As filed with the Securities and Exchange Commission on February 27, 2001.
Registration No. 333-55386
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------
Amendment No. 1
to
FORM S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
----------
OMNICOM GROUP INC.
(Exact name of registrant as specified in its charter)
New York 13-1514814
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
437 Madison Avenue
New York, NY 10022
(212) 415-3600
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
BARRY J. WAGNER, ESQ.
Secretary and General Counsel
Omnicom Group Inc.
437 Madison Avenue
New York, New York l0022
(212) 415-3600
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
----------
Copy to:
CHRISTOPHER M. KELLY, ESQ.
Jones, Day, Reavis & Pogue
599 Lexington Avenue
New York, New York 10022
(212) 326-3939
----------
Approximate date of commencement of proposed sale to the public: From time
to time after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. |_|
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. |X|
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. |_|
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |_|
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. |_|
CALCULATION OF REGISTRATION FEE
===============================================================================
Proposed Proposed
Amount Maximum Maximum Amount of
Title of Securities to be Offering Aggregate Registration
to be Registered Registered Price Per Security(1) Offering Price(1) Fee(1)
-------------------------------------------------------------------------------------------------------------------
Liquid Yield Option(TM)Notes due 2031 $850,000,000 $1,007.50 $856,375,000 $214,094
-------------------------------------------------------------------------------------------------------------------
Common stock, par value $.15 per share(2) -- -- -- --
================================================================================
(TM) Trademark of Merrill Lynch & Co., Inc.
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) under the Securities Act, based on the average of
the bid and asked prices of the LYONs on the Portal System on February 16,
2001 of $1,007.50 per $1,000 issue price of LYONs. A fee of $165,000 was
previously paid to the Commission on February 12, 2001.
(2) Also being registered are an indeterminate number of shares of common
stock issuable upon conversion and/or redemption of the LYONs registered
hereby or in connection with a stock split, stock dividend,
recapitalization or similar event for which no additional registration fee
is payable pursuant to Rule 457(i) under the Securities Act.
The registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
================================================================================
PROSPECTUS
$850,000,000
OMNICOM GROUP INC.
Liquid Yield Option(TM) Notes due 2031
(Zero Coupon - Senior)
----------
The Offering:
We issued the LYONs in a private placement on February 7, 2001 with no
original issue discount at an issue price of $1,000 per LYON. Selling
securityholders will use this prospectus to resell their LYONs and the shares of
common stock issuable upon conversion and/or redemption of their LYONs. The
LYONs are zero-coupon debt securities. On February 7, 2031, the maturity date of
the LYONs, a holder will receive the principal amount at maturity of the LYONs,
which will be $1,000 per LYON unless that amount is increased at February 7,
2021 as described in this prospectus. If the principal amount at maturity is
increased, then contingent additional principal, the difference between the
issue price and the principal amount at maturity, will accrue from February 7,
2021 until maturity. The LYONs are unsecured and unsubordinated and rank equal
in right of payment to all of our existing and future unsecured and
unsubordinated indebtedness.
Convertibility of the LYONs:
Holders may convert their LYONs into 9.09 shares of our common stock,
subject to adjustment, if (1) the sale price of our common stock issuable upon
conversion of a LYON reaches specified thresholds, (2) the credit rating of the
LYONs is reduced to or below a specified level, (3) the LYONs are called for
redemption, or (4) specified corporate transactions have occurred. Our common
stock currently trades on the New York Stock Exchange under the symbol "OMC."
The last reported sale price of our common stock on the New York Stock Exchange
was $90.20 per share on February 23, 2001.
Contingent Cash Interest:
We will pay contingent cash interest to the holders of LYONs during the
six-month period commencing February 7, 2006 and during any six-month period
thereafter until maturity if the average market price of a LYON for a five
trading day measurement period preceding the applicable six-month period equals
120% or more of the issue price of the LYON. For any six-month period, the
amount of contingent cash interest payable per LYON will be equal to the amount
of regular cash dividends paid by us per share on our common stock during that
six-month period multiplied by the number of shares issuable upon conversion of
a LYON at the then applicable conversion rate.
For United States federal income tax purposes, the LYONs will constitute
contingent payment debt instruments. You should read the discussion of selected
United States federal income tax consequences relevant to the LYONs beginning on
page 26.
Purchase of the LYONs by Omnicom at the Option of the Holder:
Holders may require us to purchase all or a portion of their LYONs each
February 7, commencing February 7, 2002 at the prices set forth in this
prospectus. We may choose to pay the purchase price in cash, shares of common
stock or a combination of cash and common stock. In addition, upon a change in
control of Omnicom occurring on or before February 7, 2006, holders may require
us to purchase all or a portion of their LYONs for cash at a purchase price of
$1,000 per LYON. If 90% or more of the outstanding LYONs are purchased in any
such event, we may redeem all of the remaining LYONs for cash at a redemption
price of $1,000 per LYON.
Redemption of the LYONs at the Option of Omnicom:
We may redeem all or a portion of the LYONs for cash at any time on or
after February 7, 2006, at the issue price or, if the principal amount at
maturity has been increased, at the issue price plus accrued contingent
additional principal.
The LYONs issued in the initial private placement are eligible for trading
in the PORTAL system. LYONs sold using this prospectus, however, will no longer
be eligible for trading in the PORTAL system. We do not intend to list the LYONs
on any other national securities exchange or automated quotation system.
----------
Investing in the LYONs involves risks that are described in the "Risk
Factors Relating to the LYONs" section beginning on page 9 of this prospectus
----------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
----------
The date of this prospectus is February 26, 2001
-----------------
(TM) Trademark of Merrill Lynch & Co., Inc.
TABLE OF CONTENTS
Page
----
Where You Can Find More Information ....................................... 3
Forward-Looking Information ............................................... 3
Summary ................................................................... 4
Risk Factors Relating to the LYONs ........................................ 9
Selected Consolidated Historical Financial Information .................... 11
Ratio of Earnings to Fixed Charges ........................................ 11
Use of Proceeds ........................................................... 12
Price Range of Common Stock and Dividend History .......................... 12
Capitalization ............................................................ 13
Description of LYONs ...................................................... 14
Description of Capital Stock .............................................. 25
Federal Income Tax Considerations ......................................... 26
Selling Securityholders ................................................... 29
Plan of Distribution ...................................................... 30
Legal Matters ............................................................. 32
Experts ................................................................... 32
2
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements and other
information with the Securities and Exchange Commission. You may read and copy
any document we file at the Securities and Exchange Commission's public
reference rooms in Washington, D.C., New York, New York and Chicago, Illinois.
You can also request copies of the documents, upon payment of a duplicating fee,
by writing to the Public Reference Section of the Securities and Exchange
Commission. Please call the Securities and Exchange Commission at 1-800-SEC-0330
for further information on the public reference rooms. These filings with the
Securities and Exchange Commission are also available to the public from the
Securities and Exchange Commission's web site at http://www.sec.gov.
We are "incorporating by reference" into this prospectus certain
information we file with the Securities and Exchange Commission, which means
that we are disclosing important information to you by referring you to those
documents. The information incorporated by reference is considered to be part of
this prospectus, except for any information superseded by information contained
directly in this prospectus. Information that we file later with the Securities
and Exchange Commission will automatically update information in this
prospectus. In all cases, you should rely on the later information over
different information included in this prospectus. We incorporate by reference
the documents listed below and any future filings made with the Securities and
Exchange Commission under Section 13(a), 13(c), 14, or 15(d) of the Securities
Exchange Act of 1934, as amended:
o Annual Report on Form 10-K for the year ended December 31, 1999;
o Quarterly Reports on Form 10-Q for the quarters ended March 31,
2000, June 30, 2000 and September 30, 2000; and
o Current Report on Form 8-K, filed on February 5, 2001.
All documents we file pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act after the date of this prospectus to the end of the offering of the
LYONs and shares of common stock under this prospectus will also be incorporated
by reference in this prospectus from the date of filing of such documents.
You may request a copy of these filings, or any other documents or other
information referred to in, or incorporated by reference into, this prospectus,
at no cost, by writing or telephoning Omnicom at the following address:
Barry J. Wagner
Secretary and General Counsel
Omnicom Group Inc.
437 Madison Avenue
New York, NY 10022
(212) 415-3600
FORWARD-LOOKING INFORMATION
Some of the statements in this prospectus and any documents incorporated
by reference constitute forward-looking statements. These statements relate to
future events or our future financial performance and involve known and unknown
risks, uncertainties and other factors that may cause our or our industry's
actual results, levels of activity, performance or achievements to be materially
different from those expressed or implied by any forward-looking statements. In
some cases, you can identify forward-looking statements by terminology such as
"may," "will," "could," "would," "should," "expect," "plan," "anticipate,"
"intend," "believe," "estimate," "predict," "potential" or "continue" or the
negative of those terms or other comparable terminology. These statements are
only present expectations. Actual events or results may differ materially.
Moreover, we do not, nor does any other person, assume responsibility for the
accuracy and completeness of those statements. We have no duty to update any of
the forward-looking statements after the date of this prospectus to conform them
to actual results.
3
--------------------------------------------------------------------------------
SUMMARY
The following summary is qualified in its entirety by the more detailed
information included elsewhere or incorporated by reference into this
prospectus. Because this is a summary, it may not contain all the information
that may be important to you. You should read the entire prospectus, as well as
the information incorporated by reference, before making an investment decision.
When used in this prospectus, the terms "Omnicom," "we," "our" and "us" refer to
Omnicom Group Inc. and its consolidated subsidiaries, unless otherwise
specified.
Omnicom Group Inc.
We are one of the world's leading marketing communications services
companies. The services offered by us include advertising, direct response and
promotional marketing, public relations, strategic media planning and buying and
internet and digital media development. We operate in over 100 countries around
the world. We offer these services to clients worldwide on a local, national,
pan-regional and global basis. Our operations cover the major regions of North
America, the United Kingdom, Germany, France, the remainder of Continental
Europe, Latin America, the Far East, Australia, the Middle East and Africa.
We are incorporated in New York. Our principal office is located at 437
Madison Avenue, New York, NY 10022, and its telephone number is (212) 415-3600.
For additional information regarding our business, see our Forms 10-K and
10-Q and other SEC filings which are incorporated by reference into this
prospectus.
--------------------------------------------------------------------------------
4
--------------------------------------------------------------------------------
The Offering
LYONs ................ $850,000,000 aggregate issue price of LYONs due February
7, 2031. We issued the LYONs at an issue price per LYON
of $1,000.
Maturity of LYONs .... February 7, 2031.
Principal Amount at
Maturity of LYONs .. Before February 7, 2021, the principal amount at
maturity of a LYON will be equal to the issue price of
the LYON. On or after February 7, 2021, if, for the last
20 trading days preceding February 7, 2021, the average
conversion value of a LYON is greater than the issue
price but less than or equal to 220% of the issue price,
then the principal amount at maturity of a LYON will be
equal to the conversion value of the LYON on February 7,
2021, but in no event greater than two times the issue
price. If that conversion value exceeds 220% of the
issue price, then the principal amount at maturity will
equal the issue price.
The conversion value of a LYON as of any date of
determination will equal the sale price per share of our
common stock on that determination date multiplied by
the number of shares of common stock then issuable upon
conversion of a LYON.
If the principal amount at maturity is increased, then
contingent additional principal, the difference between
the issue price and the principal amount at maturity,
will accrue from February 7, 2021 until maturity.
No Cash Interest ..... We will not pay any cash interest on the LYONs prior to
maturity, unless contingent cash interest becomes
payable.
Yield to Maturity
of LYONs ........... The yield to maturity (except contingent cash interest
payments, if any) will be zero unless, for the last 20
trading days preceding February 7, 2021, the average
conversion value of a LYON is greater than the issue
price but less than 220% of the issue price, in which
case contingent additional principal will accrue daily
on the issue price of the LYON ratably to the principal
amount at maturity of the LYON, which represents the
issue price plus contingent additional principal.
Contingent Cash We will pay contingent cash interest to the holders of
Interest ........... LYONs during any six-month period from February 8 to
August 7, and from August 8 to February 7, commencing
February 8, 2006, if the average market price of a LYON
for a five trading day measurement period preceding the
applicable six-month period equals 120% or more of the
issue price of the LYON.
For any six-month period, the amount of contingent cash
interest payable per LYON will be equal to amount of the
regular cash dividends paid by us per share on our
--------------------------------------------------------------------------------
5
--------------------------------------------------------------------------------
common stock in that period multiplied by the number of
shares issuable upon conversion of a LYON.
Contingent cash interest, if any, will accrue and be
payable to holders of LYONs as of the record date for
the related common stock dividend during the relevant
six-month period. Such payments will be made on the
payment date for the related common stock dividend. If
we do not pay regular cash dividends, holders will not
be entitled to any contingent cash interest.
