As filed with the Securities and Exchange Commission on May 21, 2002
Registration No. 333-86194
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
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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, New York 10022
(212) 415-3600
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
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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)
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Copy to:
MEREDITH GOLDBERG BERKOWITZ, ESQ.
Jones, Day, Reavis & Pogue
222 East 41st Street
New York, New York 10017
(212) 326-3939
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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
Title of securities Amount to be maximum offering maximum aggregate Amount of
to be registered registered price per security(1) offering price Registration Fee(2)
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Zero Coupon Zero Yield Convertible Notes due 2032 $900,000,000 $1,023.8 $921,420,000 $84,824
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Common Stock, par value $.15 per share(3) 9,000,000 -- -- --
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(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 notes on the Portal System on April 9,
2002 of $1,023.8 per $1,000 aggregate initial principal amount at maturity
of the notes.
(2) This fee was paid on April 12, 2002.
(3) Also being registered are 9,000,000 shares of common stock issuable upon
conversion and/or redemption of the notes registered hereby and an
indeterminate number of shares issuable in connection with a stock split,
stock dividend, recapitalization or similar events 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.
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The information in this prospectus is not complete and may be changed. The
selling securityholders may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is effective. This
prospectus is not an offer to sell these securities and it is not soliciting an
offer to buy these securities in any jurisdiction where the offer or sale is not
permitted.
SUBJECT TO COMPLETION DATED MAY 21, 2002
PROSPECTUS
$900,000,000
OMNICOM GROUP INC.
Zero Coupon Zero Yield Convertible Notes due 2032
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We sold the notes in private transactions on March 6, 2002 and March 19,
2002. Selling securityholders may use this prospectus to resell their notes and
the shares of common stock issuable upon conversion and/or redemption of their
notes. The notes are senior unsecured obligations and rank equal in right of
payment to all of our existing and future senior unsecured indebtedness. The
notes are also zero-coupon debt securities. On July 31, 2032, the maturity date
of the notes, a holder will receive the principal amount at maturity of the
notes, which will be $1,000 per note unless that amount is increased on and
after July 31, 2022 as described in this prospectus.
We will not initially pay any cash interest on the notes. However, under
some circumstances, contingent cash interest may become payable, as described in
this prospectus. We may also elect to voluntarily pay cash interest on the notes
at any time, but we are not obligated to do so.
Holders may convert each $1,000 face amount of notes originally issued
into 9.09 shares of our common stock if the conditions for conversion described
in this prospectus are satisfied. These conditions were not met as of the date
of this prospectus. The conversion rate may be adjusted under limited
circumstances. 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 $89.77 per share on May 17, 2002.
We cannot redeem the notes before July 31, 2007. On or after July 31, 2007
and before July 31, 2022, we may redeem all or any portion of the notes at any
time at the prices described in this prospectus. In addition, holders may
require us to purchase all or a portion of their notes if we undergo a change in
control or on July 31 of each year, or if July 31 is not a business day, on the
next business day, beginning July 31, 2003. If 90% or more of the notes are
repurchased, we may redeem all of the remaining notes.
For United States federal income tax purposes, the notes constitute
contingent payment debt instruments. You should read the discussion of selected
United States federal income tax consequences relevant to the notes beginning on
page 28.
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Investing in the Notes involves risks that are described in the "Risk
Factors" section beginning on page 7 of this prospectus.
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The notes issued in the initial private placements are eligible for
trading in the PORTAL System. The notes sold using this prospectus, however will
no longer be eligible for trading in the PORTAL System. We do not intend to list
the notes on any other national securities exchange or automated quotation
system.
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 , 2002
TABLE OF CONTENTS
Page
----
Summary ................................................................... 3
Risk Factors .............................................................. 7
Forward-Looking Information ............................................... 9
Selected Consolidated Historical Financial Information .................... 9
Ratio of Earnings to Fixed Charges ........................................ 10
Use of Proceeds ........................................................... 11
Price Range of Common Stock and Dividend History .......................... 11
Capitalization ............................................................ 12
Description of the Notes .................................................. 13
Description of Capital Stock .............................................. 27
Federal Income Tax Considerations ......................................... 28
Selling Securityholders ................................................... 32
Plan of Distribution ...................................................... 33
Legal Matters ............................................................. 34
Experts ................................................................... 34
Where You Can Find More Information ....................................... 35
2
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SUMMARY
The following summary is qualified in its entirety by the more detailed
information included elsewhere in 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 largest marketing and corporate communications companies
in the world. Our branded networks and numerous specialty firms provide
advertising, strategic media planning and buying, direct and promotional
marketing, public relations and other specialty communications services to over
5,000 clients in more than 100 countries.
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 SEC filings
which are incorporated by reference into this prospectus. Copies of these
filings may be obtained as described under "Where You Can Find Additional
Information."
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3
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The Offering
Securities Offered ............... $900,000,000 aggregate initial principal
amount at maturity of Zero Coupon Zero Yield
Convertible Notes due July 31, 2032.
Principal Amount at
Maturity of the Notes ............ Before July 31, 2022, the principal amount
at maturity of a note will be equal to
$1,000 per $1,000 face amount of notes
originally issued, which we refer to as the
initial principal amount at maturity. On or
after July 31, 2022, the principal amount of
the notes due at maturity may be increased,
as described in this prospectus.
If the principal amount due at maturity is
increased, then contingent additional
principal, which is the difference between
$1,000 per $1,000 face amount of notes
originally issued and the principal amount
at maturity, will accrue from and including
July 31, 2022 until maturity.
Cash Interest .................... We will not pay any cash interest on the
notes unless contingent cash interest
becomes payable or we elect to do so in our
sole discretion.
Yield to Maturity of the Notes ... The yield to maturity, calculated on the
basis of the initial principal amount at
maturity and therefore excluding any
contingent cash interest or contingent
additional principal that may become
payable, will be zero. In addition, the
yield to maturity for a particular purchaser
of the notes will be negative if the price
paid by that purchaser exceeds $1,000 per
$1,000 face amount of the notes. If
contingent cash interest and/or contingent
additional principal becomes payable the
yield to maturity may increase.
Tax Original Issue Discount ...... For United States federal income tax
purposes, the notes constitute contingent
payment debt instruments. As a result, the
notes are deemed to have been issued with
original issue discount for United States
federal income tax purposes, referred to as
tax original issue discount. You should read
the discussion of selected United States
federal income tax consequences relevant to
the notes beginning on page 28.
Conversion Rights ................ The notes are convertible if:
o the average conversion value for the
notes, which is calculated based upon
the price of our common stock on the
relevant date of determination, meets
specified thresholds,
o the credit rating for the notes is
reduced to Baa3 or lower by Moody's
Investors Service, Inc. or BBB or
lower by Standard & Poor's Ratings
Service,
o we call the notes for redemption, or
o we enter into specified corporate
transactions.
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4
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In the case of the first two conditions,
once the condition is satisfied, the notes
will remain convertible at any time at the
option of the holder until maturity.
If the conditions for conversion are met, a
holder may surrender each $1,000 face amount
of notes originally issued for 9.09 shares
of our common stock. The conversion rate may
be adjusted under the limited circumstances
described in this prospectus and the
indenture but will not be adjusted for any
contingent additional principal or
contingent interest that may become payable.
The ability to surrender notes for
conversion will expire at the close of
business on July 31, 2032.
Ranking .......................... The notes are our senior unsecured
obligations and rank equal in right of
payment to all our existing and future
senior unsecured indebtedness. The notes are
effectively subordinated to all existing and
future obligations of our subsidiaries. The
notes are also effectively subordinated to
all of our existing and future obligations
that are secured, to the extent of the
security.
As of March 31, 2002, we had $2,792.3
million of indebtedness outstanding, all of
which is unsecured. Of this amount, $1,882.9
million represents indebtedness directly
incurred by us and $909.5 million represents
indebtedness of our subsidiaries that is
guaranteed by us. As of March 31, 2002, our
subsidiaries had an additional $99.9 million
of indebtedness outstanding.
Redemption of Notes at
the Option of Omnicom ............ We cannot redeem the notes before July 31,
2007. On or after July 31, 2007 and before
July 31, 2022, we may redeem all or any
portion of the notes at any time at a price
of $1,000 per $1,000 face amount of the
notes. On or after July 31, 2022, we may
redeem all or any portion of the notes at
any time at a price equal to the sum of
$1,000 per $1,000 face amount of the notes
plus any contingent additional principal
that has accrued to the date of redemption.
Purchase of the Notes at the
Option of the Holder ............. On each July 31, or if July 31 is not a
business day, the next business day, from
and including July 31, 2003 through July 31,
2031, holders may require us to purchase all
or a portion of their notes, at the
following prices:
(1) for July 31, 2003 through but
not including July 31, 2022, at
a price of $1,000 per $1,000
face amount of the notes; and
(2) for July 31, 2022 through and
including July 31, 2031, at a
price of $1,000 per $1,000 face
amount of the notes plus any
accrued contingent additional
principal that has accrued to
the date of purchase.
