 2001 from
62,000 at December 31, 2000, a benefit of $50.0 in 2001 resulting from a reduction in severance reserves related to
significant headcount reductions, and reduced incentive compensation commensurate with performance. The
components of the total change of (6.1)% were: net acquisitions/divestitures 0.8%, impact of foreign currency
changes (2.0)%, impact of the loss of the Chrysler account (1.4)% and reductions in salaries and related expenses
from existing operations (3.5)%.

Office and General Expenses
Office and general expenses were $2,096.6 in 2002 and $2,103.8 in 2001, a decrease of $7.2 or 0.3%. The decrease
was primarily due to the cost reduction initiatives from the 2001 restructuring plan including reduced travel and
entertainment costs and reduced office related and supplies costs, and write-off of operating assets of $85.4 in 2001
which were no longer considered realizable. This was offset by an increase in professional fees resulting from the
restatements and the related litigation and the SEC investigation previously described, an increase in bad debt
expense and higher costs related to the Company's motorsports business within SEG. The components of the total
change of (0.3)% were: net acquisitions/divestitures (0.2)%, impact of foreign currency changes 0.5%, impact of the
loss of the Chrysler account and loss of accounts of Pepsi owned brands (0.7)% and increases in office and general
expenses from existing operations 0.1%.

THE INTERPUBLIC GROUP OF COMPANIES, INC. AND ITS SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Dollars in Millions, Except Per Share Amounts)

Office and general expenses were $2,103.8 in 2001 and $1,986.6 in 2000, an increase of $117.2 or 5.9%. The
increase was primarily due to higher office rental costs, supplies costs and travel and entertainment costs. However,
during the latter part of the year, the Company benefited from the restructuring plan initiatives, which reflected a
reduction of such costs. The components of the total change of 5.9% were: acquisitions net of divestitures 0.4%,
impact of foreign currency changes (2.4)%, impact of the loss of the Chrysler account (2.2)% and increases in office
and general expenses from existing operations 10.1%.

Amortization of Intangible Assets
Amortization of intangible assets was $13.0 in 2002, $173.1 in 2001 and $144.4 in 2000. The decrease in 2002 is
primarily a result of the adoption of the new standard on accounting for goodwill and other intangible assets
effective January 1, 2002. See Recent Accounting Standards section for discussion of the cessation of goodwill
amortization and the amortization of other intangible assets.

Restructuring and Other Merger-related Costs
2002 Activities
In the third quarter of 2002, the Company recorded an additional $12.1 in charges related to the 2001 restructuring
plan. The additional charge was necessitated largely by increases in estimates of lease losses due to lower than
anticipated sublease income in key markets, including San Francisco, Chicago, Paris and London.

2001 Activities
Following the completion of the True North acquisition in June 2001, the Company initiated a series of operational
initiatives focusing on: a) the integration of the True North operations and the identification of synergies and
savings, b) the realignment of certain Interpublic businesses and c) productivity initiatives to achieve higher
operating margins. In connection with the operational initiatives, the Company executed a wide-ranging
restructuring plan that included severance, lease terminations and other actions. The total amount of the charges
incurred in 2001 in connection with the plan was $645.6 ($446.5, net of tax).

A summary of the remaining liability for restructuring and other merger-related costs, including the 2002 charges, is
as follows:

Balance at
December
31, 2001

2002
Charge

Cash paid
in 2002

Long-
term
Liabilities
and Non-
cash
Items

Liability
at December
31, 2002

TOTAL BY TYPE
Severance and termination costs
Lease termination and other exit costs
Total

$154.0
157.1
$311.1

$ 2.3
9.8
$12.1

$(129.2)
(72.3)
$(201.5)

$(11.2)
--
$(11.2)

$ 15.9
94.6
$110.5

The Company has terminated approximately 7,000 employees in connection with the restructuring plan. The
majority of the remaining severance liabilities are expected to be paid out through the end of the third quarter of
2003. Amounts totaling $11.2 have been transferred from restructuring liabilities to non-current liabilities (in the
case of certain long-term deferred compensation arrangements) or to additional paid-in capital (in the case of vested
restricted stock amounts).

The Company downsized or vacated approximately 180 locations. The remaining liabilities will be paid out over a
period of up to five years. Lease termination and related costs included write-offs related to the abandonment of
leasehold improvements as part of the office vacancies.

Other exit costs relate principally to the impairment loss on sale or closing of certain business units in the US and
Europe. In the aggregate, the businesses sold or closed represented an immaterial portion of the revenue and
operating profit of the Company. 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. The sales and closures had been
completed by September 30, 2002.

THE INTERPUBLIC GROUP OF COMPANIES, INC. AND ITS SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Dollars in Millions, Except Per Share Amounts)

2000 Activities
During 2000, the Company recorded restructuring and other merger-related costs of $177.7 ($124.3, net of tax). Of
the total pre-tax restructuring and other merger-related costs, cash charges represented $104.6. The key components
of the charge were: a) costs associated with the restructuring of Lowe & Partners Worldwide (formerly Lowe Lintas
& Partners Worldwide), b) costs associated with the loss, by True North, of the Chrysler account, c) other costs
related to the acquisition of Deutsch and d) costs related principally to the merger with NFO.

Lowe & 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. The merger
involved the consolidation of operations in agencies in approximately 24 cities in 22 countries around the world and
the severance of approximately 600 employees. As of September 30, 2000, all restructuring activities had been
completed.

In connection with this restructuring, costs of $84.1 ($51.4, net of tax) were recorded in 1999 and $87.8 ($53.6, net
of tax) in 2000. Of the totals, $75.6 related to severance, $50.2 related to lease related costs and the remainder
related principally to investment write-offs. No adjustment to the Company's statement of operations was required as
a result of the completion of the restructuring plan.

Loss of Chrysler Account
As a result of the loss of the Chrysler account, one of True North's larger accounts, the Company recorded a charge
of $17.5 pre-tax ($10.0, net of tax) in the fourth quarter of 2000. The charge covered primarily severance, lease
termination and other exit costs associated with the decision to close the Detroit office. In addition, an impairment
loss of $5.5 was recorded for intangible assets that were determined to be no longer recoverable. Offsetting these
charges was a $5.2 payment from Chrysler to compensate the Company for severance and other exit costs. As of
December 31, 2001, all actions had been completed.

Acquisition of Deutsch
In connection with the acquisition of Deutsch in 2000, the Company recognized a charge related to one-time
transaction costs of $44.7 ($41.7, net of tax). The principal component of this amount related to the expense
associated with various equity participation agreements with certain members of management. These agreements
provided for participants to receive a portion of the proceeds in the event of the sale or merger of Deutsch.

NFO
In addition to the above 2000 activities, additional charges, substantially all of which were cash costs, were recorded
during 2000 related principally to the transaction and other merger-related costs arising from the acquisition of NFO.

Long-Lived Asset Impairment and Other Charges
2002 Impairment
Octagon Motorsports (OMS), within SEG, owns and leases certain racing circuit facilities that are used for
automobile, motorcycle and go-cart racing, primarily in the United Kingdom. Beginning in the second quarter of
2002 and continuing in subsequent quarters, certain of the Octagon businesses experienced significant operational
difficulties, including significantly lower than anticipated attendance at the marquee British Grand Prix race in July
2002. These events and a change in management at OMS in the third quarter of 2002 led the Company to begin
assessing its long-term strategy for OMS.

In accordance with the provisions of SFAS 142, the Company prepared a discounted cash flow analysis which
indicated that the book value of OMS significantly exceeded its estimated fair value and that a goodwill impairment
had occurred in the third quarter of 2002. In addition, as a result of the goodwill analysis, the Company assessed
whether there had been an impairment of the Company's long-lived assets in accordance with SFAS 144. The
Company concluded that the book value of certain asset groupings at OMS was significantly higher than their
expected future cash flows and that an impairment had occurred. Accordingly, the Company has recognized a non-
cash impairment loss and related charge of $127.1 ($89.7, net of tax) in 2002. The charges included $82.1 of
goodwill impairment, $33.0 of fixed assets and capital expenditure write-offs, and $12.0 to record the fair value of
an associated put option.

THE INTERPUBLIC GROUP OF COMPANIES, INC. AND ITS SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Dollars in Millions, Except Per Share Amounts)

In addition, OMS is contractually required to upgrade and improve certain of its existing facilities over the next two
years. As of December 31, 2002, these capital expenditure commitments amount to approximately $30 and are
expected to be impaired as incurred based on current cash flow analyses for the relevant asset groupings.

In the fourth quarter of 2002, management determined that its original operating plans were no longer feasible and
decided to explore options to exit some or all of these businesses. The remaining book value of long-lived assets
relating to OMS was approximately $70 at December 31, 2002, and this amount, as well as other substantial
contractual obligations, may not be fully recoverable depending upon the exit strategy ultimately followed.

2001 Impairment
Following the completion of the True North acquisition and the realignment of certain of the Company's businesses
in 2001, the Company evaluated the realizability of various assets. In connection with this review undiscounted cash
flow projections were prepared for certain investments, and the Company determined that the goodwill attributable
to certain business units was stated at an amount in excess of the future estimated cash flows. As a result, an
impairment charge of $303.1 ($263.4, net of tax) was recorded in 2001. Of the total write-off, $221.4 was recorded
in the second quarter, with the remainder recorded in the third quarter. The largest components of the goodwill
impairment and other charges were Capita Technologies, Inc. (approximately $145) and Zentropy Partners
(approximately $16), both internet services businesses. The remaining amount primarily related to several other
businesses including internet services, healthcare consulting and certain advertising offices in Europe and Asia
Pacific.

OTHER INCOME (EXPENSE)
Interest Expense
Interest expense decreased by $19.0 to $145.6 in 2002 due to lower debt levels, lower interest rates paid on short-
term borrowings and the issuance and sale of the Zero-Coupon Notes in December 2001. The Company used the net
proceeds of $563.2 from the Zero-Coupon Notes to repay indebtedness under the Company's credit facilities.
Interest expense increased by $38.3 to $164.6 in 2001 due to higher debt levels, which included the issuance and
sale of $500.0, 7.25% notes due 2011 in August 2001. The increase was partially offset by lower interest rates paid
on short-term borrowings. The Company's effective interest rate was benefited by the interest rate swap agreements
covering substantially all of the $500.0, 7.875% notes issued in 2000. The interest rate savings as a result of these
agreements was approximately $13.9 and $4.5 in 2002 and 2001, respectively. During 2002, the Company
terminated all interest rate swap agreements. See "Liquidity and Capital Resources" below for description of
financing activities.

Interest Income
Interest income was $29.8 in 2002, $41.8 in 2001 and $57.5 in 2000. The decrease in 2002 is primarily due to lower
interest rates. The decrease in 2001 is primarily due to lower interest rates and lower average cash balances
primarily resulting from the lower earnings levels in 2001.

Other Income
The following table sets forth the components of other income:

Gains on sales of business

2002

2001

2000

$ 7.0

$12.3

$16.5

Gains (losses) on sales of available-for-sale securities

5.3

(2.5)

28.5

Investment income and miscellaneous

2.8

3.9

(2.4)

$15.1

$13.7

$42.6

See Investing Activities in "Liquidity and Capital Resources" below for a discussion of proceeds from sales of
businesses.

THE INTERPUBLIC GROUP OF COMPANIES, INC. AND ITS SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Dollars in Millions, Except Per Share Amounts)

INVESTMENT IMPAIRMENT
During 2002, the Company recorded $39.7 of investment impairment primarily related to certain investments of
Octagon, the Company's sports marketing business within SEG. The impairment charges adjusted the carrying value
of investments to the estimated market value where an other than temporary impairment had occurred.

During 2001, the Company recorded total charges related to the impairment of investments of $210.8 ($136.6, net of
tax). Of the total amount, $160.1 ($103.7, net of tax) was recorded in the first quarter, and $48.2 ($30.4, net of tax)
was recorded in the third quarter. The charge in the first quarter related to the impairment of investments primarily
in publicly traded internet-related companies, including marchFIRST, Inc. (an internet professional services firm),
which had filed for relief under Chapter 11 of the Federal Bankruptcy Code in April 2001. The third quarter charge
included write-offs for investments in non-internet companies, certain venture funds and other investments. In
addition, the Company recorded a charge of $2.5 to record the fair value of a put option. The impairment charges
adjusted the carrying value of investments to the estimated market value where an other than temporary impairment
had occurred.

OTHER ITEMS
Effective Income Tax Rate
The Company's effective income tax rate was an expense of 52.9% in 2002, a benefit of 9.8% in 2001 and an
expense of 43.0% in 2000. The 2002 effective income tax rate includes the effect of the adoption of SFAS 142 (See
Note 1). The 2001 and 2000 effective income tax rates reflect the impact of goodwill amortization. The 2002, 2001
and 2000 effective tax rates were also impacted by restructuring and other merger-related costs and long-lived asset
impairment and other charges that resulted in tax benefits lower than the statutory rate of 35%. The difference
between the effective tax rate and the statutory federal rate of 35% is also due to state and local taxes and the effect
of non-US operations. The increased tax rate in 2002 reflects a higher proportion of earnings derived from the US,
where it is taxed at higher rates. The increased tax rate in 2001 reflects a change in the tax status of Deutsch, Inc.,
which was acquired in November 2000, from "S" Corporation to "C" Corporation status.

Minority Interest
Income applicable to minority interests was $31.3 in 2002, $30.3 in 2001 and $42.8 in 2000. The decrease in 2001
was primarily due to lower operating results of certain operations in Europe and Asia Pacific.

Unconsolidated Affiliates
Equity in net income (loss) of unconsolidated affiliates was $5.7 in 2002, $4.0 in 2001 and a loss of $15.6 in 2000.
The increase in 2002 was primarily due to increased earnings of unconsolidated affiliates in the US, partially offset
by the sale of an unconsolidated affiliate in Europe and the US. The increase in 2001 was due to a charge of $25.7 in
2000 related to the Company's share of the asset impairment and restructuring charges of Modem Media, reduced
earnings of unconsolidated affiliates and the consolidation of an advertising office in the Middle East at the end of
2000.

DERIVATIVES AND HEDGING ACTIVITIES
The Company enters into interest rate swaps, hedges of net investments in foreign operations and forward contracts.

Interest Rate Swaps
At December 31, 2001, the Company had outstanding interest rate swap agreements covering $400.0 of the $500.0,
7.875% notes due October 2005. The swaps had the same term as the debt and effectively converted the fixed rate
on the debt to a variable rate based on 6 month LIBOR. The swaps were accounted for as hedges of the fair value of
the related debt and were recorded as an asset or liability as appropriate. As of December 31, 2001, the fair value of
the hedges was an asset of approximately $10.

As of December 31, 2002, the Company had terminated all of the interest rate swap agreements covering the $500.0,
7.875% notes due October 2005. In connection with the termination of the interest rate swap agreements, the
Company received $45.7 in cash which will be recorded as an offset to interest expense over the remaining life of
the related debt.

THE INTERPUBLIC GROUP OF COMPANIES, INC. AND ITS SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Dollars in Millions, Except Per Share Amounts)

Hedges of Net Investments
The Company has significant foreign operations and conducts business in various foreign currencies. In order to
hedge the value of its investment in Europe, the Company had designated approximately 125 million Euro of
borrowings under its $375.0 Revolving Credit Facility as a hedge of this net investment. Changes in the spot rate of
the debt instruments designated as hedges of the net investment in a foreign subsidiary are reflected in the
cumulative translation adjustment component of stockholders' equity. The amount deferred in 2001 was
approximately $5. The Company has repaid the Euro borrowings that, as of December 31, 2001, had been
designated as a hedge of a net investment.

On December 12, 2002, the Company designated the Yen borrowings under its $375.0 Revolving Credit Facility in
the amount of $36.5 as a hedge of its net investment in Japan. The amount deferred in 2002 was not material.

Forward Contracts
The Company has entered into foreign currency transactions in which foreign currencies (principally the Euro,
Pounds Sterling and the Japanese Yen) are bought or sold forward. The contracts were entered into to meet currency
requirements arising from specific transactions. The changes in value of these forward contracts were reflected in
the Company's consolidated statement of operations. As of December 31, 2001 the Company had contracts covering
approximately $50 of notional amount of currency and the fair value of the forward contracts was a loss of $0.2.

As of December 31, 2002, the Company had contracts covering $37.1 of notional amount of currency and the fair
value of the forward contracts was a gain of $5.1.

Other
The Company has two embedded derivative instruments under the terms of the offering of Zero-Coupon Notes (for
which a tender offer was made in March 2003) as discussed in Note 8. At December 31, 2002, the fair value of the
two derivatives was negligible. In connection with the issuance and sale of the 4.5% Convertible Senior Notes in
March 2003, two embedded derivatives were created. The fair value of the two derivatives in March 2003 was
negligible.

As discussed in Note 3 to the consolidated financial statements, the Company has entered into various put and call
options related to acquisitions. The exercise price of such options is generally based upon the achievement of
projected operating performance targets and approximate fair value.

LIQUIDITY AND CAPITAL RESOURCES
At December 31, 2002, cash and cash equivalents were $933.0, a decrease of $2.2 from the December 31, 2001
balance of $935.2. The Company collects funds from clients on behalf of media outlets resulting in cash receipts and
disbursements at levels substantially exceeding its revenue. Therefore, the working capital amounts reported on its
balance sheet and cash flows from operating activities reflect the "pass-through" of these items.

Cash flow from operations and borrowings under existing credit facilities, and refinancings thereof, have been the
primary sources of the Company's working capital, and management believes that they will continue to be so in the
future.

Operating Activities
Net cash provided by operating activities was $873.8, $141.6 and $602.1 for the years ended December 31, 2002,
2001 and 2000, respectively. The increase in 2002 was attributable to an increase in cash provided from working
capital primarily as a result of improved receivables management and timing of international media payments at
year end, and includes reduced payments of incentives in 2002. The decrease in 2001 was primarily attributable to
lower operating profit levels and to severance payments made in connection with the Company's restructuring plan.

THE INTERPUBLIC GROUP OF COMPANIES, INC. AND ITS SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Dollars in Millions, Except Per Share Amounts)

Investing Activities
The Company has pursued acquisitions to complement and enhance its service offerings. In addition, the Company
has also sought to acquire businesses similar to those already owned to expand its geographic scope to better serve
new and existing clients. Acquisitions have historically been funded using stock, cash or a combination of both.

During 2002, 2001 and 2000 the Company paid $54.1, $1,729.7 and $1,668.3, respectively, in cash and stock for
new acquisitions, including a number of specialized marketing and communications services 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 and includes cash of $53.0, $84.7
and $577.4 in 2002, 2001 and 2000, respectively.

During the three-year period ended December 31, 2002, the Company paid the following deferred payments on
acquisitions that had closed in prior years:

Cash
Stock

2002
$240.1
83.2
$323.3

2001
$228.9
48.2
$277.1

2000
$158.1
63.2
$221.3

The Company's capital expenditures in 2002 were $183.2 compared to $268.0 in 2001 and $259.5 in 2000. The
primary purposes of these expenditures were to upgrade computer and telecommunications systems and to
modernize offices. The Company's planned capital expenditures for 2003 are estimated to be less than the level of
spending in 2002. Currently, the Company is restricted in making capital expenditures by new terms of its
Revolving Credit Facilities. See "Financing Activities" for further discussion.

During 2002, proceeds from the sales of businesses included an unconsolidated affiliate in Europe for proceeds of
$12.8, an unconsolidated affiliate in the US for proceeds of $5.2 and a marketing services affiliate for proceeds of
$3.8.

During 2001, proceeds from the sales of businesses included a marketing services affiliate in Europe for proceeds of
approximately $5 and some non-core marketing services affiliates in the US for proceeds of $6.9.

During 2000, proceeds from the sales of businesses included its interest in a non-core minority owned marketing
services business for proceeds of approximately $12.

Financing Activities
Total debt at December 31, 2002 was $2,638.0, a decrease of $271.0 from December 31, 2001. The Company's debt
position was positively impacted by international cash and debt pooling arrangements that were put in place to
optimize the net debt balances in certain markets.

Revolving Credit Agreements
On June 27, 2000 and May 16, 2002, the Company entered into two revolving credit facilities, respectively, each
provided by a syndicate of banks (the "Revolving Credit Facilities"), which are used to fund the Company's ordinary
course business needs. The facility entered into on June 27, 2000 provides for borrowings of up to $375.0 and is for
a term of five years, which expires in June of 2005. The facility entered into on May 16, 2002 provides for
borrowings of up to $500.0 and is for a term of 364 days, which expires on May 15, 2003. However, the Company
has the option to extend the maturity of amounts outstanding on the termination date under the 364-day Revolving
Credit Facility for a period of one year. As of December 31, 2002, no amounts were borrowed under the 364-day
Revolving Credit Agreements and $50.3 was borrowed under the five-year Revolving Credit Facility. As of March
20, 2003, no amounts were borrowed under the 364-day Revolving Credit Facility and approximately $49.8 was
borrowed under the five-year Revolving Credit Facility.

THE INTERPUBLIC GROUP OF COMPANIES, INC. AND ITS SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Dollars in Millions, Except Per Share Amounts)

affected by the facilities' utilization levels and the Company's credit ratings. On October 25, 2002, Moody's
Investors Services, Inc. downgraded the Company's credit rating to Baa3. On March 7, 2003, Standard and Poor's
downgraded the Company's credit rating to BB+. As of March 7, 2003, the combined effect of the downgrades was
an increase in the interest spread payable on LIBOR loans under the Revolving Credit Facilities of 25 basis points
from the interest rate spread of 1.25% applicable as of December 31, 2002.

The Company's Revolving Credit Facilities include financial covenants that set i) maximum levels of debt as a
function of EBITDA and ii) minimum levels of EBITDA as a function of interest expense (in each case, as defined
in these agreements). As of December 31, 2002, the Company was in compliance with all of the covenants
(including the financial covenants, as amended) contained in the Revolving Credit Facilities.

During the third quarter of 2002, the Company obtained waivers of certain provisions (excluding financial
covenants) contained in the Revolving Credit Facilities, which related to the restatement of the Company's historical
consolidated financial statements in the aggregate amount of $181.3. In connection with these waivers, the
Company agreed to an increase in interest rates and commitment fees payable to the lenders. The Company also paid
fees to the lenders as additional consideration for their granting the waivers. The impact of the fees paid and the
increased interest rates is not material to the Company's financial position, cash flows or results of operations.

On February 10, 2003, certain defined terms relating to financial covenants contained in the Revolving Credit
Facilities were amended effective as of December 31, 2002. The definition of debt for borrowed money in the
Revolving Credit Facilities was modified to include the Company's 1.8% Convertible Subordinated Notes due 2004
and 1.87% Convertible Subordinated Notes due 2006. As a result, the definition of Interest Expense was also
amended to include all interest with respect to these Subordinated Notes. The definition of EBITDA in the
Revolving Credit Agreements was amended to include up to $500.0 of non-cash, non-recurring charges taken in the
fiscal year ended December 31, 2002 and the quarter ended March 31, 2003. The corresponding financial covenant
ratio levels in the Revolving Credit Facilities were also amended.

The Company also amended certain other provisions of the Revolving Credit Facilities effective as of December 31,
2002. The new terms of the Revolving Credit Facilities restrict the Company's ability to declare or pay dividends,
repurchase shares of common stock, make cash acquisitions or investments, make capital expenditures and prepay
long-term debt, as well as the ability of the Company's domestic subsidiaries to incur additional debt. Certain of
these limitations are modified upon receipt of aggregate net cash proceeds equal to at least $400.0 from asset sales
and capital markets transactions. The level of proceeds from such transactions and the outstanding balance of the
Company's Zero-Coupon Convertible Senior Notes due 2021 (the "Zero-Coupon Notes") will determine the
permitted levels of annual acquisition spending and the permitted level of long-term debt prepayment. The level of
proceeds, the outstanding balance of the Zero-Coupon Notes and the Company's future earnings performance will
determine the permitted levels of share buybacks and dividend payments.

On March 13, 2003, the Company sold 4.5% Convertible Senior Notes due 2023 (the "4.5% Notes") in an aggregate
principal amount of $800.0. The Company received net cash proceeds from this transaction equal to approximately
$778.0. As a result, the Company's permitted level of annual cash acquisition spending has increased to $25.0 and
the permitted level of annual share buybacks and dividend payments has increased to $25.0. In addition, on March
10, 2003, the Company commenced a tender offer to purchase for cash any and all of the outstanding Zero-Coupon
Notes. The tender offer will expire on April 4, 2003, unless extended. If the Zero-Coupon Notes are substantially
retired pursuant to this tender offer, the Company's permitted level of annual cash acquisition spending would be
further increased to $100.0 and the Company would be permitted to prepay long-term debt.

In addition, if the Zero-Coupon Notes are substantially retired pursuant to the tender offer and earnings before
interest, taxes, depreciation and amortization are at least $1,000.0 for four consecutive quarters, the Company's
permitted level of annual share buybacks and dividend payments would increase to $100.0. All limitations on
dividend payments and share buybacks expire when the Zero-Coupon Notes have been substantially retired and
earnings before interest, taxes, depreciation and amortization are at least $1,300.0 for four consecutive quarters.

THE INTERPUBLIC GROUP OF COMPANIES, INC. AND ITS SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Dollars in Millions, Except Per Share Amounts)

As a result of the issuance of the 4.5% Notes in the first quarter of 2003 and the anticipated settlement of the tender
offer for the Zero-Coupon Notes in the second quarter of 2003, both the 4.5% Notes and the Zero-Coupon Notes
will be outstanding at March 31, 2003. Therefore, the Company amended the Revolving Credit Facilities, as of
March 13, 2003, to exclude the Zero-Coupon Notes in calculating the ratio of debt for borrowed money to
consolidated EBITDA for the period ended March 31, 2003.

