Delaware                                                  
(State or other jurisdiction of
incorporation or organization)

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

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

         10020         
       (Zip Code)

          Item 1.

Financial Statements

Consolidated Statement of Operations

  Three months ended June 30, 2002

  and 2001 (unaudited)

Consolidated Statement of Operations

  Six months ended June 30, 2002

  and 2001 (unaudited)

Consolidated Balance Sheet

  June 30, 2002 (unaudited) and

  December 31, 2001

Consolidated Statement of Comprehensive Income

  Three months ended June 30, 2002

  and 2001 (unaudited)

Consolidated Statement of Comprehensive Income

  Six months ended June 30, 2002

  and 2001 (unaudited)

Consolidated Statement of Cash Flows

  Six months ended June 30, 2002

  and 2001 (unaudited)

Notes to Consolidated Financial Statements (unaudited)

          Item 2.

Management's Discussion and Analysis of

  Financial Condition and Results of Operations

          Item 1.

LEGAL PROCEEDINGS

          Item 6.

EXHIBITS AND REPORTS ON FORM 8-K.

          SIGNATURES

          CERTIFICATIONS

          INDEX TO EXHIBITS

PART I - FINANCIAL INFORMATION

Item 1.

THE INTERPUBLIC GROUP OF COMPANIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF OPERATIONS

THREE MONTHS ENDED JUNE 30,

(Amounts in Millions, Except Per Share Amounts)

(Unaudited)

2002

     2001    

(Restated)

(Restated)

REVENUE

$1,612.7  

$1,759.8  

OPERATING EXPENSES:

   Salaries and related expenses

890.9  

979.0  

   Office and general expenses

492.8  

501.0  

   Amortization of intangible assets

3.6  

42.2  

   Restructuring and other merger related costs

--  

51.3  

   Long-lived asset impairment and other charges

           --  

    221.4  

        Total operating expenses

 1,387.3  

  1,794.9  

OPERATING INCOME (LOSS)

    225.4  

     (35.1) 

OTHER INCOME (EXPENSE):

   Interest expense

(36.9) 

(41.4) 

   Interest income

8.1  

10.1  

   Other income

     10.3  

        3.3  

Investment impairment

     (16.2) 

            --  

        Total other income (expense)

     (34.7) 

     (28.0) 

Income (loss) before provision for income taxes

190.7  

(63.1) 

Provision for income taxes

     74.2  

       45.8  

Income (loss) of consolidated companies

116.5  

(108.9) 

Income applicable to minority interests

(11.1) 

(10.5) 

Equity in net income of unconsolidated affiliates

        3.6  

         2.1  

NET INCOME (LOSS)

$  109.0  

$ (117.3) 

Earnings (loss) per share:

   Basic

$   0.29  

$   (0.32) 

   Diluted

$   0.29  

$   (0.32) 

Weighted average shares:

   Basic

375.7  

368.9  

   Diluted

382.4  

368.9  

Cash dividends per share

$ 0.095  

$  0.095  

THE INTERPUBLIC GROUP OF COMPANIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF OPERATIONS

SIX MONTHS ENDED JUNE 30,

(Amounts in Millions, Except Per Share Amounts)

(Unaudited)

     2002    

     2001    

(Restated)

(Restated)

REVENUE

$3,032.7  

$3,434.6  

OPERATING EXPENSES:

   Salaries and related expenses

1,759.7  

1,983.1  

   Office and general expenses

912.6  

979.9  

   Amortization of intangible assets

6.4  

84.1  

   Restructuring and other merger related costs

--  

52.8  

   Long-lived asset impairment and other charges

           --  

     221.4  

        Total operating expenses

 2,678.7  

  3,321.3  

OPERATING INCOME

    354.0  

     113.3  

OTHER INCOME (EXPENSE):

   Interest expense

(72.2) 

(78.9) 

   Interest income

15.0  

22.6  

   Other income

      10.6  

       11.9  

   Investment impairment

    (16.2) 

    (160.1) 

        Total other income (expense)

    (62.8) 

    (204.5) 

Income (loss) before provision for income taxes

291.2  

(91.2) 

   Provision for income taxes

   112.2  

       43.3  

Income (loss) of consolidated companies

179.0  

(134.5) 

   Income applicable to minority interests

(14.7) 

(17.4) 

   Equity in net income of unconsolidated affiliates

        4.5  

         3.4  

NET INCOME (LOSS)

$  168.8  

$ (148.5) 

Earnings (loss) per share:

   Basic

$   0.45  

$   (0.40) 

   Diluted

$   0.44  

$   (0.40) 

Weighted average shares:

   Basic

374.3  

367.5  

   Diluted

381.1  

367.5  

Cash dividends per share

$  0.19  

$    0.19  

THE INTERPUBLIC GROUP OF COMPANIES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

(Amounts in Millions, Except Per Share Amounts)

ASSETS

June 30,

2002

December 31,

(Unaudited)

2001

  (Restated)   

  (Restated)   

CURRENT ASSETS:

   Cash and cash equivalents

$   537.3     

$      935.2     

   Account receivables (net of allowance for doubtful
     accounts: 2002-$91.5; 2001-$90.7)

4,911.5     

4,673.2     

   Expenditures billable to clients

460.1     

325.5     

   Deferred taxes on income

44.5     

80.0     

   Prepaid expenses and other current assets

       390.3     

       337.6     

        Total current assets

    6,343.7     

    6,351.5     

FIXED ASSETS, AT COST:

   Land and buildings

168.0     

161.1     

   Furniture and equipment

1,125.3     

1,083.2     

   Leasehold improvements

       504.6     

       461.4     

1,797.9     

1,705.7     

   Less: accumulated depreciation

      (938.6)    

      (858.0)   

        Total fixed assets

       859.3     

       847.7     

OTHER ASSETS:

   Investment in unconsolidated affiliates

174.9     

156.7     

   Deferred taxes on income

469.6     

495.0     

   Other assets and miscellaneous investments

432.5     

427.9     

   Goodwill

3,308.4     

2,994.3     

   Other intangible assets (net of accumulated

     amortization: 2002-$34.8; 2001-$24.0)

         92.9     

       102.2     

        Total other assets

    4,478.3     

    4,176.1     

TOTAL ASSETS

$11,681.3     

$11,375.3     

THE INTERPUBLIC GROUP OF COMPANIES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

(Amounts in Millions, Except Per Share Amounts)

LIABILITIES AND STOCKHOLDERS' EQUITY

June 30,

2002

December 31,

(Unaudited)

2001

  (Restated)   

  (Restated)   

CURRENT LIABILITIES:

   Accounts payable

$  4,807.8     

$  4,555.5       

   Accrued expenses

1,023.1     

1,323.7       

   Loans payable

598.6     

453.1       

   Accrued income taxes

        25.5     

        61.5       

   Dividends payable

             --     

        36.0       

               Total current liabilities

   6,455.0     

   6,429.8       

NON-CURRENT LIABILITIES:

   Long-term debt

1,243.1     

1,356.8       

   Convertible subordinated notes

556.5     

548.5       

   Zero-coupon convertible senior notes

578.1     

575.3       

   Deferred compensation

417.7     

377.3       

   Accrued postretirement benefits

56.5     

54.4       

   Other non-current liabilities

115.7     

103.8       

   Minority interests in consolidated subsidiaries

        89.1     

        89.3       

               Total non-current liabilities

   3,056.7     

   3,105.4       

Commitments and contingencies (Note 12)

STOCKHOLDERS' EQUITY:

   Preferred stock, no par value,

     shares authorized: 20.0, shares issued: none

   Common stock, $0.10 par value,

      shares authorized: 550.0,

      shares issued: 2002 - 388.4; 2001 - 385.8

38.8     

38.6       

   Additional paid-in capital

1,808.8     

1,785.2       

   Retained earnings

1,000.5     

     868.3       

   Accumulated other comprehensive loss, net of tax

     (361.3)    

      (447.8)      

2,486.8     

2,244.3       

   Less:

   Treasury stock, at cost: 2002 - 4.9 shares; 2001 - 7.3 shares

(193.5)    

(290.2)      

   Unamortized deferred compensation

     (123.7)    

      (114.0)      

               Total stockholders' equity

    2,169.6     

    1,840.1       

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$11,681.3     

$11,375.3       

THE INTERPUBLIC GROUP OF COMPANIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

THREE MONTHS ENDED JUNE 30,

(Amounts in Millions)

(Unaudited)

2002

   2001  

(Restated)

(Restated)

Net Income (Loss)

$109.0    

$(117.3)  

Foreign Currency Translation Adjustments

 107.7    

    (11.7)  

Unrealized Holding Gains (Losses) on Securities

     Unrealized holding gains

--    

9.2   

     Tax expense

--    

(3.8)  

     Unrealized holding losses

(5.5)   

--   

     Tax benefit

2.3    

--   

     Reclassification of unrealized loss to net earnings

--    

--   

     Tax benefit

         --    

          --   

Unrealized holding gains (losses) on securities

    (3.2)   

       5.4   

Comprehensive Income (Loss)

$213.5    

$(123.6)  

THE INTERPUBLIC GROUP OF COMPANIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

SIX MONTHS ENDED JUNE 30,

(Amounts in Millions)