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5
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We may choose to pay the purchase price in
cash, shares of our common stock or a
combination of cash and common stock.
Payment will be made on the fourth business
day following the purchase date.
Change in Control ................ If we undergo a change in control on or
before July 31, 2007, holders may require us
to purchase for cash all or a portion of
their notes at a price equal to $1,000 per
$1,000 face amount of the notes. In
addition, if at least 90% of the notes
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 notes at the same purchase
price.
DTC Eligibility .................. The notes were issued only in the form of
global securities held in book-entry form.
DTC or its nominee will be the sole
registered holder of the notes 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.
Use of Proceeds .................. We will not receive any proceeds from the
sale by any selling securityholder of the
notes or the common stock issuable upon
conversion and/or redemption of the notes.
Trading .......................... The notes sold in the initial private
placements are eligible for trading in the
PORTAL system. The notes resold using this
prospectus, however, will no longer be
eligible for trading in the PORTAL system.
We do not intend to list the notes 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".
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6
RISK FACTORS
You should carefully consider the following information with the other
information contained in or incorporated by reference into this prospectus
before purchasing the notes.
The Lack of Covenants Applicable to the Notes May Not Afford Protection Under
Some Circumstances
The holders of notes may require us to purchase the notes upon the
occurrence of certain change-in-control events described under "Description of
the Notes -- Purchase at Option of Holders upon Change in Control." However, 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 notes but that would 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 notes 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 the Notes May Not Develop
The notes comprise a new issue of securities for us for which there is
currently no public market. The notes will not be listed on any securities
exchange or included in any automated quotation system. If the notes are traded
after their initial issuance, they may trade at a discount, 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 notes. To the extent that an active
trading market does not develop, the price at which you may be able to sell the
notes, if at all, may be less than the price you pay for them. In addition, the
notes 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 note is otherwise convertible. These features could adversely
affect the value and the trading prices for the notes.
Our Holding Company Structure Results in Structural Subordination and May Affect
Our Ability to Make Payments on the Notes
The notes 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 notes, are 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 notes 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 notes, 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
the Notes
The notes will be 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 notes.
The notes also constitute contingent payment debt instruments and
therefore 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 to that income. You should be aware
that, even though we will not pay any interest on the notes, other than any
contingent cash interest that may become payable, and the notes 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 a yield of 6.69% per year, computed on a semiannual bond
equivalent basis, which we have determined represents the yield we would pay on
noncontingent, nonconvertible, fixed-rate debt with terms otherwise similar to
the notes. 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.
7
We are required to furnish to the IRS and to certain noncorporate U.S.
holders annual information regarding the amount of original issue discount on
the notes attributable to that year. We are also required to furnish to holders
a schedule of projected payments which we will use in computing the amounts of
original issue discount on the notes. 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 any adjustments to
those accruals, unless the holder timely discloses and justifies the use of
their estimates to the IRS and establishes that the comparable yield and
schedule of projected payments that we have used is unreasonable.
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 note 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 note. 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
realized upon conversion or redemption for stock may not be allowed under
certain rules regarding recapitalizations. Holders should consult their own tax
advisors regarding the deductibility of a capital loss.
For more information, see "Federal Income Tax Considerations."
We May Not Have the Ability or the Funds Necessary to Finance the Purchase at
the Option of the Holder or the Change in Control Purchase and the Amount You
Receive Upon Redemption, Purchase or a Change of Control May Be Less Than What
You Paid for the Notes
On each July 31, or if July 31 is not a business day, the next business
day, from and including July 31, 2003 through and including July 31, 2031, and
upon a change in control of Omnicom occurring on or before July 31, 2007,
holders of the notes have the right to require us to purchase their notes. We
have the right to elect to pay the purchase price in shares of our common stock
and to designate a financial institution to satisfy, at its option, our purchase
obligation. However, if we fail or are unable to elect to pay in stock or to so
designate a financial institution, we may not have sufficient funds at those
times to make any required purchase of notes. In addition, we may not have the
funds available to repay the notes at maturity or upon acceleration following an
event of default. Even if we do have funds available, other agreements to which
we are subject may prohibit the payments and the indenture prohibits us from
making a purchase of notes with cash during any time that an event of default
has happened and is continuing.
Furthermore, the notes were sold by the initial purchasers in the private
placements at a premium to the initial principal amount at maturity. As a
result, at maturity or at any time that you elect to have us, or any financial
institution we may designate, purchase your notes, you will receive a cash
payment in an amount less than you originally paid for the notes unless
contingent additional principal has accrued in an amount sufficient to equal the
amount paid by you for the notes at the time of such purchase. See "Description
of the Notes -- Purchase of the Notes at Option of Holder" and "-- Purchase at
Option of Holders Upon Change in Control."
The Markets in Which We Participate are Highly Competitive and, If We Are Not
Able to Compete Effectively, Our Business and Financial Results Could Be
Adversely Affected.
We face the risks normally associated with global services businesses. The
operational and financial performance of our businesses is generally tied to
overall economic and regional market conditions, competition for client
assignments and talented staff, new business wins and losses and the risks
associated with extensive international operations. While we have no reason to
believe that our international operations as a whole present any material risk
to our overall business, there are some risks of doing business, including those
of currency fluctuations, political instability and exchange controls, which do
not affect domestic-focused firms.
The particular business in which we participate are highly competitive. In
general, the financial and technological barriers to entry are low, with the key
competitive considerations for keeping existing business and winning new
business being the quality and effectiveness of the services offered, including
our ability to efficiently serve clients, particularly large international
clients, on a broad geographic basis. While many of our client relationships are
long-standing, companies often put their advertising, marketing services and
public and corporate communications business up for competitive review from time
to time. To the extent that we were not able to remain competitive or to keep
key clients, our business and financial results could be adversely affected.
8
Our ability to retain existing clients and to attract new clients may, in
some cases, be limited by clients' policies on or perceptions of conflicts of
interest arising out of other client relationships. In addition, an important
aspect of our competitiveness is its ability to retain key employee and
management personnel. Our continuing ability to attract and retain these
employees may have a material effect on our business and financial results.
FORWARD-LOOKING INFORMATION
Some of the statements in this prospectus and 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.
These uncertainties and risks include, but are not limited to, our future
financial condition and results of operations, changes in general economic
conditions, competitive factors, changes to client communication requirements,
the hiring and retention of human resources and our international operations are
subject to the risk of currency fluctuations and exchange controls. 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.
SELECTED CONSOLIDATED HISTORICAL FINANCIAL INFORMATION
The following tables set 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 in the first
table was derived from the audited financial information included in our Annual
Report on Form 10-K for the year ended December 31, 2001. The information in the
second table was derived from the unaudited financial information included in
our Quarterly Report on Form 10-Q for the quarter ended March 31, 2002.
Year ended December 31,
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2001 2000 1999 1998 1997
----------- ---------- ---------- ---------- ----------
(Dollars in thousands except for per share amounts)
For the year:
Revenue .................................. $ 6,889,406 $6,154,230 $5,130,545 $4,290,946 $3,296,224
Net income ............................... 503,142 498,795(a) 362,882 278,845 217,300
Net income per common share,
excluding Razorfish gain
Basic .................................. 2.75 2.49 2.07 1.61 1.30
Diluted ................................ 2.70 2.40 2.01 1.57 1.28
Net income per common share,
including Razorfish gain
Basic .................................. 2.85
Diluted ................................ 2.73
Dividends declared per
common share ............................. 0.775 0.70 0.625 0.525 0.45
At year end:
Total assets ............................. $10,617,414 $9,853,707 $9,017,637 $7,121,968 $5,114,364
Long-term obligations:
Long-term debt and convertible
subordinated debentures .............. 1,340,105 1,335,387 711,632 717,410 341,665
Deferred compensation and
other liabilities .................... 296,980 296,921 300,746 269,966 166,492
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(a) Includes $63.8 million after-tax gain on sale of Razorfish shares.
9
Three months ended March 31,
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2002 2001
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Revenue ..................................... $ 1,732,426 $ 1,601,134
Net income .................................. 128,565 95,280
Net Income per Common Share:
Basic ..................................... $ 0.69 $ 0.52
Diluted ................................... $ 0.68 $ 0.52
Dividends declared per common share ......... $ 0.200 $ 0.175
Net income and net income per common
share, adjusted to exclude goodwill
amortization
Adjusted net income ....................... 128,565 115,330(a)
Adjusted basic ............................ $ 0.69 $ 0.63(a)
Adjusted diluted .......................... $ 0.68 $ 0.62(a)
Total assets ................................ $10,968,837 $ 9,227,229
Long-term obligations:
Long-term debt and convertible
subordinated debentures ................. 2,609,771 2,133,822
Deferred compensation and other
liabilities ............................. 287,775 297,894
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(a) Effective January 1, 2002 Omnicom stopped recording goodwill amortization
expense as required by the Financial Accounting Standard Board Statement
No. 142 -- "Goodwill and other Intangibles." To present 2001 on a
comparable basis with 2002, the previously reported amounts have been
adjusted to assume that we stopped recording goodwill amortization expense
on January 1, 2001.