Tax Original Issue
Discount ........... The LYONs are debt instruments subject to the United
States federal income tax contingent payment debt
regulations. The LYONs will be deemed to be issued with
original issue discount for United States federal income
tax purposes, referred to as tax original issue
discount. You should be aware that, even though we will
not pay any interest (except for contingent cash
interest, if any) on the LYONs and that the LYONs will
not be nominally issued at a discount, you will be
required to include accrued tax original issue discount
in your gross income for United States federal income
tax purposes. We intend to compute and report accruals
of the tax original issue discount based upon an overall
yield of 6.71% per year, computed on a semiannual bond
equivalent basis, which represents the yield on
noncontingent, nonconvertible, fixed-rate debt with
terms otherwise similar to the LYONs.
In accordance with our application of the contingent
payment debt tax regulations, you will also recognize
gain or loss on the sale, exchange, conversion or
redemption of a LYON in an amount equal to the
difference between the amount realized, including the
fair market value of any common stock received, and your
adjusted tax basis in the LYON. Any gain recognized by
you generally will be ordinary interest income; any loss
will be ordinary loss to the extent of the interest
previously included in income and, thereafter, capital
loss. However, it is possible that deductions for
capital losses may not be allowed under certain rules
regarding recapitalizations.
Conversion Rights .... For each LYON surrendered for conversion, if the
conditions for conversion are satisfied, a holder will
receive 9.09 shares of our common stock. The conversion
rate will be adjusted for reasons specified in the
indenture but will not be adjusted for accrued
contingent additional principal, if any.
Before February 7, 2021, holders may surrender a LYON
for conversion during any calendar quarter commencing
after March 31, 2001 if, for the last 20 trading days in
the preceding calendar quarter, the average conversion
value of the LYON is greater than or equal to a
specified percentage, initially 125% and increasing 5%
per quarter
--------------------------------------------------------------------------------
6
up to a maximum of 220%, of the issue price of the LYON.
On or after February 7, 2021, holders may surrender a
LYON for conversion during any calendar quarter if, for
the last 20 trading days in the preceding calendar
quarter, the average conversion value of the LYON is
greater than or equal to 110% of the principal amount at
maturity of the LYON. If either of the foregoing
conditions is satisfied, then the LYONs will thereafter
be convertible at any time at the option of the holder,
through maturity.
On February 7, 2021, if the average conversion value of
a LYON is greater than or equal to 220% of the issue
price of the LYON, then the LYONs will be convertible at
any time at the option of the holder, through maturity.
Holders may also surrender a LYON for conversion at any
time after the credit rating assigned to the LYONs is
reduced to Baa3 or lower by Moody's Investors Service,
Inc. or BBB or lower by Standard & Poor's Ratings
Services.
In addition, if we call the LYONs for redemption or if
we make any significant distribution to our
stockholders, or enter into any merger or binding share
exchange, the LYONs may be surrendered for conversion
even if the foregoing conditions are not satisfied.
The ability to surrender LYONs for conversion will
expire at the close of business on February 7, 2031.
Ranking .............. The LYONs are unsecured and unsubordinated obligations
of Omnicom and rank equal in right of payment to all our
existing and future unsecured and unsubordinated
indebtedness. The LYONs are effectively subordinated to
all of our existing and future obligations of our
subsidiaries and to our obligations that are secured, to
the extent of the security.
As of September 30, 2000, we had $2,109.9 million of
indebtedness outstanding, all of which is unsecured,
$582.8 million of which is issued by us and $1,527.1
million of which is indebtedness of our subsidiaries
that is guaranteed by us. We subsequently called $218.3
million of our unsecured convertible subordinated debt.
As of September 30, 2000, our subsidiaries had an
additional $98.6 million of indebtedness outstanding.
Sinking Fund ......... None.
Redemption of LYONs
at the Option of
Omnicom .............. We cannot redeem the LYONs before February 7, 2006. On
or after February 7, 2006 and before February 7, 2021,
we may redeem the LYONs at any time in whole or in part
at the issue price of the LYONs. On or after February 7,
2021, we may redeem the LYONs at any time in whole or in
part at the issue price plus accrued contingent
additional principal, if any.
--------------------------------------------------------------------------------
7
Purchase of the LYONs
at the Option of the
Holder ............... At each February 7, from February 7, 2002, through
February 7, 2030, holders may require us to purchase all
or a portion of their LYONs on each February 7 at the
following prices:
(1) February 7, 2002 through February 7, 2021 at the
issue price of the LYON; and
(2) February 7, 2022 through February 7, 2030 at the
issue price of the LYON plus accrued contingent
additional principal, if any.
We may choose to pay the purchase price in cash, shares
of common stock or a combination of cash and common
stock. See "Description of LYONs--Purchase of LYONs at
the Option of the Holder."
Change in Control .... Upon a change in control of Omnicom occurring on or
before February 7, 2006, holders may require us to
purchase for cash all or a portion of their LYONs at a
price equal to $1,000 per LYON. In addition, if at least
90% of the LYONs outstanding immediately prior to the
change in control are purchased, we may, within 90 days
after the change in control purchase date, at our
option, redeem for cash all of the remaining LYONs at a
redemption price equal to $1,000 per LYON. See
"Description of LYONs--Purchase at Option of Holders
upon Change in Control."
DTC Eligibility ...... The LYONs were issued only in the form of global
securities held in book-entry form. DTC or its nominee
is the sole registered holder of the LYONs represented
by a global security for all purposes under the
indenture. Beneficial interests in any such securities
will be shown on, and transfers will be effected only
through, records maintained by DTC and its direct and
indirect participants and any such interest may not be
exchanged for certificated securities, except in limited
circumstances. See "Description of LYONs--Book-Entry
System."
Use of Proceeds ...... We will not receive any of the proceeds from the sale by
any selling securityholder of the LYONs or the common
stock issuable upon conversion and/or redemption of the
LYONs. See "Use of Proceeds."
Trading .............. The LYONs issued in the initial private placement are
eligible for trading in the PORTAL system. LYONs sold
using this prospectus, however, will no longer be
eligible for trading in the PORTAL system. We do not
intend to list the LYONs on any other national
securities exchange or automated quotation system. Our
common stock is traded on the New York Stock Exchange
under the symbol "OMC."
--------------------------------------------------------------------------------
8
RISK FACTORS RELATING TO THE LYONS
You should carefully consider the following information with the other
information contained in or incorporated by reference into this prospectus
before purchasing the LYONs.
The Lack of Covenants Applicable to the LYONs May Not Afford Protection Under
Some Circumstances
The holders of LYONs may require us to purchase the LYONs upon the
occurrence of certain change-in-control events described under "Description of
LYONs -- Purchase at Option of Holders upon Change in Control" on page 21.
However, certain transactions, including certain recapitalizations, would not
constitute a change in control with respect to the change in control purchase
feature of the LYONs, even though these transactions may increase the amount of
our (or our subsidiaries') outstanding indebtedness. This purchase right would
also not restrict us from incurring indebtedness or effecting extraordinary
dividends. Further, the LYONs do not afford a holder protection under
maintenance or other covenants relating to our consolidated financial position
or results of operations.
An Active Trading Market for LYONs May Not Develop
The LYONs comprise a new issue of securities for us for which there is
currently no public market. The LYONs issued in the initial private placement
are eligible for trading in the PORTAL system. LYONs sold using this prospectus,
however, will no longer be eligible for trading in the PORTAL system. We do not
intend to list the LYONs on any other national securities exchange or automated
quotation system. If the LYONs are traded, they may trade at a discount from
their initial offering price, depending on prevailing interest rates, the market
for similar securities, the price of our common stock, our performance and other
factors. We do not know whether an active trading market will develop for the
LYONs. To the extent that an active trading market does not develop, the price
at which you may be able to sell the LYONs, if at all, may be less than the
price you pay for them. In addition, the LYONs have a number of features,
including conditions to conversion, which, if not met, could result in a holder
receiving less than the value of the common stock into which a LYON is otherwise
convertible. These features could adversely affect the value and the trading
prices for the LYONs.
Our Holding Company Structure Results in Structural Subordination and May Affect
Our Ability to Make Payments on LYONs
The LYONs are obligations exclusively of Omnicom. We are a holding company
and, accordingly, substantially all of our operations are conducted through our
subsidiaries. As a result, our cash flow and our ability to make payments on our
debt, including the LYONs, is dependent upon the earnings of our subsidiaries.
In addition, we are dependent on the distribution of earnings, loans or other
payments by our subsidiaries to us.
Our subsidiaries are separate and distinct legal entities. Our
subsidiaries have no obligation to pay any amounts due on the LYONs or to
provide us with funds for our payment obligations, whether by dividends,
distributions, loans or other payments. In addition, any payment of dividends,
distributions, loans or advances by our subsidiaries to us could be subject to
statutory or contractual restrictions. Payments to us by our subsidiaries will
also be contingent upon our subsidiaries' earnings and business considerations.
Because we are a holding company, the claims of creditors of our
subsidiaries will have a priority over our equity rights and the rights of our
creditors, including the holders of LYONs, to participate in the assets of the
subsidiary upon the subsidiary's liquidation.
You Should Consider the United States Federal Income Tax Consequences of Owning
LYONs
The LYONs are characterized as indebtedness for United States federal
income tax purposes. Accordingly, you will be required to include in your income
interest with respect to the LYONs.
The LYONs constitute contingent payment debt instruments and will accrue
tax original issue discount. As a result, you will be required to include
amounts in income, as ordinary income, in advance of the receipt of the cash, or
other property, attributable thereto. Pursuant to our determination of the tax
original issue discount on the LYONs, you will recognize gain or loss on the
sale, purchase by us at your option, conversion or redemption of a LYON in an
amount equal to the difference between the amount realized on such a
transaction, including the fair market value of any common stock received upon
conversion or otherwise, and your adjusted tax basis in the LYON. Any gain so
recognized by you generally will be ordinary interest income; any loss will be
9
ordinary loss to the extent of the interest previously included in income and,
thereafter, capital loss. However, it is possible that holders may be precluded
by certain rules regarding recapitalizations from recognizing any capital loss
with respect to a conversion or redemption of the LYONs in exchange for shares
of our stock. Holders should consult their tax advisors regarding the
deductibility of any such capital loss. A summary of the federal income tax
consequences of ownership of the LYONs is described in this offering memorandum
under the heading "Federal Income Tax Considerations."
We May Not Have the Ability to Raise the Funds Necessary to Finance the Purchase
at the Option of the Holder or the Change in Control Purchase
At each February 7, from February 7, 2002 through February 7, 2030 and a
change in control of Omnicom occurring on or before February 7, 2006, holders of
LYONs have the right to require us to purchase their LYONs. We may not have
sufficient funds at those times to make any required purchase of LYONs. In
addition, corporate events involving fundamental changes to our capital
structure, such as leveraged recapitalizations that would increase the level of
our indebtedness or that of our subsidiaries, would not necessarily constitute a
change in control for these purposes. See "Description of LYONs -- Purchase of
LYONs at Option of Holder" and "-- Purchase at Option of Holders Upon Change in
Control."
10
SELECTED CONSOLIDATED HISTORICAL FINANCIAL INFORMATION
The following table sets forth our selected consolidated financial data
and should be read in conjunction with our consolidated financial statements
incorporated into this prospectus by reference. The information for the nine
months ended September 30, 2000 and 1999 was derived from the unaudited
financial data included in our Quarterly Report on Form 10-Q for the quarterly
period ended September 30, 2000 which, in the opinion of management, include all
adjustments, consisting of normal recurring adjustments, which we consider
necessary for a fair presentation, in all material respects, of our financial
position and results of operations for these periods. Our results for the nine
months ended September 30, 2000 are not necessarily indicative of the results to
be expected for the fiscal year ended December 31, 2000. The information for the
years ended December 31, 1999, 1998, 1997. 1996 and 1995 was derived from the
audited financial information included in our Annual Report on Form 10-K for the
year ended December 31, 1999. All information prior to 1999 has been restated to
give effect to the accounting for the acquisition of Abbott Mead Vickers Group
Limited, formerly known as Abbott Mead Vickers plc, under the pooling of
interests method of accounting. Per share amounts for 1995 and 1996 have been
restated to give effect to the two-for-one stock split completed in December
1997.