On February 26, 2003, the Company obtained waivers of certain defaults under the Revolving Credit Facilities
relating to the restatement of the Company's historical consolidated financial statements in the aggregate amount of
$118.7. The waivers covered certain financial reporting requirements related to the Company's consolidated
financial statements for the quarter ended September 30, 2002. No financial covenants were breached as a result of
this restatement.

Other Committed and Uncommitted Facilities

In addition to the Revolving Credit Facilities, at December 31, 2002 and 2001, respectively, the Company had
$157.8 and $53.3 of committed lines of credit, all of which were provided by overseas banks that participate in the
Revolving Credit Facilities. At December 31, 2002 and 2001, respectively, $3.1 and $7.2 were outstanding under
these lines of credit.

At December 31, 2002 and 2001, respectively, the Company also had $707.9 and $738.3 of uncommitted lines of
credit, 66.8% and 56.2% of which, respectively, were provided by banks that participate in the Revolving Credit
Agreements. At December 31, 2002 and 2001, respectively, approximately $213.2 and $286.6 were outstanding
under these uncommitted lines of credit. The Company's uncommitted borrowings are repayable upon demand.

Prudential Agreements

On May 26, 1994, April 28, 1995, October 31, 1996, August 18, 1997 and January 21, 1999, the Company entered
into five note purchase agreements, respectively, with The Prudential Insurance Company of America (the
"Prudential Agreements"). The notes issued pursuant to the Prudential Agreements are repayable on May 2004,
April 2005, October 2006, August 2007 and January 2009, respectively. The interest rates on these notes range
from 8.05% to 10.01%. As of December 31, 2002 and 2001, respectively, $148.8 and $155.0 were outstanding
under the notes.

The Prudential Agreements contain financial covenants that set i) minimum levels for net worth and for cash flow as
a function of borrowed funds and ii) maximum levels of borrowed funds as a function of net worth (in each case, as
defined in these agreements). The most restrictive of these covenants is that of cash flow to borrowed funds. This
ratio is required to exceed an amount that varies from .16 to .25 for each quarter in the applicable consecutive four-
quarter period. During 2001, as a result of significant restructuring, asset impairment and other charges, the
Company required and received amendments related to the financial covenants in the Prudential Agreements.

During the third quarter of 2002, due to the impact on the Company's net worth resulting from (a) lower operating
profit in the third quarter and (b) restructuring charges and lower operating profit in prior periods resulting from the
restatement of the Company's historical consolidated financial statements in the aggregate amount of $181.3, the
Company required and received waivers related to its financial covenants in the Prudential Agreements.

In connection with the third quarter waivers, the Company agreed to increase the interest rates on the outstanding
balances under the Prudential Agreements. The Company also paid a fee to Prudential as additional consideration
for the waivers. The impact of the fee and the increased interest rates is not material to the Company's financial
position, cash flows or results of operations.

On February 10, 2003, the Company amended certain provisions of the Prudential Agreements effective as of
December 31, 2002. The new terms of the Prudential Agreements contain the same restrictions on the Company's
ability to declare or pay dividends, repurchase shares of common stock, make cash acquisitions or investments,
make capital expenditures and prepay long-term debt, as well as the ability of the Company's domestic subsidiaries
to incur additional debt, as the new terms of the Revolving Credit Agreements described above.

THE INTERPUBLIC GROUP OF COMPANIES, INC. AND ITS SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Dollars in Millions, Except Per Share Amounts)

Certain defined terms relating to financial covenants contained in the Prudential Agreements were also amended
effective as of December 31, 2002. The definitions of cash flow and consolidated net worth in the Prudential
Agreements were amended to include up to $500.0 of non-cash, non-recurring charges taken in the fiscal year ended
December 31, 2002 and the quarter ended March 31, 2003. The corresponding financial covenant ratio levels in the
Prudential Agreements were also amended.

In addition, the Company amended the Prudential Agreements, as of March 13, 2003, to exclude the Zero-Coupon
Notes in calculating the ratio of total borrowed funds to cash flow for the period ended March 31, 2003.

On February 26, 2003, the Company obtained waivers of certain defaults under the Prudential Agreements relating
to the restatement of the Company's historical consolidated financial statements in the aggregate amount of $118.7.
The waivers covered certain financial reporting requirements related to the Company's consolidated financial
statements for the quarter ended September 30, 2002. No financial covenants were breached as a result of this
restatement.

UBS Facility

On February 10, 2003, the Company received from UBS AG a commitment for an interim credit facility providing
for $500.0, maturing no later than July 31, 2004 and available to the Company beginning May 15, 2003, subject to
certain conditions. This commitment terminated in accordance with its terms when the Company received net cash
proceeds in excess of $400.0 from its sale of the 4.5% Notes. The fees associated with this commitment were not
material to the Company's financial position, cash flows or results of operations.

Other Debt Instruments

(i) Convertible Senior Notes - 4.5%

In March 2003, the Company completed the issuance and sale of $800 aggregate principal amount of the 4.5%
Notes. The Company intends to use the net proceeds of this offering to fund its concurrent offer to repurchase the
outstanding Zero-Coupon Notes. Assuming 100% of the Zero-Coupon Notes are tendered, the Company will pay a
total of $582.5 to the holders of the Zero-Coupon Notes in connection with the offer. Any funds not used to
repurchase the Zero-Coupon Notes will be used for the repayment of other indebtedness, general corporate purposes
and working capital. The 4.5% Notes are unsecured, senior securities that may be converted into common shares if
the price of the Company's common stock reaches a specified threshold, at an initial conversion rate of 80.5153
shares per one thousand dollars principal amount, equal to a conversion price of $12.42 per share, subject to
adjustment. This threshold will initially be 120% of the conversion price and will decline 1/2% each year until it
reaches 110% at maturity in 2023.

The 4.5% Notes may also be converted, regardless of the price of the Company's common stock, if: (i) the credit
rating assigned to the 4.5% Notes by any two of Moody's Investors Service, Inc., Standard & Poor's Ratings
Services and Fitch Ratings are Ba2, BB and BB, respectively, or lower, or the 4.5% Notes are no longer rated by at
least two of these ratings services, (ii) the Company calls the 4.5% Notes for redemption, (iii) the Company makes
specified distributions to shareholders or (iv) the Company becomes a party to a consolidation, merger or binding
share exchange pursuant to which its common stock would be converted into cash or property (other than securities).

The Company, at the investor's option, may be required to redeem the 4.5% Notes for cash on March 15, 2008. The
Company may also be required to redeem the 4.5% Notes at the investor's option on March 15, 2013 and March 15,
2018, for cash or common stock or a combination of both, at the Company's election. Additionally, investors may
require the Company to redeem the 4.5% Notes in the event of certain change of control events that occur prior to
May 15, 2008, for cash or common stock or a combination of both, at the Company's election. The Company at its
option may redeem the 4.5% Notes on or after May 15, 2008 for cash. The redemption price in each of these
instances will be 100% of the principal amount of the notes being redeemed, plus accrued and unpaid interest, if
any.

THE INTERPUBLIC GROUP OF COMPANIES, INC. AND ITS SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Dollars in Millions, Except Per Share Amounts)

If at any time on or after March 13, 2003 the Company pays cash dividends on its common stock, the Company will
pay contingent interest per 4.5% Note in an amount equal to 100% of the per share cash dividend paid on the
common stock multiplied by the number of shares of common stock issuable upon conversion of a note.

(ii) Zero-Coupon Convertible Senior Notes

In December 2001, the Company completed the issuance and sale of approximately $702 of aggregate principal
amount of Zero-Coupon Convertible Senior Notes ("Zero-Coupon Notes") due 2021. The Company used the net
proceeds of $563.5 from this offering to repay indebtedness under the Company's credit facilities. The Zero-Coupon
Notes are unsecured, zero-coupon, senior securities that may be converted into common shares if the price of the
Company's common stock reaches a specified threshold, at a conversion rate of 22.8147 shares per one thousand
dollars principal amount at maturity, subject to adjustment. This threshold will initially be 120% of the accreted
value of a Zero-Coupon Note, divided by the conversion rate and will decline 1/2% each year until it reaches 110%
at maturity in 2021. A Zero-Coupon Note's accreted value is the sum of its issue price plus its accrued original issue
discount.

The Zero-Coupon Notes may also be converted, regardless of the sale price of the Company's common stock, at any
time after: (i) the credit rating assigned to the Zero-Coupon Notes by any two of Moody's Investors Service, Inc.,
Standard & Poor's Ratings Group and Fitch Ratings are Bal, BB+ and BB+, respectively, or lower, or the Zero-
Coupon Notes are no longer rated by at least two of these ratings services, (ii) the Company calls the Zero-Coupon
Notes for redemption, (iii) the Company makes specified distributions to shareholders or (iv) the Company becomes
a party to a consolidation, merger or binding share exchange pursuant to which the Company's common stock would
be converted into cash or property (other than securities).

The Company, at the investor's option, may be required to redeem the Zero-Coupon Notes for cash on December 14,
2003. The Company may also be required to redeem the Zero-Coupon Notes at the investor's option, on December
14, 2004, 2005, 2006, 2011 or 2016 for cash or common stock or a combination of both, at the Company's election.
Additionally, the Company has the option of redeeming the Zero-Coupon Notes after December 14, 2006 for cash.

The yield to maturity of the Zero-Coupon Notes at the date of issuance was 1%. Unless the Company is required to
pay the contingent interest described in the following sentence or the US tax laws change in certain ways, no cash
interest will be paid at any time. After December 14, 2006, if the Company's stock price reaches specified
thresholds, the Company would be obligated to pay semi-annual contingent cash interest which would approximate
the dividends paid to common stockholders during the prior six-month period (subject to a floor rate).

The balance outstanding under the Zero-Coupon Notes as of December 31, 2002 was $581.0. This amount is
classified as current in the accompanying consolidated balance sheet.

On March 10, 2003, the Company commenced a tender offer to purchase for cash any and all of the outstanding
Zero-Coupon Notes, at a price equal to 82.9876% of the principal amount of the notes at maturity. The tender offer
will expire on April 4, 2003, unless extended. The price offered is equal to the accreted value of the notes as of
April 4, 2003. If all of the Zero-Coupon Notes are tendered pursuant to the tender offer, the Company would pay a
total of $582.5 to the holders of the Zero-Coupon Notes.

(iii) Floating Rate Notes

On June 28, 2001, the Company issued and sold $100.0 of floating rate notes which bore interest based on three-
month LIBOR. The notes matured and were repaid on June 28, 2002.

(iv) Senior Unsecured Notes - 7.25%

On August 22, 2001, the Company completed the issuance and sale of $500.0 principal amount of senior unsecured
notes due 2011. The notes bear interest at a rate of 7.25% per annum. The Company used the net proceeds of
approximately $493 from the sale of the notes to repay outstanding indebtedness under its Revolving Credit
Facilities.

THE INTERPUBLIC GROUP OF COMPANIES, INC. AND ITS SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Dollars in Millions, Except Per Share Amounts)

(v) Senior Unsecured Notes - 7.875%

On October 20, 2000, the Company completed the issuance and sale of $500.0 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 from the sale of the notes to repay outstanding indebtedness under its Revolving Credit
Facilities.

During 2001, the Company entered into interest rate swap agreements to convert the fixed interest rate on the
7.875% notes to a variable rate based on 6 month LIBOR. At December 31, 2001, the Company had outstanding
interest rate swap agreements covering $400.0 of the $500.0, 7.875% notes due October 2005, which reduced the
effective interest rate on the notes to 6.972%. During 2002, the Company terminated all interest rate swaps
agreements, and generated proceeds to the Company of $45.7. The net proceeds are being recorded as an adjustment
to the interest rate of the 7.875% notes. The remaining unamortized gain at December 31, 2002 was $33.7.

(vi) Convertible Subordinated Notes - 1.87%

On June 1, 1999, the Company issued $361.0 face amount of Convertible Subordinated Notes due 2006 with a cash
coupon rate of 1.87% and a yield to maturity of 4.75%. The 2006 notes were issued at an original price of 83% of
the face amount, generating proceeds of approximately $300. The notes are convertible into 6.4 million shares of the
Company's common stock at a conversion rate of 17.616 shares per one thousand dollars face amount. Since June
2002, the Company has had the option to redeem the notes for cash.

(vii) Convertible Subordinated Notes - 1.80%

On September 16, 1997, the Company issued $250.0 face amount of Convertible Subordinated Notes due 2004 with
a coupon rate of 1.80% and a yield to maturity of 5.25%. The 2004 Notes were issued at an original price of 80% of
the face amount, generating proceeds of approximately $200. The notes are convertible into 6.7 million shares of the
Company's common stock at a conversion rate of 26.772 shares per one thousand dollars face amount. Since
September 2000, the Company has had the option to redeem the notes for cash.

Short-Term Debt at December 31, 2002 and 2001

The Company and its subsidiaries have short-term lines of credit with various banks that permit borrowings at
variable interest rates. At December 31, 2002 and 2001, all borrowings under these facilities were by the Company's
subsidiaries and totaled $216.3 and $293.8, respectively. Where required, the Company has guaranteed the
repayment of borrowings by its subsidiaries.

As of December 31, 2002 and 2001, respectively, 66.8% and 56.2% of these short-term facilities were provided by
banks that participate in the Company's Revolving Credit Facilities. The weighted-average interest rates on
outstanding balances under the committed and uncommitted short-term facilities at December 31, 2002 and 2001
were approximately 4.83% and 3.64%, respectively.

THE INTERPUBLIC GROUP OF COMPANIES, INC. AND ITS SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Dollars in Millions, Except Per Share Amounts)

The following table summarizes the Company's short term debt as of December 31, 2002 and 2001.

2002

Committed
364-day Revolving Credit Facility
Other Facilities (principally International)

Uncommitted
Domestic
International

Total

2001

Committed
364-day Revolving Credit Facility
Other Facilities (principally International)

Uncommitted
Domestic
International

Total

Other

Amount
Outstanding
at December 31,
2002

$ --
3.1
$ 3.1

$ 7.7
205.5
213.2

Total
Facility

$ 500.0
157.8
$ 657.8

$ 27.7
680.2
707.9

Total
Available

$ 500.0
154.7
$ 654.7

$ 20.0
474.7
494.7

$1,365.7

$216.3

$1,149.4

Amount
Outstanding
at December 31,
2001

Total
Facility

$ 500.0
53.3
$ 553.3

$ --
7.2
$ 7.2

$ 127.5
610.8
738.3

$ 62.5
224.1
286.6

Total
Available

$ 500.0
46.1
$ 546.1

$ 65.0
386.7
451.7

$1,291.6

$ 293.8

$ 997.8

As of December 31, 2002 and 2001, respectively, the Company's credit ratings as reported by each of Standard &
Poor's Ratings Services, Moody's Investors Services, Inc. and Fitch Ratings were BBB-, Baa3 and BBB-, and
BBB+, Baa1, and A-. On March 7, 2003, Standard & Poor's Ratings Services downgraded the Company's credit
rating to BB+ with negative outlook. The Company's remaining two credit ratings are currently BBB- with negative
outlook, as reported by Fitch Ratings, and Baa3 with stable outlook, as reported by Moody's Investors Services, Inc.

During 2001, the Company purchased approximately 2.4 million shares of its common stock, compared to 4.8
million shares in 2000. Since July 2001, the Company has not repurchased its common stock in the open market.

The Company has paid cash dividends at a quarterly rate of $0.095 per share since the second quarter of 2000, when
it was increased from $0.085 per share. The determination of dividend payments is made by the Company's Board of
Directors on a quarterly basis. However, as previously discussed, the Company's ability to declare or pay dividends
is currently restricted by new terms of its Revolving Credit Facilities and Prudential Agreements, and the Company
has not declared or paid a dividend in the first quarter of 2003.

THE INTERPUBLIC GROUP OF COMPANIES, INC. AND ITS SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Dollars in Millions, Except Per Share Amounts)

Deferred Payments
Deferred payments (or "earn-outs") generally tie the aggregate price ultimately paid for an acquisition to its
performance.

As of December 31, 2002, the Company's estimated liability for deferred payments on prior acquisitions is as
follows:

Cash
Stock
Total

2003
$142.0
41.7
$183.7

2004
$78.8
9.2
$88.0

2005
$49.4
13.4
$62.8

2006 and
thereafter
$28.2
9.3
$37.5

Total
$298.4
73.6
$372.0

The amounts above are estimates based on the current projections as to the amount that will be paid and are subject
to revisions as the earn-out periods progress.

In addition to the estimated liability for earn-outs, the Company has entered into agreements that may require the
Company to purchase additional equity interests in certain companies (put options). In many cases, the Company
also has the option to purchase the additional equity interests (call options) in certain circumstances.

The total amount of potential payments under put options is $192.5, of which $9.9 is payable in stock. Exercise of
the put options would require payments to be made as follows:

2003
2004
2005
2006 and thereafter

$87.6
$20.4
$34.4
$50.1

The actual amount to be paid is generally contingent upon the achievement of projected operating performance
targets and satisfying other conditions as specified in the relevant agreement.

The Company also has call options to acquire additional equity interests in companies in which it already has an
ownership interest. The estimated amount that would be paid under such call options is $112.5 and, in the event of
exercise, would be paid as follows:

2003
2004
2005
2006 and thereafter

$25.8
$ 5.8
$15.3
$65.6

The actual amount to be paid is contingent upon the achievement of projected operating performance targets and
satisfying other conditions as specified in the relevant agreements.

THE INTERPUBLIC GROUP OF COMPANIES, INC. AND ITS SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Dollars in Millions, Except Per Share Amounts)

Summary of Significant Contractual Obligations
The following summarizes the Company's estimated contractual obligations at December 31, 2002, and the effect
such obligations are expected to have on its liquidity and cash flow in future periods.

2003

2004

2005

2006 and
thereafter

Total

Long-term debt

$604.0

$291.2

$591.9

$ 934.6

$2,421.7

Non-cancelable operating lease obligations

$281.5

$251.7

$222.7

$1,546.1

$2,302.0

Obligations under executory contract

$ 8.7

$ 9.9

$ 11.3

$ 100.1

$ 130.0

Obligations for deferred payments

$183.7

$ 88.0

$ 62.8

$ 37.5

$ 372.0

Obligations under put options

$87.6

$ 20.4

$ 34.4

$ 50.1

$ 192.5

As discussed in Note 10 to the consolidated financial statements, the Company has a number of retirement plans.
The deficit in the funded status of these plans has increased to $182.6 at December 31, 2002. The Company
considers that the long-term return on its pension assets and the funding available to the Company will be sufficient
to finance these obligations.

In 2002, the Company's liquidity was negatively impacted by lower profitability and issues resulting from the
restatements. The Company believes that cash flow from operations, together with its availability under existing
lines of credit and expected refinancings thereof and cash on hand, will be sufficient to fund the Company's working
capital needs and other obligations for the next twelve months. In the event additional funds are required, the
Company believes it will have sufficient resources, including borrowing capacity and access to capital markets, to
meet such requirements. Unanticipated decreases in cash flow from operations as a result of decreased demand for
our services and other developments may require the Company to seek other sources of liquidity (including the
disposition of certain assets) and modify its operating strategies.

CRITICAL ACCOUNTING POLICIES
The Company's significant accounting policies are described in Note 1 to the consolidated financial statements. The
Company believes the following accounting policies are critical to the accuracy of the more significant judgments
and estimates used in the preparation of its consolidated financial statements:

*
*
*
*

revenue recognition;
allowance for doubtful accounts;
accounting for income taxes; and
valuation of long-lived and intangible assets and investments.

Revenue Recognition
The Company derives revenue from advertising services, including media buying, and from marketing and
communication services, including market research, public relations, direct marketing, sales promotion and event
marketing activities.

The Company's advertising services revenue is derived from commissions that are earned when the media is placed,
from fees earned as advertising services are performed and from production services rendered. In addition, incentive
amounts may be earned based on qualitative and/or quantitative criteria. In the case of commissions, revenue is
recognized as the media placements appear. In the case of fee and production arrangements, the revenue is
recognized as the services are performed which is generally ratably over the period of the client contract. The
Company's marketing service revenues are generally earned on a fee basis, and in certain cases incentive amounts
may also be earned. As with fee arrangements in advertising, such revenue is recognized as the work is performed.
Incentive amounts for advertising and marketing services are recognized upon satisfaction of the qualitative and/or
quantitative criteria, as set out in the relevant client contract.

THE INTERPUBLIC GROUP OF COMPANIES, INC. AND ITS SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Dollars in Millions, Except Per Share Amounts)

In many cases, the amount the Company bills to clients significantly exceeds the amount of revenues that is earned
due to the existence of various "pass-through" charges such as the cost of media. In compliance with EITF 01-14,
"Income Statement Characterization of Reimbursements Received for "Out-of-Pocket Expenses Incurred", the
Company generally records revenue net of "pass-through" charges as it is not the primary obligor with respect to the
cost of "pass-through" charges.

Allowance for Doubtful Accounts
The Company assesses the required amount of allowance for doubtful accounts based on past experience and
reviews of aging and analysis of specific accounts. While the expense for bad debts has historically fluctuated in line
with revenue, in 2002 the Company recorded a higher amount of bad debt expense reflective of general economic
conditions.

Accounting for Income Taxes
As part of the process of preparing its consolidated financial statements, the Company is required to estimate income
taxes payable in each of the jurisdictions in which it operates. This process involves estimating the actual current tax
expense together with assessing temporary differences resulting from differing treatment of items for tax and
accounting purposes. These differences result in deferred tax assets and liabilities, which are included within the
Company's consolidated balance sheet. The Company then assesses the likelihood that deferred tax assets will be
recovered from future taxable income and to the extent it is determined that recovery is not likely, a valuation
allowance is established. Significant management judgment is required in determining the provision for income
taxes and the amount of valuation allowance that would be required. In the event that actual results differ from these
estimates or the Company adjusts these estimates in future periods, the Company may need to establish an additional
valuation allowance which could materially impact the Company's financial position and results of operations.

Valuation of Long-Lived and Intangible Assets and Investments
The Company has a significant amount of long-lived assets, including fixed assets, investments, goodwill and other
intangibles. The Company periodically evaluates the realizability of all of its long-lived assets whenever events or
changes in circumstances indicated that the carrying value of an asset may not be recoverable. Future events could
cause the Company to conclude that impairment indicators exist and that the asset values associated with a given
operation have become impaired. Any resulting impairment loss could have a material impact on the Company's
financial condition and results of operations.

OTHER MATTERS

Argentina and Brazil
As a result of the devaluation of the currencies in Argentina and Brazil, the Company's cumulative translation
adjustment balance reflected a reduction in stockholders' equity of approximately $23 at December 31, 2002. The
Company expects to maintain its strategic investment in Argentina and Brazil for the long-term.

RECENT ACCOUNTING STANDARDS

Standards Adopted Effective January 1, 2002
Property and Equipment
Property and equipment are reviewed for impairment whenever events or circumstances indicate their carrying value
may not be recoverable. When such events or circumstances arise, an estimate of the future undiscounted cash flows
produced by the asset, or the appropriate grouping of assets, is compared to the asset's carrying value to determine if
an impairment exists pursuant to the requirements of SFAS 144, "Accounting for the Impairment or Disposal of
Long-Lived Assets" ("SFAS 144"). If the asset is determined to be impaired, the impairment loss is measured based
on the excess of its carrying value over its fair value. Assets to be disposed of are reported at the lower of its
carrying value or net realizable value. Effective January 1, 2002, the Company adopted SFAS 144. The adoption of
this statement did not have a material impact on the Company's financial position or results of operations.

THE INTERPUBLIC GROUP OF COMPANIES, INC. AND ITS SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Dollars in Millions, Except Per Share Amounts)

Intangible Assets
Goodwill is the excess of cost of an acquired entity over the amounts assigned to assets acquired and liabilities
assumed in a business combination. Effective January 1, 2002, with the adoption of SFAS 142, "Goodwill and Other
Intangible Assets" ("SFAS 142"), goodwill is no longer amortized. Prior to January 1, 2002, goodwill was amortized
on a straight-line basis, over periods not exceeding 40 years. Beginning January 1, 2002, goodwill is tested for
impairment annually, and will be tested for impairment between annual tests if an event occurs or circumstances
change that would indicate the carrying amount may be impaired. Impairment testing for goodwill is done at a
reporting unit level. Reporting units are one level below the business segment level, but can be combined when
reporting units within the same segment have similar economic characteristics. The vast majority of goodwill relates
to and is assigned directly to a specific reporting unit. An impairment loss would generally be recognized when the
carrying amount of the reporting unit's net assets exceeds the estimated fair value of the reporting unit. The
estimated fair value of a reporting unit is determined using a discounted cash flow analysis. The Company
completed its assessment of any potential impairment upon adoption of this standard and upon its annual assessment
the Company determined that, other than the impairment charges discussed in Note 5 to the consolidated financial
statements, no impairments existed. Prior to January 1, 2002, goodwill was tested for impairment in a manner
consistent with the method used to test property and equipment and intangible assets with a definite life. During the
first quarter of 2002, the Company performed the required impairment tests of goodwill and determined that there
was no impairment required to be recognized upon adoption.