RATIO OF EARNINGS TO FIXED CHARGES
The following table shows the ratio of earnings to fixed charges of
Omnicom for each of the five most recent fiscal years and for the three months
ended March 31, 2002 and 2001.
Three months ended
March 31, Year ended December 31,
------------------ ---------------------------------------------
2002 2001 2001 2000 1999 1998 1997
---- ---- ---- ---- ---- ---- ----
5.23x 3.84x 4.82x 4.83x 4.44x 4.03x 4.23x
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. Effective January 1, 2002 Omnicom stopped recording
goodwill and amortization expense as required by the Financial Accounting
Standard Board Statement No. 142 -- "Goodwill and Other Intangibles." The March
31, 2001 ratio shown includes goodwill amortization. For comparison purposes,
the ratio of earnings to fixed charges for the period ended March 31, 2001,
excluding goodwill amortization expense, would have been 4.21x.
The ratios shown for the years ended December 31, 1997 through 2001,
include goodwill amortization expense.
10
USE OF PROCEEDS
We will not receive any proceeds from the sale by any selling
securityholder of the notes or the common stock issuable upon conversion and/or
redemption of the notes. See "Selling Securityholders."
PRICE RANGE OF COMMON STOCK AND DIVIDEND HISTORY
Our common stock is traded 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 May 17, 2002 was $89.77.
Omnicom Common Stock
-------------------------- Average Last Dividends
High Low Sale Price Per Share
------- ------- ---------- ---------
1999:
First Quarter .................................................. $79.94 $56.50 $65.27 $0.150
Second Quarter ................................................. 85.13 67.00 73.72 0.150
Third Quarter .................................................. 80.69 67.06 73.54 0.150
Fourth Quarter ................................................. 107.13 71.63 88.15 0.175
2000:
First Quarter .................................................. $99.63 $79.88 $92.27 $0.175
Second Quarter ................................................. 97.25 82.13 89.26 0.175
Third Quarter .................................................. 90.44 70.00 82.80 0.175
Fourth Quarter ................................................. 92.25 72.69 81.64 0.175
2001:
First Quarter .................................................. $94.51 $78.69 $87.96 $0.175
Second Quarter ................................................. 97.57 79.50 88.29 0.200
Third Quarter .................................................. 87.71 60.01 79.57 0.200
Fourth Quarter ................................................. 89.77 62.35 80.70 0.200
2002:
First Quarter .................................................. $97.35 $83.66 $90.10 $0.200
Second Quarter (through May 17) ................................ $94.80 $84.39 $90.95 (a)
----------
(a) Dividends for the quarter have not yet been declared.
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 187.1 million shares were outstanding on April 30, 2002.
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CAPITALIZATION
The following table sets forth our consolidated capitalization as of March
31, 2002. You should read this table together with our financial statements and
related notes and other financial and operating data included elsewhere in or
incorporated by reference into this prospectus.
March 31, 2002
--------------
Current liabilities:
Accounts payable ........................................ $ 3,819,643
Advance billings ........................................ 598,069
Current portion of long-term debt ....................... 77,259
Bank loans .............................................. 205,187
Accrued taxes and other liabilities ..................... 1,295,730
------------
Total current liabilities ............................... 5,995,888
------------
Long-term debt ............................................ 859,771
Convertible debentures .................................... 1,750,000
Deferred compensation and other liabilities ............... 287,775
Minority interests ........................................ 160,799
------------
Total long-term indebtedness ............................ 3,058,345
------------
Shareholders' equity:
Preferred stock, $1.00 par value,
7,500,000 shares authorized, none issued
Common stock, $0.15 par value,
1,000,000,000 shares authorized,
187,027,723 shares outstanding,
198,669,254 shares issued on
March 31, 2002(1) ..................................... 29,800
Additional paid-in capital .............................. 1,406,914
Retained earnings ....................................... 1,711,300
Unamortized restricted stock ............................ (112,229)
Accumulated other comprehensive
(loss) income ......................................... (324,582)
Treasury stock, at cost, 11,641,531
shares on March 31, 2002 .............................. (796,599)
------------
Total shareholders' equity ............................ 1,914,604
------------
Total liabilities and
shareholders' equity .................................. $ 10,968,837
============
----------
(1) Outstanding common stock as of March 31, 2002 of 187.0 million shares
excludes shares issuable upon exercise of options, conversion of
convertible debt, including 8.2 million shares reserved for issuance upon
conversion of the notes, and other events. See Note 4 to our unaudited
consolidated financial statements for the three months ended March 31,
2002, incorporated by reference into this prospectus.
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DESCRIPTION OF THE NOTES
We issued the notes under a senior indenture between us and JPMorgan Chase
Bank, as trustee. The following summarizes the material provisions of the notes
and the indenture. The following summary is not complete and is subject to, and
qualified by reference to, all of the provisions of the notes 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 notes 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
The notes are limited to $900,000,000 aggregate initial principal amount
at maturity. The notes will mature July 31, 2032. Before July 31, 2022, the
principal amount at maturity of a note will be equal to $1,000 per $1,000 face
amount of notes originally issued. On or after July 31, 2022, if, for the last
20 trading days preceding July 31, 2022, the average conversion value per $1,000
face amount of notes is greater than $1,000 but less than or equal to $2,200,
then the principal amount at maturity of that $1,000 face amount of notes will
be equal to the lesser of the conversion value on July 31, 2022 and $2,000. If
the conversion value exceeds $2,200 then the principal amount at maturity will
equal $1,000 per $1,000 face amount of notes.
For purposes of the notes and the indenture, the difference between the
$1,000 initial principal amount at maturity of a note and the principal amount
at maturity, as determined in accordance with the prior paragraph, is known as
contingent additional principal. If contingent additional principal becomes
payable, it will accrue from and including July 31, 2022 until maturity.
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 note as of any date of determination will equal
the sale price per share of our common stock on the determination date
multiplied by the number of shares of common stock then issuable upon conversion
of each $1,000 face amount of notes.
Principal on the notes 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 that purpose, in the Borough of Manhattan, The City
of New York.
We will not pay any cash interest on the notes except in the limited
circumstance described below under "--Contingent Cash Interest" or if we elect
to do so in our sole discretion. Each note was originally issued at a face
amount amount of $1,000 per note.
Any and all contingent additional principal and contingent cash interest
otherwise payable on a note will cease to accrue on that note upon maturity,
conversion, purchase by us at the option of the holder or redemption of the
note. We may not reissue a note that has matured or been converted, purchased by
us at your option, redeemed or otherwise cancelled.
Notes may be presented for exchange or registration of transfer at the
office of the registrar. The registrar will initially be the trustee. We will
not charge a service fee for any exchange or registration of transfer of notes.
However, we may require the holder to pay any tax, assessment or other
governmental charge payable as a result of such transfer or exchange.
Because we sold the notes to the initial purchasers, and the initial
purchasers resold the notes, at a higher price than the initial principal amount
at maturity, you may receive less than you originally paid to purchase notes at
maturity or upon redemption or repurchase as described below.
Ranking of the Notes
The notes are our senior unsecured obligations. The notes rank equal in
right of payment to all of our existing and future senior unsecured
indebtedness. However, we are a holding company and the notes are therefore
effectively subordinated to all existing and future obligations of our
subsidiaries and to our obligations that are secured, to the extent of the
security.
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As of March 31, 2002, we had $2,792.3 million of indebtedness outstanding,
all of which is unsecured. Of this amount, $1,882.9 million represents
indebtedness directly incurred by us and $909.5 million represents indebtedness
of our subsidiaries that is guaranteed by us. As of March 31, 2002, our
subsidiaries had an additional $99.9 million of indebtedness outstanding.
Yield to Maturity; Tax Original Issue Discount
The yield to maturity, calculated on the basis of the initial principal
amount at maturity and therefore excluding any contingent cash interest or
contingent additional principal that may become payable, will be zero. In
addition, the yield to maturity for a particular purchaser of the notes will be
negative if the price paid by the purchaser exceeds $1,000 per $1,000 face
amount of the notes. If contingent cash interest and/or contingent additional
principal becomes payable, the yield to maturity may increase.
Although the notes were not originally offered at a discount, the notes
constitute contingent debt instruments. As a result, the notes are deemed to
have been 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 on the notes other than any
contingent cash interest that may become payable and the notes 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 a yield of 6.69% per year, computed on a semiannual bond
equivalent basis, which we have determined represents the yield we would pay on
noncontingent, nonconvertible, fixed-rate debt with terms otherwise similar to
the notes.
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 note 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 note. 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
realized upon conversion or redemption for stock may not be allowed under
certain rules regarding recapitalizations.