Nine months ended
September 30, Year ended December 31,
---------------------- ----------------------------------------------------------
2000 1999 1999 1998 1997 1996 1995
---------- ---------- ---------- ---------- ---------- ---------- ----------
(unaudited) (In thousands except for
per share amounts)
For the period:
Commissions and fees ....... $4,351,783 $3,628,126 $5,130,545 $4,290,946 $3,296,224 $2,775,873 $2,360,688
Net income 356,589 242,989 362,882 278,845 217,300 162,076 135,196
Earnings per common share
Basic .................... $ 2.04 $ 1.39 $ 2.07 $ 1.61 $ 1.30 $ 1.02 $ 0.92
Diluted .................. $ 1.95 $ 1.35 $ 2.01 $ 1.57 $ 1.28 $ 0.99 $ 0.89
Dividends declared per
common share ............. 0.525 0.450 0.625 0.525 0.450 0.375 0.330
At period end:
Total assets ............... $9,352,515 $7,461,809 $9,017,637 $7,121,968 $5,114,364 $4,192,156 $3,653,265
Long-term obligations:
Long-term debt and
convertible subordinated
debentures ............. 1,888,429 1,153,719 711,632 717,410 341,665 208,329 293,418
Deferred compensation
and other liabilities .. 289,147 248,201 300,746 269,966 166,492 130,606 126,725
RATIO OF EARNINGS TO FIXED CHARGES
The following table shows the ratio of earnings to fixed charges of
Omnicom for the nine months ended September 30, 2000 and September 30, 1999 and
each of the five most recent fiscal years.
Nine months ended
September 30, Year ended December 31,
------------------------ -----------------------------------------------------------------------
2000 1999 1999 1998 1997 1996 1995
----------- ----------- ----------- ------------ ------------ ------------ -----------
4.74x 4.05x 4.44x 4.03x 4.23x 4.06x 3.55x
The ratio of earnings to fixed charges is computed by dividing fixed
charges into earnings before income taxes plus fixed charges. Fixed charges
consist of interest expense and that portion of net rental expense deemed
representative of interest.
11
USE OF PROCEEDS
We will not receive any of the proceeds from the sale of the LYONs or
shares of common stock by the selling securityholders. See "Selling
Securityholders" for a list of those entities receiving proceeds from sales of
LYONs.
PRICE RANGE OF COMMON STOCK AND DIVIDEND HISTORY
Our common stock is listed on the New York Stock Exchange under the symbol
"OMC." The table below shows the range of quarterly high and low closing sale
prices per share reported on the New York Stock Exchange Composite Tape for our
common stock for the periods indicated and the average closing sale price per
share and the dividends paid per share on our common stock for such periods. The
last reported sale price per share on February 23, 2001 was $90.20.
Average Last Dividends
Omnicom Common Stock Sale Price Per Share
--------------------- ------------ ----------
High Low
-------- ------
1999:
First Quarter .............................. $79.94 $56.50 $65.27 $.150
Second Quarter ............................. 85.13 67.00 73.72 .150
Third Quarter .............................. 80.69 67.06 73.54 .150
Fourth Quarter ............................. 107.13 71.63 88.15 .175
2000
First Quarter .............................. $99.63 $79.88 $92.27 $.175
Second Quarter ............................. 97.25 82.13 89.26 .175
Third Quarter .............................. 90.44 70.00 82.80 .175
Fourth Quarter ............................. 92.25 72.69 81.64 .175
2001
First Quarter (through February 23, 2001) .. $95.45 $78.69 $89.36 $.175
The payment of dividends by us in the future will be determined by our
board of directors and will depend on business conditions, our financial
condition and earnings and other factors.
We are not aware of any restrictions on our present or future ability to
pay dividends. However, in connection with certain borrowing facilities entered
into by us and our subsidiaries, we are subject to certain covenants requiring
that we satisfy certain financial tests in order to pay dividends.
We have one billion authorized shares of common stock, par value $0.15 per
share, of which 184.1 million shares were outstanding on December 31, 2000.
12
CAPITALIZATION
The following table sets forth our consolidated capitalization as of
September 30, 2000 on an actual basis and on an as adjusted basis to give effect
to the issuance of the LYONs in the first quarter of 2001 and the conversion of
our 4.25% convertible debentures during the fourth quarter of 2000 and the
application of the net proceeds from the sale of the LYONs to reduce commercial
paper borrowings.
You should read this table together with our financial statements and
related notes and the other financial and operating data included elsewhere in
or incorporated by reference into this prospectus.
September 30, 2000
------------------------
Actual As adjusted
------ ------------
(in thousands)
Current liabilities
Accounts payable ......................................... $ 3,460,911 $ 3,460,911
Advance billings ......................................... 514,701 514,701
Bank loans ............................................... 320,106 320,106
Accrued taxes and other liabilities ...................... 1,418,998 1,418,998
Dividends payable ........................................ 30,867 30,867
----------- -----------
Total current liabilities ................................ 5,745,583 5,745,583
----------- -----------
Long-term debt(1) .......................................... 1,440,202 609,977
LYONs issued(1) ............................................ 0 850,000
Convertible subordinated debentures(2) ..................... 448,227 229,973
Deferred compensation and other liabilities ................ 289,147 289,147
Deferred income taxes on unrealized gains .................. 55,743 55,743
Minority interests ......................................... 120,436 120,436
----------- -----------
Total long-term indebtedness ............................. 2,353,755 2,155,276
----------- -----------
Shareholders' equity:
Common stock, 176,718,095 shares issued and outstanding(3) 28,076 28,076
Additional paid-in capital(2) ............................ 946,227 783,454
Retained earnings ........................................ 1,146,955 1,146,955
Unamortized restricted stock ............................. (127,949) (127,949)
Accumulated other comprehensive income ................... (166,556) (166,556)
Treasury stock(2) ........................................ (573,576) (192,549)
----------- -----------
Total shareholders' equity ............................. 1,253,177 1,471,431
----------- -----------
Total liabilities and shareholders' equity ............... $ 9,352,515 $ 9,372,290
=========== ===========
--------------------
(1) Reduction in long-term debt reflects use of the net proceeds of $830.2
million from our issuance of the LYONs in the first quarter of 2001. As
disclosed in the notes to our consolidated financial statements for the
year ended December 31, 1999, we include outstanding commercial paper
obligations in long term debt. Accordingly, the use of the net proceeds
from the offering to reduce commercial paper does not significantly affect
our total outstanding long term indebtedness. We may reborrow the amounts
repaid for general corporate purposes.
(2) Reduction in convertible subordinated debentures and additional paid-in
capital and the issuance of treasury stock reflect conversion of our 4.25%
convertible debentures during the fourth quarter of 2000 into 6.8 million
shares of common stock. Common stock outstanding after giving effect to
the issuance of the shares related to the 4.25% convertible debentures was
184.1 million shares at December 31, 2000, exclusive of shares reserved
for issuance upon conversion of our outstanding 2.25% convertible
debentures and shares reserved for issuance upon exercise of common stock
equivalents.
(3) Outstanding common stock as of September 30, 2000 of 176,718,095 excludes
7,726,500 shares reserved for issuance upon conversion of the LYONs,
3,007,000 shares reserved for issuance upon exercise of outstanding common
share equivalents and 11,547,000 shares reserved for issuance upon
conversion of our 2.5% convertible subordinated debentures and prior, to
their conversion as described above, our 4.25% convertible debentures.
13
DESCRIPTION OF LYONS
We issued the LYONs under a senior indenture dated as of February 7, 2001
between us and The Chase Manhattan Bank, as trustee. The following summarizes
the material provisions of the LYONs and the indenture. The following summary is
not complete and is subject to, and qualified by reference to, all of the
provisions of the LYONs and the indenture. As used in this description, the
words "we," "us," "our" and "Omnicom" do not include any current or future
subsidiary of Omnicom.
The indenture does not contain any financial covenants or any restrictions
on the payment of dividends or the issuance or purchase of our securities. The
indenture contains no covenants or other provisions to give protection to the
holders of the LYONs in the event of a highly leveraged transaction or a change
in control, except to the extent described under "--Purchase at Option of
Holders upon Change in Control."
General
On February 7, 2001, we issued $750,000,000 aggregate issue price of LYONs
and on February 16, 2001, we issued an additional $100,000,000 aggregate issue
price of LYONs following the exercise by Merrill Lynch of its over-allotment
option in full. The LYONs will mature 30 years from the issue date. Before
February 7, 2021, the principal amount at maturity of a LYON will be equal to
the issue price of the LYON. On or after February 7, 2021, if, for the last 20
trading days preceding February 7, 2021, the average conversion value of a LYON
is greater than the issue price but less than or equal to 220% of the issue
price, then the principal amount at maturity of a LYON will be equal to the
conversion value of the LYON on February 7, 2021, but in no event greater than
two times the issue price. If that conversion value exceeds 220% of the issue
price then the principal amount at maturity will equal the issue price.
Contingent additional principal is the difference between the issue price
and the principal amount at maturity, if any. Contingent additional principal
will be calculated on a semi-annual bond equivalent basis, using a 360-day year
composed of twelve 30-day months.
The conversion value of a LYON as of any date of determination will equal
the sale price per share of our common stock on such determination date
multiplied by the number of shares of common stock then issuable upon conversion
of a LYON. The LYONs will be payable at the office of the paying agent, which
initially will be an office or agency of the trustee, or an office or agency
maintained by us for such purpose, in the Borough of Manhattan, The City of New
York.
We will not pay any interest on the LYONs prior to maturity unless
contingent cash interest becomes payable. Each LYON was issued at an issue price
of $1,000 per LYON. Although the LYONs were not offered at a discount from their
issue price, they are contingent payment debt instruments. As a result, the
LYONs are deemed to have been issued with original issue discount for United
States federal income tax purposes, referred to as tax original issue discount.
We currently compute and report accruals of the tax original issue discount
based upon an overall yield of 6.71% per year, computed on a semiannual bond
equivalent basis, which represents the yield on our noncontingent,
nonconvertible, fixed-rate debt with terms otherwise similar to the LYONs. See
"Federal Income Tax Considerations."
Maturity, conversion, purchase by us at the option of the holder or
redemption of a LYON will cause contingent additional principal, if any, and
contingent cash interest, if any, to cease to accrue on such LYON. We may not
reissue a LYON that has matured or been converted, purchased by us at your
option, redeemed or otherwise cancelled.
LYONs may be presented for conversion at the office of the conversion
agent and for exchange or registration of transfer at the office of the
registrar. The conversion agent and the registrar will initially be the trustee.
We will not charge a service fee for any exchange or registration of transfer of
LYONs. However, we may require the holder to pay any tax, assessment or other
governmental charge payable as a result of such transfer or exchange.
Ranking of LYONs
The LYONs are unsecured and unsubordinated obligations. The LYONs rank
equal in right of payment to all of our existing and future unsecured and
unsubordinated indebtedness. However, we are a holding company and the LYONs are
effectively subordinated to all existing and future obligations of our
subsidiaries and to our
14
obligations that are secured, to the extent of the security. See "Risk Factors
-- Our Holding Company Structure Results in Structural Subordination and May
Affect Our Ability to Make Payments on LYONs."
As of September 30, 2000, we had $2,109.9 million of indebtedness
outstanding, all of which is unsecured, $582.8 million of which is issued by us
and $1,527.1 million of which is indebtedness of our subsidiaries that is
guaranteed by us. We subsequently called $218.3 million of our unsecured
convertible subordinated debt. As of September 30, 2000, our subsidiaries had an
additional $98.6 million of indebtedness outstanding.
Book-Entry System
The LYONs were issued only in the form of global securities held in
book-entry form. DTC or its nominee is the sole registered holder of the LYONs
for all purposes under the indenture. Owners of beneficial interests in the
LYONs represented by the global securities hold their interests pursuant to the
procedures and practices of DTC. As a result, beneficial interests in these
securities are shown on, and may only be transferred through, records maintained
by DTC and its direct and indirect participants and any such interest may not be
exchanged for certificated securities, except in limited circumstances. Owners
of beneficial interests must exercise any rights in respect of their interests,
including any right to convert or require purchase of their interests in the
LYONs, in accordance with the procedures and practices of DTC. Beneficial owners
are not holders and are not entitled to any rights provided to the holder of
LYONs under the global securities or the indenture. Omnicom and the trustee, and
any of their respective agents, may treat DTC as the sole holder and registered
owner of the global securities.
Exchange of Global Securities
LYONs represented by a global security are exchangeable for certificated
securities with the same terms only if:
o DTC is unwilling or unable to continue as depositary or if DTC
ceases to be a clearing agency registered under the Exchange Act and
a successor depositary is not appointed by us within 90 days,
o we decide to discontinue use of the system of book-entry transfer
through DTC (or any successor depositary), or
o a default under the indenture occurs and is continuing.
DTC has advised us that it is a limited-purpose trust company organized
under the New York Banking Law, a "banking organization" within the meaning of
the New York Uniform Commercial Code and a "clearing agency" registered pursuant
to the provisions of Section 17A of the Exchange Act. DTC facilitates the
settlement of transactions among its participants through electronic
computerized book-entry changes in participants' accounts, eliminating the need
for physical movement of securities certificates. DTC's participants include
securities brokers and dealers, banks, trust companies, clearing corporations
and other organizations, some of whom and/or their representatives own DTC.
