The Interpublic Group of Companies
Annual Report 2011

Plain-text annual report

A LETTER FROM THE CHAIRMAN TO OUR SHAREHOLDERS: Following a strong 2010, we set ambitious goals for ourselves going into 2011. Actual performance for the year was very strong. Our 6.1% organic revenue growth exceeded our target of 4% to 5% – and led the industry on this important metric. By achieving operating margin of 9.8%, we delivered on our target and demonstrated once again the capacity to significantly improve the profitability of the business. Earnings per share also increased dramatically. These accomplishments are noteworthy in their own right, but also in light of the macro economic uncertainty that prevailed during the latter half of 2011. Our progress is a reflection of the caliber and contributions of our people, as well as the benefits of strategic actions taken in recent years. Chief among these are our investment in digital talent across the portfolio and our decision to hold all operating unit leaders accountable for developing native digital expertise within their respective agencies, regardless of discipline. Our ongoing investment in high-growth geographic markets and marketing services also contributed to our results. We continued to strengthen our capital structure, which in turn positioned us to initiate a common share repurchase program and a cash dividend on our common stock, further enhancing shareholder value. A DYNAMIC AND COMPLEX LANDSCAPE The world in which we compete is evolving rapidly. Around the globe, all media are undergoing transformative change, driven by technology, which moves at an increasing rate of speed. As a result, the number of choices available to consumers, in terms of where and how they access entertainment and information, is unlike anything we have ever experienced. What’s more, one can plug into the grid instantaneously, at any time, from anywhere. While the term “information overload” was coined in the 1960s and popularized in the 70s, it has become the reality we all must live with today. And it is a challenge that will remain with us going forward. Other major drivers of change are the emerging economies, including of course the BRICs, as well as other major markets in Asia and Latin America, to say nothing of Central Europe and Turkey, the Middle East and Africa. These are countries or regions in which demographics, increasing prosperity and access to the mobile web are accelerating the development of the media and consumer ecosystem and creating significant opportunity for growth. to maximize the impact of The implications for marketing are without precedent. Companies everywhere, regardless of size, are confronted by a staggering array of questions. How best to identify and engage with the right audiences for their brands? What is the right mix of integrated disparate channels campaigns that include television and the web, plus social and mobile programs? Who is best able to craft compelling messages that engage consumers across these platforms and media formats? What is the role of experiential marketing and interactions with the consumer at retail? And how can organizations tap into the torrent of data being generated by all of these devices and touchpoints to increase marketing accountability and efficiency? More than ever, our clients need a high-value partner to help them navigate this complexity. This is the challenge we face, as well as the great opportunity to drive our business forward. In 2011, we proved ourselves up to the task. THE INTERPUBLIC GROUP OF COMPANIES 2011 ANNUAL REPORT 1 OVERVIEW OF RESULTS For 2011, revenue grew by 6.1% organically compared to prior year, driven by increased spending from existing clients across all client sectors and nearly all geographic regions. As was the case in 2010, our organic growth rate positioned us at or near the top end of our peer group. Operating margin was 9.8%, 140 basis points better than the previous year, bringing our two-year improvement on this key measure of operational efficiency to over 400 basis points. All our global networks had organic revenue growth and improved operating margins. The operating margin performance we achieved last year represents a level of profitability that the company had not attained in over a decade. On revenues of $7.01 billion, 2011 operating profit increased to $687.2 million, a significant year-on-year improvement of $138.5 million, or 25%. Diluted earnings per share grew to $0.99, including the benefit of our sale of part of our stake in Facebook. Excluding that transaction, diluted earnings per share was $0.76, a 62% increase over like-for-like improvement in EPS is outstanding. the previous year – this We ended the year in a strong liquidity position, with $2.32 billion of cash and marketable securities on the balance sheet, which includes returning $512 million to shareholders in 2011 in the form of share repurchases and common stock dividends. to strengthen our company’s During the course of the year, we made further progress in the continued long-term de-leveraging of our balance sheet, which has seen us take total debt from $2.35 billion at the end of 2007 to $1.77 billion at the conclusion of 2011. We also took further actions financial position by amending our corporate credit facility to increase its size to $1 