See "Federal Income Tax Considerations" for more information and a summary
of the resulting consequences from this treatment.
Book-Entry System
The notes were only issued in the form of global securities held in
book-entry form. The Depository Trust Company, or its nominee, is the sole
registered holder of the notes for all purposes under the indenture. Owners of
beneficial interests in the notes represented by the global securities hold
their interests pursuant to the procedures and practices of The Depository Trust
Company. As a result, beneficial interests in the notes are shown on, and may
only be transferred through, records maintained by The Depository Trust Company
and its direct and indirect participants and beneficial interests in the notes
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 notes, in accordance with the procedures and practices
of The Depository Trust Company. Beneficial owners are not holders and are not
entitled to any rights provided to the holder of notes under the global
securities or the indenture. Omnicom and the trustee, and any of their
respective agents, may treat The Depository Trust Company as the sole holder and
registered owner of the notes.
Notes represented by a global security are exchangeable for certificated
securities with the same terms only if:
o The Depository Trust Company is unwilling or unable to continue as
depositary or if The Depository Trust Company ceases to be a
clearing agency registered under the Exchange Act and a successor
depositary is not appointed by us within 90 days,
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o we decide to discontinue use of the system of book-entry transfer
through The Depository Trust Company, or any successor depositary,
or
o a default under the indenture occurs and is continuing.
The Depository Trust Company 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. The Depository Trust Company 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. The Depository Trust Company's participants include securities
brokers and dealers, including the initial purchasers, banks, trust companies,
clearing corporations and other organizations, some of whom and/or their
representatives own The Depository Trust Company. Access to The Depository Trust
Company'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 notes for conversion into shares of our common stock
only if at least one of the following conditions is met:
Conversion Based on Common Stock Price
Before July 31, 2022, holders may surrender a note for conversion during
any calendar quarter beginning after March 31, 2002 if, for the last 20 trading
days in the preceding calendar quarter, the average conversion value, calculated
as described above under "--General," per $1,000 face amount of notes is greater
than or equal to the following amounts for the calendar quarters indicated:
Quarter Ended Amount
------------- ------
June 30, 2002 ..................................................... $1250
September 30, 2002 ................................................ $1300
December 31, 2002 ................................................. $1350
March 31, 2003 .................................................... $1400
June 30, 2003 ..................................................... $1450
September 30, 2003 ................................................ $1500
December 31, 2003 ................................................. $1550
March 31, 2004 .................................................... $1600
June 30, 2004 ..................................................... $1650
September 30, 2004 ................................................ $1700
December 31, 2004 ................................................. $1750
March 31, 2005 .................................................... $1800
June 30, 2005 ..................................................... $1850
September 30, 2005 ................................................ $1900
December 31, 2005 ................................................. $1950
March 31, 2006 .................................................... $2000
June 30, 2006 ..................................................... $2050
September 30, 2006 ................................................ $2100
December 31, 2006 ................................................. $2150
March 31, 2007 and thereafter ..................................... $2200
If this condition is met at any time after July 31, 2003 and before July 31,
2022, then the notes will be convertible at any time after the date on which the
condition is first met, at the option of the holder, through maturity.
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On or after July 31, 2022, holders may surrender a note for conversion
during any calendar quarter if, for the last 20 trading days in the preceding
calendar quarter, the average conversion value per $1,000 face amount of notes
is greater than or equal to 110% of the principal amount at maturity of the
note. If this condition is satisfied, then the notes will be convertible at any
time after the date on which the condition is met, at the option of the holder,
through maturity.
Conversion Based on Credit Ratings
Holders may also surrender a note for conversion at the then-applicable
conversion rate at any time after the credit rating assigned to the notes is
reduced to Baa3 or lower by Moody's Investors Service, Inc. or BBB or lower by
Standard & Poor's Ratings Services. This event would not, however, result in an
adjustment of the number of shares issuable upon conversion.
Conversion upon Notice of Redemption
A holder may surrender for conversion a note called for redemption at any
time prior to the close of business on the second business day prior to the
redemption date, even if the note is not otherwise convertible at that time.
Conversion upon Occurrence of Specified Corporate Transactions
If we elect to:
o distribute to all holders of common stock 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 other rights to purchase our securities, and the
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 the distribution,
we must notify the holders of notes at least 20 days prior to the ex-dividend
date for the distribution. Once we have given this notice, holders may surrender
their notes 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 the distribution will not take place.
In addition, if we are party to a consolidation, merger or binding share
exchange under which our common stock would be converted into cash, securities
or other property, a holder may surrender notes 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.
If one or more of the conditions to conversion described above has been
met, we will promptly notify the holders of notes and use our reasonable best
efforts to post this information on our web site or, at our option, otherwise
publicly disclose this information.
The ability to surrender notes for conversion will expire at the close of
business on July 31, 2032.
A note for which a holder has delivered a purchase notice or a change in
control purchase notice as described below requiring us to purchase the note may
be surrendered for conversion only if the notice is withdrawn in accordance with
the terms of the indenture.
Conversion Rate Adjustments and Delivery of Common Stock
The initial conversion rate is 9.09 of our common shares for each $1,000
face amount of notes originally issued. The conversion rate will not be adjusted
for any contingent additional principal or contingent cash interest that may
become payable.
If contingent cash interest is payable to holders of notes during any
particular six-month period, and any notes are converted after the applicable
record date, those notes, upon surrender, must be accompanied by funds equal to
the amount of contingent cash interest payable on the principal amount of notes
so converted, unless those notes have been called for redemption, in which case
no payment will be required.
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We are required to 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
the dividend or other distribution.
However, no adjustment will voluntarily be made if holders participate in the
transaction without conversion or in limited other cases as described in the
indenture. The indenture also permits us to voluntarily 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 note
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 of
another person which the holder would have received if the holder had converted
the holder's note 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 notes 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 notes 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."
A holder of a note otherwise entitled to a fractional share will receive
cash in an amount equal to the value of the fractional share based on the sale
price, as defined below under "-- Purchase of Notes at the Option of the
Holder," on the trading day immediately preceding the conversion date.
To convert a note into shares of common stock, a holder must:
o complete and manually sign the conversion notice on the back of the
note or complete and manually sign a facsimile of the conversion
notice and deliver the conversion notice to the conversion agent,
o surrender the note 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.
Under the indenture, the date on which all of these requirements have been
satisfied is the conversion date.
Notes may be presented for conversion at the office of the conversion
agent, who will initially be the trustee.
When a holder surrenders notes for conversion, the conversion agent may
first offer the notes to a financial institution chosen by us for exchange in
lieu of conversion. The designated institution will have the option, but not the
obligation, unless separately agreed to by it and us at the time, to agree to
exchange those notes for the number of shares of our common stock that the
holder of those notes would have been entitled to receive upon conversion, plus
cash for any fractional shares. We may, but will not be obligated to, enter into
a separate
17
agreement with the financial institution which would compensate it for this type
of transaction. As soon as practicable following the conversion date, the
designated institution or we, as the case may be, will deliver through the
conversion agent a certificate for the number of full shares of common stock
into which any note 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 note 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 note whether the delivery is made by us or by the
designated institution. For a discussion of the tax treatment of a holder
receiving common stock upon conversion, see "Federal Income Tax
Considerations--Disposition or Conversion."
Contingent Cash Interest
We will be required to pay contingent cash interest to the holders of
notes during any six-month period from August 1 to January 31, and from February
1 to July 31, commencing August 1, 2007 if the average market price per $1,000
face amount of notes for a five trading day measurement period preceding the
applicable six-month period equals or exceeds $1,200. For any six-month period,
the amount of contingent cash interest per note will be equal to the amount of
regular cash dividends paid by us per share on our common stock multiplied by
the number of shares then issuable upon conversion of a note. 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. As a result, if we do not pay regular cash
dividends, holders will not be entitled to any contingent cash interest.
The payment of contingent cash interest is designed to enable holders of
the notes to receive the same current cash yield on the notes that they would
have received had they converted the notes into our common stock in the event
that we pay dividends on our common stock. As a result, if the conditions
described above are met, contingent cash interest will accrue and be payable to
holders of notes as of the record date for the related common stock dividend
during the relevant six-month period. Payments of contingent cash interest will
be made on the payment date of the related common stock dividend.
Each five trading day measurement period will end on the second trading
day immediately preceding the applicable six-month period. However, 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 purposes of determining whether contingent cash interest is payable,
the market price of a note on any date of determination means the average of the
secondary market bid quotations per note obtained by the bid solicitation agent
for $10.0 million principal amount at maturity of notes at approximately 4:00
p.m., New York City time, on the 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 notes,
then the market price of the note will equal the then applicable conversion rate
of the notes multiplied by the average sale price of our common stock on the
five trading days ending on the determination date, appropriately adjusted.
The bid solicitation agent will be initially JPMorgan Chase Bank. We may
change the bid solicitation agent, but the bid solicitation agent may not, under
any circumstance, 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
notes.