Access to DTC's book-entry system is also available to others, such as banks,
brokers, dealers and trust companies that clear through or maintain a custodial
relationship with a participant, either directly or indirectly.
Conversion Rights
Holders may surrender LYONs for conversion into shares of our common stock
only if at least one of the conditions described below is satisfied. In
addition, a LYON for which a holder has delivered a purchase notice or a change
in control purchase notice requiring us to purchase the LYON may be surrendered
for conversion only if such notice is withdrawn in accordance with the
indenture.
The initial conversion rate is 9.09 shares per LYON, subject to adjustment
upon the occurrence of the events described below. A holder of a LYON otherwise
entitled to a fractional share will receive cash in an amount equal to the value
of such fractional share based on the sale price, as defined below under
"--Purchase of LYONs at the Option of the Holder," on the trading day
immediately preceding the conversion date.
15
If contingent cash interest is payable to holders of LYONs during any
particular six-month period, and any LYONs are converted after the applicable
record date, those LYONs upon surrender must be accompanied by funds equal to
the amount of contingent cash interest payable on the principal amount of LYONs
so converted, unless those LYONs have been called for redemption, in which case
no such payment shall be required.
The ability to surrender LYONs for conversion will expire at the close of
business on February 7, 2031.
To convert a LYON into shares of common stock, a holder must:
o complete and manually sign the conversion notice on the back of the
LYON or complete and manually sign a facsimile of the conversion
notice and deliver the conversion notice to the conversion agent;
o surrender the LYON to the conversion agent;
o if required by the conversion agent, furnish appropriate
endorsements and transfer documents; and
o if required, pay all transfer or similar taxes.
Pursuant to the indenture, the date on which all of the foregoing requirements
have been satisfied is the conversion date.
If one or more of the conditions to the conversion of the LYONs has been
satisfied, we will promptly notify the holders of LYONs thereof and use our
reasonable best efforts to post this information on our web site or, at our
option, otherwise publicly disclose this information.
Conversion Based on Common Stock Price
Before February 7, 2021, holders may surrender a LYON for conversion
during any calendar quarter commencing after March 31, 2001 if, for the last 20
trading days in the preceding calendar quarter, the average conversion value of
the LYON is greater than or equal to a specified percentage, initially 125% and
increasing 5% per quarter up to a maximum of 220%, of the issue price of the
LYON. If the foregoing condition is satisfied at any time after February 7,
2002, and before February 7, 2021, then the LYONs will be convertible at any
time at the option of the holder, through maturity. On or after February 7,
2021, holders may surrender a LYON for conversion during any calendar quarter
if, for the last 20 trading days in the preceding calendar quarter, the average
conversion value of the LYON is greater than or equal to 110% of the principal
amount at maturity of the LYON. If the foregoing condition is satisfied at any
time after February 7, 2021, then the LYONs will be convertible at any time at
the option of the holder, through maturity.
On February 7, 2021, if the average conversion value of a LYON is greater
than or equal to 220% of the issue price of the LYON, then the LYONs will be
convertible at any time thereafter at the option of the holder, through
maturity.
Conversion Based on Credit Ratings
Holders may also surrender a LYON for conversion at any time after the
credit rating assigned to the LYONs is reduced to Baa3 or lower by Moody's
Investors Service, Inc. or BBB or lower by Standard & Poor's Ratings Services.
Conversion upon Notice of Redemption
A holder may surrender for conversion a LYON called for redemption at any
time prior to the close of business on the second business day prior to the
redemption date, even if it is not otherwise convertible at that time. A LYON
for which a holder has delivered a purchase notice or a change in control
purchase notice as described below requiring us to purchase the LYON may be
surrendered for conversion only if such notice is withdrawn in accordance with
the indenture.
Conversion upon Occurrence of Specified Corporate Transactions
If we elect to
o distribute to all holders of common stock certain rights entitling
them to purchase, for a period expiring within 60 days, common stock
at less than the quoted price at the time, or
o distribute to all holders of our common stock assets, debt
securities or certain rights to purchase our securities, which
distribution has a per share value as determined by our board of
directors exceeding 15% of the closing price of the common stock on
the day preceding the declaration date for such distribution,
16
we must notify the holders of LYONs at least 20 days prior to the ex-dividend
date for such distribution. Once we have given such notice, holders may
surrender their LYONs for conversion at any time until the earlier of the close
of business on the business day prior to the ex-dividend date or our
announcement that such distribution will not take place.
In addition, if we are party to a consolidation, merger or binding share
exchange pursuant to which our common stock would be converted into cash,
securities or other property, a holder may surrender LYONs for conversion at any
time from and after the date which is 15 days prior to the anticipated effective
date for the transaction until 15 days after the actual effective date of such
transaction.
Conversion Rate Adjustments and Delivery of Common Stock
The conversion rate will not be adjusted for accrued contingent additional
principal, if any, or contingent cash interest, if any. As soon as practicable
following the conversion date, we will deliver through the conversion agent a
certificate for the number of full shares of common stock into which any LYON is
converted, together with any cash payment for fractional shares. Delivery to the
holder of the full number of shares of common stock into which the LYON is
convertible, together with any cash payment for such holder's fractional shares,
will be deemed to satisfy our obligation to pay the principal amount at maturity
of the LYON. For a discussion of the tax treatment of a holder receiving common
stock upon conversion, see "Federal Income Tax Considerations--Disposition or
Conversion."
We will adjust the conversion rate for:
o dividends or distributions on our common stock payable in our common
stock or other capital stock,
o subdivisions, combinations or certain reclassifications of our
common stock,
o distributions to all holders of common stock of certain rights to
purchase common stock for a period expiring within 60 days at less
than the sale price at the time, and
o distributions to those holders of our assets or debt securities or
certain rights to purchase our securities (excluding cash dividends
or other cash distributions from current or retained earnings unless
the annualized amount thereof per share exceeds 5% of the sale price
of the common stock on the day preceding the date of declaration of
such dividend or other distribution).
However, no adjustment need be made if holders may participate in the
transaction without conversion or in certain other cases.
The indenture permits us to increase the conversion rate from time to
time.
If we are party to a consolidation, merger or binding share exchange
pursuant to which our common stock is converted into cash, securities or other
property, at the effective time of the transaction, the right to convert a LYON
into shares of our common stock will be changed into a right to convert it into
the kind and amount of securities, cash or other property of Omnicom or another
person which the holder would have received if the holder had converted the
holder's LYON immediately prior to the transaction. If the transaction also
constitutes a "change in control," as defined below, the holder will be able to
require us to purchase all or a portion of its LYONs as described under
"--Purchase at Option of Holders upon Change in Control."
In the event of:
o a taxable distribution to holders of common stock which results in
an adjustment of the conversion rate, or
o an increase in the conversion rate at our discretion,
the holders of the LYONs may, in certain circumstances, be deemed to have
received a distribution subject to United States federal income tax as a
dividend. See "Federal Income Tax Considerations--Constructive Dividend."
17
Contingent Cash Interest
We will pay contingent cash interest to the holders of LYONs during any
six-month period from February 8 to August 7, and from August 8 to February 7,
commencing February 8, 2006 if the average market price of a LYON for a five
trading day measurement period preceding the applicable six-month period equals
120% or more of the issue price of the LYON. Each five trading day measurement
period will end on the second trading day immediately preceding the applicable
six-month period; provided, however, that if we declare a dividend for which the
record date will occur prior to the applicable six-month period but for which
the payment date will occur during the applicable six-month period, the five
trading day measurement period will instead end on the second trading day
immediately preceding that record date.
For any six-month period, the amount of contingent cash interest per LYON
will be equal to the regular cash dividends paid by us per share on our common
stock multiplied by the number of shares then issuable upon conversion of a
LYON.
Contingent cash interest, if any, will accrue and be payable to holders of
LYONs as of the record date for the related common stock dividend during the
relevant six-month period. Such payments will be made on the payment date of the
related common stock dividend. If we do not pay regular cash dividends, holders
will not be entitled to any contingent cash interest.
Regular cash dividends are quarterly or other periodic cash dividends on
our common stock as declared by our board of directors as part of its cash
dividend payment practices and that are not designated by them as extraordinary
or special or other nonrecurring dividends.
The market price of a LYON on any date of determination means the average
of the secondary market bid quotations per LYON obtained by the bid solicitation
agent for $10.0 million principal amount at maturity of LYONs at approximately
4:00 p.m., New York City time, on such determination date from three independent
nationally recognized securities dealers we select, provided that if
o at least three such bids are not obtained by the bid solicitation
agent, or
o in our reasonable judgment, the bid quotations are not indicative of
the secondary market value of the LYONs,
then the market price of the LYON will equal (1) the then applicable conversion
rate of the LYONs multiplied by (2) the average sale price of our common stock
on the five trading days ending on such determination date, appropriately
adjusted.
The bid solicitation agent will initially be The Chase Manhattan Bank. We
may change the bid solicitation agent, but the bid solicitation agent will not
be our affiliate. The bid solicitation agent will solicit bids from securities
dealers that are believed by us to be willing to bid for the LYONs.
We will determine every six months, commencing February 8, 2006, whether
the conditions to the payment of contingent cash interest have been satisfied
and, if so, we will promptly notify the holders of LYONs thereof and use our
reasonable best efforts to post this information on our web site or, at our
option, otherwise publicly disclose this information.
We may unilaterally increase the amount of contingent cash interest we
pay, but we will have no obligation to do so.
Redemption of LYONs at the Option of Omnicom
No sinking fund is provided for the LYONs. We cannot redeem the LYONs on
or before February 7, 2006. After February 7, 2006, and before February 7, 2021
we may, at our option, redeem the LYONs for cash at any time in whole or from
time to time in part at the issue price of the LYONs. On or after February 7,
2021, we may redeem the LYONs at any time in whole or in part at the issue price
plus accrued contingent additional principal, if any. We will give not less than
30 days nor more than 60 days notice of redemption by mail to holders of LYONs.
LYONs called for redemption will be convertible by the holder, even if the other
conditions described under "--Conversion Rights" have not occurred, until the
close of business on the second business day prior to the redemption date.
The LYONs will be redeemable in integral multiples of $1,000.
18
If less than all of the outstanding LYONs are to be redeemed, the trustee
will select the LYONs to be redeemed. In this case, the trustee may select the
LYONs by lot, pro rata or by any other method the trustee considers fair and
appropriate. If a portion of a holder's LYONs is selected for partial redemption
and the holder converts a portion of the LYONs, the converted portion will be
deemed to be the portion selected for redemption.
Purchase of LYONs at the Option of the Holder
At each February 7, from February 7, 2002 through February 7, 2030,
holders may require us to purchase any outstanding LYON for which the holder has
properly delivered and not withdrawn a written purchase notice, subject to
certain additional conditions. Holders may require us to purchase all or a
portion of their LYONs on each February 7 at the following prices:
(1) February 7, 2002 through February 7, 2021 at the issue price of the
LYON; and
(2) February 7, 2022 through February 7, 2030 at the issue price of the
LYON plus accrued contingent additional principal, if any.
Holders may submit their LYONs for purchase to the paying agent at any time from
the opening of business on the date that is 20 business days prior to the
purchase date until the close of business on the third business day prior to the
purchase date.
The purchase price will be payable, at our option, in cash, shares of our
common stock or any combination thereof.
We will be required to give notice on a date not less than 20 business
days prior to the purchase date to all holders at their addresses shown in the
register of the registrar, and to beneficial owners as required by applicable
law, stating among other things:
o whether we will pay the purchase price of LYONs in cash or common
stock or any combination thereof, specifying the percentage of each,
o if we elect to pay in common stock, the method of calculating the
market price of common stock, and
o the procedures that holders must follow to require us to purchase
their LYONs.
The purchase notice given by each holder electing to require us to
purchase LYONs shall be given so as to be received by the paying agent no later
than the close of business on the third business day prior to the purchase date
and must state:
o the certificate numbers of the holder's LYONs to be delivered for
purchase,
o the portion of the principal amount at maturity of LYONs to be
purchased, which must be $1,000 or an integral multiple of $1,000,
and
o that the LYONs are to be purchased by us pursuant to the applicable
provisions of the LYONs.
A holder may withdraw any purchase notice by delivering a written notice
of withdrawal to the paying agent prior to the close of business on the purchase
date. The notice of withdrawal shall state:
o the principal amount at maturity of the LYONs being withdrawn,
o the certificate numbers of the LYONs being withdrawn, and
o the principal amount at maturity, if any, of the LYONs that remain
subject to the purchase notice.
If we elect to pay the purchase price, in whole or in part, in shares of
common stock, the number of shares of common stock to be delivered by us shall
be equal to the portion of the purchase price to be paid in common stock divided
by the market price of a share of common stock.
We will pay cash based on the market price for all fractional shares of
common stock in the event we elect to deliver common stock in payment, in whole
or in part, of the purchase price. See "Federal Income Tax Considerations."