billion and extend its maturity. The combination of strong operating performance and a solid balance sheet resulted in upgrades to investment grade by two of the leading credit rating agencies, Moody’s and Fitch. A BALANCED PORTFOLIO – STRENGTH IN EMERGING DISCIPLINES AND MARKETS Our performance is testament to the strength of our agencies, their people and their professional offerings – particularly in the key growth areas of digital, marketing services and emerging economies. Our organic revenue performance is the best indicator that we are building a terrific talent base and that our strategic decisions and investments in people can continue to drive positive results in the marketplace. Mediabrands delivers a fully contemporary and competitive offering in an area of the industry that is becoming increasingly to every marketer’s success. Their digital and targeted vital offerings – whether at multinational networks UM and Initiative, 2 THE INTERPUBLIC GROUP OF COMPANIES 2011 ANNUAL REPORT specialist capabilities or at such as Cadreon, Orion and Geomentum – are second to none, as is the recently launched Emerging Media Lab. Mediabrands is also at the forefront in developing pay-for-performance models, an area in which Interpublic is leading the way, and one which will remain a priority for our company. At our Constituency Management Group, we are seeing the successful evolution of a broad range of marketing services. The social media capabilities at our PR firms, as well as our sports and event marketing agencies, are best-in-class and the market share gains consistently posted by Weber Shandwick, Golin Harris, Octagon and Jack Morton reflect the degree to which we have been investing in digital talent at all of these agencies. At McCann, MRM is among the leading global digital networks, with offices in over 30 world markets and a strong track record of growth in recent years. R/GA is not only our industry’s most celebrated digital agency in terms of innovation, awards and press recognition – it is also a creative force that is now serving clients from eight offices, in the U.S. and Latin America, Asia and Europe. HUGE is on a similar growth path, due to the great tech talent that is at the core of the agency. At its U.S. operations, Draftfcb already has more than 300 people in its digital practice and an almost equal number in its shopper marketing group. They are all fully embedded in the agency’s integrated, behavior-based agency model. In 2011, Draftfcb Worldwide once again delivered outstanding top and bottom line performance. Our domestic integrated agencies continue to perform at an exceptional level. From Mullen and Hill Holliday to The Martin Agency and Deutsch, a Lowe and Partners company – all of these agencies have strong full-service offerings that span every consumer touch-point. These firms have the strategic and creative talent that comes up with big brand ideas and leading-edge digital capabilities that include web development and social media, digital media planning and app development, as well as a full range of analytics tools. In the high-growth markets, we are also well positioned. Draftfcb has one of the most powerful holistic offerings in India and a strong presence in Brazil that serves as a hub for regional operations. The agency is also a dominant market leader in South Africa, from which it plans to build its business in that emerging continent. Lowe is well positioned in India and Southeast Asia and has outstanding agencies and talent in all of the key Latin American markets. Lowe’s position as a highly creative network with strong agencies and deep cultural understanding in developing markets gives it a differentiating proposition that is attractive to major multinational clients. McCann Worldgroup remains one of the industry’s most powerful global networks, delivering a full range of marketing services capabilities in over 100 world markets, with strong operations and talent across Latin America and in key Asian markets. MRM, Momentum, McCann advertising and its healthcare offerings combine to provide a broad range of expertise, delivering custom solutions that build clients’ brands and businesses. Over the course of 2011, Worldgroup continued to improve its financial performance, as well as upgrade senior positions throughout the organization. DIVERSITY AS A DIFFERENTIATOR We remain committed to our goal of being a leader in diversity and inclusion. In 2011, our diversity and inclusion programs continued to show results and garner recognition. The New York Urban League bestowed its Champions of Diversity Award on Interpublic, the first time an advertising holding company has received this important honor. Our company also received a 2011 CEO Diversity Leadership Award from Diversity Best Practices, the preeminent organization for diversity thought leadership in the corporate sector. During the year, we became one of only six Fortune 500 companies with a 40% or higher representation of women on our Board of Directors. We also sponsored a ground-breaking seminar at the Cannes Lions International Festival of Creativity, bringing together key marketing leaders to discuss the advancement of women in creative roles. This marked the first time in the Festival’s 58-year history that this topic was formally addressed. Called “Beyond Mad