We will determine every six months, commencing August 1, 2007, whether the
conditions to the payment of contingent cash interest have been satisfied and,
if so, we will promptly notify the holders of notes thereof and use our
reasonable best efforts to post this information on our web site or, at our
option, otherwise publicly disclose this information.
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Under the indenture, we may also voluntarily pay contingent cash interest
or other amounts we are not obligated to pay, but we will have no obligation to
do so.
Redemption of Notes at the Option of Omnicom
No sinking fund is provided for the notes. We cannot redeem the notes
before July 31, 2007. On or after July 31, 2007 and before July 31, 2022, we
may, at our option, redeem all or any portion of the notes for cash at any time
at a redemption price of $1,000 per $1,000 face amount of notes. On or after
July 31, 2022, we may redeem all or any portion of the notes at a redemption
price equal to the sum of $1,000 per $1,000 face amount of notes plus any
contingent additional principal that has accrued to the date of redemption. We
will provide a notice of redemption by mail to holders of notes at least 30 days
and not more than 60 days in advance of any redemption.
The notes will be redeemable in integral multiples of $1,000.
If less than all of the outstanding notes are to be redeemed, the trustee
will select the notes to be redeemed. In this case, the trustee may select the
notes by lot, pro rata or by any other method the trustee considers fair and
appropriate. If a portion of a holder's notes is selected for partial redemption
and the holder converts a portion of the notes, the converted portion will be
deemed to be the portion selected for redemption.
Purchase of Notes at the Option of the Holder
On each July 31, or if July 31 is not a business day, the next business
day, which date is referred to as the purchase date in this section, from July
31, 2003 through July 31, 2031, holders may require us to purchase any
outstanding note for which the holder has properly delivered a written purchase
notice, subject to meeting additional conditions, including that the notice is
not withdrawn by the close of business on the next business day, at the
following prices:
o for July 31, 2003 through but not including July 31, 2022, at a
purchase price equal to the face amount of the notes, and
o for July 31, 2022 through July 31, 2031, at a purchase price equal
to the sum of the face amount of the notes plus any contingent
additional principal that has accrued to the purchase date.
Holders may submit their notes 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
applicable purchase date until the close of business on the applicable purchase
date.
The purchase price will be payable on the fourth business day following
the applicable purchase date in cash, shares of our common stock or a
combination of cash and common stock, at our option. When a holder surrenders
the notes for purchase, the purchase agent may first offer the notes to a
financial institution chosen by us to purchase the notes. The designated
financial institution will have the option, but not the obligation, unless
separately agreed to by it and us at the time, to purchase the notes at the
applicable purchase price and in the form of cash or common stock or both as we
may have previously elected in the notice sent to holders described in the next
paragraph. We may, but will not be obligated to, enter into a separate agreement
with the financial institution which would compensate it for the transaction.
We will be required to give notice on a date not less than 20 business
days prior to each applicable 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 the purchase price will be paid 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 notes.
Each holder electing to require us to purchase notes is required to give
notice of its election to the paying agent no later than the close of business
on the applicable purchase date. The notice is required to state:
o the certificate numbers of the holder's notes to be delivered for
purchase,
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o the portion of the initial principal amount at maturity of notes to
be purchased, which must be $1,000 or an integral multiple of
$1,000, and
o that the notes are to be purchased pursuant to the applicable
provisions of the notes.
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 business
day following the date on which the purchase notice is required to be delivered.
The notice of withdrawal is required state:
o the initial principal amount at maturity of the notes being
withdrawn,
o the certificate numbers of the notes being withdrawn, and
o the initial principal amount at maturity, if any, of the notes 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, or the
designated institution, as the case may be, will 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.
For this purpose, 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 the
third business day prior to the applicable purchase date, which we refer to as
the measurement date, 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
measurement date. The price as determined will be 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 any events that would result in an adjustment of the
conversion rate then in effect for the notes as described above under "
Conversion Rights."
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 that date as reported in composite
transactions for the principal United States securities exchange on which the
common stock is then traded. If the common stock is not listed on a United
States national or regional securities exchange, then we will use the prices 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 notes bear the market risk with respect to
the value of the common stock to be received from the date the market price is
determined to the purchase date. We, or the designated institution, as the case
may be, 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 face amount of notes, we will promptly notify the holders
of notes and use our reasonable best efforts to post this information on our web
site or, at our option, otherwise publicly disclose this information.
We, or the designated institution, as the case may be, 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.
In addition to the above conditions, our right, or the right of the
designated institution, as the case may be, to purchase notes, 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.
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If these conditions are not satisfied with respect to any holder prior to
the close of business on the purchase date, we, or the designated institution,
as the case may be, will be required to pay the purchase price of the notes to
that holder entirely in cash. See "Federal Income Tax
Considerations--Disposition or Conversion." Neither we nor the designated
institution may change the form or components or percentages of components of
the consideration to be paid for the notes once we have given the notice that we
are required to give to holders of notes, except as described in the first
sentence of this paragraph.
In connection with any purchase offer, we, or the designated institution,
as the case may be, 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.
Our obligation, or the obligation of the designated institution, as the
case may be, to pay the purchase price for a note for which a purchase notice
has been delivered and not validly withdrawn is conditioned upon the holder
delivering the note, together with necessary endorsements, to the paying agent
at any time after delivery of the purchase notice. Payment of the purchase price
for the note will be made promptly following the later of the purchase date or
the time of delivery of the note.
If on any purchase date, the notes are purchased in accordance with the
terms of the indenture, then, immediately after the purchase date, whether or
not the note is delivered to the paying agent, the holder exercising its right
to require Omnicom to purchase such notes will cease to be entitled to any
contingent additional principal or conditional additional interest that may
become payable or then be accruing, and all other rights of that holder will
terminate, other than the right to receive the purchase price upon delivery of
the note.
Our ability to purchase notes may be limited by the terms of our
then-existing borrowing agreements.
We may not purchase any notes for cash at the option of holders if an
event of default with respect to those notes has occurred and is continuing,
other than a default in the payment of the purchase price with respect to such
notes.
Purchase at Option of Holders upon Change in Control
In the event of a change in control occurring on or prior to July 31,
2007, 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 notes, at a price equal to $1,000 per $1,000 face
amount of notes. We will be required to purchase the notes 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 notes
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 notes at a
redemption price equal to $1,000 per $1,000 face amount of notes.
Within 15 days after the occurrence of a change in control, we must mail
to the trustee and to all holders of notes 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,
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o that notes 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 notes to be delivered by the holder,
o the initial principal amount at maturity of notes to be purchased,
which must be $1,000 or an integral multiple of $1,000, and
o that we are to purchase such notes pursuant to the applicable
provisions of the notes.
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 initial principal amount at maturity of the notes being
withdrawn,
o the certificate numbers of the notes being withdrawn, and
o the initial principal amount at maturity, if any, of the notes that
remain subject to a change in control purchase notice.
Our obligation to pay the change in control purchase price for a note for
which a change in control purchase notice has been delivered and not validly
withdrawn is conditioned upon delivery of the note, 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 note will be made promptly following the later of the change in control
purchase date or the time of delivery of such note.
If on any change in control purchase date, notes are purchased in
accordance with the terms of the indenture, then, immediately after the change
in control purchase date, whether or not the note is delivered to the paying
agent, the holder exercising its right to require Omnicom to purchase such notes
will cease to be entitled to contingent additional principal or contingent
additional interest, if any, and all other rights of that holder shall
terminate, other than the right to receive the change in control purchase price
upon delivery of the note.
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 any consolidation, merger or share exchange of Omnicom shall have
been consummated under 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 notes 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
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o file a Schedule TO or any other required schedule under the Exchange
Act, if required.
The change in control purchase feature of the notes 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 notes offerings that have been marketed by the initial
purchasers and other investment banks. The terms of the change in control
purchase feature resulted from negotiations between the initial purchasers 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 notes but that would
increase the amount of our, or our subsidiaries', outstanding indebtedness. See
"Risk Factors--The Lack of Covenants Applicable to the Notes May Not Afford
Protection Under Some Circumstances."
We may not purchase notes 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 notes, other than a default in the payment of the change in control
purchase price with respect to the notes.
Events of Default
The following will be events of default for the notes:
(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 note 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 notes
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 notes 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 notes 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 notes then outstanding may declare the initial principal amount
at maturity of the notes, plus any accrued and unpaid contingent cash interest
and contingent
23
additional principal through the date of such declaration, to be immediately due
and payable. In the case of the events of bankruptcy or insolvency of Omnicom
which would constitute an event of default, the initial principal amount at
maturity of the notes plus accrued and unpaid contingent cash interest and
contingent additional principal will automatically become immediately due and
payable without any declaration or other act on the part of the trustee or any
holders. The holders of a majority in aggregate principal amount at maturity of
the notes at the time outstanding, by notice to the trustee, and without notice
to any other holder, may rescind an acceleration and its consequences:
o if the rescission would not conflict with any judgment or decree and
o if all existing events of default have been cured or waived, except
any nonpayment of the initial principal amount at maturity plus
accrued and unpaid contingent cash interest and contingent
additional principal that have become due solely as a result of
acceleration, and
o if all amounts due to the trustee have been paid.