The following analysis shows the impact on the Company's statement of operations of discontinuing goodwill
amortization had SFAS 142 been effective for all periods presented:

Reported net income (loss)
Add back:
Goodwill amortization
Tax benefit on goodwill amortization
Adjusted net income (loss)

Basic earnings (loss) per share:
Reported earnings (loss)
Add back: goodwill amortization, net of tax
Adjusted earnings (loss)

Diluted earnings (loss) per share:
Reported earnings (loss)
Add back: goodwill amortization, net of tax
Adjusted earnings (loss)

Year Ended December 31,
2001
$(534.5)

2002
$99.5

--
--
$99.5

169.0
(24.3)
$(389.8)

$0.26
--
$0.26

$(1.45)
0.39
$(1.06)

2000
$392.8

140.4
(17.2)
$516.0

$1.09
0.34
$1.43

$1.06
0.33
$1.39

Other intangible assets include, principally, customer lists, trade names, customer relationships and other intangible
assets acquired from an independent party. Effective January 1, 2002, with the adoption of SFAS 142, intangible
assets with an indefinite life, namely certain trade names, are not amortized. Intangible assets with a definite life are
amortized on a straight-line basis with estimated useful lives generally ranging from 7 to 40 years. Indefinite-lived
intangible assets will be tested for impairment annually, and will be tested for impairment between annual tests if an
event occurs or circumstances change that would indicate that the carrying amount may be impaired. Intangible
assets with a definite life are tested for impairment whenever events or circumstances indicate that a carrying
amount of an asset (asset group) may not be recoverable. An impairment loss would be recognized when the
carrying amount of an asset exceeds the estimated undiscounted cash flows used in determining the fair value of the
asset. The amount of the impairment loss to be recorded is calculated by the excess of the assets carrying value over
its fair value. Fair value is generally determined using a discounted cash flow analysis.

As of December 31, 2002, the Company's remaining unamortized goodwill balance and intangible assets were
$3,377.1 and $81.6, respectively. The Company estimates that, based on its current intangible assets, amortization
expense will be approximately $8.0 in each of the next five years.

THE INTERPUBLIC GROUP OF COMPANIES, INC. AND ITS SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Dollars in Millions, Except Per Share Amounts)

In November 2001, the Emerging Issues Task Force reached a consensus on Issue No. 01-14, Income Statement
Characterization of Reimbursements Received for "Out-of-Pocket" Expenses Incurred ("EITF 01-14"). EITF 01-14
establishes that reimbursements received for certain out-of-pocket expenses should be reported as revenue and
operating expenses in the statement of operations. Historically, the Company classified reimbursed out-of-pocket
expenses as a reduction of operating expenses. The Company has adopted this guidance, retroactively, effective the
first quarter of fiscal year 2001. The adoption of this statement did not have a material impact on the Company's
financial position or results of operations.

In December 2002, SFAS 148, "Accounting for Stock-Based Compensation-Transition and Disclosure", ("SFAS
148"), an amendment of FASB Statement No. 123 was issued. The Company is choosing to continue with its current
practice of applying the recognition and measurement principles of APB 25, "Accounting for Stock Issued to
Employees." The Company has adopted the disclosure requirements of SFAS 148.

Standards to be Adopted
In June 2001, SFAS 143, Accounting for Asset Retirement Obligations ("SFAS 143") was issued. SFAS 143
addresses financial accounting and reporting for legal obligations associated with the retirement of tangible long-
lived assets and the associated retirement costs that result from the acquisition, construction, or development and
normal operation of a long-lived asset. Upon initial recognition of a liability for an asset retirement obligation, SFAS
143 requires an increase in the carrying amount of the related long-lived asset. The asset retirement cost is
subsequently allocated to expense using a systematic and rational method over the asset's useful life. SFAS 143 is
effective for fiscal years beginning after June 15, 2002. The adoption of this statement is not expected to have a
material impact on the Company's financial position or results of operations.

In June 2002, SFAS 146, Accounting for Costs Associated with Exit or Disposal Activities ("SFAS 146") was
issued. SFAS 146 changes the measurement and timing of recognition for exit costs, including restructuring charges,
and is effective for any such activities initiated after December 31, 2002. It has no effect on charges recorded for
exit activities begun prior to this date.

In November 2002, FASB Interpretation 45, "Guarantor's Accounting and Disclosure Requirements for Guarantees,
Including Indirect Guarantees of Indebtedness of Others" was issued. This interpretation elaborates on the
disclosures to be made by a guarantor in its interim and annual financial statements about its obligations under
certain guarantees that it has issued. It also clarifies (for guarantees issued after January 1, 2003) that a guarantor is
required to recognize, at the inception of a guarantee, a liability for the fair value of the obligations undertaken in
issuing the guarantee. Disclosures concerning guarantees are found in Note 15 to the consolidated financial
statements.

THE INTERPUBLIC GROUP OF COMPANIES, INC. AND ITS SUBSIDIARIES
(Dollars in Millions, Except Per Share Amounts)

Item 7A: Quantitative and Qualitative Disclosures About Market Risk

The Company is exposed to market risk related to interest rates and foreign currencies.

Interest Rates
At December 31, 2002, a significant portion of the Company's debt obligations were at fixed interest rates.
Accordingly, assuming the fixed rate debt is not refinanced, there would be no impact on interest expense or cash
flow from either a 10% increase or decrease in market rates of interest. The fair market value of the debt obligations
would decrease by $23.3 if market rates were to increase by 10% and would increase by $23.8 if market rates were
to decrease by 10%. For that portion of the debt that is either maintained at variable rates, based on amounts and
rates outstanding at December 31, 2002, the change in interest expense and cash flow from a 10% change in rates
would be approximately $1.1.

Foreign Currencies
The Company faces two risks related to foreign currency exchange: translation risk and transaction risk. Amounts
invested in the Company's foreign operations are translated into US dollars at the exchange rates in effect at the
balance sheet date. The resulting translation adjustments are recorded as a component of accumulated other
comprehensive income (loss) in the stockholders' equity section of the balance sheet. The Company's foreign
subsidiaries generally collect revenues and pay expenses in currencies other than the US dollar. Since the functional
currency of the Company's foreign operations is generally the local currency, foreign currency translation of the
balance sheet is reflected as a component of stockholders' equity and does not impact operating results. Revenues
and expenses in foreign currencies translate into varying amounts of US dollars depending upon whether the US
dollar weakens or strengthens against other currencies. Therefore, changes in exchange rates may negatively affect
the Company's consolidated revenues and expenses (as expressed in US dollars) from foreign operations. Currency
transaction gains or losses arising from transactions in currencies other than the functional currency are included in
results of operations and were not significant in 2000, 2001 and 2002. The Company has not entered into a material
amount of foreign currency forward exchange contracts or other derivative financial instruments to hedge the effects
of adverse fluctuations in foreign currency exchange rates.

Item 8. Financial Statements and Supplementary Data

INDEX TO FINANCIAL STATEMENTS

The Interpublic Group of Companies, Inc. and Subsidiaries Report of Independent Public
Accountants....................................................................................................................................... 42
True North Communications Inc. and Subsidiaries Report of Independent Public Accountants...... 43
Deutsch, Inc. and Subsidiary and Affiliates Report of Independent Public Accountants.................. 44
Consolidated Statement of Operations for the years ended December 31, 2002, 2001 and 2000... 45
Consolidated Balance Sheet as of December 31, 2002 and 2001.................................................... 46
Consolidated Statement of Cash Flows for the years ended December 31, 2002, 2001 and 2000.. 48
Consolidated Statement of Changes in Stockholders' Equity and Comprehensive Income for the
years ended December 31, 2002, 2001 and 2000.............................................................................. 49
Notes to Consolidated Financial Statements..................................................................................... 50
Report of Independent Accountant on Financial Statement Schedule............................................... 87
Valuation and Qualifying Accounts (for the three years ended December 31, 2002)....................... 88

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 other auditors, the accompanying consolidated balance
sheets and the related consolidated statements of operations, 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, 2002 and 2001, and the results of their
operations and their cash flows for each of the three years in the period ended December 31, 2002, 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 Deutsch, Inc. and Subsidiary and
Affiliates ("Deutsch"), a wholly-owned subsidiary, which statements reflect total net loss constituting approximately
2% of the related consolidated financial statement total for the year ended December 31, 2000. Additionally, we did
not audit the financial statements of True North Communications Inc. ("True North"), a wholly-owned subsidiary,
which statements reflect total revenues constituting approximately 22% of the related consolidated financial
statement total for the year ended December 31, 2000. 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 Deutsch and True North, 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 our opinion. The financial statements of True North for the year
ended December 31, 2000 were audited by other independent accountants who have ceased operations. Those
independent accountants expressed an unqualified opinion on those financial statements in their report dated March
20, 2001.

As disclosed in the Summary of Significant Accounting Policies note, effective January 1, 2002, the Company
changed the manner in which it accounts for goodwill and other intangible assets upon adoption of the accounting
guidance of Statement of Financial Accounting Standards No. 142 on July 1, 2001.

PricewaterhouseCoopers LLP
New York, New York
March 6, 2003 except Note 8, which is as of March 13, 2003

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

The following report is a copy of the report previously issued by Arthur Andersen LLP ("Andersen") and has not
been reissued by them. Andersen has informed the Company that it can no longer provide any consent to the
incorporation by reference of its reports into the Company's existing or future registration statements. Andersen has
been found guilty of certain federal obstruction of justice charges. Events arising in connection with this conviction
and related matters are reasonably likely to materially and adversely affect the ability of Andersen to satisfy any
claims that may be made by investors or by the Company with respect to its audit reports and the related financial
data included in the Company's annual reports and incorporated by reference into its registration statements.
Additionally, because Andersen is unable to provide the Company with a consent for the inclusion of its reports,
investors may not be able to sue Andersen pursuant to Section 11 of the Securities Act of 1933, as amended, and
rights of recovery under that section may be limited.

To the Stockholders and Board of Directors of True North Communications Inc.:

We have audited the consolidated balance sheets of True North Communications Inc. (a Delaware corporation) and
Subsidiaries (the "Company") as of December 31, 2000 and 1999, and the related consolidated statements of
income, stockholders' equity and cash flows for each of three years in the period ended December 31, 2000 (not
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 audits. We did not audit the
financial statements of Publicis Communications for the year ended December 31, 1998. The Company's equity in
its net earnings was $3.7 million for the year ended December 31, 1998. The financial statements of Publicis
Communications were audited by other auditors whose report has been furnished to us and our opinion, insofar as it
relates to the amounts included for Publicis Communications, is based solely upon 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 audits 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 other auditors, the financial statements referred to above present
fairly, in all material respects, the financial position of True North Communications Inc. and Subsidiaries as of
December 31, 2000, and the results of their operations and their cash flows for each of the three years in the period
ended December 31, 2000, in conformity with accounting principles generally accepted in the United States.

As explained in the notes to the consolidated financial statements (not presented herein), the Company has given
retroactive effect to the change in accounting for amortization of intangible assets.

Arthur Andersen LLP
Chicago, Illinois,
March 20, 2001

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Stockholder of Deutsch, Inc. and Subsidiary and Affiliates:

We have audited the combined balance sheet of Deutsch, Inc. and Subsidiary and Affiliates as of December 31,
2000, and the related combined statements of operations, stockholder's equity and cash flows for the year then
ended. These combined financial statements are 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 auditing standards generally accepted in the United States of America.
Those standards require that we plan and perform the audits 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 audits provide 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, 2000, and their results of
operations and cash flows for the year then ended, in conformity with accounting principles generally accepted in
the United States of America.

J.H. Cohn LLP
Roseland, New Jersey
February 13, 2001

THE INTERPUBLIC GROUP OF COMPANIES, INC. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(Amounts in Millions, Except Per Share Amounts)

YEAR ENDED DECEMBER 31,
2000
2001
2002

REVENUE

$6,203.6

$6,791.2

$7,182.7

OPERATING EXPENSES:
Salaries and related expenses
Office and general expenses
Amortization of intangible assets
Restructuring and other merger-related costs
Long-lived asset impairment and other charges

3,549.0
2,096.6
13.0
12.1
127.1

3,809.2
2,103.8
173.1
645.6
303.1

4,056.4
1,986.6
144.4
177.7
--

Total operating expenses

5,797.8

7,034.8

6,365.1

OPERATING INCOME (LOSS)

405.8

(243.6)

817.6

OTHER INCOME (EXPENSE):
Interest expense
Interest income
Other income
Investment impairment
Total other income (expense)

(145.6)
29.8
15.1
(39.7)
(140.4)

(164.6)
41.8
13.7
(210.8)
(319.9)

(126.3)
57.5
42.6
--
(26.2)

Income (loss) before provision for (benefit of) income taxes

265.4

(563.5)

791.4

Provision for (benefit of) income taxes

140.3

(55.3)

340.2

Income (loss) of consolidated companies

125.1

(508.2)

451.2

Income applicable to minority interests
Equity in net income (loss) of unconsolidated affiliates

(31.3)
5.7

(30.3)
4.0

(42.8)
(15.6)

NET INCOME (LOSS)

Earnings (loss) per share:
Basic EPS
Diluted EPS

Weighted average shares:
Basic
Diluted

Cash dividends per share

$ 99.5

$ (534.5)

$ 392.8

$ 0.26
$ 0.26

$ (1.45)
$ (1.45)

$ 1.09
$ 1.06

376.1
381.3

369.0
369.0

359.6
370.6

$ 0.38

$ 0.37

The accompanying notes are an integral part of these financial statements.

THE INTERPUBLIC GROUP OF COMPANIES, INC. AND ITS SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(Amounts in Millions, Except Per Share Amounts)

ASSETS

CURRENT ASSETS:
Cash and cash equivalents
Accounts receivable (net of allowance for doubtful
accounts: 2002-$139.8; 2001-$90.7)
Expenditures billable to clients
Deferred taxes on income
Prepaid expenses and other current assets

Total current assets

FIXED ASSETS, AT COST:
Land and buildings
Furniture and equipment
Leasehold improvements

Less: accumulated depreciation

Total fixed assets

OTHER ASSETS:
Investment in less than majority-owned affiliates
Deferred taxes on income
Other assets
Goodwill
Other intangible assets (net of accumulated
amortization: 2002-$40.9; 2001-$24.0)

Total other assets

TOTAL ASSETS

The accompanying notes are an integral part of these financial statements.

DECEMBER 31,
2002

2001

$ 933.0

$ 935.2

4,517.6
407.6
37.0
427.1

4,673.2
325.5
80.0
337.6

6,322.3

6,351.5

168.2
1,125.1
487.8
1,781.1
(955.4)

161.1
1,083.2
461.4
1,705.7
(858.0)

825.7

847.7

357.3
509.9
319.8
3,377.1

302.8
495.0
281.8
2,994.3

81.6

102.2

4,645.7

4,176.1

$11,793.7

$11,375.3

THE INTERPUBLIC GROUP OF COMPANIES, INC. AND ITS SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(Amounts in Millions, Except Per Share Amounts)

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
Accounts payable
Accrued expenses
Accrued income taxes
Dividends payable
Loans payable
Zero-coupon convertible senior notes
Current portion of long-term debt
Total current liabilities

NON-CURRENT LIABILITIES:
Long-term debt
Convertible subordinated notes
Zero-coupon convertible senior notes
Deferred compensation
Accrued postretirement benefits
Other non-current liabilities
Minority interests in consolidated subsidiaries
Total non-current liabilities

Commitments and contingencies (Note 15)

STOCKHOLDERS' EQUITY:
Preferred stock, no par value,
shares authorized: 20.0, shares issued: none

Common stock, $0.10 par value,
shares authorized: 550.0,
shares issued: 2002 - 389.3; 2001 - 385.8
Additional paid-in capital
Retained earnings
Accumulated other comprehensive loss, net of tax

Less:
Treasury stock, at cost: 2002 - 3.1 shares; 2001 - 7.3 shares
Unamortized deferred compensation

Total stockholders' equity

DECEMBER 31,

2002

2001

$ 5,125.5
1,110.8
33.2
--
216.3
581.0
23.0
7,089.8

1,253.1
564.6
--
470.5
55.6
189.7
70.4
2,603.9

$ 4,555.5
1,348.4
61.5
36.0
393.8
--
34.6
6,429.8

1,356.8
548.5
575.3
377.3
54.4
103.8
89.3
3,105.4

38.9
1,797.0
858.0
(373.6)
2,320.3

38.6
1,785.2
868.3
(447.8)
2,244.3

(119.2)
(101.1)

(290.2)
(114.0)

2,100.0

1,840.1

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$11,793.7

$11,375.3

The accompanying notes are an integral part of these financial statements.

THE INTERPUBLIC GROUP OF COMPANIES, INC. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(Amounts in Millions)

CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)
Adjustments to reconcile net income (loss) to
cash provided by operating activities:
Depreciation and amortization of fixed assets
Amortization of intangible assets
Amortization of restricted stock awards and bond discounts
Provision for (benefit of) deferred income taxes
Undistributed equity earnings
Income applicable to minority interests
Restructuring charges - non-cash
Long-lived asset impairment and ot her
Investment impairment
Other, non-cash
Change in assets and liabilities, net of acquisitions:
Accounts receivable
Expenditures billable to clients
Prepaid expenses and other current assets
Accounts payable, accrued expenses and other current liabilities
Accrued income taxes
Other non-current assets and liabilities

Net cash provided by operating activities

CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions, including deferred payments, net of cash acquired
Capital expenditures
Proceeds from sales of businesses
Proceeds from sales of long-term investments
Purchases of long-ter m investments
Maturities of short-term marketable securities
Purchases of short-term marketable securities
Other investments and miscellaneous assets

Net cash used in investing activities

CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (decrease) in short-term bank borrowings
Proceeds from long-term debt
Proceeds from termination of interest rate swaps
Payments of long-term debt
Treasury stock acquired
Treasury stock transactions
Issuance of common stock
Distributions to minority interest
Contributions from minority interest
Cash dividends - Interpublic
Cash dividends - pooled companies

Net cash provided by (used in) financing activities

Deconsolidation of subsidiary

Effect of exchange rates on cash and cash equivalents

Increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year

YEAR ENDED DECEMBER 31,
2001
$ (534.5)

2000
$ 392.8

$ 99.5

2002

204.5
13.0
83.0
55.0
(5.7)
31.3
--
127.1
39.7
(6.0)

355.0
(64.9)
(49.8)
43.9
(43.7)
(8.1)

873.8

(281.4)
(183.2)
22.8
51.3
(48.4)
50.5
(21.9)
(66.8)

(477.1)

(213.8)
4.4
50.0
(175.4)
--
(7.9)
58.6
(32.7)
3.1
(145.6)
--

(459.3)

60.4

(2.2)
935.2

209.9
173.1
68.4
(191.2)
(4.0)
30.3
104.3
275.6
210.8
(6.4)

795.6
90.8
(105.5)
(886.3)
(108.4)
19.1

141.6

(310.6)
(268.0)
18.9
36.8
(29.4)
85.3
(79.7)
(125.5)

(672.2)

(670.6)
1,804.7
--
(281.8)
(87.2)
(30.8)
85.6
(24.3)
6.9
(129.2)
(15.2)

658.1

200.2
144.4
53.0
(21.6)
15.6
42.8
73.1
--
--
(33.3)

(208.3)
(29.5)
(56.6)
31.8
(20.3)
18.0

602.1

(670.1)
(259.5)
12.1
83.9
(147.9)
98.3
(101.4)
(90.5)

(1,075.1)

105.8
1,013.9
--
(521.8)
(219.7)
(28.4)
60.0
(16.9)
5.0
(109.1)
(44.3)

244.5

(29.1)

(36.9)

(45.1)

90.6
844.6

(302.7)
1,147.3

Cash and cash equivalents at end of year

$ 933.0

$ 935.2

$ 844.6

SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid for interest
Cash paid for income taxes

The accompanying notes are an integral part of these financial statements.

$ 116.0
$ 56.0

$ 122.5
$ 231.1

$ 88.7
$ 274.5

THE INTERPUBLIC GROUP OF COMPANIES, INC. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY AND COMPREHENSIVE INCOME
FOR THE THREE YEAR PERIOD ENDED DECEMBER 31, 2002
(Amounts in Millions)

BALANCES AT DECEMBER 31, 1999
Comprehensive income:
Net income
Change in market value of securities
available-for-sale (net of reclassifications)
Foreign currency translation adjustment
Total comprehensive income
Dividends
Awards of stock under Company plans:
Achievement stock and incentive awards
Restricted stock, net of forfeitures and
amortization
Employee stock purchases
Exercise of stock options, including tax benefit
Purchase of Company's own stock
Issuance of shares for acquisitions
Tax impact of Deutsch acquisition
Equity adjustments - pooled companies
Other
BALANCES AT DECEMBER 31, 2000
Comprehensive income:
Net loss
Adjustment for minimum pension liability
Change in market value of securities
available-for-sale (net of reclassifications)
Foreign currency translation adjustment
Total comprehensive loss
Dividends
Awards of stock under Company plans:
Restricted stock, net of forfeitures and
amortization
Employee stock purchases
Exercise of stock options, including tax benefit
Purchase of Company's own stock
Issuance of shares for acquisitions
Equity adjustments - pooled companies
Other
BALANCES AT DECEMBER 31, 2001
Comprehensive income:
Net income
Adjustment for minimum pension liability
Change in market value of securities
available-for-sale (net of reclassifications)
Foreign currency translation adjustment
Total comprehensive income
Dividends
Awards of stock under Company plans:
Achievement stock and incentive awards
Restricted stock, net of forfeitures and amortization
Employee stock purchases
Exercise of stock options, including tax benefit
Issuance of shares for acquisitions
Other
BALANCES AT DECEMBER 31, 2002

Common Stock

Number
of Shares

371.6

Amount
(par value $.10)
$37.1

Additional
Retained
Paid-In
Earnings
Capital
$1,171.0 $1,320.3

Accumulated
Other
Comprehensive
Income (Loss)

Unamortized
Expense
of Restricted
Stock Grants

Treasury
Stock

Total

$ (96.7) $(312.9)

$(78.9) $2,039.9

$ 392.8

(158.9)

(224.2)
(89.3)

1.8
1.0
2.9

.2
.1
.3

90.8
22.0
84.0

377.3

$37.7

43.9
94.9
1.1

(.2)
6.1
$1,514.7 $1,554.0

$ (534.5)

(151.0)

37.4
19.6
129.4

.1
.1
.4

56.8
26.0
1.3

(.2)
$38.6 $1,785.2 $ 868.3

6.2

(236.8)
348.5

$(410.2) $(194.8)

(5.4)

55.1
(87.3)

(.9)

(123.7)
29.2

$(447.8) $(290.2)

$ 99.5

(109.8)

(45.1)

(4.4)
123.7

.1
.1
.1
--

.1
30.6
15.9
17.7
(53.7)

(5.5)

48.3
128.2

1.2
$38.9 $1,797.0 $ 858.0

$(373.6) $(119.2)

.8
1.0
3.8

2.9

385.8

1.1
.9
1.5
--

389.3

$ 392.8

(224.2)
(89.3)
79.3
(158.9)

1.1

(52.2)

45.0
22.1
84.3
(236.8)
392.4
94.9
.9
6.1
$(131.1) $2,370.3

$ (534.5)
(5.4)

55.1
(87.3)
(572.1)
(151.0)

17.1

53.7
19.7
129.8
(123.7)
86.3
26.0
1.1
$(114.0) $1,840.1

$ 99.5
(45.1)

(4.4)
123.7
173.7
(109.8)

12.9

.1
38.1
16.0
66.1
74.5
1.2
$(101.1) $2,100.0

The accompanying notes are an integral part of these financial statements.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Millions, Except Per Share Amounts)

Note 1: Summary of Significant Accounting Policies

Nature of Operations

The Company is a worldwide global marketing services company, providing clients with communications expertise
in four broad areas: a) advertising and media management, b) marketing communications, which includes client
relationship management (direct marketing), public relations, sales promotion, on-line marketing, corporate and
brand identity and healthcare marketing, c) marketing intelligence, which includes marketing research, brand
consultancy and database management and d) marketing services, which includes sports and entertainment
marketing, corporate meetings and events, retail marketing and other marketing and business services.

The Company is organized into five global operating groups. Three of these groups, McCann-Erickson WorldGroup,
the FCB Group and The Partnership, are global marketing communications companies that provide a full
complement of global marketing services and marketing communication services. The fourth global operating
group, Advanced Marketing Services ("AMS"), is the management center for the Company's specialized and
advanced marketing services. In the event of successful sale of NFO, the Company will realign the remaining
components of AMS with other operating groups. The fifth global operating group, Interpublic Sports and
Entertainment Group, which was formed in the second quarter of 2002, provides a range of sports and event
planning activities. As discussed in Note 14, the Company has two reportable segments.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its subsidiaries, most of which are
wholly owned. All significant intercompany transactions and balances have been eliminated. The Company also has
certain investments in unconsolidated affiliates that are carried on the equity basis.

Certain prior year amounts have been reclassified to conform to the current year presentation.

Restatements

As discussed in Note 16, in 2002 the Company identified charges that were related to prior year periods. The total
amount of such charges has been recorded through restatements of previously reported amounts in amended periodic
filings with the SEC.

Cash Equivalents and Investments

Cash equivalents are highly liquid investments, including certificates of deposit, government securities and time
deposits, with maturities of three months or less at the time of purchase and are stated at estimated fair value which
approximates cost.

The Company classifies the majority of its existing marketable securities as available-for-sale in accordance with the
provisions of Statement of Financial Accounting Standards 115, "Accounting for Certain Investments in Debt and
Equity Securities." These securities are carried at fair value with the corresponding unrealized gains and losses
reported as a separate component of comprehensive income. The cost of securities sold is determined based upon the
average cost of the securities sold.

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.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Millions, Except Per Share Amounts)

Translation of Foreign Currencies

The financial statements of the Company's foreign operations, when the local currency is the functional currency,
are translated into US dollars at the exchange rates in effect at each year end for assets and liabilities and average
exchange rates during each year for the results of operations. The related unrealized gains or losses from translation
are reported as a separate component of comprehensive income.

The financial statements of foreign subsidiaries located in highly inflationary economies are remeasured as if the
functional currency were the US dollar. The related remeasurement adjustments are included as a component of
operating expenses.