(Unaudited)

2002

  2001  

(Restated) 

(Restated)

Net Income (Loss)

$168.8   

$(148.5)  

Foreign Currency Translation Adjustments

    89.2   

   (99.0)  

Unrealized Holding Gains (Losses) on Securities

     Unrealized holding gains

0.9   

9.2   

     Tax expense

(0.4)  

(3.8)  

     Unrealized holding losses

(5.5)  

(7.7)  

     Tax benefit

2.3   

3.2   

     Reclassification of unrealized loss to net earnings

--   

89.4   

     Tax benefit

         --   

     (37.5)  

Unrealized holding gains (losses) on securities

    (2.7) 

      52.8   

Comprehensive Income (Loss)

$255.3   

$(194.7)  

THE INTERPUBLIC GROUP OF COMPANIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS

SIX MONTHS ENDED JUNE 30,

(Amounts in Millions)

(Unaudited)

   2002   

   2001   

(Restated)

(Restated)

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income (loss)

$ 168.8  

$ (148.5)

Adjustments to reconcile net income (loss) to

  cash provided by (used in) operating activities:

   Depreciation and amortization of fixed assets

98.7  

104.1 

   Amortization of intangible assets 

6.4  

84.1 

   Amortization of restricted stock awards and bond discounts

39.4  

33.4 

   Provision for (benefit of) deferred income taxes

59.3  

(82.1)

   Undistributed equity earnings

(4.5) 

(3.4)

   Income applicable to minority interests

14.7  

17.4 

   Restructuring charges - non cash

--  

30.2 

   Goodwill impairment and other

--  

197.4 

   Investment impairment

16.2  

160.1 

   Other

(9.7) 

(8.7)

Change in assets and liabilities, net of acquisitions:

   Accounts receivable

(36.1) 

220.4 

   Expenditures billable to clients

(121.9) 

(58.8)

   Prepaid expenses and other current assets

(29.6) 

(42.8)

   Accounts payable, accrued expenses and other current liabilities

(177.3) 

(773.6)

   Accrued income taxes

(37.8) 

(63.5)

   Other non-current assets and liabilities

   33.0  

     14.4 

               Net cash provided by (used in) operating activities

   19.6  

  (319.9)

CASH FLOWS FROM INVESTING ACTIVITIES:

   Acquisitions, net of cash acquired

(206.5) 

(142.4)

   Capital expenditures

(81.9) 

(124.7)

   Proceeds from sales of businesses

0.2  

12.2 

   Proceeds from sales of long-term investments

39.3  

14.9 

   Purchases of long-term investments

(38.5) 

(15.4)

   Maturities of short-term marketable securities

23.5  

15.6 

   Purchases of short-term marketable securities

(9.3) 

(33.6)

   Other investments and miscellaneous assets

   (56.4) 

    (86.1)

               Net cash used in investing activities

   (329.6) 

  (359.5)

CASH FLOWS FROM FINANCING ACTIVITIES:

   Increase in short-term bank borrowings

88.8  

787.0 

   Proceeds from long-term debt

1.5  

150.0 

   Payments of long-term debt

(132.1) 

(261.7)

   Treasury stock acquired

(7.7) 

(100.1)

   Issuance of common stock

44.2  

56.4 

   Cash dividends - Interpublic

   (72.5) 

   (59.5)

   Cash dividends - pooled companies

         --  

     (15.1)

               Net cash provided by (used in) financing activities

    (77.8) 

   557.0 

Effect of exchange rates on cash and cash equivalents

    (10.1) 

    (36.1)

Decrease in cash and cash equivalents

(397.9) 

(158.5)

Cash and cash equivalents at beginning of year

   935.2  

    844.6 

Cash and cash equivalents at end of period

$ 537.3  

$  686.1 

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

1.

Basis of Presentation
In the opinion of management, the financial statements included herein contain all adjustments (consisting of normal recurring accruals) necessary to present fairly the financial position, results of operations and cash flows at June 30, 2002 and for all periods presented. These consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in The Interpublic Group of Companies, Inc.'s (the "Company" or "Interpublic") December 31, 2001 Annual Report to Stockholders filed on Form 10-K/A on March 7, 2003. The operating results for the first six months of the year are not necessarily indicative of the results for the year or other interim periods.

As discussed in Note 2, the Company identified pre-tax charges of which $3.5 ($2.3, net of tax) and $6.4 ($4.2, net of tax) related to the three and six months ended June 30, 2002. The charges have been recorded through a restatement of previously reported amounts in this Form 10-Q/A.

Certain prior year amounts have been reclassified to conform with current year presentation. Additionally, as discussed in Note 7 below, the consolidated statement of operations is not comparable to the prior year reflecting a change in accounting principle pursuant to Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets.