No rescission shall affect any subsequent default or impair any right
consequent to the rescission.
In some circumstances the holders of a majority in aggregate principal
amount at maturity of the notes at the time outstanding, by notice to the
trustee, and without notice to any other holder, may waive an existing default
and its consequences. When a default is waived, it is deemed cured, but no
waiver will extend to any subsequent or other default or impair any consequent
right.
The holders of a majority in aggregate principal amount at maturity of the
notes at the time outstanding may direct the time, method and place of
conducting any proceeding for any remedy available to the trustee or of
exercising any trust or power conferred on the trustee. However, the trustee may
refuse to follow any direction that conflicts with law or the indenture or that
the trustee determines in good faith is unduly prejudicial to the rights of
other holders or would involve the trustee in personal liability unless the
trustee is offered indemnity satisfactory to it against loss, liability or
expense.
A holder may not pursue any remedy with respect to the indenture or the
notes unless:
o the holder gives to the trustee written notice stating that an event
of default is continuing,
o the holders of at least 25% in aggregate principal amount at
maturity of the notes at the time outstanding make a written request
to the trustee to pursue the remedy,
o the holder or holders offer to the trustee reasonable security or
indemnity satisfactory to the trustee against any loss, liability or
expense,
o the trustee does not comply with the request within 60 days after
receipt of such notice, request and offer of security or indemnity,
and
o the holders of a majority in aggregate principal amount at maturity
of the notes at the time outstanding do not give the trustee a
direction inconsistent with the request during such 60-day period.
A holder may not use the indenture to prejudice the rights of any other holder
or to obtain a preference or priority over any other holder.
Under the indenture, we are required to deliver to the trustee, within
five business days of becoming aware of the occurrence of an event of default,
written notice of the event of default. In addition, we are required to deliver
to the trustee, written notice of any event which with the giving of notice or
the lapse of time, or both, would become an event of default under clause (3) or
clause (4) above, its status and what action we are taking or propose to take
with respect thereto.
If the trustee collects any money as a result of an event of default, it
shall pay out the money in the following order:
First: to the trustee for amounts due as compensation, reimbursement or
indemnification;
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Second: to holders for amounts due and unpaid on the notes for the
principal amount at maturity, initial principal amount at maturity plus
contingent additional principal, redemption price, purchase price, change in
control purchase price or contingent cash interest, if any, as the case may be,
ratably, without preference or priority of any kind, according to such amounts
due and payable on the notes; and
Third: to us, if any balance remains.
The trustee may fix a record date and payment date for any payment to
holders. At least 15 days before such record date, the trustee is required to
mail to each holder and to us a notice that states the record date, the payment
date and the amount to be paid.
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 notes and the indenture, and
o we or such successor entity will not immediately following the
transaction be in default under the indenture.
Upon the assumption of our obligations by a successor corporation, subject
to limited exceptions contained in the indenture, we will be discharged from all
obligations under the notes and the indenture. Although these types of
transactions are permitted under the indenture, some of these types of
transactions occurring on or prior to July 31, 2007 could constitute a change as
defined above in control for purposes of the notes. In this circumstance,
holders could require us to purchase their notes as described above.
Modification
We and the trustee may modify or amend the indenture or the notes with the
consent of the holders of not less than a majority in aggregate principal amount
at maturity of the notes then outstanding. However, the consent of the holders
of each outstanding note 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 note payable in money or securities other than that stated
in the note,
o alter the stated maturity of any note,
o reduce the principal amount at maturity, contingent additional
principal, redemption price, purchase price or change in control
purchase price with respect to any note,
o make any change that adversely affects the right of a holder to
receive shares of common stock upon surrendering a note for
conversion,
o make any change that adversely affects the right to require us to
purchase a note,
o impair the right to institute suit for the enforcement of any
payment with respect to, or conversion of, the notes, and
o change the provisions in the indenture that relate to modifying or
amending the indenture.
Without the consent of any holder of notes, 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 notes,
o to add covenants for the benefit of the holders of the notes or to
surrender any right or power conferred upon us,
25
o to secure our obligations in respect of the notes,
o to make any changes or modifications to the indenture necessary in
connection with the registration of the notes under the Securities
Act and the qualification of the notes under the Trust Indenture Act
of 1939 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 notes.
The holders of a majority in aggregate principal amount at maturity of the
notes then outstanding may, on behalf of the holders of all notes:
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 note or in respect of any
provision which under the indenture cannot be modified or amended
without the consent of the holder of each outstanding note affected.
Calculations in Respect of Notes
We are responsible for making all calculations called for under the note.
See "--Conversion Rights." These calculations include, but are not limited to,
determination of the market prices of the note 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 note. We will make all
these calculations in good faith and, absent manifest error, our calculations
will be final and binding on holders of note. 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
JPMorgan Chase Bank, an affiliate of J.P. Morgan Securities Inc., one of
the initial purchasers, is the trustee, registrar, paying agent and conversion
agent.
The indenture provides that, except during the continuance of an event of
default, the trustee will perform only those duties as are specifically set
forth in the indenture. During the existence of an event of default, the trustee
is required to exercise the rights and powers vested in it by the indenture, and
to use the same degree of care and skill in its exercise of those rights and
powers as a prudent man would exercise or use under the circumstances in the
conduct of his own affairs.
The indenture and the provisions of the Trust Indenture Act contain
limitations on the rights of the trustee, should it become a creditor of
Omnicom, to obtain payments of claims in certain cases or to realize on certain
property received in respect of any such claim as security or otherwise. Subject
to the Trust Indenture Act, the trustee will be permitted to engage in other
transactions, provided that if the trustee acquires any conflicting interests,
as described in the Trust Indenture Act, the trustee must eliminate the conflict
or resign.
The trustee is required to deliver notice of all defaults to the holders
within 90 days after the occurrence, unless the defaults shall have been cured
before the giving of the notice. However, in the case of a default in the
payment of principal of, or interest on, or other similar obligation with
respect to, the notes, the trustee may withhold the notice if and so long as the
board of directors, the executive committee or a trust committee of directors or
trustees and/or responsible officers of the trustee in good faith determines
that the withholding of the notice is in the interest of holders of the notes.
A trustee may at any time resign by giving written notice of resignation
to us and to the holders. Upon receiving a notice of resignation, we will be
required to promptly appoint a successor trustee. If no successor trustee is
appointed within 30 days after the mailing of the notice of resignation, the
resigning trustee or any holder who has been a bona fide holder of a note for at
least six months may, subject to the provisions of the indenture, petition any
court of competent jurisdiction for the appoint of a successor trustee.
26
We may remove a trustee and appoint a successor trustee if
o the trustee fails to comply with the provisions relating to any
conflict of interest after written request made by us or by any
holder who has been a bona fide holder of notes for at least six
months,
o the trustee ceases to be eligible in accordance with the provisions
contained in the indenture and the trustee fails to resign after
requested to by us or any holder,
o the trustee becomes incapable of acting or is adjudged a bankrupt or
insolvent, or a receiver or liquidator for the trustee or its
property is appointed, or any public officer takes charge or control
of the trustee or its property or affairs for the purpose of
rehabilitation, conservation or liquidation, or
o we determine that the trustee has failed to perform its obligations
under the indenture in any material respect.
If we fail to remove the trustee, any holder who has been a bona fide
holder of a note for at least six months may petition a court of competent
jurisdiction for the removal of the trustee and the appointment of a successor
trustee. In addition, the holders of a majority in aggregate principal amount at
maturity of the notes outstanding may at any time remove a trustee and appoint a
successor trustee by delivering notice to the trustee to be removed, the
successor trustee and us. Any resignation or removal of the trustee and any
appointment of a successor trustee will become effective upon acceptance of
appointment by the successor trustee.
Governing Law
The indenture and the notes will be 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 187.8 million shares were outstanding on April 8,
2002, 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.
27
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, 2001, we had outstanding $850,000,000 of senior
unsecured debentures with a scheduled maturity in 2031, which are convertible
into shares of our common stock at a conversion price of $110.01 per share,
subject to adjustment in certain events.
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 material United States federal income tax
considerations relevant to holders of notes. This summary is based upon the
Internal Revenue Code of 1986 (which we refer to as the Code), Treasury
Regulations, Internal Revenue Service ("IRS") 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 notes 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 notes,
nor, except as specifically stated below, have we obtained nor do we intend to
obtain an opinion of counsel with respect to the tax consequences of acquiring
or holding notes.
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 notes 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 notes who acquire notes at the "issue price", as defined below,
and who hold the notes and common stock into which the notes 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 notes 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
notes 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, partnership or other 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 beneficial owner of notes other
than a U.S. Holder.