Men,” the panel was well received by both look to build on this our people and our clients. We will discussion in the years to come. Like any company that’s embarked on this journey, our commitment reflects both a moral and a business imperative. We know there is still much work to be done, but we’re driving real results with our efforts. In 2011, we once again saw year-on-year improvement for women and people of color at both the manager and executive levels. Embracing diversity and inclusion makes us an even more attractive employer, better able to connect with today’s consumers, and ultimately a more valued partner for our clients. LOOKING FORWARD We continue to believe that our product is our people. The therefore be driven by evolution of our business model will mastering and incorporating new forms of marketing activity into our agency offerings. This calls for significant investment in talent and training, which we continue to make and remains our top strategic priority. To supplement these efforts, we also bring a disciplined approach to identifying and integrating targeted acquisitions that can bolster our capabilities. This includes seeking out quality assets in high-growth geographic markets and among businesses in the more dynamic areas of marketing services. During the course of 2011, IPG acquired multiple agencies across the marketing spectrum, including firms specializing in digital and social media, healthcare communications, and public relations. An increasingly sophisticated digital media ecosystem represents opportunity for us and we are well positioned to capitalize on the dynamic changes that are transforming the consumer landscape. Our agencies have the tools to help marketers and brands to succeed in this new world. We are building on strong positions in emerging disciplines and geographic regions. We are committed to continuing to return capital to our shareholders. Together, this is a combination that gives us confidence that we can keep moving the business forward and continue to drive strong shareholder returns. We can all be proud of Interpublic’s accomplishments in 2011. Above all, they reflect the great professionalism and hard work of our people, around the world. As always, we’ll stay focused on serving our clients and closely managing our company. This approach has served us well in recent years, as has the ongoing support of our shareholders, for which we thank you. Sincerely, Michael I. Roth Chairman and Chief Executive Officer THE INTERPUBLIC GROUP OF COMPANIES 2011 ANNUAL REPORT 3 EXECUTIVE OFFICERS MICHAEL I. ROTH Chairman & Chief Executive Officer FRANK MERGENTHALER Executive Vice President, Chief Financial Officer PHILIPPE KRAKOWSKY Executive Vice President, Chief Strategy and Talent Officer ANDREW BONZANI Senior Vice President, General Counsel and Secretary CHRISTOPHER CARROLL Senior Vice President, Controller and Chief Accounting Officer JULIE M. CONNORS Senior Vice President, Audit and Chief Risk Officer CORPORATE HEADQUARTERS 1114 Avenue of the Americas New York, NY 10036 (212) 704-1200 TRANSFER AGENT & REGISTRAR FOR COMMON STOCK Computershare Shareowner Services LLC (acquired BNY Mellon in 2011) 480 Washington Boulevard Jersey City, NJ 07310 Stock of The Interpublic Group of Companies, Inc., is traded on the New York Stock Exchange. At February 15, 2012, there were 19,931 shareholders of record. ANNUAL MEETING The annual meeting will be held on May 24, 2012 at 9:30 am at: McGraw Hill Building 1221 Avenue of the Americas New York, NY 10020 AUTOMATIC DIVIDEND REINVESTMENT PLAN An Automatic Dividend Reinvestment Plan is offered to all shareholders of record. The Plan, which is administered by BNY Mellon Shareowner Services LLC, provides a way to acquire additional shares of Interpublic Common Stock in a systematic and convenient manner that affords savings in commissions for most shareholders. Those interested in participating in this plan are invited to write for details and an authorization form to: The Interpublic Group of Companies, Inc. c/o BNY Mellon Shareowner Services LLC Attn: Shareholder Relations P.O. Box 358015 Pittsburgh, PA 15252-8015 FORM 10-K 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: Andrew Bonzani Senior Vice President, General Counsel & Secretary, The Interpublic Group of Companies, Inc. 1114 Avenue of the Americas New York, NY 10036 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. SHARE OWNER INTERNET ACCOUNT ACCESS Share 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 Computershare Shareowner Services LLC toll free at (877) 363-6398, or visit www.bnymellon.com/shareowner/ equityaccess Outside the US and Canada, call (201) 680-6578 For hearing impaired: (800) 231-5469 E-MAIL: shrrelations@bnymellon.com INTERNET: www.bnymellon.com/shareowner/ equityaccess For more information regarding The Interpublic Group of Companies, visit its Web site at www.interpublic.com. BOARD OF DIRECTORS MICHAEL I. ROTH (2002) 3 Chairman & Chief Executive Officer REGINALD K. BRACK (1996) 2, 4 Former Chairman & Chief Executive Officer, Time, Inc. JOCELYN CARTER – MILLER (2007) 1, 2 President TechEd Ventures JILL M. CONSIDINE (1997) 2, 3, 4 Former Chairman & Chief Executive Officer, The Depository Trust & Clearing Corporation RICHARD A. GOLDSTEIN (2001) 1, 3, 4 Presiding Director Former Chairman & Chief Executive Officer, International Flavors & Fragrances Inc. H. JOHN GREENIAUS (2001) 1, 2 Former Chairman & Chief Executive Officer, Nabisco, Inc. MARY J. STEELE GUILFOILE (2007) 1, 4 Chairman MG Advisors, Inc. DAWN HUDSON (2011) 1, 4 Vice Chairman The Pantheon Group WILLIAM T. KERR (2006) 1, 2 President & Chief Executive Officer, Arbitron, Inc. DAVID M. THOMAS (2004) 1, 3, 4 Former Chairman & Chief Executive Officer, IMS Health Inc. (Year Elected) 1 Audit Committee 2 Compensation and Leadership Talent Committee 3 Executive Policy Committee 4 Corporate Governance Committee 4 THE INTERPUBLIC GROUP OF COMPANIES 2011 ANNUAL REPORT UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-K È ANNUAL REPORT PURSUANT TO SECTION 13 OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2011 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) 13-1024020 (I.R.S. Employer Identification No.) 1114 Avenue of the Americas, New York, New York 10036 (Address of principal executive offices) (Zip Code) (212) 704-1200 (Registrant’s telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: Title of each class Common Stock, $0.10 par value Name of each exchange on which registered New York Stock Exchange Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Securities Registered Pursuant to Section 12(g) of the Act: None Yes È No ‘ Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ‘ No È 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 È No ‘ Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes È No ‘ Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§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 a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. Large accelerated filer È Non-accelerated filer ‘ (Do not check if a smaller reporting company) Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ‘ Accelerated filer Smaller reporting company ‘ Yes ‘ No È As of June 30, 2011, the aggregate market value of the shares of registrant’s common stock held by non-affiliates was approximately $6.0 billion. The number of shares of the registrant’s common stock outstanding as of February 15, 2012 was 446,111,507. DOCUMENTS INCORPORATED BY REFERENCE The following sections of the Proxy Statement for the Annual Meeting of Stockholders to be held on May 24, 2012 are incorporated by reference in Part III: “Election of Directors,” “Director Selection Process,” “Code of Conduct,” “Principal Committees of The Board of Directors,” “Audit Committee,” “Section 16(a) Beneficial Ownership Reporting Compliance,” “Compensation of Executive Officers,” “Non-Management Director Compensation,” “Compensation Discussion and Analysis,” “Compensation and Leadership Talent Committee Report,” “Outstanding Shares,” “Review and Approval of Transactions with Related Persons,” “Director Independence” and “Appointment of Independent Registered Public Accounting Firm.” TABLE OF CONTENTS PART I Item 1. Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 1A. Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 1B. Unresolved Staff Comments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 2. Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 3. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 4. Mine Safety Disclosures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 6. Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations . . . . . . . . . . . . . . . . Item 7A. Quantitative and Qualitative Disclosures About Market Risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 8. Financial Statements and Supplementary Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure . . . . . . . . . . . . . . . . Item 9A. Controls and Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 9B. Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . PART III Item 10. Directors, Executives Officers and Corporate Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 11. Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters . . . . . . . Item 13. Certain Relationships and Related Transactions, and Director Independence . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 14. Principal Accountant Fees and Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page No. 3 7 10 10 11 11 12 14 15 38 40 85 85 85 86 86 86 86 87 Item 15. Exhibits, Financial Statement Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88 PART IV 1 STATEMENT REGARDING FORWARD-LOOKING DISCLOSURE This annual report on Form 10-K contains forward-looking statements. Statements in this report that are not historical facts, including statements about management’s beliefs and expectations, constitute forward-looking statements. Without limiting the generality of the foregoing, words such as “may,” “will,” “expect,” “believe,” “anticipate,” “intend,” “could,” “would,” “estimate,” “continue” or comparable terminology are intended to identify forward-looking statements. These statements are based on current plans, estimates and projections, and are subject to change based on a number of factors, including those outlined under Item 1A, Risk Factors, in this report. Forward-looking statements speak only as of the date they are made and we undertake 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, the following: • • • • • • • potential effects of a challenging economy, for example, on the demand for our advertising and marketing