19
The "market price" of our common stock means the average of the sale
prices of the common stock for the five trading days ending on (if the third
business day prior to the applicable purchase date is a trading day or, if not,
then on the last trading day prior to) the third business day prior to the
applicable purchase date, appropriately adjusted to take into account the
occurrence, during the period commencing on the first of the trading days during
the relevant five trading day period and ending on the purchase date, of certain
events that would result in an adjustment of the conversion rate with respect to
the common stock.
The "sale price" of our common stock on any date means the closing per
share sale price (or if no closing sale price is reported, the average of the
bid and ask prices or, if more than one in either case, the average of the
average bid and the average ask prices) on such date as reported in composite
transactions for the principal United States securities exchange on which the
common stock is then traded or, if the common stock is not listed on a United
States national or regional securities exchange, as reported by the National
Association of Securities Dealers Automated Quotation System or by the National
Quotation Bureau Incorporated or otherwise as provided in the indenture.
Because the market price of the common stock is determined prior to the
applicable purchase date, holders of LYONs bear the market risk with respect to
the value of the common stock to be received from the date such market price is
determined to such purchase date. We may pay the purchase price or any portion
of the purchase price in common stock only if the information necessary to
calculate the market price is published in a daily newspaper of national
circulation.
Upon determination of the actual number of shares of common stock to be
issued for each $1,000 principal amount at maturity of LYONs in accordance with
the foregoing provisions, we will promptly notify the holders of LYONs thereof
and use our reasonable best efforts to post this information on our web site or,
at our option, otherwise publicly disclose this information.
In addition to the above conditions, our right to purchase LYONs, in whole
or in part, with common stock is subject to our satisfying various conditions,
including:
o listing such common stock on the principal United States securities
exchange on which our common stock is then listed or, if not so
listed, on Nasdaq,
o the registration of the common stock under the Securities Act and
the Exchange Act, if required, and
o any necessary qualification or registration under applicable state
securities law or the availability of an exemption from such
qualification and registration.
If these conditions are not satisfied with respect to a holder prior to
the close of business on the purchase date, we will be required to pay the
purchase price of the LYONs to the holder entirely in cash. See "Federal Income
Tax Considerations -- Disposition or Conversion." We may not change the form or
components or percentages of components of consideration to be paid for the
LYONs once we have given the notice that we are required to give to holders of
LYONs, except as described in the first sentence of this paragraph.
In connection with any purchase offer, we will
o comply with the provisions of any tender offer rules under the
Exchange Act which may then be applicable, and
o file Schedule TO or any other required schedule under the Exchange
Act, if required.
Our obligation to pay the purchase price for a LYON for which a purchase
notice has been delivered and not validly withdrawn is conditioned upon the
holder delivering the LYON, together with necessary endorsements, to the paying
agent at any time after delivery of the purchase notice. Payment of the purchase
price for the LYON will be made promptly following the later of the purchase
date or the time of delivery of the LYON.
If the paying agent holds money or securities sufficient to pay the
purchase price of the LYON on the business day following the purchase date in
accordance with the terms of the indenture, then, immediately after the purchase
date, the LYON will cease to be outstanding and contingent additional principal,
if any, will cease to accrue, whether or not the LYON is delivered to the paying
agent. Thereafter, all other rights of the holder shall terminate, other than
the right to receive the purchase price upon delivery of the LYON.
Our ability to purchase LYONs may be limited by the terms of our
then-existing borrowing agreements.
20
We may not purchase any LYONs for cash at the option of holders if an
event of default with respect to the LYONs has occurred and is continuing, other
than a default in the payment of the purchase price with respect to such LYONs.
Purchase at Option of Holders upon Change in Control
In the event of a change in control occurring on or prior to February 7,
2006, each holder will have the right, at the holder's option, subject to the
terms and conditions of the indenture, to require us to purchase for cash all or
any portion of the holder's LYONs, at a price equal to $1,000 per LYON. We will
be required to purchase the LYONs as of the date that is 35 business days after
the occurrence of such change in control. We refer to this date as the "change
in control purchase date."
In addition, if at least 90% in aggregate principal amount of the LYONs
outstanding immediately prior to the change of control are purchased on the
change in control purchase date, we may, within 90 days following the change in
control purchase date, at our option, redeem all of the remaining LYONs at a
redemption price equal to $1,000 per LYON.
Within 15 days after the occurrence of a change in control, we must mail
to the trustee and to all holders of LYONs at their addresses shown in the
register of the registrar and to beneficial owners as required by applicable law
a notice regarding the change in control, which notice must state:
o the events causing the change in control,
o the date of the change in control,
o the last date on which a holder may exercise the purchase right,
o the change in control purchase price,
o the change in control purchase date,
o the name and address of the paying agent and the conversion agent,
o the conversion rate and any adjustments to the conversion rate,
o that LYONs with respect to which a change in control purchase notice
is given by the holder may be converted, if otherwise convertible,
only if the change in control purchase notice has been withdrawn in
accordance with the terms of the indenture, and
o the procedures that holders must follow to exercise these rights.
To exercise this right, the holder must deliver a written notice so as to
be received by the paying agent no later than the close of business on the third
business day prior to the purchase date. The required purchase notice upon a
change in control must state:
o the certificate numbers of the LYONs to be delivered by the holder,
o the principal amount at maturity of LYONs to be purchased, which
will be $1,000 or an integral multiple of $1,000, and
o that we are to purchase such LYONs pursuant to the applicable
provisions of the LYONs.
A holder may withdraw any change in control purchase notice by delivering
to the paying agent a written notice of withdrawal prior to the close of
business on the change in control purchase date. The notice of withdrawal must
state:
o the principal amount at maturity of the LYONs being withdrawn,
o the certificate numbers of the LYONs being withdrawn, and
o the principal amount at maturity, if any, of the LYONs that remain
subject to a change in control purchase notice.
21
Our obligation to pay the change in control purchase price for a LYON for
which a change in control purchase notice has been delivered and not validly
withdrawn is conditioned upon delivery of the LYON, together with necessary
endorsements, to the paying agent at any time after the delivery of such change
in control purchase notice. Payment of the change in control purchase price for
such LYON will be made promptly following the later of the change in control
purchase date or the time of delivery of such LYON.
If the paying agent holds money sufficient to pay the change in control
purchase price of the LYON on the change in control purchase date in accordance
with the terms of the indenture, then, immediately after the change in control
purchase date, whether or not the LYON is delivered to the paying agent, all
rights of the holder shall terminate, other than the right to receive the change
in control purchase price upon delivery of the LYON.
Under the indenture, a "change in control" of Omnicom is deemed to have
occurred at such time as:
o any person, including its affiliates and associates, other than
Omnicom, its subsidiaries or their employee benefit plans, files a
Schedule 13D or TO (or any successor schedules, forms or reports
under the Exchange Act) disclosing that such person has become the
beneficial owner of 50% or more of the voting power of our common
stock or other capital stock into which our common stock is
reclassified or changed, with limited exceptions, or
o there shall be consummated any consolidation, merger or share
exchange of Omnicom pursuant to which the common stock would be
converted into cash, securities or other property, in each case
other than a consolidation, merger or share exchange of Omnicom in
which the holders of our common stock immediately prior to the
consolidation, merger or share exchange have, directly or
indirectly, at least a majority of the total voting power in the
aggregate of all classes of ordinary voting stock of the continuing
or surviving corporation immediately after the consolidation, merger
or share exchange.
The indenture does not permit our board of directors to waive our
obligation to purchase LYONs at the option of holders in the event of a change
in control.
In connection with any purchase offer in the event of a change in control,
we will:
o comply with the provisions of any tender offer rules under the
Exchange Act which may then be applicable, and
o file a Schedule TO or any other required schedule under the Exchange
Act, if required.
The change in control purchase feature of the LYONs may in certain
circumstances make more difficult or discourage a takeover of Omnicom. The
change in control purchase feature, however, is not the result of our knowledge
of any specific effort:
o to accumulate shares of our common stock,
o to obtain control of Omnicom by means of a merger, tender offer,
solicitation or otherwise, or
o part of a plan by management to adopt a series of anti-takeover
provisions.
Instead, the change in control purchase feature is a standard term
contained in other LYONs offerings that have been marketed by Merrill Lynch. The
terms of the change in control purchase feature resulted from negotiations
between Merrill Lynch and us.
We could, in the future, enter into certain transactions, including
certain recapitalizations, that would not constitute a change in control with
respect to the change in control purchase feature of the LYONs but that would
increase the amount of our (or our subsidiaries') outstanding indebtedness. See
"Risk Factors Relating to the LYONs--The Lack of Covenants Applicable to the
LYONs May Not Afford Protection Under Some Circumstances."
We may not purchase LYONs at the option of holders upon a change in
control if there has occurred and is continuing an event of default with respect
to the LYONs, other than a default in the payment of the change in control
purchase price with respect to the LYONs.
22
Events of Default
The following will be events of default for the LYONs
(1) default in payment of the principal amount at maturity, contingent
additional principal, redemption price, purchase price or change in
control purchase price with respect to any LYON when such becomes
due and payable,
(2) default in payment of any contingent cash interest, which default
continues for 30 days,
(3) our failure to comply with any of our other agreements in the LYONs
or the indenture upon receipt by us of notice of such default by the
trustee or by holders of not less than 25% in aggregate principal
amount at maturity of the LYONs then outstanding and our failure to
cure (or obtain a waiver of) such default within 60 days after
receipt of such notice,
(4) (A) our failure to make any payment by the end of any applicable
grace period after maturity of indebtedness, which term as used in
the indenture means obligations (other than nonrecourse obligations)
of Omnicom for borrowed money or evidenced by bonds, debentures,
notes or similar instruments in an amount (taken together with
amounts in (B)) in excess of $100 million and continuance of such
failure, or (B) the acceleration of indebtedness in an amount (taken
together with the amounts in (A)) in excess of $100 million because
of a default with respect to such indebtedness without such
indebtedness having been discharged or such acceleration having been
cured, waived, rescinded or annulled in case of (A) or (B) above,
for a period of 30 days after written notice to us by the trustee or
to us and the trustee by the holders of not less than 25% in
aggregate principal amount at maturity of the LYONs then
outstanding; however, if any such failure or acceleration referred
to in (A) or (B) above shall cease or be cured, waived, rescinded or
annulled, then the event of default by reason thereof shall be
deemed not to have occurred, or
(5) certain events of bankruptcy or insolvency affecting us or certain
of our subsidiaries.
If an event of default shall have happened and be continuing, either the
trustee or the holders of not less than 25% in aggregate principal amount at
maturity of the LYONs then outstanding may declare the issue price of the LYONs,
plus any accrued and unpaid contingent cash interest and contingent additional
principal through the date of such declaration, to be immediately due and
payable. In the case of certain events of bankruptcy or insolvency of Omnicom,
the issue price of the LYONs plus accrued and unpaid contingent cash interest
and contingent additional principal shall automatically become immediately due
and payable.
Backup Withholding and Information Reporting
Information reporting will apply to payments of interest, including a
payment of shares of common stock to you upon a conversion if any, made by us
on, or the proceeds of the sale or other disposition or retirement of, the LYONs
or dividends on shares of common stock with respect to certain noncorporate
holders, and backup withholding at a rate of 31% may apply unless the recipient
of such payment supplies a taxpayer identification number, certified under
penalties of perjury, as well as certain other information or otherwise
establishes an exemption from backup withholding. Any amount withheld under the
backup withholding rules will be allowable as a credit against the holder's
federal income tax, provided that the required information is provided to the
IRS.
Mergers and Sales of Assets
The indenture provides that we may not consolidate with or merge into any
person or convey, transfer or lease our properties and assets substantially as
an entirety to another person, unless, among other things:
o the resulting, surviving or transferee person is a corporation
organized under the laws of the United States, any state thereof or
the District of Columbia and such entity assumes all our obligations
under the LYONs and the indenture, and
o we or such successor entity shall not immediately thereafter be in
default under the indenture.
23
Upon the assumption of our obligations by such corporation in such
circumstances, subject to certain exceptions, we shall be discharged from all
obligations under the LYONs and the indenture. Although such transactions are
permitted under the indenture, certain of the foregoing transactions occurring
on or prior to February 7, 2006 could constitute a change in control of Omnicom,
permitting holders to require us to purchase their LYONs as described above.
Modification
We and the trustee may modify or amend the indenture or the LYONs with the
consent of the holders of not less than a majority in aggregate principal amount
at maturity of the LYONs then outstanding. However, the consent of the holders
of each outstanding LYON would be required to:
o alter our obligation to pay contingent cash interest (except that we
may increase the amount thereof without the consent of the trustee
or the holders),
o make any LYON payable in money or securities other than that stated
in the LYON,
o alter the stated maturity of any LYON,
o reduce the principal amount at maturity, contingent additional
principal, redemption price, purchase price or change in control
purchase price with respect to any LYON,
o make any change that adversely affects the right of a holder to
receive shares of common stock upon surrendering a LYON for
conversion,
o make any change that adversely affects the right to require us to
purchase a LYON,
o impair the right to institute suit for the enforcement of any
payment with respect to, or conversion of, the LYONs, and
o change the provisions in the indenture that relate to modifying or
amending the indenture.