28
Opinion as to Federal Income Tax Treatment
We have been advised by our counsel, Jones, Day, Reavis & Pogue, that, in
their opinion, the notes 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. Based upon that opinion, pursuant to the terms of
the indenture, we and each holder of the notes agree to treat the notes as debt
instruments with original issue discount under the CPDI regulations, as
described below.
Original Issue Discount
Under the CPDI regulations, for United States federal income tax purposes,
U.S. Holders of notes are required to accrue interest income on the notes,
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 note.
Accordingly, U.S. Holders may be required to include interest in taxable income
in each year in excess of the accruals on the notes 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 notes. The amount required to be accrued equals the sum of the daily
portions of original issue discount with respect to the note for each day during
the taxable year or portion of a taxable year on which the holder holds the
note, adjusted if necessary as described below. In general, the daily portion is
(1) the sum of the issue price of the note 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 note, 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 note. The "issue price"
is the initial price at which a substantial amount of notes are sold to
investors (excluding bond houses, brokers or similar persons acting in the
capacity of underwriters, placement agents or wholesalers) for money.
Based on the advice of our counsel, Jones, Day, Reavis & Pogue, we intend
to 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 notes. Accordingly, we intend to take the position that the comparable
yield for the notes is 6.69%, 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 notes attributable to that year. We will calculate and report original issue
discount on the notes based upon six-month accrual periods ending on the
maturity day of the notes. We are also required to furnish to holders a schedule
of projected payments which we will use in computing the amounts of original
issue discount on the notes. 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 schedule of projected payments will be 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 notes, 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.
29
THE COMPARABLE YIELD AND PROJECTED PAYMENT SCHEDULE ARE NOT DETERMINED FOR
ANY PURPOSE OTHER THAN FOR DETERMINATION OF YOUR INTEREST ACCRUALS AND
ADJUSTMENTS THEREOF IN RESPECT OF THE NOTES FOR U.S. FEDERAL INCOME TAX PURPOSES
AND DO NOT CONSTITUTE A PROJECTION OR REPRESENTATION REGARDING THE ACTUAL
AMOUNTS PAYABLE TO HOLDERS OF NOTES.
Adjustments to Interest Accruals on the Notes
If, during any taxable year, a U.S. Holder receives actual payments with
respect to the notes 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 notes 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 "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 (including shares of our common stock) received in that year.
A net negative adjustment will (1) reduce the U.S. Holder's interest
income on the notes 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 notes during prior taxable years, reduced
to any extent such interest was offset by prior net negative adjustments.
Disposition or Conversion
Generally, the sale, exchange or conversion of a note, or the redemption
of a note 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 notes takes into account the receipt of stock upon
conversion and contingent additional principal as contingent payments with
respect to the notes. Accordingly, we intend to treat the receipt of our common
stock by a U.S. Holder upon the conversion of a note, as well as any contingent
additional principal, as contingent payments under the CPDI regulations.
Pursuant to our treatment of the notes 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 note will generally be recognized as ordinary gain or loss,
except that loss, if any, realized in excess of the amount of previously accrued
original issue discount will be capital loss. Loss deductions are subject to
limitations under the United States federal income tax laws. In the event of an
exchange of notes for our common stock, upon conversion or otherwise, it is
possible that a deduction for any such capital loss might be denied. 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 note (including
the fair market value of our common stock) and the holder's tax basis in the
note, 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 note (including any fractional shares
for which cash is received) will be the fair market value of the stock at the
time of the exchange. While the matter is not entirely certain, the holding
period for common stock received in the exchange may commence on the day
following the date of the exchange. Holders should consult their tax advisors as
to the application of the holding period rules to an exchange of a note for
common stock.
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
notes, the conversion rate of the notes is increased or if the conversion rate
is increased at our discretion, such increase may be deemed to be the payment of
a taxable dividend to holders of the notes.
30
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 notes, 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 notes.
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
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 interest
represents a return of principal under the CPDI regulations, or on some other
grounds.
All other payments on the notes 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 notes (other than gain attributable to accrued
contingent interest payments), will be exempt from United States federal income
or withholding tax, as long as:
o 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 and is not a controlled foreign corporation
related, directly or indirectly, to us through stock ownership,
o 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,
o 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
o our common stock continues to be actively traded within the meaning
of section 871(h)(4)(C)(v)(I) 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 note 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 notes is engaged in a trade or business in the
United States, and if interest on the notes 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 the interest and on any gain realized on
the sale or exchange of the notes 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 notes or
dividends on shares of common stock with respect to certain noncorporate
holders, and backup withholding (currently at a rate of 30%) 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.
31
SELLING SECURITYHOLDERS
The notes were originally issued by us and sold to J.P. Morgan Securities
Inc., Goldman, Sachs & Co. and Salomon Smith Barney Inc., to whom we refer to
elsewhere as the "initial purchasers," in transactions exempt from the
registration requirements of the federal securities laws. The initial purchasers
resold the notes to persons reasonably believed by them to be "qualified
institutional buyers," as defined in Rule 144A under the Securities Act. The
selling securityholders, which term includes their transferees, pledges, donees
or successors, may from time to time offer and sell pursuant to this prospectus
any and all of the notes and the shares of common stock issuable upon conversion
and/or redemption of the notes. Set forth below are the names of each selling
securityholder, the principal amount of the notes that may be offered by such
selling securityholder pursuant to this prospectus and the number of shares of
common stock into which such notes are convertible, each to the extent known to
us as of the date of this prospectus. 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.
Any or all of the notes 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 notes 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 notes
since the date on which the information regarding their notes was provided in
transactions exempt from the registration requirements of the Securities Act.
Aggregate
Principal
Amount of
Notes at Percentage of Common Stock Common Stock
Maturity that Notes Owned Prior Registered
Name may be Sold Outstanding to Conversion Hereby(1)
-------- ------------- ------------ ------------- -------------
AIG DKR SoundShore Holdings Ltd. ................ $ 9,200,000 1.02% -- 83,628
AIG DKR SoundShore Opportunity Holding
Fund Ltd. .................................... 6,120,000 * -- 55,630
AIG DKR SoundShore Strategic Holding
Fund Ltd. .................................... 4,680,000 * -- 42,541
Alpha U.S. Sub Fund VIII, LLC ................... 1,750,000 * -- 15,907
Alta Partners Holdings, LDC ..................... 30,000,000 3.3% -- 272,700
Amerisure Mutual Insurance Company .............. 400,000 * -- 3,636
Argent Classic Convertible Arbitrage
Fund (Bermuda) Ltd. .......................... 5,000,000 * -- 45,450
Aristeia International Limited .................. 28,875,000 3.2% -- 262,473
Aristeia Trading LLC ............................ 8,625,000 * -- 78,401
BMO Nesbitt Burns Inc. .......................... 5,000,000 * -- 45,450
CDC Ixis Paris .................................. 10,000,000 1.1% 400 90,900
Deephaven Domestic Convertible Trading Ltd. ..... 58,250,000 6.47% -- 529,492
GAIA Offshore Master Fund Ltd. .................. 8,700,000 * -- 79,083
Global Bermuda Limited Partnership .............. 12,000,000 1.3% -- 109,080
HBK Master Fund L.P. ............................ 5,000,000 * -- 45,450
Innovest Finanzdienstleistungs AG ............... 545,000 * -- 4,954
KBC Financial Products USA Inc. ................. 2,000,000 * -- 18,180
Lakeshore International, Ltd. ................... 48,000,000 5.3% -- 436,320
Lyxor Master Fund ............................... 1,300,000 * -- 11,817
Nicholas Applegate Investment Grade Convertible . 15,000 * -- 136.35
Onyx Fund Holdings, LDC ......................... 18,000,000 2.00% -- 163,620
SAM Investments LDC ............................. 100,000,000 11.11% -- 909,000
Tribeca Investments L.L.C ....................... 18,000,000 2.00% -- 163,620
All other holders of notes or future transferees,
pledges, donees or successors of any such
holders(2)(3) ................................ 518,540,000 57.61% -- 4,713,532
------------ ------ ---- ---------
Total ........................................ $900,000,000 100.00% 400 8,181,000
============ ====== ==== =========
* Less than 1%
----------
(1) Assumes conversion of all of the holder's notes at a conversion rate of
9.09 shares of common stock per $1,000 principal amount at maturity of the
notes. However, this conversion rate will be subject to adjustment as
described under "Description of the Notes -- Conversion Rights." As a
result, the amount of common stock issuable upon conversion of the notes
may increase or decrease in the future.
32
(2) Information about other selling securityholders will be set forth in
prospectus supplements, if required.
(3) Assumes that any other holders of notes, or any future transferees,
pledgees, donees or successors of or from any such other holders of notes,
do not beneficially own any common stock other than the common stock
issuable upon conversion of the notes 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 notes and common stock may be
known by certain holders thereof not named in the preceding table, with whom we
believe we have no affiliation. Information about the selling securityholders
may change over time. Any changed information will be set forth in prospectus
supplements.