services, on our clients’ financial condition and on our business or financial condition; our ability to attract new clients and retain existing clients; our ability to retain and attract key employees; risks associated with assumptions we make in connection with our critical accounting estimates, including changes in assumptions associated with any effects of a weakened economy; potential adverse effects if we are required to recognize impairment charges or other adverse accounting-related developments; risks associated with the effects of global, national and regional economic and political conditions, including counterparty risks and fluctuations in economic growth rates, interest rates and currency exchange rates; and developments from changes in the regulatory and legal environment for advertising and marketing and communications services companies around the world. Investors should carefully consider these factors and the additional risk factors outlined in more detail under Item 1A, Risk Factors, in this report. 2 Item 1. Business PART I The Interpublic Group of Companies, Inc. (“Interpublic,” “IPG,” “we,” “us,” or “our”) 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. The company has operated under the Interpublic name since January 1961. About Us We are one of the world’s premier global advertising and marketing services companies. Through our 42,000 employees in all major world markets, our companies specialize in consumer advertising, digital marketing, communications planning and media buying, public relations and specialized communications disciplines. Our agencies create customized marketing programs for many of the world’s largest companies. Comprehensive global services are critical to effectively serve our multinational and local clients in markets throughout the world, as they seek to build brands, increase sales of their products and services and gain market share. The work we produce for our clients is specific to their unique needs. Our solutions vary from project-based activity involving one agency to long-term, fully integrated campaigns created by multiple IPG agencies working together. With offices in over 100 countries, we can operate in a single region, or deliver global integrated programs. The role of our holding company is to provide resources and support to ensure that our agencies can best meet clients’ needs. Based in New York City, our holding company sets company-wide financial objectives and corporate strategy, establishes financial management and operational controls, guides personnel policy, directs collaborative inter-agency programs, conducts investor relations, provides enterprise risk management and oversees mergers and acquisitions. In addition, we provide limited centralized functional services that offer our companies operational efficiencies, including accounting and finance, executive compensation management and recruitment assistance, employee benefits, marketing information retrieval and analysis, internal audit, legal services, real estate expertise and travel services. Our Brands Interpublic is home to some of the world’s best-known and most innovative communications specialists. We have three global networks, McCann Worldgroup (“McCann”), Draftfcb and Lowe & Partners (“Lowe”), that provide integrated, large- scale advertising and marketing solutions for clients, and two global media services companies, UM and Initiative, operating under the Mediabrands umbrella. We also have premier domestic integrated and interactive agencies that are industry leaders as well as a range of best-in-class specialized communications assets. • McCann offers a full range of communications tools and resources to many of the world’s top companies and most famous brands, positioning McCann to meet client demands in all regions of the world and in all marketing disciplines. McCann Erickson Advertising has operations in over 100 countries. MRM Worldwide is among our industry’s largest global digital and customer relationship management (“CRM”) networks. Momentum Worldwide is a leader in experiential marketing and promotions, as is McCann Healthcare Worldwide in healthcare communications. • Draftfcb is a modern agency model for clients seeking creative and accountable marketing programs delivered in a media-neutral manner under a unified, integrated business. The company has its roots in both consumer advertising and behavioral, data-driven direct marketing. We believe the agency is the first global, behavior-based, creative and accountable marketing communications organization operating as a financially and structurally integrated business unit. • Lowe is a premier creative agency that operates in the world’s most dynamic growth markets. Lowe’s core strength is developing high-value ideas that connect with popular culture and drive business results. This is evident in the agency’s global creative rankings and strong local operations in major key markets, such as Deutsch (U.S.), DLKW/Lowe (U.K.), Lowe Lintas (India) and BorghiErh/Lowe (Brazil). • Mediabrands delivers on the scale and breadth of our media capabilities, making investment decisions for tens of billions of dollars of client marketing budgets, yet retains a nimble, collaborative culture. UM and Initiative seek to 3 

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