Revenue Recognition

The Company derives revenue from advertising services, including media buying, and from marketing and
communication services, including market research, public relations, direct marketing, sales promotion and event
marketing activities.

The Company's advertising services revenue is derived from commissions that are earned when the media is placed,
from fees earned as advertising services are performed and from production services rendered. In addition, incentive
amounts may be earned based on qualitative and/or quantitative criteria. In the case of commissions, revenue is
recognized as the media placements appear. In the case of fee and production arrangements, the revenue is
recognized as the services are performed which is generally ratably over the period of the client contract. The
Company's marketing service revenue is generally earned on a fee basis, and in certain cases incentive amounts may
also be earned. As with fee arrangements in advertising, such revenue is recognized as the work is performed.
Incentive amounts for advertising and marketing services are recognized upon satisfaction of the qualitative and/or
quantitative criteria, as set out in the relevant client contract.

Expenditures Billable to Clients

Expenditures billable to clients include costs incurred primarily in connection with production work by the
Company on behalf of clients that have not yet been billed to clients. Commissions and fees on such production
work are recorded as revenue when earned.

Property and Depreciation

The cost of property and equipment is depreciated generally using the straight-line method over the estimated useful
lives of the related assets, which range from 3 to 20 years for furniture and equipment and from 10 to 45 years for
property. Leasehold improvements are capitalized and amortized over the shorter of the life of the asset or the lease
term.

Long-lived Assets

Long-lived assets consist primarily of property and equipment and intangible assets.

Property and Equipment
Property and equipment are reviewed for impairment whenever events or circumstances indicate their carrying value
may not be recoverable. When such events or circumstances arise, an estimate of the future undiscounted cash flows
produced by the asset, or the appropriate grouping of assets, is compared to the asset's carrying value to determine if

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Millions, Except Per Share Amounts)

an impairment exists pursuant to the requirements of SFAS 144, "Accounting for the Impairment or Disposal of
Long-Lived Assets" ("SFAS 144"). If the asset is determined to be impaired, the impairment loss is measured based
on the excess of its carrying value over its fair value. Assets to be disposed of are reported at the lower of its
carrying value or net realizable value. Effective January 1, 2002, the Company adopted SFAS 144. The adoption of
this statement did not have a material impact on the Company's financial position or results of operations. See Note
5 for a description of impairment charges recognized during the third quarter of 2002.

Intangible Assets
Goodwill is the excess of cost of an acquired entity over the amounts assigned to assets acquired and liabilities
assumed in a business combination. Effective January 1, 2002, with the adoption of SFAS 142, "Goodwill and Other
Intangible Assets" ("SFAS 142"), goodwill is no longer amortized. Prior to January 1, 2002, goodwill was amortized
on a straight-line basis, over periods not exceeding 40 years. Beginning January 1, 2002, goodwill is tested for
impairment annually, and will be tested for impairment between annual tests if an event occurs or circumstances
change that would indicate the carrying amount may be impaired. Impairment testing for goodwill is done at a
reporting unit level. Reporting units are one level below the business segment level, but can be combined when
reporting units within the same segment have similar economic characteristics. The vast majority of goodwill relates
to and is assigned directly to a specific reporting unit. An impairment loss would generally be recognized when the
carrying amount of the reporting unit's net assets exceeds the estimated fair value of the reporting unit. The
estimated fair value of a reporting unit is determined using a discounted cash flow analysis. The Company
completed its assessment of any potential impairment upon adoption of this standard. Additionally, in connection
with its annual assessment the Company determined that, other than the impairment charges discussed in Note 5, no
impairments had occurred. Prior to January 1, 2002, goodwill was tested for impairment in a manner consistent with
the method used to test property and equipment and intangible assets with a definite life. During the first quarter of
2002, the Company performed the required impairment test of goodwill and determined that there was no
impairment required to be recognized upon adoption.

The following analysis shows the impact on the Company's statement of operations of discontinuing goodwill
amortization had SFAS 142 been effective for all periods presented:

Reported net income (loss)
Add back:
Goodwill amortization
Tax benefit on goodwill amortization
Adjusted net income (loss)

Basic earnings (loss) per share:
Reported earnings (loss)
Add back: goodwill amortization, net of tax
Adjusted earnings (loss)

Diluted earnings (loss) per share:
Reported earnings (loss)
Add back: goodwill amortization, net of tax
Adjusted earnings (loss)

Year Ended December 31,
2001
$(534.5)

2002
$99.5

--
--
$99.5

169.0
(24.3)
$(389.8)

$0.26
--
$0.26

$(1.45)
0.39
$(1.06)

2000
$392.8

140.4
(17.2)
$516.0

$1.09
0.34
$1.43

$1.06
0.33
$1.39

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Millions, Except Per Share Amounts)

carrying amount of an asset exceeds the estimated undiscounted cash flows used in determining the fair value of the
asset. The amount of the impairment loss to be recorded is calculated by the excess of the assets carrying value over
its fair value. Fair value is generally determined using a discounted cash flow analysis.

Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are
recognized for the estimated future tax consequences of temporary differences between the financial statement
carrying amounts and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax
rates expected to apply to taxable income in the year in which the temporary differences are expected to be
recovered or settled.

Income taxes are generally not provided on undistributed earnings of foreign subsidiaries because these earnings are
considered to be permanently invested.

Earnings Per Share

Basic earnings per share are computed using the weighted average number of common shares outstanding during the
year. Diluted earnings per share are computed using the weighted average number of common shares outstanding
during the year but also include the dilutive effect of stock-based incentives and option plans (including stock
options and awards to restricted stock) and the assumed conversion, as applicable, of the convertible notes as
described in Note 8.

Treasury Stock

In July 1999, the Board of Directors authorized the repurchase of up to 60 million shares of the Company's common
stock and, specifically, authorized a maximum of 6 million shares be purchased annually. The purchase of treasury
shares is accounted for at cost. The reissuance of treasury shares is accounted for on a first-in, first-out basis and any
gains or losses are accounted for as additional paid-in capital. Since July 2001, the Company has not made any
material purchases of treasury shares.

Concentrations of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk are primarily cash and
cash equivalents, accounts receivable, expenditures billable to clients, interest rate instruments and foreign exchange
contracts. The Company invests its excess cash in investment-grade, short-term securities with financial institutions
and limits the amount of credit exposure to any one counterparty. Concentrations of credit risk with accounts
receivable are limited due to the large number of clients and the dispersion across different industries and
geographical areas. The Company performs ongoing credit evaluations of its clients and maintains an allowance for
doubtful accounts based upon the expected collectibility of all accounts receivable. The Company is exposed to
credit loss in the event of nonperformance by the counterparties of the interest rate swaps and foreign currency
contracts. The Company limits its exposure to any one financial institution and does not anticipate nonperformance
by these counterparties.

Derivative Instruments and Hedging Activities

Effective January 1, 2001, the Company adopted SFAS 133, "Accounting for Derivative Instruments and Hedging
Activities", as amended by SFAS 138. The new accounting pronouncements established accounting and reporting
standards requiring that every derivative instrument, including certain derivative instruments embedded in other
contracts, be recorded in the balance sheet as either an asset or a liability measured at its fair value. Changes in the
derivative's fair value are to be recognized currently in earnings unless specific hedge accounting criteria are met.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Millions, Except Per Share Amounts)

The adoption of the new accounting pronouncement did not have a material effect on the Company's financial
condition or results of operations.

See Note 12 for a discussion of the derivative instruments currently outstanding and the associated accounting
treatment.

New Accounting Pronouncements

In June 2001, SFAS 143, Accounting for Asset Retirement Obligations ("SFAS 143") was issued. SFAS 143
addresses financial accounting and reporting for legal obligations associated with the retirement of tangible long-
lived assets and the associated retirement costs that result from the acquisition, construction, or development and
normal operation of a long-lived asset. Upon initial recognition of a liability for an asset retirement obligation, SFAS
143 requires an increase in the carrying amount of the related long-lived asset. The asset retirement cost is
subsequently allocated to expense using a systematic and rational method over the asset's useful life. SFAS 143 is
effective for fiscal years beginning after June 15, 2002. The adoption of this statement is not expected to have a
material impact on the Company's financial position or results of operations.

In November 2002, Interpretation No. 45, "Guarantor's Accounting and Disclosure Requirements for Guarantees,
Including Indirect Guarantees of Indebtedness of Others" was issued. This interpretation elaborates on the
disclosures to be made by a guarantor in its interim and annual financial statements about its obligations under
certain guarantees that it has issued. It also clarifies (for guarantees issued after January 1, 2003) that a guarantor is
required to recognize, at the inception of a guarantee, a liability for the fair value of the obligations undertaken in
issuing the guarantee. Disclosures concerning guarantees are found in Note 15 to the Consolidated Financial
Statements.

In December 2002, SFAS 148, "Accounting for Stock-Based Compensation-Transition and Disclosure. An
amendment of FASB Statement No. 123" was issued. The Company is choosing to continue with its current practice
of applying the recognition and measurement principles of APB No. 25, "Accounting for Stock Issued to
Employees." The Company has adopted the disclosure requirements of SFAS 148.

Stock Option Plans

The Company has various stock-based compensation plans as discussed in Note 9. The stock-based compensation
plans are accounted for under the intrinsic value recognition and measurement principles of APB Opinion 25,
"Accounting for Stock Issued to Employees" and related interpretations. Generally, all employee stock options are
issued with the exercise price equal to the market price of the underlying shares at the grant date and therefore, no
compensation expense is recorded. The intrinsic value of restricted stock grants and certain other stock-based
compensation issued to employees as of the date of grant is amortized to compensation expense over the vesting
period.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Millions, Except Per Share Amounts)

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 (loss) and earnings (loss) per share
would have been as follows:

Net income (loss)
As reported, net income (loss)
Add back:
Stock-based employee compensation expense included in
reported net income, net of tax
Deduct:
Total fair value of stock based employee
compensation expense, net of tax
Pro forma

Earnings (loss) per share

Basic earnings (loss) per share
As reported
Pro forma

Diluted earnings (loss) per share
As reported
Pro forma

Year Ended December 31,
2000
2001
2002

$ 99.5

$(534.5)

$392.8

29.0

28.1

21.3

(66.5)
$ 62.0

(96.8)
$(603.2)

(58.7)
$355.4

$ 0.26
$ 0.16

$ (1.45)
$ (1.63)

$ 1.09
$ 0.99

$ 1.06
$ 0.96

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 $3.21, $4.50 and $6.17 in 2002, 2001 and 2000, respectively.

The weighted-average fair value of options granted during 2002, 2001 and 2000 was $9.76, $12.55 and $14.86,
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:

Expected option lives

Risk free interest rate

Expected volatility

Dividend yield

2002

6 years

4.66%

35.79%

1.58%

2001

6 years

4.89%

30.35%

1.19%

2000

6 years

6.15%

25.86%

.89%

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Millions, Except Per Share Amounts)

Note 2: Earnings Per Share

The following is a reconciliation of the components of the basic and diluted earnings per share computations for
income available to common stockholders for the years ended December 31:

(Number of Shares in Millions)

2002

2001

2000

Net
Income

Per
Share
Amount

Net
Loss

Per
Share
Amount

Net
Income

Per
Share
Amount

BASIC EARNINGS (LOSS) PER SHARE

$99.5

376.1

$0.26

$(534.5)

369.0

$(1.45)

$392.8

359.6

$1.09

Effect of Dilutive Securities:(a)(b)

Options

Restricted stock

DILUTED EARNINGS (LOSS)
PER SHARE

2.2

7.6

3.0

3.4

$99.5

381.3

$0.26

$(534.5)

369.0

$(1.45)

$393.4

370.6

$1.06

(a) The computation of diluted earnings per share for 2002, 2001 and 2000 excludes the assumed conversion of the
1.87% and 1.80% Convertible Subordinated Notes (see Note 8) because they were antidilutive. The computation
of diluted earnings per share for 2001 excludes the weighted average number of incremental shares in connection
with stock options and restricted stock because they were antidilutive.

(b) The computation of diluted earnings per share for 2002 and 2001 excludes the assumed conversion of the Zero-

Coupon Convertible Senior Notes due 2021 (see Note 8) as they are contingently convertible and assume cash
settlement of the related put option.

Note 3: Acquisitions and Deferred Payments

Acquisitions
The Company acquired numerous advertising and specialized marketing and communications services companies
during the three-year period ended December 31, 2002. The aggregate purchase price, including cash and stock
payments, was as follows:

(Number of Shares in Millions)

Number of
Acquisitions

Consideration
Stock

Total

Cash

No. of Shares
Issued

2002 - Purchases

2001 - Purchases
- Pooling
Total

2000 - Purchases
- Poolings
Total

11 $ 53.0

$ 1.1

$ 54.1

19 $ 84.7
1 --
20 $ 84.7

93 $577.4
3 --
96 $577.4

$ 14.0
1,631.0
$1,645.0

$ 331.9
759.0
$1,090.9

$ 98.7
1,631.0
$1,729.7

$ 909.3
759.0
$1,668.3

.5
58.2
58.7

8.0
19.1
27.1

The value of the stock issued for acquisitions is based on the market price of the Company's stock at the time of the
transaction. For those entities accounted for as purchase transactions, the purchase price of the acquisitions has been
allocated to identifiable assets acquired and liabilities assumed based on estimated fair values with any excess being
recorded as goodwill.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Millions, Except Per Share Amounts)

Details of businesses acquired in transactions accounted for as purchases were as follows:

Consideration for new acquisitions

Less: fair value of net assets of new acquisitions

Goodwill recorded for new acquisitions

Cash paid for new acquisitions

Deferred cash payments, prior acquisitions

Less: cash acquired

Net cash paid for acquisitions

2002 Acquisitions

2002

$ 54.1

(13.9)

$ 40.2

$ 53.0

240.1

(11.7)

$281.4

2001

$ 98.7

(17.1)

$ 81.6

$ 84.7

228.9

(3.0)

$310.6

2000

$909.3

(91.1)

$818.2

$577.4

158.1

(65.4)

$670.1

Purchases
The results of operations of the acquired companies, which included the Target Group, were included in the
consolidated results of the Company from their respective acquisition dates, which were throughout the year. None
of the acquisitions made in 2002 was significant on an individual basis.

2001 Acquisitions

Purchases
The results of operations of the acquired companies, which included Transworld Marketing Corporation and
DeVries Public Relations, were included in the consolidated results of the Company from their respective
acquisition dates, which were generally in the middle of the year. None of the acquisitions made in 2001 was
significant on an individual basis.

Acquisition of True North
On June 22, 2001, the Company acquired True North Communications Inc. ("True North"), a global provider of
advertising and communication services, in a transaction accounted for as a pooling of interests. Approximately 58.2
million shares were issued in connection with the acquisition, which, based on the market price of the Company's
stock at the date of closing, yielded a value of approximately $1,631. No significant adjustments were necessary to
conform accounting policies of the entities. 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 True North.

The following table shows the historical results of the Company and True North for the periods prior to the
consummation of the merger:

Revenue:
IPG
True North
Revenue

Net income (loss):
IPG
True North

Net income (loss)

Three
Months
Ended
March 31,
2001
(Unaudited)

$1,318.8
356.0
$1,674.8

$ (40.7)
9.5

$ (31.2)

Year Ended
December 31,
2000

$5,625.8
1,556.9
$7,182.7

$ 331.2
61.6

$ 392.8

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Millions, Except Per Share Amounts)

2000 Acquisitions

Purchases
The companies acquired in transactions accounted for as purchases included Capita Technologies, Nationwide
Advertising Services, Waylon, MWW and certain assets of Caribiner International. 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. None of the acquisitions was significant on an individual basis.

Poolings
In April 2000, the Company acquired NFO Worldwide, Inc. ("NFO"), a leading provider of research-based
marketing information and counsel, in a transaction accounted for as a pooling of interests. Approximately 12.6
million shares were issued to acquire NFO.

In November 2000, the Company acquired Deutsch, Inc. and its affiliate companies ("Deutsch"), a full service
advertising agency, in a transaction accounted for as a pooling of interests. Approximately 6 million shares were
issued to acquire Deutsch. No adjustments were necessary to conform accounting policies of the entities. 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 NFO, Deutsch and the other immaterial acquisition (for
which 0.5 million shares were issued) accounted for as poolings of interests.

Revenue and net income for NFO for the quarter ended March 31, 2000 were $106.0 and $0.2. Revenue and net
income for Deutsch for the three quarters ended September 30, 2000 were $88.1 and $19.5.

In connection with the acquisition of Deutsch in 2000 and based on the taxable structure of the transaction, a
deferred tax asset of approximately $110 and a current tax liability of $15.0 were recorded with corresponding
adjustments to additional paid in capital. In connection with the acquisition of Deutsch, the Company recognized a
charge related to one-time transaction costs of $44.7. The principal component of this amount related to the expense
associated with various equity participation agreements with certain members of management. These agreements
provided for participants to receive a portion of the proceeds in the event of the sale or merger of Deutsch.

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 lower by $10.7 in 2000.

Deferred Payments

During the three-year period ended December 31, 2002, the Company paid the following deferred payments on
acquisitions that had closed in prior years:

Cash
Stock

2002
$240.1
83.2
$323.3

2001
$228.9
48.2
$277.1

2000
$158.1
63.2
$221.3

Deferred payments (or "earn-outs") generally tie the aggregate price ultimately paid for an acquisition to its
performance and are recorded as an increase to goodwill and other intangibles.

As of December 31, 2002, the Company's estimated liability for deferred payments is as follows:

Cash
Stock
Total

2003
$142.0
41.7
$183.7

2004
$78.8
9.2
$88.0

2005
$49.4
13.4
$62.8

2006 and
thereafter
$28.2
9.3
$37.5

Total
$298.4
73.6
$372.0

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Millions, Except Per Share Amounts)

The amounts above are estimates based on the current projections as to the amount that will be paid and are subject
to revisions as the earn-out periods progress.

Put and Call Options

The total amount of potential payments under put options is $192.5, of which $9.9 is payable in stock. Exercise of
the put options would require payments to be made as follows:

2003
2004
2005
2006 and thereafter

$87.6
$20.4
$34.4
$50.1

The actual amount to be paid is generally contingent upon the achievement of projected operating performance
targets and satisfying other conditions as specified in the relevant agreement.

2003
2004
2005
2006 and thereafter

$25.8
$ 5.8
$15.3
$65.6

The actual amount to be paid is contingent upon the Company's decision to exercise its option and the upon the
achievement of projected operating performance targets and satisfying other conditions as specified in the relevant
agreement.

Note 4: Restructuring and Other Merger-related Costs

2002 Activities
In the third quarter of 2002, the Company recorded an additional $12.1 in charges related to the 2001 restructuring
plan. The additional charge was necessitated largely by increases in estimates of lease losses due to lower than
anticipated sublease income in key markets, including San Francisco, Chicago, Paris and London.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Millions, Except Per Share Amounts)

A summary of the remaining liability, including the 2002 charges, for restructuring and other merger-related costs is
as follows:

Balance at
December
31, 2001

2002
Charge

Cash paid
in 2002

Long-
term
Liabilities
and Non-
cash
Items

Liability
at December
31, 2002

TOTAL BY TYPE
Severance and termination costs
Lease termination and other exit costs
Total

$154.0
157.1
$311.1

$ 2.3
9.8
$12.1

$(129.2)
(72.3)
$(201.5)

$(11.2)
--
$(11.2)

$ 15.9
94.6
$110.5

The Company has terminated approximately 7,000 employees in connection with the restructuring plan. The
majority of the remaining severance liabilities are expected to be paid out through the end of the third quarter of
2003. Amounts totaling $11.2 were transferred from restructuring liabilities to non-current liabilities (in the case of
certain long-term deferred compensation arrangements) or to additional paid-in capital (in the case of vested
restricted stock amounts).

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Millions, Except Per Share Amounts)

Note 5: Long-Lived Asset Impairment and Other Charges

2002 Impairment
Octagon Motorsports (OMS), within SEG, owns and leases certain racing circuit facilities that are used for
automobile, motorcycle and go-cart racing, primarily in the United Kingdom. Beginning in the second quarter of
2002 and continuing in subsequent quarters, certain of the Octagon businesses experienced significant operational
difficulties, including significantly lower than anticipated attendance at the marquee British Grand Prix race in July
2002. These events and a change in management at OMS in the third quarter of 2002 led the Company to begin
assessing its long-term strategy for OMS.

In accordance with the provisions of SFAS 142, the Company prepared a discounted cash flow analysis which
indicated that the book value of OMS significantly exceeded its estimated fair value and that a goodwill impairment
had occurred. In addition, as a result of the goodwill analysis, the Company assessed whether there had been an
impairment of the Company's long-lived assets in accordance with SFAS 144. The Company concluded that the
book value of certain asset groupings at OMS was significantly higher than their expected future cash flows and that
an impairment had occurred. Accordingly, the Company has recognized a non-cash impairment loss and related
charge of $127.1 ($89.7, net of tax) in 2002. The charges included $82.1 of goodwill impairment, $33.0 of fixed
assets and capital expenditure write-offs, and $12.0 to record the fair value of an associated put option.

In addition, OMS is contractually required to upgrade and improve certain of its existing facilities over the next two
years. As of December 31, 2002, these capital expenditure commitments amount to approximately $30.0 and are
expected to be impaired as incurred based on current cash flow analyses for the relevant asset groupings.

In the fourth quarter of 2002, management determined that its original operating plans were no longer feasible and
decided to explore options to exit some or all of these businesses. The remaining book value of long-lived assets
relating to OMS is approximately $70 at December 31, 2002, and this amount, as well as other substantial
contractual obligations, may not be fully recoverable depending upon the exit strategy ultimately followed.

2001 Impairment
Following the completion of the True North acquisition in 2001 and the realignment of certain of the Company's
businesses, the Company evaluated the realizability of various assets. In connection with this review undiscounted
cash flow projections were prepared for certain investments, and the Company determined that the goodwill
attributable to certain business units was stated at an amount in excess of the future estimated cash flows. As a
result, an impairment charge of $303.1 ($263.4, net of tax) was recorded in 2001. Of the total write-off, $221.4 was
recorded in the second quarter, with the remainder recorded in the third quarter. The largest components of the
goodwill impairment and other charges were Capita Technologies, Inc. (approximately $145) and Zentropy Partners
(approximately $16), both internet services businesses. The remaining amount primarily related to several other
businesses including internet services, healthcare consulting and certain advertising offices in Europe and Asia
Pacific.

Operating Expenses
Included in office and general expenses in 2001 are charges of $85.4 ($49.5, net of tax) relating primarily to
operating assets, which are no longer considered realizable. Additionally, a benefit of $50.0 ($29.0, net of tax)
resulting from a reduction in severance reserves related to significant headcount reductions is included in salaries
and related expenses in 2001.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Millions, Except Per Share Amounts)

Note 6: Other Income (Expense)

Investment Impairment
During 2002, the Company recorded $39.7 of investment impairment primarily related to certain investments of
Octagon, the Company's sports marketing business within SEG. The impairment charges adjusted the carrying value
of investments to the estimated market value where an other than temporary impairment had occurred.

Other Income
The following table sets forth the components of other income:

Gains on sales of business

2002

2001

2000

$ 7.0

$12.3

$16.5

Gains (losses) on sales of available-for-sale securities

5.3

(2.5)

28.5

Investment income and miscellaneous

2.8

3.9

(2.4)

$15.1

$13.7

$42.6

During 2002, the Company sold an unconsolidated affiliate in Europe for proceeds of $12.8, an unconsolidated
affiliate in the US for proceeds of $5.2 and a marketing services affiliate for proceeds of $3.8.

During 2001, the Company sold a marketing services affiliate in Europe for proceeds of approximately $5 and some
non-core marketing services affiliates in the US for proceeds of $6.9.

During 2000, the Company sold its interest in a non-core minority owned marketing services business for proceeds
of approximately $12.

Note 7: Provision for Income Taxes

The Company accounts for income taxes under SFAS 109, "Accounting for Income Taxes" ("SFAS 109"). 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 (loss) before provision for (benefit of) income taxes are as follows:

Year Ended December 31,
2001

2002

2000

Domestic
Foreign

Total

$353.6
(88.2)

$265.4

$(474.3)
(89.2)

$(563.5)

$499.0
292.4

$791.4

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Millions, Except Per Share Amounts)

The provision for (benefit of) income taxes consists of:

Federal Income Taxes (Including
Foreign Withholding Taxes):
Current
Deferred

State and Local Income Taxes:
Current
Deferred

Foreign Income Taxes:
Current
Deferred

Total

$ 6.2
120.1
126.3

26.6
3.3
29.9

52.5
(68.4)
(15.9)
$140.3

$48.3
(144.4)
(96.1)

3.7
(36.9)
(33.2)

83.9
(9.9)
74.0
$ (55.3)

$168.1
2.9
171.0

48.3
(2.8)
45.5

145.4
(21.7)
123.7
$340.2

At December 31, 2002 and 2001 the deferred tax assets consisted of the following items:

Postretirement/postemployment benefits
Deferred compensation
Pension costs
Depreciation
Rent
Interest
Accrued reserves
Allowance for doubtful accounts
Goodwill amortization
Investments in equity securities
Tax loss/tax credit carryforwards
Restructuring and other merger-related costs
Other

Total deferred tax assets
Valuation allowance

Net deferred tax assets

December 31,
2001

2002

$ 22.4
141.1
47.1
0.7
(6.3)
(7.2)
24.6
33.5
50.7
5.8
155.0
130.1
18.7

616.2
(69.3)

$546.9

$ 59.6
112.5
21.3
(11.0)
(9.6)
3.5
12.2
16.8
83.9
33.7
74.2
220.3
(0.6)

616.8
(41.8)

$575.0

The valuation allowance of $69.3 and $41.8 at December 31, 2002 and 2001, respectively, represents a provision for
uncertainty as to the realization of certain deferred tax assets, including US tax credits and net operating loss
carryforwards in certain jurisdictions. The change during 2002 in the deferred tax valuation allowance primarily
relates to uncertainties regarding the utilization of tax credits and net operating loss carryforwards. At December 31,
2002, there were $57.2 of tax credit carryforwards with expiration periods through 2007 and loss carryforwards with
a tax effect of $97.8 with various expiration periods. The Company has concluded that, based upon expected future
results, it is more likely than not that the net deferred tax asset balance will be realized.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Millions, Except Per Share Amounts)

A reconciliation of the effective income tax rate as shown in the consolidated statement of income to the federal
statutory rate is as follows:

Year Ended December 31,
2000
2001
2002

Statutory federal income tax rate

35.0%

(35.0)%

State and local income taxes, net of federal income tax benefit

Impact of foreign operations, including withholding taxes

Goodwill and intangible asset amortization

Effect of pooled companies

Goodwill and other long-lived asset impairment

Restructuring and other merger-related costs

Other

Effective tax rate

7.3

9.9

2.7

(0.2)

(1.8)

52.9%

2.9

2.7

6.1

11.7

4.7

(2.9)

(9.8)%

35.0%

3.7

(0.3)

3.6

1.8

1.2

(2.0)

43.0%

As described in Note 3, 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
a "C" Corporation. Deutsch became a "C" Corporation upon its acquisition by the Company. Assuming Deutsch had
been a "C" Corporation, the Company's effective tax rate would have been 44.3% for 2000.