Without the consent of any holder of LYONs, we and the trustee may enter
into supplemental indentures for any of the following purposes:
o to evidence a successor to us and the assumption by that successor
of our obligations under the indenture and the LYONs,
o to add covenants for the benefit of the holders of the LYONs or to
surrender any right or power conferred upon us,
o to secure our obligations in respect of the LYONs,
o to make any changes or modifications to the indenture necessary in
connection with the registration of the LYONs under the Securities
Act and the qualification of the LYONs under the Trust Indenture Act
as contemplated by the indenture,
o to cure any ambiguity or inconsistency in the indenture, or
o to make any change that does not adversely affect the rights of any
holder of the LYONs.
The holders of a majority in aggregate principal amount at maturity of the
LYONs then outstanding may, on behalf of the holders of all LYONs:
o waive compliance by us with restrictive provisions of the indenture,
as detailed in the indenture; and
o waive any past default under the indenture and its consequences,
except a default in the payment of the principal amount at maturity,
contingent additional principal, redemption price, purchase price,
change in control purchase price or obligation to deliver common
stock upon conversion with respect to any LYON or in respect of any
provision which under the indenture cannot be modified or amended
without the consent of the holder of each outstanding LYON affected.
24
Calculations in Respect of LYONs
We are responsible for making all calculations called for under the LYONs.
See "--Conversion Rights." These calculations include, but are not limited to,
determination of the market prices of the LYONs and of our common stock, amounts
of tax original issue discount, and amounts of contingent cash interest and
contingent additional principal, if any, payable on the LYONs. We will make all
these calculations in good faith and, absent manifest error, our calculations
will be final and binding on holders of LYONs. We will provide a schedule of our
calculations to the trustee, and the trustee is entitled to rely upon the
accuracy of our calculations without independent verification.
Information Concerning the Trustee
The Chase Manhattan Bank is the trustee, registrar, paying agent and
conversion agent.
Governing Law
The indenture and the LYONs are governed by, and construed in accordance
with, the law of the State of New York.
Miscellaneous
We or our affiliates may from time to time purchase the securities offered
in this prospectus which are then outstanding by tender, in the open market or
by private agreement.
DESCRIPTION OF CAPITAL STOCK
The following briefly summarizes the material terms of our capital stock.
You should read our certificate of incorporation, a copy of which may be
obtained from Omnicom as described under "Where You Can Find More Information,"
for more detailed information that may be important to you.
We are authorized to issue 1.0 billion shares of common stock, par value
$0.15 per share, of which 184.1 million shares were outstanding on December 31,
2000, and 7.5 million shares of preferred stock at $1.00 per share, none of
which is outstanding.
Each share of common stock entitles the holder to one vote for the
election of directors and for all other matters to be voted on by holders of our
common stock. Holders of common stock may not cumulate their votes in the
election of directors. All shares of common stock have equal rights and are
entitled to such dividends as may be declared by the board of directors out of
funds legally available therefor, but only after payment of dividends required
to be paid on any outstanding shares of preferred stock. All shares of common
stock share ratably upon liquidation in the assets available for distribution to
shareholders after payments to creditors and provision for the preference of any
preferred stock. We are not aware of any restrictions on our present or future
ability to pay dividends. However, in connection with certain borrowing
facilities entered into by us and/or our subsidiaries, we are subject to certain
covenants requiring that we satisfy certain financial tests in order to pay
dividends. The shares of common stock are not subject to call or assessment,
have no preemptive or other subscription rights or conversion rights and cannot
be redeemed. We have a classified board of directors and our shareholders can
remove a director only by an affirmative two-thirds vote of all outstanding
voting shares. A two-thirds vote of all outstanding voting shares is also
required to amend our by-laws or some of the provisions of our certificate of
incorporation and to change the number of directors comprising the full board.
The board of directors has power to amend the by-laws or change the number of
directors comprising the full board.
We may issue preferred stock in series having whatever rights and
preferences the board of directors may determine without the approval of our
shareholders. One or more series of preferred stock may be made convertible into
common stock at rates determined by the board of directors, and preferred stock
may be given priority over common stock in payment of dividends, rights on
liquidation, voting and other rights.
As of December 31, 2000, we had outstanding $229,973,000 of 21/4%
convertible subordinated debentures with a scheduled maturity in 2013, which are
convertible into shares of our common stock at a conversion price of $49.83 per
share, subject to adjustment in certain events.
25
The transfer agent and registrar for the common stock is ChaseMellon
Shareholder Services. The common stock is listed on the New York Stock Exchange
under the symbol "OMC."
FEDERAL INCOME TAX CONSIDERATIONS
This is a summary of certain United States federal income tax
considerations relevant to holders of LYONs. This summary is based upon the
Internal Revenue Code of 1986 (which we refer to as the Code), Treasury
Regulations, Internal Revenue Service rulings and judicial decisions now in
effect, all of which are subject to change, possibly with retroactive effect, or
different interpretations. No statutory, regulatory, administrative or judicial
authority directly addresses the treatment of the LYONs or instruments similar
to the LYONs for United States federal income tax purposes. There can be no
assurance that the IRS will not challenge one or more of the conclusions
described herein, and we have not obtained, nor do we intend to obtain, a ruling
from the IRS with respect to the United States federal income tax consequences
of acquiring or holding LYONs.
This summary does not purport to deal with all aspects of United States
federal income taxation that may be relevant to a holder, such as a holder
subject to the alternative minimum tax provisions of the Code. Also, it is not
intended to address specific considerations relevant to persons in special tax
situations, such as financial institutions, insurance companies, regulated
investment companies, tax exempt investors, dealers in securities and
currencies, U.S. expatriates or persons holding LYONs as hedges or as positions
in a "straddle," "hedge," "conversion" or other integrated transaction for tax
purposes.
This summary also does not discuss the tax consequences arising under tax
laws other than the federal income tax laws, including the laws of any state,
local or foreign jurisdiction. In addition, this summary is limited to original
purchasers of LYONs who acquire LYONs at their original issue price within the
meaning of the federal income tax laws and who hold the LYONs and common stock
into which the LYONs may be converted as "capital assets" within the meaning of
the federal income tax laws.
Persons considering the purchase, ownership, conversion or other
disposition of LYONs should consult their own tax advisors regarding the federal
income tax consequences to them in their particular circumstances, and
consequences arising under the laws of any state, local or foreign taxing
jurisdiction.
For purposes of this summary, a "U.S. Holder" is a beneficial owner of the
LYONs who or which is:
o a citizen or individual resident of the United States, as defined in
Section 7701(b) of the Code;
o a corporation, including any entity treated as a corporation for
United States federal income tax purposes, created or organized in
or under the laws of the United States, any state thereof or the
District of Columbia;
o an estate if its income is subject to United States federal income
taxation regardless of its source; or
o a trust if (1) a United States court can exercise primary
supervision over its administration and (2) one or more United
States persons have the authority to control all of its substantial
decisions.
Notwithstanding the preceding sentence, certain trusts in existence on
August 20, 1996, and treated as a U.S. Holder prior to such date, may also be
treated as U.S. Holders. A Non-U.S. Holder is a holder of LYONs other than a
U.S. Holder.
We have been advised by our counsel, Jones, Day, Reavis & Pogue, that, in
their opinion, the LYONs will be treated as debt instruments that are subject to
United States federal income tax regulations governing contingent payment debt
instruments (which we refer to as the CPDI regulations) for United States
federal income tax purposes. Accordingly, pursuant to the terms of the
indenture, we and each holder of the LYONs agree to treat the LYONs as debt
instruments with original issue discount under the contingent payment
regulations as described below.
Original Issue Discount
Under the CPDI regulations, for United States federal income tax purposes,
U.S. Holders of LYONs are required to accrue interest income on the LYONs,
regardless of whether the holder uses the cash or accrual method of accounting,
in amounts described below for each taxable year the holder holds the LYON.
26
Accordingly, U.S. Holders may be required to include interest in taxable income
in each year in excess of the accruals on the LYONs for non-tax purposes and in
excess of any contingent cash interest payments actually received in that year.
The CPDI regulations provide that a U.S. Holder must accrue an amount of
ordinary interest income, as original issue discount, for United States federal
income tax purposes for each accrual period prior to and including the maturity
date of the LYONs. The amount required to be accrued equals the sum of the daily
portions of original issue discount with respect to the LYON for each day during
the taxable year or portion of a taxable year on which the holder holds the
LYON, adjusted if necessary as described below. The daily portion is (1) the sum
of the issue price of the LYON plus all accrued interest, determined without
regard to any adjustments to interest accruals described below, and minus the
amounts of projected scheduled payments for prior periods at the beginning of
each six-month accrual period (as defined below), multiplied by (2) the
comparable yield to maturity (as defined below) on the LYON, divided by (3) the
number of days in the accrual period. Under these rules, holders may have to
include in gross income increasingly greater amounts of original issue discount
in each successive accrual period. Any amount included in income as original
issue discount will increase a holder's tax basis in the LYON. The issue price
is the initial price at which the LYONs are sold to investors for money.
Based on the advice of our counsel, Jones, Day, Reavis & Pogue, we treat
the "comparable yield" as the annual yield we would pay, as of the initial issue
date, on a fixed-rate nonconvertible debt security with no contingent payments,
but with terms and conditions otherwise comparable to those of the LYONs.
Accordingly, we take the position that the comparable yield for the LYONs is
6.71%, compounded semiannually. The specific yield, however, is not entirely
clear. If our determination of the comparable yield were successfully challenged
by the IRS, the redetermined yield could be materially greater or less than the
comparable yield which we have determined.
We are required to furnish annually to the IRS and to certain noncorporate
U.S. Holders information regarding the amount of the original issue discount on
the LYONs attributable to that year. We will calculate and report original issue
discount on the LYONs based upon six-month accrual periods ending on the
maturity day of the LYONs. We are also be required to furnish to holders a
projected schedule of payments which we will use in computing the amounts of
original issue discount on the LYONs. In this schedule, we will include
estimates (for purposes of computing the original issue discount only) of
payments of contingent cash interest that we will make, and of a payment at
maturity, taking into account the conversion feature and the contingent
additional principal. Under the CPDI regulations, this schedule must produce the
comparable yield. Our determination of the comparable yield and the projected
schedule of payments is set forth in the indenture.
For United States federal income tax purposes, a U.S. Holder must use the
comparable yield and the schedule of projected payments in determining its
interest accruals, and the adjustments thereto described below, in respect of
the LYONs, unless such U.S. Holder timely discloses and justifies the use of
other estimates to the IRS. A U.S. Holder that determines its own comparable
yield or schedule of projected payments must also establish that our comparable
yield or schedule of projected payments is unreasonable.
The comparable yield and the schedule of projected payments are not
determined for any purpose other than for the determination of a U.S. Holder's
interest accruals and adjustments thereof in respect of the LYONs for United
States federal income tax purposes and do not constitute a projection or
representation regarding the actual amounts payable on the LYONs.
Adjustments to Interest Accruals on the LYONs
If, during any taxable year, a U.S. Holder receives actual payments with
respect to the LYONs for that taxable year that in the aggregate exceed the
total amount of projected payments for that taxable year, and/or the amount of a
future contingent payment is established in an amount greater than the projected
amount, the U.S. Holder will incur a "positive adjustment" under the CPDI
regulations. If a U.S. Holder receives in a taxable year actual payments with
respect to the LYONs for that taxable year that in the aggregate were less than
the amount of projected payments for that taxable year, and/or the amount of a
future contingent payment is established in an amount less than the projected
amount, the U.S. Holder will incur a "negative adjustment" under the CPDI
regulations. The difference between the positive adjustments and the negative
adjustments for any year is the
27
"net positive adjustment" (if positive) or the "net negative adjustment" (if
negative). The U.S. Holder will treat a "net positive adjustment" as additional
interest income for the taxable year. For this purpose, the payments in a
taxable year include the fair market value of property received in that year.
A net negative adjustment will (1) reduce the U.S. Holder's interest
income on the LYONs for that taxable year, and (2) to the extent of any excess
after the application of (1), give rise to an ordinary loss to the extent of the
U.S. Holder's interest income on the LYONs during prior taxable years, reduced
to an extent such interest was offset by prior net negative adjustments.