PLAN OF DISTRIBUTION
The notes 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 notes and the common stock
covered by this prospectus.
We will not receive any of the proceeds from the offering of notes 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 notes 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 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 notes 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 notes and
the common stock for whom they may act as agent. The aggregate proceeds to the
selling securityholders from the sale of the notes or common stock offering will
be the purchase price of such notes or common stock less discounts and
commissions, if any.
The notes 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 notes 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
notes and the underlying common stock in the course of hedging their positions.
The selling securityholders may also sell the notes and underlying common stock
short and deliver notes and the underlying common stock to close out short
positions, or loan or pledge notes and the underlying common stock to
broker-dealers that in turn may sell the notes and the underlying common stock.
In connection with their purchase of notes from the initial purchasers in
the private placements, the selling securityholders were required to represent
that they were purchasing the notes in the ordinary course of business and that
they had no plans, arrangements or understandings with any underwriter,
broker-dealer, agent or any other person regarding the resale of the notes or
the underlying common stock. Selling securityholders may not sell any or all of
the notes 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 notes 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.
33
The selling securityholders and any broker and any broker-dealers, agents
or underwriters that participate with the selling securityholders in the
distribution of the notes 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 notes 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 the notes, any
broker-dealer who acquired the notes 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 notes, other than a resale
of an unsold allotment from the original sale of the outstanding notes, with
this prospectus.
The notes were issued and sold on March 6, 2002 and March 19, 2002 in
transactions exempt from the registration requirements of the federal securities
laws to the initial purchasers. We have agreed to indemnify the initial
purchasers and each selling securityholder, including each person, if any, who
controls any of them within the meaning of either Section 15 of the Securities
Act or Section 20 of the Exchange Act, and each selling securityholder had
agreed severally and not jointly, to indemnify us, the initial purchasers and
each other selling shareholder, including each person, if any, who controls us
or any of them within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act against certain liabilities arising under the
Securities Act.
The selling securityholders and any other persons participating in the
distribution will be subject to the provisions of the federal securities laws,
including Regulation M, which may limit the timing of purchases and sales of the
notes and the underlying common stock by the selling securityholders and any
other such person. In addition, Regulation M may restrict the ability of any
person engaged in the distribution of the notes and the underlying common stock
to engage in market-making activities with respect to the particular notes and
the underlying common stock being distributed for a period of up to five
business days prior to the commencement of such distribution. This may affect
the marketability of the notes and the underlying common stock and the ability
of any person or entity to engage in market-making activities with respect to
the notes and the underlying common stock.
We have agreed to use our reasonable best efforts to keep the registration
statement of which this prospectus is a part effective until the earlier of:
o the sale pursuant to the registration statement of all the
securities registered thereunder; and
o 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.
This obligation is subject to a number of exceptions and qualifications.
In some circumstances, we have the right to suspend use of this prospectus and
offers and sales of notes and common stock pursuant to the registration
statement to which this prospectus relates.
LEGAL MATTERS
The validity of the notes and the shares of common stock issuable upon
conversion of the notes 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, 2001
and 2000 and for each of the three years in the period ended December 31, 2001
and the related schedules included in Omnicom's Annual Report on Form 10-K for
the fiscal year ended December 31, 2001, 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 prospectus in reliance upon
the authority of said firm as experts in accounting and auditing.
34
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements and other
information with the SEC. You may read and copy any document we file at the
SEC's public reference room in Washington, D.C. You can also request copies of
the documents, upon payment of a duplicating fee, by writing to the Public
Reference Section of the SEC. Please call the SEC at 1-800-SEC-0330 for further
information on the public reference room. These SEC filings are also available
to the public from the SEC's web site at http://www.sec.gov. Reports, proxy
statements and other information filed by us may also be inspected at the
offices of the New York Stock Exchange at 20 Broad Street, New York, New York
10005.
We are incorporating by reference into this prospectus certain information
we file with the SEC, 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 SEC will automatically update
information in this prospectus. In all cases, you should rely on the later
information over different information included in or incorporated by reference
into this prospectus. We incorporate by reference into this prospectus the
following documents:
o Our annual report on Form 10-K for the year ended December 31, 2001
(SEC File no. 001-10551)
o Our quarterly report on Form 10-Q for the fiscal quarter ended March
31, 2002 (SEC File no. 001-10551): and
o The description of the common stock contained in the Registration
Statement on Form 8-A filed with the SEC pursuant to Section 12 of
the Exchange Act (SEC File no. 001-10551), including any
subsequently filed amendments and reports updating such description.
Any future filings made with the SEC under Section 13(a), 13(c), 14, or
15(d) of the Securities Exchange Act of 1934, as amended, until completion of
the resale of all of the notes by the selling securityholders under this
prospectus are also incorporated herein by reference.
You may request a copy of these filings, or any other documents or other
information referred to in, or incorporated by reference into, including a
schedule of projected payments for U.S. federal income tax purposes, 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
35
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 the registrant, are as follows:
SEC Registration Fee ................ $ 84,824
Legal Fees and Expenses ............. 15,000
Miscellaneous Expenses .............. 50,000
--------
Total .......................... $149,824
========
Item l5. Indemnification of Directors and Officers.
Our certificate of incorporation contains a provision limiting the
liability of directors to acts or omissions determined by a judgment or other
final adjudication to have been in bad faith, involving intentional misconduct
or a knowing violation of the law, resulting in personal gain to which the
director was not legally entitled or where such director's acts violated section
719 of the New York Business Corporation Law (approval of statutorily prohibited
dividends, share repurchases or redemptions, distributions of assets on
dissolution or loans to directors). 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 the 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 which 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 such 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 its 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
------- ----------------------
4.1 Indenture between Omnicom Group Inc. and JP Morgan Chase Bank
dated as of March 6, 2002 (Exhibit 4.6 to our Annual Report on
Form 10-K for the year ended December 31, 2001 (SEC File no.
001-10551) and incorporated herein by reference).
4.2 Form of the Zero Coupon Zero Yield Convertible Note due 2032
(included in Exhibit 4.1 above and incorporated herein by
reference).
4.3 Registration Rights Agreement, dated March 1, 2002, by and between
Omnicom Group Inc. and J.P. Morgan Securities Inc, Goldman Sachs &
Co. and Salomon Smith Barney Inc. (Exhibit 4.8 to our Annual
Report on Form 10-K for the year ended December 31, 2001 (SEC File
no. 001-10551) and incorporated herein by reference).
5.1* Opinion of Jones, Day, Reavis & Pogue as to certain legal matters.
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).
25.1* Form of T-1 Statement of Eligibility of the Trustee under the
Indenture.
99.1 Letter to SEC pursuant to Temporary Note 3T to Article 3 of
Regulation S-X (Exhibit 99.1 to our Annual Report on Form 10-K for
the year ended December 31, 2001 (SEC File no. 001-10551) and
incorporated herein by reference)
----------
* 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.
(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.
II-2
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 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 May 20,
2002.
Omnicom Group Inc.,
as Registrant
/s/ JOHN D. WREN
By: ------------------------------------
John D. 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 and on the dates indicated.
Signature and Title Date
-------------------- ----
/s/ JOHN D. WREN President, Chief Executive Officer May 20, 2002
----------------------- and Director (Principal Chief
John D. Wren Executive Officer)
* Executive Vice President and May 20, 2002
----------------------- Chief Financial Officer
Randall J. Weisenburger (Principal Financial Officer)
* Controller (Principal May 20 2002
----------------------- Accounting Officer)
Philip J. Angelastro
* Director May 20, 2002
-----------------------
Jean-Marie Dru
* Director May 20, 2002
-----------------------
Bernard Brochand
* Director May 20, 2002
-----------------------
Robert J. Callander
* Director May 20, 2002
-----------------------
James A. Cannon
* Director May 20, 2002
-----------------------
Leonard S. Coleman, Jr.
* Director May 20, 2002
-----------------------
Bruce Crawford
* Director May 20, 2002
-----------------------
Susan S. Denison
* Director May 20, 2002
-----------------------
Peter Foy
II-4
Signature and Title Date
-------------------- ----
Director
-----------------------
Michael Greenlees
* Director May 20, 2002
-----------------------
Thomas L. Harrison
* Director May 20, 2002
-----------------------
John R. Murphy
* Director May 20, 2002
-----------------------
John R. Purcell
* Director May 20, 2002
-----------------------
Keith L. Reinhard
Director
-----------------------
Linda Johnson Rice
* Director May 20, 2002
-----------------------
Allen Rosenshine
* Director May 20, 2002
-----------------------
Gary L. Roubos
*By /s/ JOHN D. WREN
-----------------------
Attorney-in-fact
Pursuant to Powers of Attorney filed herewith
or previously with the
Securities and Exchange Commission
II-5
INDEX TO EXHIBITS
Exhibit
Number Description of Exhibit
------- ----------------------
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.