The total amount of undistributed earnings of foreign subsidiaries for income tax purposes was approximately
$794.7 at December 31, 2002. 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.

The Internal Revenue Service (IRS) is currently examining the Company's federal income tax returns for 1994 to
1996. While the audit is not complete, the IRS has indicated its intention to challenge certain of the Company's tax
positions. The Company believes that its tax positions comply with applicable tax law and intends to defend its
positions vigorously. The ultimate disposition of these matters could require the Company to make additional
payment to the IRS. Nonetheless, the Company believes that there will not be a material effect on the Company's
financial position, cash flows or results of operations from the ultimate resolution of these matters.

Note 8: Debt

Revolving Credit Agreements

On June 27, 2000 and May 16, 2002, the Company entered into two revolving credit facilities, respectively, each
provided by a syndicate of banks (the "Revolving Credit Facilities"), which are used to fund the Company's ordinary
course business needs. The facility entered into on June 27, 2000 provides for borrowings of up to $375.0 and is for
a term of five years, which expires in June of 2005. The facility entered into on May 16, 2002 provides for
borrowings of up to $500.0 and is for a term of 364 days, which expires on May 15, 2003. However, the Company
has the option to extend the maturity of amounts outstanding on the termination date under the 364-day Revolving
Credit Facility for a period of one year. As of December 31, 2002, no amounts were borrowed under the 364-day
Revolving Credit Agreements and $50.3 was borrowed under the five-year Revolving Credit Facility. As of March
20, 2003, no amounts were borrowed under the 364-day Revolving Credit Facility and approximately $49.8 was
borrowed under the five-year Revolving Credit Facility.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Millions, Except Per Share Amounts)

The Revolving Credit Facilities bear interest at variable rates based on either LIBOR or a bank's base rate, at the
Company's option. The interest rates on base rate loans and LIBOR loans under the Revolving Credit Facilities are
affected by the facilities' utilization levels and the Company's credit ratings. On October 25, 2002, Moody's
Investors Services, Inc. downgraded the Company's credit rating to Baa3. On March 7, 2003, Standard and Poor's
downgraded the Company's credit rating to BB+. As of March 7, 2003, the combined effect of the downgrades was
an increase in the interest spread payable on LIBOR loans under the Revolving Credit Facilities of 25 basis points
from the interest rate spread of 1.25% applicable as of December 31, 2002.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Millions, Except Per Share Amounts)

Other Committed and Uncommitted Facilities

Prudential Agreements

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Millions, Except Per Share Amounts)

UBS Facility

On February 10, 2003, the Company received from UBS AG a commitment for an interim credit facility providing
for $500.0, maturing no later than July 31, 2004 and available to the Company beginning May 15, 2003, subject to
certain conditions. This commitment terminated in accordance with its terms when the Company received net cash
proceeds in excess of $400.0 from its sale of the 4.5% Notes. The fees associated with the commitment were not
material to the Company's financial position, cash flows or results of operations.

Other Debt Instruments

(i) Convertible Senior Notes - 4.5%

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Millions, Except Per Share Amounts)

(ii) Zero-Coupon Convertible Senior Notes

The balance outstanding under the Zero-Coupon Notes as of December 31, 2002 was $581.0. This amount is
classified as current in the accompanying consolidated balance sheet.

(iii) Floating Rate Notes

On June 28, 2001, the Company issued and sold $100.0 of floating rate notes which bore interest based on three-
month LIBOR. The notes matured and were repaid on June 28, 2002.

(iv) Senior Unsecured Notes - 7.25%

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Millions, Except Per Share Amounts)

(v) Senior Unsecured Notes - 7.875%

During 2001, the Company entered into interest rate swap agreements to convert the fixed interest rate on the
7.875% notes to a variable rate based on 6 month LIBOR. At December 31, 2001, the Company had outstanding
interest rate swap agreements covering $400.0 of the $500.0, 7.875% notes due October 2005, which reduced the
effective interest rate on the notes to 6.972%. During 2002, the Company terminated all interest rate swaps
agreements and generated proceeds to the Company of $45.7. The net proceeds are being recorded as an adjustment
to the interest rate of the 7.875% notes. The remaining unamortized gain at December 31, 2002 was $33.7.

(vi) Convertible Subordinated Notes - 1.87%

(vii) Convertible Subordinated Notes - 1.80%

Debt Outstanding at December 31, 2002 and 2001

(i) Short-Term Debt

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Millions, Except Per Share Amounts)

The following table summarizes the Company's short term debt as of December 31, 2002 and 2001.

2002

Committed
364-day Revolving Credit Facility
Other Facilities (principally International)

Uncommitted
Domestic
International

Total

2001

Committed
364-day Revolving Credit Facility
Other Facilities (principally International)

Uncommitted
Domestic
International

Total

(ii) Long-Term Debt

Long-term debt at December 31 consisted of the following:

Convertible Subordinated Notes - 1.80%

Convertible Subordinated Notes - 1.87%

Zero-Coupon Convertible Notes

Senior Unsecured Note - 7.875%

Senior Unsecured Note - 7.25%

Five-Year Revolving Credit Facility - .0525% (3.05% in 2001)

Term Loans - 8.05% to 10.01% (6.05% to 8.01% in 2001)

Other Notes Payable and Capitalized Leases - 2.25% to 25.67%

Less: Current Portion

Long-Term Debt

Amount
Outstanding
at December 31,
2002

$ --
3.1
$ 3.1

$ 7.7
205.5
213.2

Total
Facility

$ 500.0
157.8
$ 657.8

$ 27.7
680.2
707.9

Total
Available

$ 500.0
154.7
$ 654.7

$ 20.0
474.7
494.7

$1,365.7

$216.3

$1,149.4

Amount
Outstanding
at December 31,
2001

$ --
7.2
$ 7.2

$ 62.5
224.1
286.6

Total
Facility

$ 500.0
53.3
$ 553.3

$ 127.5
610.8
738.3

Total
Available

$ 500.0
46.1
$ 546.1

$ 65.0
386.7
451.7

$1,291.6

$ 293.8

$ 997.8

2002

$ 236.1

2001

$ 228.5

328.5

581.0

533.7

500.0

50.3

157.1

35.0

2,421.7

604.0

$1,817.7

320.0

575.3

500.0

144.1

203.9

43.4

2,515.2

34.6

$2,480.6

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Millions, Except Per Share Amounts)

Long-term debt maturing over the next five years and thereafter is as follows:

2003
2004
2005
2006
2007
2008 and thereafter

Other

$604.0
$291.2
$591.9
$359.1
$ 50.0
$525.5

See Note 13 for discussion of fair market value of the Company's long-term debt.

Note 9: Incentive Plans

The 2002 Performance Incentive Plan ("2002 PIP Plan") was approved by the Company's stockholders in May 2002
and includes both stock and cash based incentive awards. The maximum number of shares of the Company's
common stock that may be granted under the 2002 PIP Plan is 12,500,000 shares, supplemented with additional
shares as defined in the 2002 PIP Plan document (excluding management incentive compensation performance
awards). The 2002 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 2002
PIP Plan remain subject to the respective terms and conditions of the predecessor plans. Except as otherwise noted,
awards under the 2002 PIP Plan have terms similar to awards made under the respective predecessor plans.

Stock Options
Stock 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:

(Number of Shares in Thousands)

Shares under option,
beginning of year
Options granted
Options exercised
Options cancelled

Shares under option,
end of year

Options exercisable
at year-end

2002
Weighted
Average
Exercise
Price

2001
Weighted
Average
Exercise
Price

2000
Weighted
Average
Exercise
Price

38,314
7,895
(2,831)
(1,037)

$29
$26
$14
$29

34,939
10,048
(5,228)
(1,445)

$25
$36
$15
$33

34,665
6,381
(3,657)
(2,450)

$22
$38
$15
$28

42,341

$29

38,314

$29

34,939

$25

19,758

$25

20,166

$22

12,008

$15

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Millions, Except Per Share Amounts)

The following table summarizes information about stock options outstanding and exercisable at December 31, 2002:

(Number of Shares in Thousands)

Range of
Exercise Prices

Number of
Shares
Outstanding
at 12/31/02

Weighted-
Average
Remaining
Contractual
Life

Weighted-
Average
Exercise
Price

Number of
Shares
Exercisable
at 12/31/02

Weighted-
Average
Exercise
Price

$ 3.31 to $9.99

219

0.89

$ 9.27

219

$ 9.27

$10.00 to $14.99

3,279

5.45

$12.26

1,843

$11.01

$15.00 to $24.99

9,252

4.78

$19.18

8,622

$19.04

$25.00 to $60.00

29,591

7.47

$34.71

9,074

$34.19

See Note 1 for pro forma disclosure of net income (loss) and earnings (loss) per share under SFAS 123.

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 900,000 shares,
800,000 shares and 600,000 shares in 2002, 2001 and 2000, respectively. An additional 13.3 million shares were
reserved for issuance at December 31, 2002.

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, 2002, there was a total of 6.6 million shares of restricted stock outstanding. During 2002, 2001 and
2000, the Company awarded 1.5 million shares, 1.5 million shares and 2.4 million shares of restricted stock with a
weighted-average grant date fair value of $29.11, $32.09 and $42.13, respectively. The cost recorded for restricted
stock awards in 2002, 2001 and 2000 was $50.0, $48.5 and $36.7, 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 $15, $45 and $40 in 2002, 2001 and 2000, respectively.

Note 10: Retirement Plans

Defined Benefit Pension Plans
Through March 31, 1998 the Company and certain of its domestic subsidiaries had a defined benefit plan
("Domestic 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 benefit plan.

Under the amended plan, each participant's account is credited with an annual allocation, which approximates the
projected discounted pension benefit accrual (normally made under the Domestic Plan) 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 plan participation with the Company after March 31, 1998.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Millions, Except Per Share Amounts)

Net periodic pension costs (income) for the Domestic Plan for 2002, 2001 and 2000 were $3.4, $1.6 and ($.9),
respectively.

Additionally, NFO maintains a defined benefit plan ("NFO Plan") covering approximately one half of NFO's US
employees. The periodic pension costs for this plan for 2002, 2001 and 2000 were $1.0, $0.6 and $0.5, 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.

Certain of the Company's international subsidiaries have similar plans for their employees. The cost to the Company
for retired employees is not significant for these plans.

Net periodic pension costs for foreign pension plans for 2002, 2001 and 2000 included the following components:

Service cost

Interest cost

Expected return on plan assets

Amortization of unrecognized transition obligation

Amortization of prior service cost

Recognized actuarial loss (gain)

Net periodic pension cost

2002

$ 9.9

12.0

(10.3)

$13.2

2001

$10.4

11.7

(10.7)

1.3

(.6)

$12.7

2000

$ 9.5

11.6

(12.0)

(.3)

$10.0

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, 2002 and
2001:

Domestic
Pension Plans
2001
2002

Foreign
Pension Plans
2001
2002

Change in Benefit Obligations

Benefit obligation at January 1

Service cost

Interest cost

Benefits paid

Plan participant contributions

Actuarial (gains) losses

Foreign currency effect

Other

Benefit obligation at December 31

$147.5

10.3

(14.6)

6.9

150.8

$ 153.8

$ 208.9

$ 231.7

10.4

(13.9)

(3.6)

147.5

9.9

12.0

(10.4)

2.6

20.4

1.0

244.4

10.4

11.7

(16.6)

2.3

(15.7)

(15.1)

208.9

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Millions, Except Per Share Amounts)

Change in Plan Assets

Fair value of plan assets at January 1

Actual return on plan assets

Employer contributions

Plan participant contributions

Benefits paid

Foreign currency effect

Other

Fair value of plan assets at December 31

Reconciliation of Funded Status to
Total Amount Recognized

Funded status of the plans

Unrecognized net actuarial loss

Unrecognized prior service cost

Unrecognized transition cost

Net asset (liability) recognized

Amounts Recognized in Consolidated
Balance Sheet

Prepaid Benefit Cost

Accrued Benefit Liability

Intangible Asset

Accumulated Other
Comprehensive Income

Net asset (liability) recognized

112.8

(12.0)

4.1

(14.6)

90.3

(60.5)

70.5

$ 10.1

(63.6)

63.6

$ 10.1

132.5

(6.2)

(13.9)

112.8

(34.7)

45.0

$ 10.4

$ 9.8

(40.9)

41.5

$ 10.4

148.7

(22.4)

7.0

2.6

(10.4)

(4.5)

1.3

122.3

(122.1)

67.5

$ (53.0)

$ 14.0

(112.7)

45.2

$(53.0)

183.8

(18.0)

7.8

2.3

(16.6)

(14.7)

4.1

148.7

(60.2)

14.3

1.9

$ (43.2)

$ 16.0

(59.2)

$(43.2)

At December 31, 2002 and 2001, the assets of the Domestic Plans and the foreign pension plans were primarily
invested in fixed income and equity securities.

For the Domestic Plans, discount rates of 6.75% in 2002 and 7.25% in 2001 and salary increase assumptions of
3.5% in 2002 and 2001 were used in determining the actuarial present value of the projected benefit obligation. The
expected return of Domestic Plans assets was 9% to 9.5% in 2002 and 2001. For the foreign pension plans, discount
rates ranging from 2.3% to 10% in 2002 and 3% to 10% in 2001 and salary increase assumptions ranging from 1%
to 10% in 2002 and 2001 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 .3% to 10% in 2002 and 2% to
10% in 2001.

As of December 31, 2002, the projected benefit obligation, accumulated benefit obligation and fair value of plan
assets for the Domestic Plans with accumulated benefit obligation in excess of plan assets were approximately $151,
$149 and $90, respectively, and as of December 31, 2001, approximately $147, $146 and $113, respectively. 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 approximately $240, $232 and $116,
respectively, as of December 31, 2002 and approximately $69, $66 and $3, respectively, as of December 31, 2001.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Millions, Except Per Share Amounts)

Other Benefit Arrangements
The Company sponsors other defined contribution plans ("Savings Plans") and certain domestic subsidiaries
maintain a profit sharing plan ("Profit Sharing Plan") that cover substantially all domestic employees of the
Company and participating subsidiaries. The Savings Plans permit participants to make contributions on a pre-tax
and/or after-tax basis. The Savings Plans allow 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
match is made in cash and ranges between 2-4% of salary. The Company contributed $29.0, $36.7 and $34.2 to the
Savings Plans and Profit Sharing Plan in 2002, 2001 and 2000, respectively.

The Company has deferred compensation plans which permit certain of its key officers and employees to defer a
portion of their salary and incentive compensation and receive corresponding company matching and discretionary
profit sharing contributions. The Company has purchased whole life insurance policies on participants' lives to assist
in the funding of the deferred compensation liability. As of December 31, 2002 and 2001, the cash surrender value
of these policies was approximately $121 and $105, respectively. Additionally, certain investments are maintained
in a separate trust for the purpose of paying the deferred compensation liability. The assets are held on the balance
sheet of the Company but are restricted to the purpose of paying the deferred compensation liability. As of
December 31, 2002 and 2001, the value of such restricted assets was approximately $82 and $91, 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. The Company's plan covering postretirement medical benefits is self-insured with no maximum
limit of coverage.

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 2002, 2001 and 2000 was $4.8, $3.7 and $3.0, 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, 2002
and 2001:

Change in benefit obligation

Beginning obligation

Service cost

Interest cost

Participant contributions

Benefits paid

Plan amendments

Actuarial (gain) loss

Ending obligation

Change in plan assets

Beginning fair value

Actual return on plan assets

Employer contributions

Participant contributions

Benefits paid

Ending fair value

2002

2001

$ 52.6

$ 49.4

3.8

(4.9)

(.5)

52.0

4.8

3.7

(4.6)

3.1

52.6

4.5

(4.9)

(4.6)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Millions, Except Per Share Amounts)

Reconciliation of Funded Status to Total Amount Recognized

Funded status of the plans

Unrecognized net actuarial gain

Unrecognized prior service cost

Unrecognized net transaction obligation

Net liability recognized

(52.0)

(3.5)

(.3)

1.5

(52.6)

(2.9)

(.5)

1.6

$(54.3)

$(54.4)

Discount rates of 6.75% in 2002 and 7.25% in 2001 and salary increase assumptions of 3.5% in 2002 and 3.5% to
6% in 2001 were used in determining the accumulated postretirement benefit obligation. A 7.0% to 11.5% and a
6.1% to 12% increase in the cost of covered health care benefits were assumed for 2002 and 2001, respectively.
These rates are assumed to decrease incrementally to approximately 5% to 11% in the years 2003 to 2006 and
remain at that level thereafter. A 1% increase in the health care cost trend rate would increase the obligation by
approximately $3 and the periodic expense by $0.3. A 1% decrease would decrease the obligation and expense by
similar amounts.

Note 11: Comprehensive Income

Accumulated other comprehensive income (loss) amounts are reflected in the consolidated financial statements as
follows:

Net income (loss)

$ 99.5

$(534.5)

$392.8

Foreign currency translation adjustment

123.7

(87.3)

(89.3)

2002

2001

2000

Adjustment for minimum pension liability:
Adjustment for minimum pension liability
Tax benefit
Adjustment for minimum pension liability

Unrealized holding gain (loss) on securities:
Unrealized holding gains
Tax expense

Unrealized holding losses
Tax benefit

Reclassification of unrealized loss to net earnings
Tax benefit

Reclassification of unrealized gains to net earnings
Tax expense
Unrealized holding gain (loss) on securities

(67.4)
22.3
(45.1)

--
--

(7.4)
3.0

--
--

--
--
(4.4)

(9.3)
3.9
(5.4)

0.5
(0.2)

--
--

94.8
(39.8)

(0.3)
0.1
55.1

--
--
--

9.1
(3.8)

(381.9)
160.4

--
--

(13.8)
5.8
(224.2)

Comprehensive income (loss)

$173.7

$(572.1)

$ 79.3

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Millions, Except Per Share Amounts)

As of December 31, accumulated other comprehensive loss as reflected in the Consolidated Balance Sheet is as
follows:

Foreign currency translation adjustment

Adjustment for minimum pension liability

Unrealized holding gain (loss) on securities

Accumulated other comprehensive loss

Note 12: Derivative and Hedging Instruments

2002

2001

$(300.7)

$(424.4)

(69.1)

(24.0)

(3.8)

0.6

$(373.6)

$(447.8)

2000

$(337.1)

(18.6)

(54.5)

$(410.2)

The Company enters into interest rate swaps, hedges of net investments in foreign operations and forward contracts.

As of December 31, 2002, the Company had terminated all of the interest rate swap agreements covering the $500.0,
7.875% notes due October 2005. In connection with the termination of the interest rate swap agreements
transaction, the Company received $45.7 in cash which will be recorded as an offset to interest expense over the
remaining life of the related debt.

As of December 31, 2002, the Company had contracts covering $37.1 of notional amount of currency and the fair
value of the forward contracts was a gain of $5.1.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Millions, Except Per Share Amounts)

As discussed in Note 3, the Company has entered into various put and call options related to acquisitions. The
exercise price of such options is generally based upon the achievement of projected operating performance targets
and approximate fair value.

Note 13: Financial Instruments

Financial assets, which include cash and cash equivalents, investments and receivables, have carrying values which
approximate fair value. Marketable securities are mainly available-for-sale as defined by SFAS 115, "Accounting
for Certain Investments in Debt and Equity Securities", and accordingly are reported at fair value with net unrealized
gains and losses reported as a component of other comprehensive income. The estimated fair value amounts have
been determined using available market information and appropriate valuation methodologies.

The Company's off-balance sheet financial instruments consisted of interest-rate swap agreements and foreign
currency forward contracts as discussed in Note 12. The fair value of interest rate swap agreements was estimated
based on quotes from the market makers of these instruments and represents the estimated amounts that the
Company would expect to receive or pay to terminate the agreements at the reporting date. The fair values
associated with the foreign currency contracts were estimated by valuing the net position of the contracts using the
applicable spot rates and forward rates as of the reporting date.

The following table summarizes net unrealized holding gains and losses before taxes of the Company's investments
carried on the cost method, at December 31:

Cost

Unrealized:

- Gains

- Losses

Net unrealized gains (losses)

Fair market value

2002

$169.0

(6.0)

$163.0

2001

$176.3

1.4

$177.7

2000

$379.3

1.3

(94.9)

(93.6)

$285.7

Unrealized holding gains (losses), net of tax, were $(3.8), $0.6 and $(54.5) at December 31, 2002, 2001 and 2000,
respectively.

Financial liabilities with carrying values approximating fair value include accounts payable and accrued expenses, as
well as short-term bank borrowings.

As of December 31, the fair value of the Company's significant long-term borrowings was as follows:

Convertible Subordinated Notes - 1.87%

Convertible Subordinated Notes - 1.80%

Senior Unsecured Note - 7.875%

Senior Unsecured Note - 7.25%

Zero-Coupon Convertible Notes

2002
Fair
Book
Value
Value

$328.5

$236.1

$533.7

$500.0

$581.0

$278.0

$219.4

$485.0

$475.0

$551.9

2001
Fair
Book
Value
Value
$284.7
$320.0

$228.5

$500.0

$575.3

$235.9

$513.4

$476.7

$593.1

The fair value of long-term debt instruments is based on market prices for debt instruments with similar terms and
maturities

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Millions, Except Per Share Amounts)

Effective February 10, 1999, a majority-owned subsidiary of the Company, Modem Media, Poppe Tyson, Inc. (now
known as Modem Media, Inc.), completed an initial public offering (IPO) of its common stock. As a result of the
IPO, the Company owned approximately 48% of Modem Media, down from its 70% ownership, but controlled
approximately 80% of the related stockholder votes due to the super-majority voting right on its Class B shares. In
April 2000, the Company converted all of its shares of Modem Media Class B common stock into Class A common
stock pursuant to a Stockholders' Agreement with Modem Media. As a result, the Company's voting power was
reduced from approximately 80% to approximately 46%. Accordingly, effective with the second quarter of 2000,
Modem Media is no longer consolidated in the Company's financial statements and is accounted for on the equity
method. As of December 31, 2002, the carrying value of Modem Media , Inc., was $28.9.

Note 14: Segment Information

During the second quarter of 2002, the Company reorganized its operations. Prior to the second quarter, the
Company was organized into four global operating groups: a) McCann-Erickson WorldGroup ("McCann"), b) the
FCB Group ("FCB"), c) The Partnership and d) Advanced Marketing Services ("AMS"). In the second quarter, the
Company carved out certain operations related to sports and event planning activities and combined them to form a
fifth global operating group, Interpublic Sports and Entertainment Group ("SEG"). Each of the five groups has its
own management structure and reports to senior management of the Company on the basis of the five groups.
McCann, FCB and The Partnership provide a full complement of global marketing services including advertising
and media management, marketing communications including direct marketing, public relations, sales promotion,
event marketing, on-line marketing and healthcare marketing in addition to specialized marketing services. AMS
provides specialized and advanced marketing services and also includes NFO WorldGroup (for marketing
intelligence services). SEG includes Octagon Worldwide (for sports marketing) and Jack Morton Worldwide (for
specialized marketing services including corporate events, meetings and training/learning).

Each of McCann, FCB, The Partnership, AMS and SEG operate with the same business objective which is to
provide clients with a wide variety of services that contribute to the delivery of a message and to the maintenance or
creation of a brand. However, the Partnership and AMS historically have had lower gross margins than the
Company average. The five global operating groups share numerous clients, have similar cost structures, provide
services in a similar fashion and draw their employee base from the same sources. The annual margins of each of the
five groups may vary due to global economic conditions, client spending and specific circumstances such as the
Company's restructuring activities. However, based on the respective future prospects of McCann, FCB, The
Partnership and AMS, the Company believes that the long-term average gross margin of each of these four groups
will converge over time and, given the similarity of the operations, the four groups have been aggregated. SEG has
different margins to the remaining four groups and, given current projections, the Company believes that the
margins for this operating segment will not converge with the remaining four groups.

SEG revenue is not material to the Company as a whole. However, in 2002 due to the recording of long-lived asset
impairment charges, the operating difficulties and resulting higher costs from its motorsports business, the Company
incurred a significant operating loss. Based on the fact that the book value of long-lived assets relating to OMS and
other substantial contractual obligations may not be fully recoverable, the Company no longer expects that margins
of SEG will converge with those of the rest of IPG. Accordingly, the Company has begun to report SEG as a
separate reportable segment.