Disposition or Conversion
Generally, the sale or exchange of a LYON, or the redemption of a LYON for
cash, will result in taxable gain or loss to a U.S. Holder. As described above,
our calculation of the comparable yield and the schedule of projected payments
for the LYONs takes into account the receipt of stock upon conversion and
contingent additional principal as contingent payments with respect to the
LYONs. Accordingly, we intend to treat the receipt of our common stock by a U.S.
Holder upon the conversion of a LYON, as well as any contingent additional
principal, as contingent payments under the CPDI regulations. Pursuant to our
treatment of the LYONs as contingent payment debt instruments under the CPDI
regulations as described above and the holders' agreement to be bound by our
determination, gain or loss upon a sale, exchange, redemption or conversion of a
LYON will generally be recognized as ordinary gain or loss, except that loss, if
any, realized in excess of the amount of previously accrued tax original issue
discount will be capital loss. Losses are subject to limitations under the
United States federal income tax laws. It is possible that a deduction for any
such capital loss might be denied under the rules governing recapitalizations.
Holders should consult their tax advisors regarding the deductibility of any
such capital loss.
The holder's realized gain or loss will be measured by the difference
between the total value of the consideration received for the LYON (including
the fair market value of our common stock) and the holder's tax basis in the
LYON, as previously adjusted to reflect accrued original issue discount and the
amounts of any projected payments. In general, a holder's tax basis in any
common stock received in exchange for a LYON (including any fractional shares
for which cash is received) will be the fair market value of the stock at the
time of the exchange. The holding period for common stock received in the
exchange will commence on the day following the date of the exchange. These
results may be different, however, if the exchange of a LYON for our stock
constitutes a recapitalization. Holders should consult their tax advisors as to
the applicability of the recapitalization rules to an exchange of a LYON for
common stock and the determination of basis and holding period for such common
stock under those rules.
Constructive Dividend
If at any time we make a distribution of property to our shareholders that
would be taxable to the shareholders as a dividend for United States federal
income tax purposes and, in accordance with the anti-dilution provisions of the
LYONs, the conversion rate of the LYONs is increased, such increase may be
deemed to be the payment of a taxable dividend to holders of the LYONs.
For example, an increase in the conversion rate in the event of
distributions of our evidences of indebtedness or our assets or in the event of
an extraordinary cash dividend will generally result in deemed dividend
treatment to holders of the LYONs, but generally an increase in the event of
stock dividends or the distribution of rights to subscribe for common stock will
not. However, there will be no deemed dividend treatment for regular cash
dividends because there will be no adjustment therefor under the anti-dilution
provisions of the LYONs.
Treatment of Non-U.S. Holders
Payments of contingent interest made to Non-U.S. Holders will not be
exempt from United States federal income or withholding tax and, therefore,
Non-U.S. Holders will be subject to withholding on such payments of contingent
interest at a rate of 30%, subject to reduction by an applicable treaty or upon
the receipt of a Form W-8ECI from a Non-U.S. Holder claiming that the payments
are effectively connected with the conduct of a United States trade or business.
A Non-U.S. Holder that is subject to the withholding tax should consult its tax
28
advisors as to whether it can obtain a refund for a portion of the withholding
tax, either on the grounds that some portion of the contingent interests
represents a return of principal under the CPDI regulations, or on some other
grounds.
All other payments on the LYONs made to a Non-U.S. Holder, including a
payment in common stock pursuant to a conversion, and any gain realized on a
sale or exchange of the LYONs (other than gain attributable to accrued
contingent interest payments), will be exempt from United States income or
withholding tax, provided that: (1) such Non-U.S. Holder does not own, actually
or constructively, 10% or more of the total combined voting power of all classes
of our stock entitled to vote, is not a controlled foreign corporation related,
directly or indirectly, to us through stock ownership, and is not a bank
receiving interest described in section 881(c)(3)(A) of the Code; (2) the
statement requirement set forth in Section 871(b) or section 881(c) of the Code
has been fulfilled with respect to the beneficial owner, as discussed below; (3)
such Non-U.S. holder is not an individual who is present in the United States
for 183 days or more in the taxable year of disposition, or such individual does
not have a "tax home" (as defined in section 911(d)(3) of the Code) or an office
or other fixed place of business in the United States; (4) such payments and
gain are not effectively connected with the conduct by such Non-U.S. Holder of a
trade or business in the United States; and (5) our common stock continues to be
actively traded within the meaning of section 871(b)(4)(C)(v)(1) of the Code
(which, for these purposes and subject to certain exceptions, includes trading
on the NYSE).
The statement requirement referred to in the preceding paragraph will be
fulfilled if the beneficial owner of a LYON certifies on IRS Form W-8BEN, under
penalties of perjury, that it is not a United States person and provides its
name and address.
If a Non-U.S. Holder of LYONs is engaged in a trade or business in the
United States, and if interest on the LYONs is effectively connected with the
conduct of such trade or business, the Non-U.S. Holder, although exempt from the
withholding tax discussed in the preceding paragraphs, will generally be subject
to regular U.S. federal income tax on interest and on any gain realized on the
sale or exchange of the LYONs in the same manner as if it were a U.S. Holder. In
lieu of the certificate described in the preceding paragraph, such a Non-U.S.
Holder will be required to provide to the withholding agent a properly executed
IRS Form W-8ECI (or successor form) in order to claim an exemption from
withholding tax. In addition, if such a Non-U.S. Holder is a foreign
corporation, such Holder may be subject to a branch profits tax equal to 30% (or
such lower rate provided by an applicable treaty) of its effectively connected
earnings and profits for the taxable year, subject to certain adjustments.
Backup Withholding and Information Reporting
Information reporting will apply to any payments, including a payment of
shares of common stock pursuant to a conversion or of interest, we may make on,
or the proceeds of the sale or other disposition or retirement, of the LYONs or
dividends on shares of common stock with respect to certain noncorporate
holders, and backup withholding at a rate of 31% may apply unless the recipient
of such payment supplies a taxpayer identification number, certified under
penalties of perjury, as well as certain other information or otherwise
establishes an exemption from backup withholding. Any amount withheld under the
backup withholding rules will be allowable as a credit against the holder's
federal income tax, if the required information is provided to the IRS.
SELLING SECURITYHOLDERS
The LYONs were originally issued by us and sold by Merrill Lynch, Pierce,
Fenner & Smith Incorporated in a transaction exempt from the registration
requirements of the Securities Act to persons reasonably believed by Merrill
Lynch to be "qualified institutional buyers" (as defined by Rule 144A under the
Securities Act). The selling securityholders (which term includes their
transferees, pledgees, donees or successors) may from time to time offer and
sell pursuant to this prospectus any and all of the LYONs and the shares of
common stock issuable upon conversion and/or redemption of the LYONs.
Set forth below are the names of each selling securityholder, the
principal amount of LYONs that may be offered by such selling securityholder
pursuant to this prospectus and the number of shares of common stock into which
such LYONs are convertible. Unless set forth below, none of the selling
securityholders has had a material relationship with us or any of our
predecessors or affiliates within the past three years.
29
The following table sets forth certain information received by us on or
prior to February 23, 2001. However, any or all of the LYONs or common stock
listed below may be offered for sale pursuant to this prospectus by the selling
securityholders from time to time. Accordingly, no estimate can be given as to
the amounts of LYONs or common stock that will be held by the selling
securityholders upon consummation of any such sales. In addition, the selling
securityholders identified below may have sold, transferred, or otherwise
disposed of all or a portion of their LYONs since the date on which the
information regarding their LYONs was provided, in transactions exempt from the
registration requirements of the Securities Act.
Aggregate
Principal
Amount of
Lyons at Percentage of Common Stock Common Stock
Maturity that Lyons Owned Prior Registered
Name may be Sold Outstanding to Conversion Hereby(1)
-------- ------------ ------------ ------------- -------------
AIG SoundShore Holdings Ltd. ....................... $ 4,284,000 * -- 38,941
AIG SoundShore Opportunity Holding
Fund Ltd. ....................................... 5,098,000 * -- 46,340
AIG SoundShore Strategic Holding Fund Ltd. ......... 2,118,000 * -- 19,252
Arpeggio Fund, LP .................................. 1,000,000 * -- 9,090
Bear, Stearns & Co. Inc. ........................... 2,500,000 * -- 22,725
HighBridge International LLC ....................... 30,000,000 3.53% -- 272,700
IMF Convertible Fund ............................... 700,000 * -- 6,363
Investcorp - SAM Fund Ltd. ......................... 3,200,000 * -- 29,088
KBC Financial Products USA ......................... 1,000,000 * -- 9,090
Morgan Stanley & Co. ............................... 15,000,000 1.76% -- 136,350
R2 Investments, LDC ................................ 122,000,000 14.35% -- 1,108,980
Rhapsody Fund, LP .................................. 3,700,000 * -- 33,633
St. Albans Partners Ltd. ........................... 13,000,000 1.53% -- 118,170
Tribeca Investments LLC ............................ 25,000,000 2.94% -- 227,250
White River Securities L.L.C. ...................... 2,500,000 * -- 22,725
All other Holders of LYONs or future transferees,
pledges, donees or successors of any such
Holders(2)(3) ................................... 618,900,000 75.89% -- 5,625,803
------------ ------ ---------
Total ........................................... $850,000,000 100.00% -- 7,726,500
============ ====== =========
* Less than 1%
-------------------
(1) Assumes conversion of all of the holder's LYONs at a conversion rate of
9.09 shares of common stock per $1,000 principal amount at maturity of the
LYONs. However, this conversion rate will be subject to adjustment as
described under "Description of the LYONs -- Conversion Rights." As a
result, the amount of common stock issuable upon conversion of the LYONs
may increase or decrease in the future.
(2) Information about other selling securityholders will be set forth in
prospectus supplements, if required.
(3) Assumes that any other holders of LYONs, or any future transferees,
pledgees, donees or successors of or from any such other holders of LYONs,
do not beneficially own any common stock other than the common stock
issuable upon conversion of the LYONs at the initial conversion rate.
The preceding table has been prepared based upon information furnished to
us by the selling securityholders named in the table. From time to time,
additional information concerning ownership of the LYONs and common stock may
rest with certain holders thereof not named in the preceding table, with whom we
believe we have no affiliation. Information about the selling securityholders
may change from over time. Any changed information will be set forth in
prospectus supplements.
PLAN OF DISTRIBUTION
The LYONs and the common stock are being registered to permit public
secondary trading of these securities by the holders thereof from time to time
after the date of this prospectus. We have agreed, among other things, to bear
all expenses (other than underwriting discounts and selling commissions) in
connection with the registration and sale of the LYONs and the common stock
covered by this prospectus.
We will not receive any of the proceeds from the offering of LYONs or the
common stock by the selling securityholders. We have been advised by the selling
securityholders that the selling securityholders may sell all or a portion of
the LYONS and common stock beneficially owned by them and offered hereby from
time to time on any exchange on which the securities are listed on terms to be
determined at the times of such sales. The
30
selling securityholders may also make private sales directly or through a broker
or brokers. Alternatively, any of the selling securityholders may from time to
time offer the LYONs or the common stock beneficially owned by them through
underwriters, dealers or agents, who may receive compensation in the form of
underwriting discounts, commissions or concessions from the selling
securityholders and the purchasers of the LYONs and the common stock for whom
they may act as agent. The aggregate proceeds to the selling securityholders
from the sale of the LYONs or common stock offering by them hereby will be the
purchase price of such LYONs or common stock less discounts and commissions, if
any.
The LYONs and common stock may be sold from time to time in one or more
transactions at fixed offering prices, which may be changed, or at varying
prices determined at the time of sale or at negotiated prices. These prices will
be determined by the holders of such securities or by agreement between these
holders and underwriters or dealers who may receive fees or commissions in
connection therewith.
These transactions may include block transactions or crosses. Crosses are
transactions in which the same broker acts as an agent on both sides of the
trade.
In connection with sales of the LYONs and the underlying common stock or
otherwise, the selling securityholders may enter into hedging transactions with
broker-dealers. These broker-dealers may in turn engage in short sales of the
LYONs and the underlying common stock in the course of hedging their positions.
The selling securityholders may also sell the LYONs and underlying common stock
short and deliver LYONs and the underlying common stock to close out short
positions, or loan or pledge LYONs and the underlying common stock to
broker-dealers that in turn may sell the LYONs and the underlying common stock.
To our knowledge, there are currently no plans, arrangements or
understandings between any selling securityholders and any underwriter,
broker-dealer or agent regarding the sale of the LYONs and the underlying common
stock by the selling securityholders. Selling securityholders may not sell any
or all of the LYONs and the underlying common stock offered by them pursuant to
this prospectus. In addition, we cannot assure you that any such selling
securityholder will not transfer, devise or gift the LYONs and the underlying
common stock by other means not described in this prospectus. In addition, any
securities covered by this prospectus which qualify for sale pursuant to Rule
144 or Rule 144A of the Securities Act may be sold under Rule 144 or Rule 144A
rather than pursuant to this prospectus.
