omnicare annual reports 1994

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  • 1.OmnicomAN N UA L R E P O RT94

2. Omnicom COMPARATIVE HIGHLIGHTS 1994 1993 % CHANGE (Dollars in Thousands Except Per Share Amounts)$5,724,000 Domestic billings $5,137,400 11% 6,650,600 International billings 5,530,700 20%12,374,600 Worldwide billings* 10,668,100 16%858,575 Domestic revenues 770,61111% 897,630 International revenues745,86420% 1,756,205 Worldwide revenues**1,516,47516%772,583 Domestic expenses 705,04010% 801,866 International expenses668,81120% 1,574,449 Worldwide expenses1,373,85115%Domestic operationsnet income before 53,376 change in accounting principle40,814 31% International operationsnet income before 54,758 change in accounting principle44,531 23% Worldwide net income before change in108,134 accounting principle85,345 27%Common stock data: $14.96 Shareholders equity per share$12.13 23% Net income per share before change in3.15 accounting principle Primary2.7913%3.07 Fully diluted 2.6217%1.24 Dividends declared per share 1.24 Average number of common shares and common equivalent shares outstanding34,369,200 during the year Primary30,607,900 12%38,949,600 Fully diluted37,563,5004%36,132,000 Shares outstanding at year end33,170,0009% *The term billings is commonly used in the industry to describe the volume of advertising purchased on behalf of clients. In this report, billings were computed by multiplying all income from commissions and fees by 6 2/3the reciprocal of the customary 15 percent commission which media commonly grant advertising agencies. Commission rates are not uniform, however, and are negotiated with clients. In the case of majority-owned subsidiaries, total subsidiary commissions and fees are used. In the case of minority-owned affiliates, Omnicoms percent of ownership in total affiliate commissions and fees are used. **Revenues include commissions and fees of only subsidiary companiesthat is, companies which are greater than 50 percent owned. 3. LETTER FROM THE PRESIDENTDEAR SHAREHOLDER: In a year of continuing economic strength, the U.S. Condensed Soups, three major brands from Best advertising industry showed much improved growthFoods and Ortho in the United States, as well as all in 1994, with your company posting record gains inmedia responsibilities for General Electric. In Europe, revenues, net income and earnings per share.the agency had a particularly strong year, highlighted Omnicom worldwide revenues grew by 16% whileby the consolidation of $75 million of British net income before a change in accounting principleTelecom advertising at AMV/BBDOthe largest increased by 27% versus the previous year. Fullyaccount win in U.K. history. Other significant new diluted earnings per share were up 17%. Our business wins included Credit Lyonnais, the outstanding performance for the year led the industry privatization of Renault in France and the Renault in terms of revenues, earnings and in the acquisition advertising account in Spain, and two large German of new business. The addition of substantial newaccounts, Allianz Insurance and CPC Knorr. billings during 1994, of course, translates into new In February of 1995, BBDO was once again a revenues in 1995. winner. In one of the largest account moves inWe believe that the current worldwide recovery history, Mars Incorporated awarded the agency the in advertising should continue for some time. It is global assignments for M&Ms, Snickers, Bounty being fueled by increased expenditures toward Bar, Cesar Dog Food and Sheba Cat Food. This brand building and a generally improved economicvictory for BBDO is testimony to the agencys environment. Under these favorable conditions, we continuing success in the management of major expect Omnicom to deliver revenue growth, marginmultinational brands. improvement and increases in net income in 1995In other key developments, the agency and beyond. extended its Eastern European network of agencies,But the most important factor behind our which now operates in nine countries, the most optimistic outlook is the creative power andextensive in the region. BBDO also expanded management strength of our advertising andin the Asia Pacific region, where it acquired a marketing services companies around the world.substantial equity position in a leading Thai agency, Our agencies are widely acknowledged to be thewhich has been renamed Damask/BBDO, and creative leaders of the industry, and they arebegan operations in Vietnam. Late in the year, especially attractive to sophisticated marketers whoBBDO purchased a minority interest in Israels understand that innovative advertising is a significant largest advertising and marketing communications competitive edge in the marketplace. Our companiesfirm. are led by managers of great talent and vision who DDB Needham had a remarkably successful work closely with the top executives of the worlds year. Not only did the agency continue to enhance largest and most successful companies to help its creative reputation around