Accordingly, in accordance with SFAS 131, "Disclosures about Segments of an Enterprise and Related
Information", the Company has two reportable segments. The accounting policies of the reportable segments are the
same as those described in the summary of significant accounting policies. Management evaluates performance
based upon operating earnings before interest and income taxes.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Millions, Except Per Share Amounts)

Summarized financial information concerning the Company's reportable segments is shown in the following table:

2002
Revenue
Operating income (loss)
Total assets
Goodwill
Depreciation and amortization of fixed assets
Capital expenditures

2001
Revenue
Operating loss
Total assets
Goodwill
Depreciation and amortization of fixed assets
Capital expenditures

2000
Revenue
Operating income
Total assets
Goodwill
Depreciation and amortization of fixed assets
Capital expenditures

IPG
(excl. SEG)

$ 5,834.9
596.2
11,216.0
3,057.2
187.0
$ 142.4

$ 6,365.7
(230.8)
10,737.0
2,629.0
194.9
$ 243.5

$ 6,785.1
751.6
11,653.6
2,700.1
187.9
$ 243.1

SEG

$ 368.7
(190.4)
577.7
319.9
17.5
$ 40.8

$ 425.5
(12.8)
638.3
365.3
15.0
$ 24.5

$ 397.6
66.0
600.0
359.0
12.3
$ 16.4

Consolidated
Total

$ 6,203.6
405.8
11,793.7
3,377.1
204.5
$ 183.2

$ 6,791.2
(243.6)
11,375.3
2,994.3
209.9
$ 268.0

$ 7,182.7
817.6
12,253.6
3,059.1
200.2
$ 259.5

A reconciliation of information between reportable segments and the Company's consolidated pre-tax earnings is
shown in the following table:

Total operating income (loss) for reportable segments
Interest expense
Interest income
Other income
Investment impairment
Income (loss) before income taxes

2002

2001

2000

$405.8
(145.6)
29.8
15.1
(39.7)
$265.4

$(243.6)
(164.6)
41.8
13.7
(210.8)
$(563.5)

$817.6
(126.3)
57.5
42.6
--
$791.4

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Millions, Except Per Share Amounts)

Long-lived assets and revenue are presented below by major geographic area:

Long-Lived Assets:

United States

International

United Kingdom

All Other Europe

Asia Pacific

Latin America

Other

Total International

Total Consolidated

Revenue:

United States

International

United Kingdom

All Other Europe

Asia Pacific

Latin America

Other

Total International

Total Consolidated

2002

2001

2000

$2,652.2

$2,405.7

$2,701.5

535.7

1,238.4

163.5

179.2

192.5

2,309.3

$4,961.5

667.9

943.0

172.4

189.4

150.4

2,123.1

$4,528.8

563.1

840.3

310.8

118.9

133.9

1,967.0

$4,668.5

$3,489.2

$3,879.7

$4,244.2

654.1

1,131.6

429.0

251.9

247.8

2,714.4

$6,203.6

678.8

1,157.1

480.9

328.4

266.3

2,911.5

$6,791.2

604.9

1,233.6

508.9

333.7

257.4

2,938.5

$7,182.7

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 8% in 2002, 7% in 2001 and 6% in 2000 to revenue.
The Company's second largest client contributed approximately 3% in 2002, 2% in 2001 and 2% in 2000 to revenue.

Note 15: Commitments and Contingencies

Leases
The Company and its subsidiaries lease certain facilities and equipment. Gross rental expense amounted to
approximately $458.4 for 2002, $470.2 for 2001 and $433.8 for 2000, which was reduced by sublease income of
$24.5 in 2002, $29.9 in 2001 and $27.8 in 2000.

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 2003 and thereafter, are
as follows:

Period
2003
2004
2005
2006
2007
2008 and thereafter

Amount
$ 281.5
$ 251.7
$ 222.7
$ 198.2
$ 180.5
$1,167.4

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Millions, Except Per Share Amounts)

Acquisitions-Related Commitments
Certain of the Company's acquisition agreements provide for deferred payments by the Company, contingent upon
future revenues or profits of the companies acquired. Additionally, the Company has entered into put option
agreements which are also contingent upon future revenues or profits. Contingent amounts under acquisition
deferred payments and put options are approximately $565 (including cash and stock) assuming the full amount due
under these acquisition agreements is paid. See Note 3 for further details.

Tax Matters
The Internal Revenue Service (IRS) is currently examining the Company's federal income tax returns for 1994 to
1996. While the audit is not complete, the IRS has indicated its intention to challenge certain of the Company's tax
positions. The Company believes that its tax positions comply with applicable tax law and intends to defend its
positions vigorously. The ultimate disposition of these matters could require the Company to make additional
payment to the IRS. Nonetheless, the Company believes that there will not be a material effect on the Company's
financial position, cash flows or results of operations from the ultimate resolution of these matters.

The Company and certain of its subsidiaries are party to various other 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.

Legal Matters
Federal Securities Class Actions
Thirteen federal securities purported class actions were filed against The Interpublic Group of Companies, Inc. and
certain of its present and former directors and officers by a purported class of purchasers of Interpublic stock shortly
after the Company's August 13, 2002 announcement regarding the restatement of its previously reported earnings for
the periods January 1, 1997 through March 31, 2002. These actions, which were all filed in the United States
District Court for the Southern District of New York, were consolidated by the Court and lead counsel appointed for
all plaintiffs, on November 8, 2002. A consolidated amended complaint was filed thereafter on January 10, 2003.
The purported classes consist of Interpublic shareholders who purchased Interpublic stock in the period from
October 1997 to October 2002. Specifically, the consolidated amended complaint alleges that Interpublic and
certain of its present and former directors and officers allegedly made misleading statements to its shareholders
between October 1997 and October 2002, including the alleged failure to disclose the existence of additional charges
that would need to be expensed and the lack of adequate internal financial controls, which allegedly resulted in an
overstatement of Interpublic's financial results during those periods. The consolidated amended complaint alleges
that such false and misleading statements constitute violations of Sections 10(b) and 20(a) of the Exchange Act and
Rule 10b-5 promulgated thereunder. The consolidated amended complaint also alleges violations of Sections 11 and
15 of the Securities Act of 1933 in connection with Interpublic's acquisition of True North Communications, Inc. No
amount of damages is specified in the consolidated amended complaint. On February 6, 2003, defendants filed a
motion to dismiss the consolidated amended complaint in its entirety. On February 28, 2003, plaintiffs filed their
opposition to defendants' motion, and on March 14, 2003, defendants filed their reply to plaintiffs' opposition to
defendants' motion. The motion is currently pending.

State Securities Class Actions
Two state securities purported class actions were filed against the Company and certain of its present and former
directors and officers by a purported class of purchasers of Interpublic stock shortly after the Company's November
13, 2002 announcement regarding the restatement of its previously reported earnings for the periods January 1, 1997
through March 31, 2002. The purported classes consist of Interpublic shareholders who acquired Interpublic stock
on or about June 25, 2001 in connection with Interpublic's acquisition of True North Communications, Inc. These
lawsuits allege that Interpublic and certain of its present and former directors and officers allegedly made misleading
statements in connection with the filing of a registration statement on May 9, 2001 in which Interpublic issued
67,644,272 shares of its common stock for the purpose of acquiring True North, including the alleged failure to
disclose the existence of additional charges that would need to be expensed and the lack of adequate internal
financial controls, which allegedly resulted in an overstatement of Interpublic's financial results at that time. The
suits allege that such misleading statements constitute violations of Sections 11 and 15 of the Securities Act of 1933.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Millions, Except Per Share Amounts)

No amount of damages is specified in the complaints. These actions were filed in the Circuit Court of Cook County,
Illinois. On December 18, 2002, defendants removed these actions from Illinois state court to the United States
District Court for the Northern District of Illinois. Thereafter, on January 10, 2003, defendants moved to transfer
these two actions to the Southern District of New York. Plaintiffs have moved to remand the actions to Illinois state
court, and have opposed defendants' motion to transfer. Those motions are now pending.

State Derivative Actions
In addition to the federal lawsuits, several shareholder derivative suits have been filed. On October 24, 2002, a
shareholder derivative suit was filed in Delaware Court of Chancery, New Castle County, by a single shareholder
acting on behalf of the Company against the Board of Directors. The suit alleges a breach of fiduciary duties to
Interpublic's shareholders. On November 15, 2002, another suit was filed in Delaware Court of Chancery, New
Castle County, by a single shareholder acting on behalf of the Company against the Board of Directors. On
December 18, 2002, defendants moved to dismiss these actions. In lieu of a response, plaintiffs consolidated the
actions and filed an Amended Consolidated Complaint on January 10, 2003, again alleging breach of fiduciary
duties to Interpublic's shareholders. The Amended Consolidated Complaint does not state a specific amount of
damages. On January 27, 2003, defendants filed motions to dismiss the Consolidated Amended Complaint, and
those motions are currently pending.

On September 4, 2002, a shareholder derivative suit was filed in New York Supreme Court, New York County, by a
single shareholder acting on behalf of the Company against the Board of Directors and against the Company's
auditors. This suit alleged a breach of fiduciary duties to Interpublic's shareholders. On November 26, 2002,
another shareholder derivative suit, alleging the same breaches of fiduciary duties, was filed in the New York
Supreme Court, New York County. The plaintiffs from these two shareholder derivative suits filed an Amended
Derivative Complaint on January 31, 2003. On March 18, 2003, plaintiffs filed a motion to dismiss the Amended
Derivative Complaint without prejudice. On February 24, 2003, plaintiffs filed a Shareholders' Derivative Complaint
in the United States District Court for the Southern District of New York. This action alleges the same breach of
fiduciary duties claim as the state court actions, and adds a claim for contribution and forfeiture against two of the
individual defendants pursuant to Section 21D of the Exchange Act and Section 304 of the Sarbanes-Oxley Act.
The complaint does not state a specific amount of damages. Defendants intend to move to dismiss this federal
derivative action.

The Company intends to vigorously defend the actions discussed above. While the proceedings are in the early
stages and contain an element of uncertainty, the Company has no reason to believe that the final resolution of the
actions will have a material adverse effect on the Company's financial position, cash flows or results of operations.

Other Items
The Company is committed to total payments of approximately $130 over the period 2003 through 2011 under an
executory contract.

At December 31, 2002, the Company had contingent obligations under guarantees and letters of credit issued by
banks for the account of the Company and its subsidiaries in an aggregate amount of approximately $267.7.

Note 16: Restatements

Restatement Filed in December 2002
During the second and third quarters of 2002, the Company identified total charges of $181.3 ($135.9, net of tax)
that were related to prior periods. The Company restated its financial statements for periods up to and including June
30, 2002. Of the pre-tax amount, $163.1 was related to periods prior to and including December 31, 2001.

As a result of a review undertaken surrounding the process of internally allocating certain overhead costs and
reimbursable charges to operating units throughout the world, the Company identified and recorded $101.0 of
intracompany charges. The review related to McCann-Erickson WorldGroup ("McCann"). Cost allocations are
performed by McCann in order to, among other things, satisfy regulatory authorities and measure client account
profitability. The charges were principally in Europe and had been included in accounts receivable and work in
progress rather than being expensed.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Millions, Except Per Share Amounts)

In addition to the intracompany charges, the Company identified an additional $36.3 at McCann principally related
to estimates of insurance proceeds not yet realized, specific write-offs of receivables and work in progress, costs that
had been capitalized rather than expensed and other items. An additional $44.0 at subsidiaries other than McCann
was identified. The largest component of the total was $30.3 related to understated liabilities, which the Company
has concluded date back to 1996 and prior, at a subsidiary within The Partnership. The understated liabilities were
identified as a result of the Company changing a subsidiary ledger system. Additionally, the Company identified
$8.7 related to revenue and cost recognition adjustments at a subsidiary of Interpublic Sports and Entertainment
Group.

Restatement Filed in March 2003
During the fourth quarter of 2002, the Company identified total charges of $118.7 ($83.8, net of tax) that related to
the three months ended September 30, 2002. Additionally, $47.0 ($35.3, net of tax) of other adjustments was
identified that are related to prior periods from January 1, 1997 through September 30, 2002. Of the pre-tax amount,
$23.8 was related to periods prior to and including December 31, 2001.

The total amount of charges of $23.8 includes amounts related to inappropriate purchase accounting adjustments,
compensation costs that had been deferred instead of being expensed, charges to straight line certain long-term
contracts and other items.

Octagon Motorsports Impairment
The Company has recognized a non-cash impairment loss and related charge of $118.7 ($83.8, net of tax) as of
September 30, 2002 through a restatement of previously recorded results for that period. See Note 5 for further
discussion of Octagon Motorsports impairment.

Other Items
See Note 8 for a discussion of certain liquidity matters and amendments under credit agreements.

The Company has been advised by the Securities and Exchange Commission staff that it has issued a formal order
investigation in connection with the Company's restatement of earnings for the periods from 1997. The Company is
cooperating fully with the Commission.

Note 17: Subsequent Events (Unaudited)

Possible Sale of NFO
On January 15, 2003, the Company announced that it had hired outside advisors to help it explore strategic
alternatives regarding NFO, and is currently in discussions concerning a possible sale.

4.5% Convertible Notes
As discussed in Note 8, in March 2003, the Company completed the issuance and sale of $800 of aggregate principal
amount of 4.5% Convertible Senior Notes due 2023. The Company intends to use the net proceeds of approximately
$778 from the sale of the notes to fund a concurrent offer to purchase (for up to $582.5) its outstanding Zero-
Coupon Convertible Senior Notes due 2021. Any funds raised in the offering but not used in the offer to purchase
will be used for the repayment of other indebtedness, general corporate purposes and working capital.

Offer to Purchase Zero-Coupon Notes
As discussed in Note 8, on March 10, 2003, the Company commenced a tender offer to purchase for cash any and all
of its outstanding Zero-Coupon Notes issued in December 2001. The tender offer will expire on April 4, 2003,
unless extended. The Company is offering to purchase the notes for cash at a purchase price of 82.9876% of the
principal amount of the notes at maturity. The price offered is equal to the accreted value of the notes as of April 4,
2003. If all of the Zero-Coupon Notes are tendered pursuant to the tender offer, the Company would pay a total of
$582.5 to the holders of the Zero-Coupon Notes.

RESULTS BY QUARTER (UNAUDITED)
(Amounts in Millions, Except Per Share Amounts)

First Quarter

Second Quarter

Third Quarter

Fourth Quarter

2002

2001

2002

2001

2002

2001

2002

2001

Revenue

$1,420.0

$1,674.8

$1,612.7

$1,759.8

$1,502.2

$1,622.0

$1,668.7

$1,734.6

Salaries and related expenses
Office and general expenses
Amortization of intangible assets
Restructuring and other
merger-related costs
Long-lived asset impairment
and other charges
Income (loss) from operations

Interest expense
Interest income
Other income, net
Investment impairment
Income (loss) before
provision for income taxes

Provision for (benefit of)
income taxes
Income applicable to minority
interests
Equity in net income (loss) of
unconsolidated affiliates
Net equity interests

868.8
419.8
2.8

1,004.1
478.9
41.9

890.9
492.8
3.6

979.0
501.0
42.2

861.6
574.2
3.1

895.3
586.0
42.8

927.7
609.8
3.5

930.8
537.9
46.2

1.5

51.3

12.1

592.8

--
128.6

--
148.4

--
225.4

221.4
(35.1)

118.7
(67.5)

81.7
(576.6)

8.4
119.3

--
219.7

(35.3)
6.9
0.3
--

(37.5)
12.5
8.6
(160.1)

(36.9)
8.1
10.3
(16.2)

(41.4)
10.1
3.3
--

(36.7)
5.9
4.0
(4.9)

(46.9)
6.5
(0.6)
(48.2)

(36.7)
8.9
0.5
(18.6)

(38.8)
12.7
2.4
(2.5)

100.5

(28.1)

190.7

(63.1)

(99.2)

(665.8)

73.4

193.5

38.0

(3.6)

(2.5)

(6.9)

74.2

45.8

(18.0)

(186.3)

(11.1)

(10.5)

(7.9)

(2.9)

46.1

(8.7)

87.7

(10.0)

0.9
(2.7)

1.3
(5.6)

3.6
(7.5)

2.1
(8.4)

(0.5)
(8.4)

--
(2.9)

1.7
(7.0)

0.6
(9.4)

Net income (loss)

$ 59.8

$ (31.2)

$ 109.0

$ (117.3)

$ (89.6)

$ (482.4)

$ 20.3

$ 96.4

Per share data:
Basic EPS
Diluted EPS
Cash dividends per
share - Interpublic

Weighted-average shares:
Basic
Diluted

Stock price:
High
Low

$ 0.16
$ 0.16

$ (0.09)
$ (0.09)

$ 0.29
$ 0.29

$ (0.32)
$ (0.32)

$ (0.24)
$ (0.24)

$ (1.31)
$ (1.31)

$ 0.05
$ 0.05

$ 0.26
$ 0.26

$ 0.095

373.0
379.8

366.1
366.1

375.7
382.4

368.9
368.9

377.3
377.3

369.6
369.6

378.3
381.8

371.3
377.2

$ 34.56
$ 27.20

$ 47.19
$ 32.50

$ 34.89
$ 23.51

$ 38.85
$ 27.79

$ 24.67
$ 13.40

$ 30.46
$ 19.30

$ 17.05
$ 11.25

$ 31.00
$ 19.50

As discussed in Note 16, the Company has restated amounts for all quarters for 2001 and the first three quarters for
2002 and has filed amended Form 10-Q/As for the relevant periods.

Report of Independent Accountant on
Financial Statement Schedule, Valuation and Qualifying Accounts

To the Board of Directors of
The Interpublic Group of Companies, Inc.

Our audits of the consolidated financial statements referred to in our report dated March 6, 2003, except for Note 8,
which is as of March 13, 2003, appearing in Item 8 of Part II of this Annual Report on Form 10-K, also included an
audit of the Financial Statement Schedule, Valuation and Qualifying Accounts, listed in Item 8 of this Form 10-K. In
our opinion, based on our audits and the reports of other auditors, this financial statement schedule presents fairly, in
all material respects, the information set forth therein when read in conjunction with the related consolidated
financial statements. The financial statements of True North for the year ended December 31, 2000 were audited by
other independent accountants who have ceased operations. Those independent accountants expressed an
unqualified opinion on those financial statements in their report dated March 20, 2001.

PricewaterhouseCoopers LLP
New York, New York
March 6, 2003

SCHEDULE II

THE INTERPUBLIC GROUP OF COMPANIES, INC. AND ITS SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
For the Years Ended December 31, 2002, 2001 and 2000
(Dollars in Millions)

COLUMN A

COLUMN B

COLUMN C

COLUMN D

COLUMN E

COLUMN F

Additions/(Deductions)

Description

Balance at
Beginning
of Period

Charged to
Costs &
Expenses

Charged
to Other
Accounts-
Describe

Deductions-
Describe

Balance
at End
of Period

Allowance for Doubtful Accounts - deducted from Receivables in the Consolidated Balance Sheet:

2002

2001

2000

$90.7

$76.6

$85.7

$62.8

$75.9

$43.8

$0.1 (1)
(0.7) (2)
17.2 (3)

$1.1 (1)
0.7 (2)

$3.6 (1)
1.5 (2)

$(42.7) (4)
(2.3) (5)
0.9 (6)

$(58.3) (4)
(1.3) (6)

$(30.6) (4)
(4.8) (5)
(3.7) (6)

$139.8

$ 90.7

$ 85.7

______________

(1) Allowance for doubtful accounts of acquired and newly consolidated companies.
(2) Miscellaneous.
(3) Reclassifications.
(4) Principally amounts written off.
(5) Reversal of previously recorded allowances on accounts receivable.
(6) Foreign currency translation adjustment.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Not applicable.

Item 10. Directors and Executive Officers of Interpublic

PART III

The information required by this Item is incorporated by reference to the Proxy Statement, to be filed not later
than 120 days after the end of the 2002 calendar year, except for the description of our Executive Officers which
appears in Part I of this Report on Form 10-K under the heading "Executive Officers of Interpublic".

Item 11. Executive Compensation

The information required by this Item is incorporated by reference to the Proxy Statement. Such
incorporation by reference shall not be deemed to incorporate specifically by reference the information referred to in
Item 402(a)(8) of Regulation S-K.

Item 12. Security Ownership of Certain Beneficial Owners and Management

The information required by this Item is incorporated by reference to the Proxy Statement.

Item 13. Certain Relationships and Related Transactions

Item 14. Controls and Procedures

Within the 90 days prior to the date of this report, the Company carried out an evaluation under the supervision and
with the participation of the Company's senior management, including David A. Bell, the Company's chairman and
chief executive officer, and Sean F. Orr, the Company's chief financial officer, of the effectiveness of the design and
operation of the Company's disclosure controls and procedures. Senior management and the Company's Audit
Committee have been informed by the Company's independent auditors that they have identified a "material
weakness" (as defined under standards established by the American Institute of Certified Public Accountants)
relating to the processing and monitoring of intracompany transactions. The Company's senior management has
determined that this material weakness, together with other deficiencies associated with a lack of balance sheet
monitoring, if unaddressed, could result in accounting errors such as those underlying the restatements of the
Company's consolidated financial statements.

Based on the above and under the direction of the Audit Committee and the Board of Directors, senior management
has directed that the Company dedicate resources and take steps to strengthen control processes in order both to
identify and rectify all past accounting misstatements and prevent the situations that resulted in the need to restate
prior period financial statements from recurring. To this end, the Company took the following immediate steps in
the third and fourth quarters of 2002, involving in particular the Company's McCann-Erickson subsidiaries:

Providing enhanced reporting and monitoring of intra- and intercompany transactions;

Specifically defining the manner in which intra- and intercompany transactions arise and should be accounted
for; and

Implementing procedures to ensure accurate and timely balance sheet reconciliations.

Additionally, the Company has taken the following measures to improve its disclosure controls and procedures:

* Appointing Frank J. Borelli in November 2002 as the Presiding Director of the Company, which has

enhanced transparency and further optimizes communication between the Company's board and its senior
management.

Continuing its search for a Chief Operating Officer;

* Appointing Thomas Dowling in November 2002 as Chief Risk Officer, who is charged with evaluating and

strengthening the Company's global risk management strategy;

* Maintaining a Disclosure Committee that is mandated to assist the Company's CEO and CFO in overseeing
the accuracy and timeliness of the Company's public disclosures and evaluate regularly the Company's
disclosure controls and procedures;

Beginning in November 2002, taking action, where appropriate, to augment or replace management, in
particular at those subsidiaries associated with the matters underlying the Company's restatements;

In December of 2002 and January of 2003, disseminating updated written policies and procedures company-
wide to standardize and improve procedures, including procedures relating to intra- and intercompany
transactions and balance sheet reviews;

* Working with the Company's independent auditors to expand the scope of the auditors' procedures and

expand their audit of the financial statements for the year ended December 31, 2002; and

In December 2002 formalizing and distributing to all Company's employees a code of conduct describing the
legal and ethical standards it expects all Company employees to uphold.

The Company, together with its independent auditors and other advisers, continues to evaluate further
improvements, including formalizing its processes, procedures and policies, to its internal controls and its disclosure
controls and procedures and developing a plan to implement the reporting requirements of Section 404 of the
Sarbanes Oxley Act of 2002.

As a result of the steps taken to improve controls and following the conclusion of the Company's recently completed
review of its financial accounts, as of and for the year ended December 31, 2002, Mr. Bell and Mr. Orr concluded
that the information required to be disclosed in this annual report on Form 10-K has been recorded, processed,
summarized and reported as required. Based upon and as of the date of their evaluation, the chief executive officer
and chief financial officer further concluded that the Company's disclosure controls and procedures, taking into
account the steps listed above to improve the controls and procedures, are effective in all material respects.

Other than as described above, there have been no significant changes in the Company's internal controls or in other
factors that could significantly affect these controls subsequent to the date of the Company's evaluation.

Item 15. Exhibits, Financial Statement Schedule, and Reports on Form 8-K

PART IV

(a) Listed below are all financial statements, financial statement schedules and exhibits filed as part of this Report
on Form 10-K.

Financial Statements:

The Interpublic Group of Companies, Inc. and Subsidiaries Report of Independent Public Accountants

True North Communications Inc. and Subsidiaries Report of Independent Public Accountants

Deutsch, Inc. and Subsidiaries and Affiliates Report of Independent Public Accountants

Consolidated Statements of Operations for the years ended December 31, 2002, 2001 and 2000

Consolidated Balance Sheets as of December 31, 2002 and 2001

Consolidated Statements of Cash Flows for the years ended December 31, 2002, 2001 and 2000

Consolidated Statements of Changes in Stockholders' Equity and Comprehensive Income for the years
ended December 31, 2002, 2001 and 2000

Notes to Consolidated Financial Statements

Financial Statement Schedules:

Report of Independent Accountant on Financial Statement Schedule

Valuation and Qualifying Accounts (for the three years ended December 31, 2002)

All other schedules are omitted because they are not applicable.

Exhibits:

(Numbers used are the numbers assigned in Item 601 of Regulation S-K and the EDGAR Filer Manual. An
additional copy of this exhibit index immediately precedes the exhibits filed with this Report on Form 10-K and the
exhibits transmitted to the Commission as part of the electronic filing of the Report.)

Exhibit No.
(a)
(3)

Description
The Restated Certificate of Incorporation of the Registrant, as amended is incorporated by
reference to its Report on Form 10-Q for the quarter ended June 30, 1999. See Commission file
number 1-6686.

(b)

The By-Laws of the Registrant, amended as of February 19, 1991, are incorporated by reference to
its Report on Form 10-K for the year ended December 31, 1990. See Commission file number 1-
6686.

(4)

Instruments Defining the Rights of Security Holders.