Our outstanding common stock is listed for trading on the New York Stock
Exchange.
The selling securityholders and any broker and any broker-dealers, agents
or underwriters that participate with the selling securityholders in the
distribution of the LYONs or the common stock may be deemed to be "underwriters"
within the meaning of the Securities Act, in which event any commission received
by such broker-dealers, agents or underwriters and any profit on the resale of
the LYONs or the common stock purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act.
In addition, in connection with any resales of LYONs, any broker-dealer
who acquired the LYONs for its own account as a result of market-making
activities or other trading activities must deliver a prospectus meeting the
requirements of the Securities Act. Broker-dealers may fulfill their prospectus
delivery requirements with respect to the LYONs (other than a resale of an
unsold allotment from the original sale of the outstanding LYONs) with this
prospectus. In addition, until May 27, 2001, all securityholders effecting
transactions in the LYONs may be required to deliver a prospectus and any and
all supplements or amendments thereto.
The LYONs were issued and sold on February 7, 2001 in transactions exempt
from the registration requirements of the Securities Act to persons reasonably
believed by Merrill Lynch to be "qualified institutional buyers" (as defined in
Rule 144A under the Securities Act). We have agreed to indemnify Merrill Lynch
and each selling securityholder, and each selling securityholder had agreed to
indemnify us, Merrill Lynch and each other selling shareholder against certain
liabilities arising under the Securities Act.
The selling securityholders and any other persons participating in such
distribution will be subject to the Exchange Act. The Exchange Act rules
include, without limitation, Regulation M, which may limit the timing of
purchases and sales of the LYONs and the underlying common stock by the selling
securityholders and any other such person. In addition, Regulation M of the
Exchange Act may restrict the ability of any person engaged in the distribution
of the LYONs and the underlying common stock to engage in market-making
activities with respect to the particular LYONs and the underlying common stock
being distributed for a period of up to five
31
business days prior to the commencement of such distribution. This may affect
the marketability of the LYONs and the underlying common stock and the ability
of any person or entity to engage in market-making activities with respect to
the LYONs and the underlying common stock.
We will use our best efforts to keep the registration statement of which
this prospectus is a part effective until the earlier of (i) the sale pursuant
to the registration statement of all the securities registered thereunder and
(ii) the expiration of the holding period applicable to such securities held by
persons that are not our affiliates under Rule 144(k) under the Securities Act
or any successor provision, subject to certain permitted exceptions in which
case we may prohibit offers and sales of LYONs and common stock pursuant to the
registration statement to which this prospectus relates.
LEGAL MATTERS
The validity of the LYONs and the shares of common stock issuable upon
conversion of the LYONs has been passed upon for us by Jones, Day, Reavis &
Pogue, New York, New York.
EXPERTS
The consolidated financial statements of Omnicom as of December 31, 1998
and 1999 and for each of the three years in the period ended December 31, 1999
and the related schedules included in Omnicom's Annual Report on Form 10-K for
the fiscal year ended December 31, 1999, have been audited by Arthur Andersen
llp, independent public accountants, as indicated in their report with respect
thereto, and are incorporated by reference in this offering memorandum in
reliance upon the authority of said firm as experts in accounting and auditing.
32
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
Expenses payable in connection with the distribution of the securities
being registered (estimated except for the registration fee), all of which will
be borne by us, are as follows:
SEC Registration Fee ...................................... $214,094
Legal Fees and Expenses ................................... $ 15,000
Miscellaneous Expenses .................................... $ 50,000
--------
Total ..................................................... $279,094
Item l5. Indemnification of Directors and Officers.
Our certificate of incorporation contains a provision limiting the
liability of directors (except for approving statutorily prohibited dividends,
share repurchases or redemptions, distributions of assets on dissolution or
loans to directors) to acts or omissions determined by a judgement or other
final adjudication to have been in bad faith, involving intentional misconduct
or a knowing violation of the law, or resulting in personal gain to which the
director was not legally entitled. Our by-laws provide that an officer or
director will be indemnified against any costs or liabilities, including
attorney's fees and amounts paid in settlement with our consent in connection
with any claim, action or proceeding to the fullest extent permitted by the New
York Business Corporation Law.
Section 722(a) of the New York Business Corporation Law provides that a
corporation may indemnify any officer or director, made, or threatened to be
made, a party to an action other than one by or in the right of the corporation,
including an action by or in the right of any other corporation or other
enterprise, that any director or officer of the corporation served in any
capacity at the request of the corporation, because he was a director or officer
of the corporation, or served such other corporation or other enterprise in any
capacity, against judgments, fines, amounts paid in settlement and reasonable
expenses, including attorneys' fees actually and necessarily incurred as a
result of such action, or any appeal therein, if such director or officer acted
in good faith for a purpose he reasonably believed to be in, or in the case of
service for any other corporation or other enterprise, not opposed to, the best
interests of the corporation and in criminal actions in addition had no
reasonable cause to believe that his conduct was unlawful.
Section 722(c) of the New York Business Corporation Law provides that a
corporation may indemnify any officer or director made, or threatened to be
made, a party to an action by or in the right of the corporation by reason of
the fact that he is or was an officer or director of the corporation, or is or
was serving at the request of the corporation as a director or officer of any
other corporation, or other enterprise, against amounts paid in settlement and
reasonable expenses, including attorneys' fees, actually and necessarily
incurred by him in connection with the defense or settlement of such action, or
in connection with an appeal therein, if such director or officer acted, in good
faith, for a purpose which he reasonably believed to be in, or, in the case of
service for another corporation or other enterprise, not opposed to, the best
interests of the corporation. The corporation may not, however, indemnify any
officer or director pursuant to Section 722(c) in respect of (1) a threatened
action, or a pending action that is settled or otherwise disposed of, or (2) any
claim, issue or matter for which the person shall have been adjudged to be
liable to the corporation, unless and only to the extent that the court in which
the action was brought or, if no action was brought, any court of competent
jurisdiction, determines upon application, that the person is fairly and
reasonably entitled to indemnity for that portion of the settlement and expenses
as the court deems proper.
Section 723 of the New York Business Corporation Law provides that an
officer or director who has been successful on the merits or otherwise in the
defense of a civil or criminal action of the character set forth in Section 722
is entitled to indemnification as permitted in the section. Section 724 of the
New York Business Corporation Law permits a court to award the indemnification
required by Section 722.
We have entered into agreements with our directors to indemnify them for
liabilities or costs arising out of any alleged or actual breach of duty,
neglect, errors or omissions while serving as a director. We also maintain and
pay premiums for directors' and officers' liability insurance policies.
II-1
Item 16. Exhibits and Financial Statement Schedules.
Exhibit
Number Description of Exhibit
------- ----------------------
3.1(a) Certificate of Incorporation (incorporated by reference to
Omnicom Group Inc.'s Registration Statement on Form S-3 (No.
333-46303)).
3.1(b) Certificate of Amendment of the Certificate of Incorporation
(incorporated by reference to Omnicom Group Inc.'s Quarterly
Report on Form 10-Q for the quarter ended June 30, 2000).
3.2 Bylaws (incorporated by reference to Omnicom Group Inc.'s
Annual Report on Form 10-K for the year ended December 31,
1987).
4.1 Indenture between Omnicom Group Inc. and The Chase Manhattan
Bank, dated as of February 7, 2001.
4.2 Form of Liquid Yield Option Note(TM) due 2031 (Zero Coupon --
Senior) (included in Exhibit 4.1).
4.3 Registration Rights Agreement, dated as of February 7, 2001,
by and between Omnicom Group Inc. and Merrill Lynch & Co.,
Merrill Lynch, Pierce, Fenner & Smith Incorporated.
5.1 Opinion of Jones, Day, Reavis & Pogue.
8.1 Opinion of Jones, Day, Reavis & Pogue as to certain U.S.
federal income tax considerations.
12.1 Computation of Ratio of Earnings to Fixed Charges.
23.1* Consent of Arthur Andersen LLP.
23.2 Consent of Jones, Day, Reavis & Pogue (included in Exhibit
5.1).
24.1 Power of Attorney (included on signature pages of the
Registration Statement as originally filed on February 12,
2001).
25.1* Form of T-1 Statement of Eligibility of the Trustee under the
Indenture.
----------
* Filed herewith. All other exhibits have been previously filed.
Item 17. Undertakings.
We undertake:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of this registration statement (or the most
recent post-effective amendment thereof) that, individually or in
the aggregate, represent a fundamental change in the information in
this registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high and of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Securities and Exchange Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume
and price represent no more than a 20 percent change in the maximum
aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement; and
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in this registration
statement or any material change to such information in this
registration statement.
However, paragraphs (1)(i) and (1)(ii) shall not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by us pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that
are incorporated by reference in this registration statement.
(2) That for the purpose of determining any liability under the
Securities Act of 1933 each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of the securities at that time shall be deemed
to be the initial bona fide offering thereof.
II-2
(3) To remove from registration by means of post-effective amendment
any of the securities being registered that remain unsold at the
termination of the offering.
We further undertake that, for purposes of determining any liability
under the Securities Act of 1933, each filing of our annual report
pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934
(and, where applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Securities Exchange Act of 1934)
that is incorporated by reference in this registration statement shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of the securities at that time shall be
deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the
Securities Act, may be permitted to directors, officers or persons
controlling us, pursuant to the provisions described under Item 15 above
or otherwise, we have been advised that in the opinion of the Securities
and Exchange Commission the indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment
by us of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will,
unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of
such issue.
II-3
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Amendment No. 1 to
its registration statement on Form S-3 to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York, in the State of
New York on February 26, 2001.
Omnicom Group Inc.
as Registrant
By: /s/ John Wren
----------------------------------------
John Wren
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, as amended,
this registration statement on Form S-3 has been signed below by the following
persons in the capacities on February 26, 2001.
Signature Title
--------- -----
/s/ John Wren President, Chief Executive
---------------------------------------- Officer and Director
John Wren (Principal Executive Officer)
* Executive Vice President and
---------------------------------------- Chief Financial Officer
Randall Weisenburger (Principal Financial Officer)
* Controller (Principal
---------------------------------------- Accounting Officer)
Philip J. Angelastro
---------------------------------------- Director
Richard I. Beattie
---------------------------------------- Director
Bernard Brochand
* Director
----------------------------------------
Robert J. Callander
* Director
----------------------------------------
James A. Cannon
* Director
----------------------------------------
Leonard S. Coleman, Jr.
* Director
----------------------------------------
Bruce Crawford
* Director
----------------------------------------
Susan S. Denison
* Director
----------------------------------------
Peter Foy
II-4
Signature Title
--------- -----
* Director
----------------------------------------
Michael Greenlees
* Director
----------------------------------------
Thomas L. Harrison
* Director
----------------------------------------
John R. Murphy
* Director
----------------------------------------
John R. Purcell
* Director
----------------------------------------
Keith L. Reinhard
* Director
----------------------------------------
Linda Johnson Rice
* Director
----------------------------------------
Allen Rosenshine
* Director
----------------------------------------
Gary L. Roubos
*By: /s/ John Wren
----------------------------------------
John Wren
Attorney-in-fact
II-5
INDEX TO EXHIBITS
Exhibit
Number Description of Exhibit
------- ----------------------
3.1(a) Certificate of Incorporation (incorporated by reference to
Omnicom Group Inc.'s Registration Statement on Form S-3 (No.
333-46303)).
3.1(b) Certificate of Amendment of the Certificate of Incorporation
(incorporated by reference to Omnicom Group Inc.'s Quarterly
Report on Form 10-Q for the quarter ended June 30, 2000).
3.2 Bylaws (incorporated by reference to Omnicom Group Inc.'s
Annual Report on Form 10-K for the year ended December 31,
1987).
4.1 Indenture between Omnicom Group Inc. and The Chase Manhattan
Bank, dated as of February 7, 2001.
4.2 Form of Liquid Yield Option Note(TM)due 2031 (Zero Coupon--
Senior) (included in Exhibit 4.1).
4.3 Registration Rights Agreement, dated as of February 7, 2001,
by and between Omnicom Group Inc. and Merrill Lynch & Co.,
Merrill Lynch, Pierce, Fenner & Smith Incorporated.
5.1 Opinion of Jones, Day, Reavis & Pogue.
8.1 Opinion of Jones, Day, Reavis & Pogue as to certain U.S.
federal income tax considerations.
12.1 Computation of Ratio of Earnings to Fixed Charges.
23.1* Consent of Arthur Andersen LLP.
23.2 Consent of Jones, Day, Reavis & Pogue (included in Exhibit
5.1).
24.1 Power of Attorney (included on signature pages of this
Registration Statement).
25.1* Form of T-1 Statement of Eligibility of the Trustee under the
Indenture.
----------
* Filed herewith. All other exhibits have been previously filed.