the world, but it also generate sales and build reputations for majorhad the biggest new business year in its history, brands in all categories. Each of our three globaladding major new clients around the world. agencies had excellent results in 1994, as did our Creatively, the agency once again led all agencies Diversified Agency Services division, and our at the Cannes Festival by winning 21 Lions. For the independent agencies. third consecutive year, the agency dominated thisBBDO Worldwide continues to add luster to itsevent, with awards spread throughout the global superb reputation for great creative work and network. success for its clients brands. In 1994, BBDO was In new business, the agency added three of named the Agency of the Year by both Advertisingthe biggest accounts in its history when it won Age and Adweek, the leading U.S. advertisingBudweiser, the number one brand among U.S. publications, as well as New Products Agency ofbeers, and global responsibility for Digital Equipment the Year by the American Marketing Association.and Helene Curtis. Additionally in the U.S., the At the annual creative competition in Cannes, agency was awarded Gramercy Pictures and BBDO won the most Lions for U.S. advertising andHampton Inns among other major clients. tied with DDB Needham for the most televisionIn Europe, DDB Needham, for the fourth straight awards overall. year, was number one in new business victoriesIn terms of new business, the agency added according to the magazine, Media and Marketing Russell Athletic, Sterling Health, Campbells Europe. Included among the new European accounts 4. are Barilla Pasta, Axa, Parmalat and many other TBWA International, will become Chairman and Pan-European brands.CEO of the combined operation. Jay Chiat, aDDB Needham began 1995 with two significantfounder of Chiat/Day, will become a consultant to victories. It was awarded media planningOmnicom Group. responsibility for all of Frito-Lay in the U.S. and wasDiversified Agency Services (DAS) continued awarded the Sony account for all of Europe. to make impressive gains in revenue and profit inDuring the year, the agency expanded its 1994. DAS is now operating in 17 countries serving operations with the acquisition of Griffin Bacal Inc.,4,500 clients worldwide in marketing services and the New York-based advertising agency with officesspecialty advertising. in New York, London, Toronto, Mexico City, AthensDuring the year, DAS formed a second U.S. and Frankfurt. Griffin Bacal is well known for itshealthcare group, Diversified Healthcare unique expertise in communicating to children. ItsCommunications, to function as a management major client, Hasbro, has been a common clientumbrella for three agencies. DAS also acquired a with DDB Needham. minority interest in the GMR Group, a managedOur third international network, TBWA, had a care consultancy company. year of substantial growth from present clients andIn addition, DAS acquired Dorritie Lyons & new business. Also, its reputation for great creative Nickel and merged it with the operations of Lavey/ work continued to grow as it won creative Wolff/Swift, creating a major healthcare com- competitions around the world for its continually munications company, Lyons/Lavey/Nickel/Swift. superb Absolut work, its campaigns for Nissan andRapp Collins Worldwide, a direct marketing its campaign for Wonderbra, which was named network, made two acquisitions, Optima Direct, campaign of the year in the U.K. TBWA was named Inc., specializing in data-driven telemarketing Agency to watch in 1995 by Media and Marketingprograms, in Vienna, Virginia, and Shain Colavito Europe, in recognition of its creative and newPensabene Direct, Inc., a leading direct response business buying company, in New York. Rapp CollinsA highly successful new business year included and TBWA Hunt Lascaris took a minority interest in several important Seagram products including Thea South African direct marketing agency. Glenlivet, worldwide responsibility for Chivas Regal In public affairs, DAS acquired the European and other brands. The agency also won Nissan in Political Consultancy Group Ltd., a leading public four additional international markets, British Gas in affairs company in the U.K. and Brussels. DAS also the U.K. and Wonderbra in the U.S.acquired 20% of GPC International Holdings Inc.,The network grew substantially with acquisitions Canadas largest Public Affairs consulting group. in the U.K., the Netherlands, South Africa, the CzechIn 1994, DAS agencies received important Republic, Switzerland, Denmark, Sweden, Greecerecognition in their industries. In public relations, and Mexico. Associates were added in Poland,Porter/Novelli (U.S.) and Countrywide Hungary, the Middle East and India. The agencyCommunications (U.K.) were both named Agency also expanded its working relationship with of the Year in their respective markets. Alcone Sims Hakuhodo, the Tokyo-based international agency, OBrien recei


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