(a)

(b)

(c)

(d)

(e)

(f)

(g)

(h)

Senior Debt Indenture, dated as of October 20, 2000, between the Registrant and The Bank of New
York, as trustee is incorporated by reference to Exhibit 99.1 to the Registrant's Current Report on
Form 8-K dated October 24, 2000.

First Supplemental Indenture, dated as of August 22, 2001, between the Registrant and The Bank
of New York, as trustee, is incorporated by reference to Exhibit 4.2 to the Registrant's Registration
Statement on Form S-4 (No. 333-74476).

Second Supplemental Indenture, dated as of December 14, 2001, between the Registrant and The
Bank of New York, as trustee is incorporated by reference to Exhibit 4.4 to the Registrant's
Registration Statement on Form S-3 (No. 333-82368).

Third Supplemental Indenture, dated as of March 13, 2003, between the Registrant and The Bank
of New York, as trustee, is incorporated by reference to Exhibit 4.1 to the Registrant's Current
Report on Form 8-K dated March 18, 2003.

Registration Rights Agreement, dated as of December 14, 2001, between the Registrant and
Salomon Smith Barney Inc., as representative of the initial purchasers named therein, is
incorporated by reference to Exhibit 4.4 to the Registrant's Registration Statement on Form S-3
(No. 333-82368).

Registration Rights Agreement, dated as of March 13, 2003, among the Registrant and Salomon
Smith Barney Inc., J.P. Morgan Securities Inc. and UBS Warburg LLC, as representatives of the
initial purchasers named therein, is incorporated by reference to Exhibit 4.2 to the Registrant's
Current Report on Form 8-K dated March 18, 2003.

Indenture, dated as of September 16, 1997, between the Registrant and The Bank of New York, is
incorporated by reference to the Registrant's Report on Form 10-Q for the quarter ended
September 30, 1998. See Commission file number 1-6686.

The Preferred Share Purchase Rights Plan as adopted on July 18, 1989, is incorporated by
reference to the Registrant's Registration Statement on Form 8-A dated August 1, 1989 (No.
00017904) and, as amended, by reference to the Registrant's Registration Statement on Form 8
dated October 3, 1989 (No. 00106686).

(10)

Material Contracts.

(a)

Purchase Agreement, dated September 10, 1997, among the Registrant, Morgan Stanley & Co.,
Incorporated, Goldman Sachs and Co. and SBC Warburg Dillon Read Inc., is incorporated by
reference to the Registrant's Report on Form 10-Q for the quarter ended September 30, 1999. See
Commission file number 1-6686.

(b)

Employment, Consultancy and other Compensatory Arrangements with Management.

Listed below are agreements or amendments to agreements between the Registrant and its
executive officers which remain in effect on and after the date hereof or were executed during the
year ended December 31, 2002 and thereafter, unless previously submitted, which are filed as
exhibits to this Report on Form 10-K.

(i)

David A. Bell

(a)

(b)

(c)

Employment Agreement Amendment, dated as of June 1, 2001, and signed as
of October 1, 2002, between True North Communications Inc. and David A.
Bell to an Employment Agreement, dated as of January 1, 2000, as amended,
is filed herewith.

Employment Agreement Amendment, dated as of March 1, 2001, to an
Employment Agreement, dated as of January 1, 2000, between True North
Communications Inc. and David A. Bell is incorporated by reference to
Exhibit 10(b)(iii)(b) to the Registrant's Report on Form 10-K for the year
ended December 31, 2001. See Commission file number 1-6686.

David A. Bell Employment Agreement, dated as of January 1, 2000, between
True North Communications Inc. and David A. Bell is incorporated by
reference to Exhibit 10(b)(iii)(a) to the Registrant's Report on Form 10-K for
the year ended December 31, 2001. See Commission file number 1-6686.

(ii)

Sean F. Orr

(a)

(b)

(c)

(d)

(e)

Supplemental Agreement, dated as of November 7, 2002, to an Employment
Agreement between the Registrant and Sean F. Orr, is filed herewith.

Supplemental Agreement, dated as of November 7, 2002, to Executive
Special Benefit Agreements, dated as of May 1, 1999 and May 1, 2002, each
between the Registrant and Sean F. Orr, is filed herewith.

Executive Special Benefit Agreement, dated as of May 1, 2002, between the
Registrant and Sean F. Orr, signed as of November 7, 2002, is filed herewith.

Supplemental Agreement, dated as of June 1, 2000, to an Executive Severance
Agreement, dated as of April 27, 1999, between the Registrant and Sean F.
Orr, is incorporated by reference to Exhibit 10(f) to the Registrant's Report on
Form 10-Q for the year ended June 30, 2000. See Commission file number 1-
6686.

Supplemental Agreement, dated as of April 1, 2000, to an Employment
Agreement between the Registrant and Sean F. Orr, is incorporated by
reference to Exhibit 10(c) to the Registrant's Report on Form 10-Q for the
quarter ended March 31, 2000. See Commission file number 1-6686.

(f)

(g)

(h)

Executive Severance Agreement, dated as of May 1, 1999, between the
Registrant and Sean F. Orr, is incorporated by reference to Exhibit 10(b)(i)(b)
to the Registrant's Report on Form 10-K for the year ended December 31,
1999. See Commission file number 1-6686.

Employment Agreement, dated as of April 27, 1999, between the Registrant
and Sean F. Orr, is incorporated by reference to Exhibit 10(b)(i)(a) to the
Registrant's Report on Form 10-K for the year ended December 31, 1999. See
Commission file number 1-6686.

Executive Severance Agreement, dated as of April 27, 1999, between the
Registrant and Sean F. Orr, is incorporated by reference to Exhibit 10(b)(i)(c)
to the Registrant's Report on Form 10-K for the year ended December 31,
1999. See Commission file number 1-6686.

(iii) Barry R. Linsky

(a)

(b)

(c)

(d)

(e)

(f)

Supplemental Employment Agreement, dated as of March 26, 2001, between
the Registrant and Barry R. Linsky, is incorporated by reference to Exhibit
10(b)(iv)(a) to the Registrant's Report on Form 10-K for the year ended
December 31, 2001. See Commission file number 1-6686.

Supplemental Agreement to an Executive Special Benefit Agreement, dated as
of June 30, 2000, between the Registrant and Barry R. Linsky, is incorporated
by reference to Exhibit 10(b)(ii)(a) to the Registrant's Report on Form 10-K
for the year ended December 31, 2000. See Commission file number 1-6686.

Executive Special Benefit-Income Replacement Agreement, dated as of June
1, 2000, between the Registrant and Barry R. Linsky, is incorporated by
reference to Exhibit 10(b)(ii)(b) to the Registrant's Report on Form 10-K for
the year ended December 31, 2000. See Commission file number 1-6686.

Executive Severance Agreement, dated as of January 1, 1998, between the
Registrant and Barry R. Linsky, is incorporated by reference to Exhibit
10(b)(iv) to the Registrant's Report on Form 10-K for the year ended
December 31, 1998. See Commission file number 1-6686.

Supplemental Agreement, dated as of August 1, 1996, to an Employment
Agreement, dated as of January 1, 1991, between the Registrant and Barry R.
Linsky, is incorporated by reference to Exhibit 10(b)(ii)(f) to the Registrant's
Report on Form 10-K for the year ended December 31, 1996. See Commission
file number 1-6686.

Supplemental Agreement, dated as of January 1, 1996, to an Employment
agreement, dated January 1, 1991, between the Registrant and Barry R.
Linsky, is incorporated by reference to Exhibit 10(b)(ii)(e) to the Registrant's

(g)

(h)

(i)

Report on Form 10-K for the year ended December 31, 1996. See Commission
file number 1-6686.

Supplemental Agreement, dated as of January 1, 1995, to an Employment
Agreement, dated as of January 1, 1991, between the Registrant and Barry R.
Linsky, is incorporated by reference to Exhibit 10(b)(ii)(d) to the Registrant's
Report on Form 10-K for the year ended December 31, 1996. See Commission
file number 1-6686.

Executive Special Benefit Agreement, dated as of March 1, 1993, between the
Registrant and Barry R. Linsky, is incorporated by reference to Exhibit
10(b)(ii)(c) to the Registrant's Report on Form 10-K for the year ended
December 31, 1996. See Commission file number 1-6686.

Supplemental Agreement, dated as of August 15, 1992, to an Employment
Agreement, dated as of January 1, 1991, between the Registrant and Barry R.
Linsky, is incorporated by reference to Exhibit 10(b)(ii)(a) to the Registrant's
Report on Form 10-K for the year ended December 31, 1996. See Commission
file number 1-6686.

(iv) Bruce Nelson

(a)

(b)

(c)

(d)

Executive Severance Agreement, dated as of April 18, 2002, between the
Registrant and Bruce Nelson, is incorporated by reference to Exhibit
10(iii)(A)(i) to the Registrant's Report on Form 10-Q for the quarter ended
June 30, 2002. See Commission file number 1-6686.

Employment Agreement, dated as of September 5, 2000, between the
Registrant and Bruce Nelson, is incorporated by reference to Exhibit
10(b)(v)(a) to the Registrant's Report on Form 10-K for the year ended
December 31, 2000. See Commission file number 1-6686.

Executive Special Benefit Agreement, dated as of September 1, 2000, between
the Registrant and Bruce Nelson, is incorporated by reference to Exhibit
10(b)(v)(b) to the Registrant's Report on Form 10-K for the year ended
December 31, 2000. See Commission file number 1-6686.

Supplemental Agreement, dated as of September 1, 2000, to an Executive
Special Benefit Agreement, dated as of January 1, 1986, between the
Registrant and Bruce Nelson, is incorporated by reference to Exhibit
10(b)(v)(c) to the Registrant's Report on Form 10-K for the year ended
December 31, 2000. See Commission file number 1-6686.

(v)

Nicholas J. Camera

(a)

Employment Agreement, dated as of November 14, 2002, between the
Registrant and Nicholas J. Camera, is filed herewith.

(b)

(c)

Executive Severance Agreement, dated as of October 31, 1997, between the
Registrant and Nicholas J. Camera, is incorporated by reference to Exhibit
10(b)(vi)(a) to the Registrant's Report on Form 10-K for the year ended
December 31, 2001. See Commission file number 1-6686.

Executive Special Benefit Agreement, dated as of January 1, 1995, between
the Registrant and Nicholas J. Camera, is filed herewith.

(vi) Albert Conte

(a)

Employment Agreement, dated as of February 21, 2000, between the
Registrant and Albert Conte, is incorporated by reference to Exhibit
10(b)(vii)(a) to the Registrant's Report on Form 10-K for the year ended
December 31, 2001. See Commission file number 1-6686.

(vii) Thomas Dowling

(a)

(b)

(c)

(d)

(e)

Supplemental Agreement, dated as of November 14, 2002, to an Employment
Agreement, dated as of November 1999, between the Registrant and Thomas
Dowling, is filed herewith.

Supplemental Agreement, dated as of October 1, 2002, to an Employment
Agreement, dated as of November 1999, between the Registrant and Thomas
Dowling, is filed herewith.

Executive Special Benefit Agreement, dated as of February 1, 2001, between
the Registrant and Thomas Dowling, is incorporated by reference to Exhibit
10(b)(viii)(b) to the Registrant's Report on Form 10-K for the year ended
December 31, 2001. See Commission file number 1-6686.

Executive Special Benefit Agreement, dated as of February 1, 2000, between
the Registrant and Thomas Dowling, is incorporated by reference to Exhibit
10(b)(viii)(a) to the Registrant's Report on Form 10-K for the year ended
December 31, 2001. See Commission file number 1-6686.

Employment Agreement, dated as of November 1999, between the Registrant
and Thomas Dowling, is incorporated by reference to Exhibit 10(b)(iii)(A)(1)
to the Registrant's Report on Form 10-Q for the quarter ended March 31, 2002.
See Commission file number 1-6686.

(viii) Brian Brooks

(a)

Employment Agreement, dated as of November 18, 2002, between the
Registrant and Brian Brooks, is filed herewith.

(b)

Executive Special Benefit Agreement, dated as of November 18, 2002,
between the Registrant and Brian Brooks, is filed herewith.

(ix)

C. Kent Kroeber

(a)

(b)

(c)

(d)

(e)

Agreement, dated as of July 11, 2002, between the Registrant and C. Kent
Kroeber, is incorporated by reference to Exhibit 10(iii)(A)(i) to the
Registrant's Report on Form 10-Q for the quarter ended September 30, 2002.
See Commission file number 1-6686.

Executive Special Benefit - Income Replacement Agreement, dated as of July
11, 2002, by and between the Registrant and C. Kent Kroeber, is incorporated
by reference to Exhibit 10(iii)(A)(ii) to the Registrant's Report on Form 10-Q
for the quarter ended September 30, 2002. See Commission file number 1-
6686.

Letter Agreement, dated July 11,2002, between the Registrant and C. Kent
Kroeber, is incorporated by reference to Exhibit 10(iii)(A)(iii) to the
Registrant's Report on Form 10-Q for the quarter ended September 30, 2002.
See Commission file number 1-6686.

Supplemental Agreement to an Executive Special Benefit Agreement, dated as
of June 30, 2000, between the Registrant and C. Kent Kroeber, is incorporated
by reference to Exhibit 10(b)(iii)(a) to the Registrant's Report on Form 10-K
for the year ended December 31, 2000. See Commission file number 1-6686.

Executive Special Benefit-Income Replacement Agreement dated as of June 1,
2000, between the Registrant and C. Kent Kroeber, is incorporated by
reference to Exhibit 10(b)(iii)(b) to the Registrant's Report on Form 10-K for
the year ended December 31, 2000. See Commission file number 1-6686.

(x)

Gunnar Wilmot

(a)

(b)

(c)

Executive Special Benefit Agreement, dated as of January 1, 2002 and signed
as of October 2, 2002, between the Registrant and Gunnar Wilmot, is filed
herewith.

Executive Special Benefit Agreement, dated as of April 1, 1999, between the
Registrant and Gunnar Wilmot, is incorporated by reference to Exhibit
10(b)(x)(a) to the Registrant's Report on Form 10-K for the year ended
December 31, 2001. See Commission file number 1-6686.

Executive Special Benefit Agreement, dated as of October 1, 1996, between
the Registrant and Gunnar Wilmot, is incorporated by reference to Exhibit
10(b)(x)(b) to the Registrant's Report on Form 10-K for the year ended
December 31, 2001. See Commission file number 1-6686.

(d)

(e)

Supplemental Agreement, dated as of May 23, 1990, to an Executive Special
Benefit Agreement, dated as of January 1, 1990, between the Registrant and
Gunnar Wilmot, is incorporated by reference to Exhibit 10(b)(x)(c) to the
Registrant's Report on Form 10-K for the year ended December 31, 2001. See
Commission file number 1-6686.

Executive Special Benefit Agreement, dated as of January 1, 1990, between
the Registrant and Gunnar Wilmot, is incorporated by reference to Exhibit
10(b)(x)(d) to the Registrant's Report on Form 10-K for the year ended
December 31, 2001. See Commission file number 1-6686.

(xi)

Philippe Krakowsky

(a)

(b)

(c)

(d)

Executive Special Benefit Agreement, dated September 30, 2002, between the
Registrant and Philippe Krakowsky, is incorporated by reference to Exhibit
10(iii)(A)(vi) to the Registrant's Report on Form 10-Q for the quarter ended
September 30, 2002. See Commission file number 1-6686.

Special Deferred Compensation Agreement, dated as of April 1, 2002, and
signed as of July 1, 2002, between the Registrant and Philippe Krakowsky,
dated as of April 1, 2002, and signed as of July 1, 2002, is incorporated by
reference to Exhibit 10(iii)(A)(iv) to the Registrant's Report on Form 10-Q for
the quarter ended September 30, 2002. See Commission file number 1-6686.

Executive Special Benefit Agreement, dated as of February 1, 2002, and
signed as of July 1, 2002, between the Registrant and Philippe Krakowsky, is
incorporated by reference to Exhibit 10(iii)(A)(v) to the Registrant's Report on
Form 10-Q for the quarter ended September 30, 2002. See Commission file
number 1-6686.

Employment Agreement, dated as of January 28, 2002, between the Registrant
and Philippe Krakowsky, is incorporated by reference to Exhibit 10(iii)(A)(2)
to the Registrant's Report on Form 10-Q for the quarter ended March 31, 2002.
See Commission file number 1-6686.

(xii) Susan Watson

(a)

Employment Agreement, dated as of November 14, 2002, between the
Registrant and Susan Watson, is filed herewith.

(xiii) Steven Berns

(a)

Executive Special Benefit Agreement, dated as of January 1, 2002, and signed
as of January 1, 2003, between the Registrant and Steven Berns, is filed
herewith.

(b)

Employment Agreement, dated as of August 3, 1999, between the Registrant
and Steven Berns, is incorporated by reference to Exhibit 10(b)(xi)(a) to the
Registrant's Report on Form 10-K for the year ended December 31, 2001. See
Commission file number 1-6686.

(xiv) Richard P. Sneeder, Jr.

(a)

(b)

Employment Agreement, dated as of November 14, 2002, between the
Registrant and Richard P. Sneeder, Jr. , is filed herewith.

Executive Severance Agreement, dated as of November 14, 2002, between the
Registrant and Richard P. Sneeder, Jr. , is filed herewith.

(xv)

John J. Dooner, Jr.

(a)

(b)

(c)

(d)

(e)

(f)

(g)

Supplemental Agreement, dated as of November 7, 2002, to an Employment
Agreement between the Registrant and John J. Dooner, Jr. , is filed herewith.

Supplemental Agreement, dated as of November 7, 2002, to an Executive
Special Benefit Agreement between the Registrant and John J. Dooner, Jr. , is
filed herewith.

Executive Special Benefit Agreement dated as of May 20, 2002, between the
Registrant and John J. Dooner, Jr., signed as of November 11, 2002. , is filed
herewith.

Supplemental Agreement, dated as of April 1, 2000, to an Employment
Agreement between the Registrant and John J. Dooner, Jr., is incorporated by
reference to Exhibit 10(b) to the Registrant's Report on Form 10-Q for the
quarter ended March 31, 2000. See Commission file number 1-6686.

Supplemental Agreement, dated as of January 1, 1999, to an Employment
Agreement dated as of January 1, 1994, between the Registrant and John J.
Dooner, Jr., is incorporated by reference to Exhibit 10(e) to the Registrant's
Report on Form 10-Q for the quarter ended March 31, 1999. See Commission
file number 1-6686.

Executive Severance Agreement, dated January 1, 1998, between the
Registrant and John J. Dooner, Jr., is incorporated by reference to Exhibit
10(b) to the Registrant's Report on Form 10-Q for the quarter ended March 31,
1998. See Commission file number 1-6686.

Supplemental Agreement, dated as of September 1, 1997, to an Employment
Agreement between the Registrant and John J. Dooner, Jr., is incorporated by
reference to Exhibit 10(k) to the Registrant's Report on Form 10-Q for the
quarter ended September 30, 1997. See Commission file number 1-6686.

(h)

(i)

(j)

(k)

(l)

(m)

(n)

(o)

(p)

Supplemental Agreement dated as of July 1, 1995, to an Employment
Agreement between the Registrant and John J. Dooner, Jr., dated as of January
1, 1994, is incorporated by reference to Exhibit 10(B) to the Registrant's
Report on Form 10-Q for the quarter ended September 30, 1995. See
Commission file number 1-6686.

Executive Special Benefit Agreement, dated as of July 1, 1986, between the
Registrant and John J. Dooner, Jr., is incorporated by reference to Exhibit
10(e) to the Registrant's Report on Form 10-K for the year ended December
31, 1995. See Commission file number 1-6686.

Executive Severance Agreement, dated as of August 10, 1987, between the
Registrant and John J. Dooner, Jr., is incorporated by reference to Exhibit
10(h) to the Registrant's Report on Form 10-K for the year ended December
31, 1995. See Commission file number 1-6686.

Supplemental Agreement, dated as of May 23, 1990, to an Executive Special
Benefit Agreement, dated as of July 1, 1986, between the Registrant and John
J. Dooner, Jr., is incorporated by reference to Exhibit 10(l) to the Registrant's
Report on Form 10-K for the year ended December 31, 1995. See Commission
file number 1-6686.

Supplemental Agreement, dated as of August 10, 1992, to an Executive
Severance Agreement, dated as of August 10, 1987, between the Registrant
and John J. Dooner, Jr., is incorporated by reference to Exhibit 10(p) to the
Registrant's Report on Form 10-K for the year ended December 31, 1995. See
Commission file number 1-6686.

Executive Special Benefit Agreement, dated as of, July 1, 1992, between the
Registrant and John J. Dooner, Jr., is incorporated by reference to Exhibit
10(q) to the Registrant's Report on Form 10-K for the year ended December
31, 1995. See Commission file number 1-6686.

Employment Agreement, dated as of January 1, 1994, between the Registrant
and John J. Dooner, Jr., is incorporated by reference to Exhibit 10(r) to the
Registrant's Report on Form 10-K for the year ended December 31, 1995. See
Commission file number 1-6686.

Executive Special Benefit Agreement, dated as of June 1, 1994, between the
Registrant and John J. Dooner, Jr., is incorporated by reference to Exhibit
10(s) to the Registrant's Report on Form 10-K for the year ended December
31, 1995. See Commission file number 1-6686.

Supplemental Agreement, dated as of July 1, 1995, to an Employment
Agreement, dated as of January 1, 1994, between the Registrant and John J.
Dooner, Jr., is incorporated by reference to Exhibit 10(t) to the Registrant's
Report on Form 10-K for the year ended December 31, 1995. See Commission

file number 1-6686.

(xvi)

Jill Considine

(a)

Deferred Compensation Agreement, dated as of April 1, 2002, between the
Registrant and Jill Considine, is incorporated by reference to Exhibit 10(c) to
the Registrant's Report on Form 10-Q for the quarter ended June 30, 2002. See
Commission file number 1-6686.

(xvii) Richard A. Goldstein

(a)

Richard A Goldstein Deferred Compensation Agreement, dated as of June 1,
2001, between the Registrant and Richard A. Goldstein, is incorporated by
reference to Exhibit 10(c) to Registrant's Report on Form 10-Q for the quarter
ended June 30, 2001. See Commission file number 1-6686.

(i)

(ii)

(iii)

(iv)

(v)

(vi)

Trust Agreement, dated as of June 1, 1990, between the Registrant, Lintas Campbell-Ewald
Company, McCann-Erickson USA, Inc., McCann-Erickson Marketing, Inc., Lintas, Inc. and
Chemical Bank, as Trustee, is incorporated by reference to the Registrant's Annual Report on
Form 10-K for the year ended December 31, 1990. See Commission file number 1-6686.

The Stock Option Plan (1988) and the Achievement Stock Award Plan of the Registrant are
incorporated by reference to Appendices C and D of the Prospectus, dated May 4, 1989, forming
part of its Registration Statement on Form S-8 (No. 33-28143).

The Management Incentive Compensation Plan of the Registrant is incorporated by reference to
the Registrant's Report on Form 10-Q for the quarter ended June 30, 1995. See Commission file
number 1-6686.

The 1986 Stock Incentive Plan of the Registrant is incorporated by reference to Registrant's
Annual Report on Form 10-K for the year ended December 31, 1993. See Commission file
number 1-6686.

The 1986 United Kingdom Stock Option Plan of the Registrant is incorporated by reference to the
Registrant's Annual Report on Form 10-K for the year ended December 31, 1992. See
Commission file number 1-6686.

The Employee Stock Purchase Plan (1985) of the Registrant, as amended, is incorporated by
reference to the Registrant's Annual Report on Form 10-K for the year ended December 31, 1993.
See Commission file number 1-6686.

(vii)

The Long-Term Performance Incentive Plan of the Registrant is incorporated by reference to
Appendix A of the Prospectus dated December 12, 1988 forming part of its Registration Statement
on Form S-8 (No. 33-25555).

100

(viii) Resolution of the Board of Directors adopted on February 16, 1993, amending the Long-Term
Performance Incentive Plan is incorporated by reference to the Registrant's Annual Report on
Form 10-K for the year ended December 31, 1992. See Commission file number 1-6686.

(ix)

(x)

(xi)

Resolution of the Board of Directors adopted on May 16, 1989 amending the Long-Term
Performance Incentive Plan is incorporated by reference to the Registrant's Report on Form 10-K
for the year ended December 31, 1989. See Commission file number 1-6686.

The 1996 Stock Incentive Plan of the Registrant is incorporated by reference to the Registrant's
Report on Form 10-Q for the quarter ended June 30, 1996. See Commission file number 1-6686.

The 1997 Performance Incentive Plan of the Registrant is incorporated by reference to the
Registrant's Report on Form 10-Q for the quarter ended June 30, 1997. See Commission file
number 1-6686.

(xii)

True North Communications Inc. Stock Option Plan is incorporated by reference to Exhibit 4.5 of
Post-Effective Amendment No. 1 on Form S-8 to Registration Statement on Form S-4
(Registration No. 333-59254).

(xiii) Bozell, Jacobs, Kenyon & Eckhardt, Inc. Stock Option Plan is incorporated by reference to Exhibit
4.5 of Post-Effective Amendment No. 1 on Form S-8 to Registration Statement on Form S-4
(Registration No. 333-59254).

(xiv)

(xv)

True North Communications Inc. Deferred Compensation Plan is incorporated by reference to
Exhibit (c)(xiv) of the Registrant's Annual Report on Form 10-K for the year ended December 31,
2002. See Commission file number 1-6686.

Resolution of the Board of Directors of True North Communications Inc. adopted on March 1,
2002 amending the Deferred Compensation Plan is incorporated by reference to Exhibit (c)(xv) of
the Registrant's Annual Report on Form 10-K for the year ended December 31, 2002. See
Commission file number 1-6686.

(xvi)

The 2002 Performance Incentive Plan of the Registrant is incorporated by reference to Appendix
A to the Registrant's Schedule 14A, filed April 17, 2002. See Commission file number 1-6686.

(d) Loan Agreements.

(i)

(ii)

(iii)

Amendment No. 1, dated as of March 13, 2002, to the 364-Day Credit Agreement among
Registrant, the initial lenders named therein and Citibank, N.A., as administrative agent.

Amendment No. 1, dated as of March 13, 2002, to the Amended and Restated Five-Year Credit
Agreement, amended and restated as of December 31, 2002, among the Registrant, the initial
lenders named therein and Citibank, N.A., as administrative agent, is filed herewith.

Waiver and Amendment letter, dated August 6, 2002 to the 364-Day Credit Agreement among the
Registrant, the initial lenders named therein, and Citibank, N.A., as Administrative Agent, is
incorporated by reference to Exhibit 10(i)(C) to the Registrant's Report on Form 10-Q for the

101

quarter ended June 30, 2002. See Commission file number 1-6686.

(iv)

(v)

(vi)

(vii)

Waiver and Amendment letter dated August 6, 2002 to the Five-Year Credit Agreement among the
Registrant, the initial lenders named therein and Citibank, N.A., as Administrative Agent, is
incorporated by reference to Exhibit 10(i)(D) to the Registrant's Report on Form 10-Q for the
quarter ended June 30, 2002. See Commission file number 1-6686.

Waiver and Amendment No. 1, dated November 13, 2002 to the 364-Day Credit Agreement
among the Registrant, the initial lenders named therein, and Citibank, N.A., as Administrative
Agent, is incorporated by reference to Exhibit 10(i)(A)(i) to the Registrant's Report on Form 10-Q
for the quarter ended September 30, 2002. See Commission file number 1-6686.

Waiver and Amendment No. 4, dated November 13, 2002 to the Five-Year Credit Agreement
among the Registrant, the initial lenders named therein and Citibank, N.A., as Administrative
Agent, is incorporated by reference to Exhibit 10(i)(A)(ii) to the Registrant's Report on Form 10-Q
for the quarter ended September 30, 2002. See Commission file number 1-6686.

Note Purchase Agreement, dated May 26, 1994, between the Registrant and The Prudential
Insurance Company of America ("Prudential"), is incorporated by reference to Exhibit 10(i)(B) to
the Registrant's Report on Form 10-Q for the quarter ended September 30, 2002. See Commission
file number 1-6686.

(viii)

Note Purchase Agreement, dated April 28, 1995, between the Registrant and Prudential, is
incorporated by reference to Exhibit 10(a) to the Registrant's Report on Form 10-Q for the quarter
ended June 30, 1995. See Commission file number 1-6686.

(ix)

(x)

(xi)

(xii)

(xiii)

Note Purchase Agreement, dated October 31, 1996, between the Registrant and Prudential, is
incorporated by reference to Exhibit 10(d)(iv) to the Registrant's Report on Form 10-K for the year
ended December 31, 1996. See Commission file number 1-6686.

Note Purchase Agreement, dated August 19, 1997, between the Registrant and Prudential, is
incorporated by reference to Exhibit 10(a) to the Registrant's Report on Form 10-Q for the quarter
ended September 30, 1997. See Commission file number 1-6686.

Note Purchase Agreement, dated January 21, 1999, between the Registrant and Prudential, is
incorporated by reference to Exhibit 10(a) to the Registrant's Report on Form 10-Q for the quarter
ended March 31, 1999. See Commission file number 1-6686.

Amendment No. 1, dated as of August 3, 1995, to the Note Purchase Agreement dated May 26,
1994, is incorporated by reference to Exhibit 10D(viii) to the Registrant's Report on Form 10-Q for
the quarter ended September 30, 1995. See Commission file number 1-6686.

Amendment No. 1, dated as of August 3, 1995, to the Note Purchase Agreement dated August 28,
1995, is incorporated by reference to Exhibit 10D(ix) to the Registrant's Report on Form 10-Q for
the quarter ended September 30, 1995. See Commission file number 1-6686.

102

(xiv)

(xv)

(xvi)

Amendment, dated as of June 30, 2001, to the Note Purchase Agreement dated May 26, 1994, is
incorporated by reference to Exhibit 10(i)(I) to the Registrant's Report on Form 10-Q for the
quarter ended September 30, 2002. See Commission file number 1-6686.

Amendment, dated as of June 30, 2001, to the Note Purchase Agreement dated April 28, 1995, is
incorporated by reference to Exhibit 10(i)(J) to the Registrant's Report on Form 10-Q for the
quarter ended September 30, 2002. See Commission file number 1-6686.

Amendment, dated as of June 30, 2001, to the Note Purchase Agreement dated October 31, 1996,
is incorporated by reference to Exhibit 10(i)(K) to the Registrant's Report on Form 10-Q for the
quarter ended September 30, 2002. See Commission file number 1-6686.

(xvii) Amendment, dated as of June 30, 2001, to the Note Purchase Agreement dated August 18, 1997, is

incorporated by reference to Exhibit 10(i)(L) to the Registrant's Report on Form 10-Q for the
quarter ended September 30, 2002. See Commission file number 1-6686.

(xviii) Amendment, dated as of June 30, 2001, to the Note Purchase Agreement dated January 21, 1999,

is incorporated by reference to Exhibit 10(i)(M) to the Registrant's Report on Form 10-Q for the
quarter ended September 30, 2002. See Commission file number 1-6686.

(xix)

(xx)

(xxi)

Amendment and Waiver Agreement, dated as of June 30, 2002, to the Note Purchase Agreement
dated May 26, 1994, is incorporated by reference to Exhibit 10(i)(N) to the Registrant's Report on
Form 10-Q for the quarter ended September 30, 2002. See Commission file number 1-6686.

Amendment and Waiver Agreement, dated as of June 30, 2002 to the Note Purchase Agreement
dated April 28, 1995, is incorporated by reference to Exhibit 10(i)(O) to the Registrant's Report on
Form 10-Q for the quarter ended September 30, 2002. See Commission file number 1-6686.

Amendment and Waiver Agreement, dated as of June 30, 2002, to the Note Purchase Agreement
dated October 31, 1996, is incorporated by reference to Exhibit 10(i)(P) to the Registrant's Report
on Form 10-Q for the quarter ended September 30, 2002. See Commission file number 1-6686.

(xxii) Amendment and Waiver Agreement, dated as of June 30, 2002, to the Note Purchase Agreement
dated August 19, 1997, is incorporated by reference to Exhibit 10(i)(Q) to the Registrant's Report
on Form 10-Q for the quarter ended September 30, 2002. See Commission file number 1-6686.

(xxiii) Amendment and Waiver Agreement, dated as of June 30, 2002, to the Note Purchase Agreement
dated January 21, 1999, is incorporated by reference to Exhibit 10(i)(R) to the Registrant's Report
on Form 10-Q for the quarter ended September 30, 2002. See Commission file number 1-6686.

(xxiv) Amendment and Waiver Agreement, dated as of September 30, 2002, to the Note Purchase

Agreement dated May 26, 1994, is incorporated by reference to Exhibit 10(i)(S) to the Registrant's
Report on Form 10-Q for the quarter ended September 30, 2002. See Commission file number 1-
6686.

103

(xxv) Amendment and Waiver Agreement, dated as of September 30, 2002, to the Note Purchase

Agreement dated April 28, 1995, is incorporated by reference to Exhibit 10(i)(T) to the
Registrant's Report on Form 10-Q for the quarter ended September 30, 2002. See Commission file
number 1-6686.

(xxvi) Amendment and Waiver Agreement, dated as of September 30, 2002, to the Note Purchase
Agreement, dated October 31, 1996, is incorporated by reference to Exhibit 10(i)(U) to the
Registrant's Report on Form 10-Q for the quarter ended September 30, 2002. See Commission file
number 1-6686.

(xxvii) Amendment and Waiver Agreement, dated as of September 30, 2002 to the Note Purchase
Agreement, dated August 18, 1997, is incorporated by reference to Exhibit 10(i)(V) to the
Registrant's Report on Form 10-Q for the quarter ended September 30, 2002. See Commission file
number 1-6686.

(xxviii) Amendment and Waiver Agreement, dated as of September 30, 2002, to the Note Purchase
Agreement, dated January 21, 1999, is incorporated by reference to Exhibit 10(i)(W) to the
Registrant's Report on Form 10-Q for the quarter ended September 30, 2002. See Commission file
number 1-6686.

(xxix) Amendment, dated March 28, 2003, to the Note Purchase Agreement, dated May 26, 1994,

between the Registrant and Prudential, is filed herewith.

(xxx)

Amendment, dated March 28, 2003, to the Note Purchase Agreement, dated April 28, 1995,
between the Registrant and Prudential, is filed herewith.

(xxxi) Amendment, dated March 28, 2003, to the Note Purchase Agreement, dated October 31, 1996,

between the Registrant and Prudential, is filed herewith.

(xxxii) Amendment, dated March 28, 2003, to the Note Purchase Agreement, dated August 19, 1997,

between the Registrant and Prudential, is filed herewith.

(xxxiii) Amendment, dated March 28, 2003, to the Note Purchase Agreement, dated January 21, 1999,

between the Registrant and Prudential, is filed herewith.

(xxxiv) 364-Day Credit Agreement, amended and restated as of December 31, 2002, among the Registrant,

the initial lenders named therein and Citibank, N.A., as administrative agent, is incorporated by
reference to the Registrant's Current Report On Form 8-K/A, filed with the Securities and
Exchange Commission on February 12, 2003.

(xxxv) Five-Year Credit Agreement, amended and restated as of December 31, 2002, among the
Registrant, the initial lenders named therein and Citibank, N.A., as administrative agent, is
incorporated by reference to the Registrant's Current Report On Form 8-K/A, filed with the
Securities and Exchange Commission on February 12, 2003.

(xxxvi) Amendment, dated as of December 31, 2002, to the Note Purchase Agreement dated May 26,

104

1994, is incorporated by reference to the Registrant's Current Report on Form 8-K/A, filed with the
Securities and Exchange Commission On February 12, 2003.

(xxxvii) Amendment, dated as of December 31, 2002, to the Note Purchase Agreement dated April 28,

1995, is incorporated by reference to the Registrant's Current Report on Form 8-K/A, filed with the
Securities and Exchange Commission On February 12, 2003.

(xxxviii)Amendment, dated as of December 31, 2002, to the Note Purchase Agreement dated October 31,

1996, is incorporated by reference to the Registrant's Current Report on Form 8-K/A, filed with the
Securities and Exchange Commission On February 12, 2003.

(xxxix) Amendment, dated as of December 31, 2002, to the Note Purchase Agreement dated August 18,

1997, is incorporated by reference to the Registrant's Current Report on Form 8-K/A, filed with the
Securities and Exchange Commission On February 12, 2003.

(xl)

(xli)

Amendment, dated as of December 31, 2002, to the Note Purchase Agreement dated January 21,
1999, is incorporated by reference to the Registrant's Current Report on Form 8-K/A, filed with the
Securities and Exchange Commission On February 12, 2003.

Amended and Restated Commitment Letter, dated February 28, 2003, by and among the
Registrant, UBS AG and UBS Warburg, LLC, is incorporated by reference to the Registrant's
Current Report on Form 8-K, filed with the Securities and Exchange Commission On March 7,
2003.

(e)

Leases.

Material leases of premises are incorporated by reference to the Registrant's Annual Report on Form 10-
K for the years ended December 31, 1980 and December 31, 1988. See Commission file number 1-
6686.

(f) Acquisition Agreement for Purchase of Real Estate.

Acquisition Agreement (in German) between Treuhandelsgesellschaft Aktiengesellschaft & Co.
Grundbesitz OHG and McCann-Erickson Deutschland GmbH & Co. Management Property KG
("McCann-Erickson Deutschland") and the English translation of the Acquisition Agreement are
incorporated by reference to the Registrant's Annual Report on Form 10-K for the year ended December
31, 1992. See Commission file number 1-6686.

(g) Mortgage Agreements and Encumbrances.

(i)

105

1993. See Commission file number 1-6686. Summaries in German and English of Mortgage
Agreement, between McCann-Erickson Deutschland and Frankfurter Sparkasse and Mortgage
Agreement, dated January 7, 1993, between McCann-Erickson Deutschland and Frankfurter
Sparkasse are incorporated by reference to the Registrant's Annual Report on Form 10-K for
the year ended December 31, 1992. See Commission file number 1-6686.

Summaries in German and English of Documents creating Encumbrances in favor of
Frankfurter Hypothekenbank and Frankfurter Sparkasse in connection with the aforementioned
Mortgage Agreements, Encumbrance, dated January 15, 1993, in favor of Frankfurter
Hypothekenbank, and Encumbrance, dated January 15, 1993, in favor of Frankfurter Sparkasse
are incorporated by reference to the Registrant's Annual Report on Form 10-K for the year
ended December 31, 1992. See Commission file number 1-6686.

Loan Agreement (in English and German), dated January 29, 1993 between Lintas Deutschland
GmbH and McCann-Erickson Deutschland is incorporated by reference to the Registrant's
Annual Report on Form 10-K for the year ended December 31, 1992. See Commission file
number 1-6686.

(ii)

(iii)

(21)

Subsidiaries of the Registrant.

(23)

(a) Consent of Independent Accountants: PricewaterhouseCoopers LLP
(b) Consent of Independent Public Accountants: J.H. Cohn LLP

(24)

Power of Attorney to sign Form 10-K and resolution of Board of Directors re Power of Attorney.

(99) (a) The Company filed the following reports on Form 8-K during the quarter ended December 31, 2002:

(i) Report dated December 12, 2002. Item 9 Regulation FD Disclosure.

(ii) Report dated December 6, 2002. Item 5 Other Events and Regulation FD Disclosure.

(iii) Report dated November 19, 2002. Item 9 Regulation FD Disclosure.

(iv) Report dated November 19, 2002. Item 5 Other Events and Exhibit 99.1 Press Release.

(v) Report dated November 13, 2002. Item 9 Regulation FD Disclosure.

(vi) Report dated November 13, 2002. Item 5 Other Events and Exhibit 99.1 Press Release.

(vii) Report dated, October 17, 2002. Item 5 Other Events and Exhibit 99.1 Press Release.

(b) Certification under Section 906 of the Sarbanes-Oxley Act of 2002.

106

SIGNATURES

Pursuant to the requirements of Section 13 of the Securities Exchange Act of 1934, the Registrant has duly
caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

THE INTERPUBLIC GROUP OF COMPANIES, INC.
(Registrant)

March 28, 2003

BY: /s/ David A. Bell

David A. Bell
Chairman of the Board, President
and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by
the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

Name

Title

Date

/s/ David A. Bell
David A. Bell

/s/ Sean F. Orr
Sean F. Orr

Chairman of the Board,
President and Chief
Executive Officer (Principal
Executive Officer)

Executive Vice President,
Chief Financial Officer
(Principal Financial
Officer) and Director

/s/ Frank J. Borelli
Frank J. Borelli

Director

/s/ Reginald K. Brack
Reginald K. Brack

Director

/s/ Jill M. Considine
Jill M. Considine

Director

107

March 28, 2003

/s/ John J. Dooner, Jr.
John J. Dooner, Jr.

Director

/s/ Richard A. Goldstein
Richard A. Goldstein

Director

/s/ H. John Greeniaus
H. John Greeniaus

Director

/s/ Michael I. Roth
Michael I. Roth

Director

/s/ J. Philip Samper
J. Phillip Samper

Director

/s/ Richard P. Sneeder, Jr.
Richard P. Sneeder, Jr.

Vice President and
Controller (Principal
Accounting Officer)

March 28, 2003

108

I, David A. Bell, certify that:

CERTIFICATION

1. I have reviewed this annual report on Form 10-K of The Interpublic Group of Companies, Inc.;

2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this annual report;

3. Based on my knowledge, the financial statements, and other financial information included in this
annual report, fairly present in all material respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this annual report;

4. The registrant's other certifying officers and I are responsible for establishing and maintaining
disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
have:

a) designed such disclosure controls and procedures to ensure that material information relating to
the registrant, including its consolidated subsidiaries, is made known to us by others within those entities,
particularly during the period in which this annual report is being prepared;

b) evaluated the effectiveness of the registrant's dis closure controls and procedures as of a date
within 90 days prior to the filing date of this annual report (the "Evaluation Date"); and

c) presented in this annual report our conclusions about the effectiveness of the disclosure
controls and procedures based on our evaluation as of the Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to
the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the
equivalent function):

a) all significant deficiencies in the design or operation of internal controls which could adversely
affect the registrant's ability to record, process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other employees who have a
significant role in the registrant's internal controls; and

6. The registrant's other certifying officers and I have indicated in this annual report whether or not there
were significant changes in internal controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant
deficiencies and material weaknesses.

Date March 28, 2003

/s/ David A. Bell
Name: David A. Bell
Title: Chief Executive Officer

109

I, Sean F. Orr, certify that:

CERTIFICATION

1. I have reviewed this annual report on Form 10-K of The Interpublic Group of Companies, Inc.;

b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date
within 90 days prior to the filing date of this annual report (the "Evaluation Date"); and

c) presented in this annual report our conclusions about the effectiveness of the disclosure
controls and procedures based on our evaluation as of the Evaluation Date;

b) any fraud, whether or not material, that involves management or other employees who have a
significant role in the registrant's internal controls; and

Date March 28, 2003

/s/ Sean F. Orr
Name: Sean F. Orr
Title: Chief Financial Officer

110

INDEX TO DOCUMENTS

Exhibit No.
(a)
(3)

(b)

The By-Laws of the Registrant, amended as of February 19, 1991, are incorporated by reference to
its Report on Form 10-K for the year ended December 31, 1990. See Commission file number 1-
6686.

(4)

Instruments Defining the Rights of Security Holders.

(a)

(b)

(c)

(d)

(e)

(f)

(g)

(h)

111

dated October 3, 1989 (No. 00106686).

(10)

Material Contracts.

(a)

(b)

Employment, Consultancy and other Compensatory Arrangements with Management.

(i)

David A. Bell

(a)

(b)

(c)

(ii)

Sean F. Orr

(a)

(b)

(c)

Supplemental Agreement, dated as of November 7, 2002, to an Employment
Agreement between the Registrant and Sean F. Orr, is filed herewith.

Supplemental Agreement, dated as of November 7, 2002, to Executive
Special Benefit Agreements, dated as of May 1, 1999 and May 1, 2002, each
between the Registrant and Sean F. Orr, is filed herewith.

Executive Special Benefit Agreement, dated as of May 1, 2002, between the
Registrant and Sean F. Orr, signed as of November 7, 2002, is filed herewith.

112

(d)

(e)

(f)

(g)

(h)

(iii) Barry R. Linsky

(a)

(b)

(c)

(d)

113

(e)

(f)

(g)

(h)

(i)

December 31, 1998. See Commission file number 1-6686.

(iv) Bruce Nelson

(a)

(b)

(c)

114

(d)

(v)

Nicholas J. Camera

(a)

(b)

(c)

Employment Agreement, dated as of November 14, 2002, between the
Registrant and Nicholas J. Camera, is filed herewith.

Executive Special Benefit Agreement, dated as of January 1, 1995, between
the Registrant and Nicholas J. Camera, is filed herewith.

(vi) Albert Conte

(a)

(vii) Thomas Dowling

(a)

(b)

(c)

(d)

Supplemental Agreement, dated as of November 14, 2002, to an Employment
Agreement, dated as of November 1999, between the Registrant and Thomas
Dowling, is filed herewith.

Supplemental Agreement, dated as of October 1, 2002, to an Employment
Agreement, dated as of November 1999, between the Registrant and Thomas
Dowling, is filed herewith.

115

(e)

(viii) Brian Brooks

(a)

(b)

Employment Agreement, dated as of November 18, 2002, between the
Registrant and Brian Brooks, is filed herewith.

Executive Special Benefit Agreement, dated as of November 18, 2002,
between the Registrant and Brian Brooks, is filed herewith.

(ix)

C. Kent Kroeber

(a)

(b)

(c)

(d)

(e)

(x)

Gunnar Wilmot

(a)

Executive Special Benefit Agreement, dated as of January 1, 2002, and signed
as of October 2, 2002, between the Registrant and Gunnar Wilmot, is filed
herewith.

116

(b)

(c)

(d)

(e)

(xi)

Philippe Krakowsky

(a)

(b)

(c)

(d)

117

(xii) Susan Watson

(a)

Employment Agreement, dated as of November 14, 2002, between the
Registrant and Susan Watson, is filed herewith.

(xiii) Steven Berns

(a)

(b)

Executive Special Benefit Agreement, dated as of January 1, 2002, and signed
as of January 1, 2003, between the Registrant and Steven Berns, is filed
herewith.

(xiv) Richard P. Sneeder, Jr.

(a)

(b)

Employment Agreement, dated as of November 14, 2002, between the
Registrant and Richard P. Sneeder, Jr. , is filed herewith.

Executive Severance Agreement, dated as of November 14, 2002, between the
Registrant and Richard P. Sneeder, Jr. , is filed herewith.

(xv)

John J. Dooner, Jr.

(a)

(b)

(c)

(d)

(e)

Supplemental Agreement, dated as of November 7, 2002, to an Employment
Agreement between the Registrant and John J. Dooner, Jr. , is filed herewith.

Supplemental Agreement, dated as of November 7, 2002, to an Executive
Special Benefit Agreement between the Registrant and John J. Dooner, Jr. , is
filed herewith.

Executive Special Benefit Agreement dated as of May 20, 2002, between the
Registrant and John J. Dooner, Jr., signed as of November 11, 2002. , is filed
herewith.

118

(f)

(g)

(h)

(i)

(j)

(k)

(l)

(m)

file number 1-6686.

(n)

Employment Agreement, dated as of January 1, 1994, between the Registrant
and John J. Dooner, Jr., is incorporated by reference to Exhibit 10(r) to the

119

(o)

(p)

Registrant's Report on Form 10-K for the year ended December 31, 1995. See
Commission file number 1-6686.

(xvi)

Jill Considine

(a)

(xvii) Richard A. Goldstein

(a)

(i)

(ii)

(iii)

(iv)

The 1986 Stock Incentive Plan of the Registrant is incorporated by reference to Registrant's
Annual Report on Form 10-K for the year ended December 31, 1993. See Commission file
number 1-6686.

120

(v)

(vi)

(vii)

(ix)

(x)

(xi)

The 1996 Stock Incentive Plan of the Registrant is incorporated by reference to the Registrant's
Report on Form 10-Q for the quarter ended June 30, 1996. See Commission file number 1-6686.

The 1997 Performance Incentive Plan of the Registrant is incorporated by reference to the
Registrant's Report on Form 10-Q for the quarter ended June 30, 1997. See Commission file
number 1-6686.

(xii)

(xiv)

(xv)

(xvi)

The 2002 Performance Incentive Plan of the Registrant is incorporated by reference to Appendix
A to the Registrant's Schedule 14A, filed April 17, 2002. See Commission file number 1-6686.

121

(d) Loan Agreements.

(i)

(ii)

(iii)

(iv)

(v)

(vi)

(vii)

Amendment No. 1, dated as of March 13, 2002, to the 364-Day Credit Agreement among
Registrant, the initial lenders named therein and Citibank, N.A., as administrative agent.

(viii)

(ix)

(x)

122

(xi)

(xii)

(xiii)

(xiv)

(xv)

(xvi)

(xvii) Amendment, dated as of June 30, 2001, to the Note Purchase Agreement dated August 18, 1997, is

incorporated by reference to Exhibit 10(i)(L) to the Registrant's Report on Form 10-Q for the
quarter ended September 30, 2002. See Commission file number 1-6686.

(xviii) Amendment, dated as of June 30, 2001, to the Note Purchase Agreement dated January 21, 1999,

is incorporated by reference to Exhibit 10(i)(M) to the Registrant's Report on Form 10-Q for the
quarter ended September 30, 2002. See Commission file number 1-6686.

(xix)

(xx)

(xxi)

(xxii) Amendment and Waiver Agreement, dated as of June 30, 2002, to the Note Purchase Agreement
dated August 19, 1997, is incorporated by reference to Exhibit 10(i)(Q) to the Registrant's Report

123

on Form 10-Q for the quarter ended September 30, 2002. See Commission file number 1-6686.

(xxiv) Amendment and Waiver Agreement, dated as of September 30, 2002, to the Note Purchase

Agreement dated May 26, 1994, is incorporated by reference to Exhibit 10(i)(S) to the Registrant's
Report on Form 10-Q for the quarter ended September 30, 2002. See Commission file number 1-
6686.

(xxv) Amendment and Waiver Agreement, dated as of September 30, 2002, to the Note Purchase

Agreement dated April 28, 1995, is incorporated by reference to Exhibit 10(i)(T) to the
Registrant's Report on Form 10-Q for the quarter ended September 30, 2002. See Commission file
number 1-6686.

(xxix) Amendment, dated March 28, 2003, to the Note Purchase Agreement, dated May 26, 1994,

between the Registrant and Prudential, is filed herewith.

(xxx)

Amendment, dated March 28, 2003, to the Note Purchase Agreement, dated April 28, 1995,
between the Registrant and Prudential, is filed herewith.

(xxxi) Amendment, dated March 28, 2003, to the Note Purchase Agreement, dated October 31, 1996,

between the Registrant and Prudential, is filed herewith.

(xxxii) Amendment, dated March 28, 2003, to the Note Purchase Agreement, dated August 19, 1997,

between the Registrant and Prudential, is filed herewith.

(xxxiii) Amendment, dated March 28, 2003, to the Note Purchase Agreement, dated January 21, 1999,

between the Registrant and Prudential, is filed herewith.

124