2.

Restatement

During the fourth quarter of 2002, the Company identified charges of $47.0 ($35.3, net of tax) (in addition to total asset impairment and other charges of $118.7 that related to the three months ended September 30, 2002) that are related to prior periods from January 1, 1997 through September 30, 2002. Of this amount, $3.5 ($2.3, net of tax), and $6.4 ($4.2, net of tax) were related to the three and six months ended June 30, 2002. The charges have been recorded through a restatement of previously recorded amounts in this Form 10 Q/A. The total amount of charges principally relates to adjustments to record intangible asset amortization.

December 2002 Restatement

During the second and third quarters of 2002, the Company identified total charges of $181.3 ($135.9, net of tax) that were related to prior periods. In December 2002, the Company restated its financial statements for periods up to and including June 30, 2002. The amounts described within this document "as previously reported" reflect the amounts restated in December 2002.

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

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

In December 2002, the Company restated its financial statements for periods up to and including June 30, 2002. The amounts described within this document "as previously reported" reflect the amounts restated in December 2002.

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

Octagon Motorsports (OMS) Impairment Announced March 2003

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

In accordance with SFAS No. 142, Goodwill and Other Intangible Assets, the Company prepared a valuation of OMS to assess its fair value. For this purpose, the Company used a valuation method based on the valuations of comparable, publicly traded entities. This method was considered by management to be the most appropriate one to value OMS, and based on the results of this analysis, the Company concluded that no impairment charge was required at September 30, 2002.

Throughout the fourth quarter of 2002, the Company continued to assess various strategic alternatives for the OMS business. In order to assist in evaluating strategic alternatives, the Company prepared a discounted cash flow analysis which indicated that the book value of OMS significantly exceeded its estimated fair value and that a goodwill impairment had occurred. As part of this process, the Company reassessed its third quarter valuation and its key assumptions, and concluded that the impairment charge should have been recorded in the third quarter of 2002.

In addition, as a result of the goodwill analysis, the Company assessed whether there had been an impairment of the Company's long-lived assets in accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets. The Company concluded that the book value of certain asset groupings at OMS was significantly higher than their expected future cash flows and that an impairment had occurred.

Accordingly, the Company has recognized a non-cash impairment loss and related charge of $118.7 ($83.8, net of tax) as of September 30, 2002 through a restatement of previously recorded results for that period. The charges included $82.1 of goodwill impairment, $24.6 of fixed asset write-offs, and $12.0 to record the fair value of an associated put option.

Subsequent to the third quarter, management determined that its original operating plans were no longer feasible and decided to explore options to exit some or all of these businesses. The remaining book value of long-lived assets relating to OMS is approximately $73 at September 30, 2002, and this amount, as well as other substantial contractual obligations, may not be fully recoverable depending upon the exit strategy ultimately followed. In addition, OMS is contractually required to upgrade and improve certain of its existing facilities over the next 2 years. These capital expenditures amount to approximately $38 and are expected to be impaired as incurred based on current cash flow analysis for the relevant asset groupings.

OTHER ITEMS

See Note 13 for a discussion of certain liquidity matters and amendments under credit agreements.

The Company has been advised by the Securities and Exchange Commission staff that it has issued a formal order in connection with its investigation of the Company's previously announced restatement of earnings for the periods from 1997 through June 2002. The matter had been subject to an informal SEC inquiry. The Company is cooperating fully with the Commission.

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

The table below presents a summary of the impact of restating the statements of financial operations for the three and six months ended June 30, 2002 and 2001, and the balance sheet as of June 30, 2002 and December 31, 2001.

CONSOLIDATED STATEMENT OF OPERATIONS

As
Previously
Reported (a)

As
Restated

Three months ended June 30, 2002

     - Operating income

$  228.9   

$  225.4   

     - Net income

$  111.3   

$  109.0   

     - Earnings per share - Basic

$    0.30   

$    0.29   

     - Earnings per share - Diluted

$    0.29   

$    0.29   

Six months ended June 30, 2002

     - Operating income

$  360.4   

$  354.0   

     - Net income

$  173.0   

$  168.8   

     - Earnings per share - Basic

$    0.46   

$    0.45   

     - Earnings per share - Diluted

$    0.45   

$    0.44   

Three months ended June 30, 2001

     - Operating loss

$  (33.7)   

$  (35.1)  

     - Net loss

$(116.3)   

$(117.3)  

     - Loss per share - Basic

$  (0.32)   

$  (0.32)  

     - Loss per share - Diluted

$  (0.32)   

$  (0.32)  

Six months ended June 30, 2001

     - Operating income

$  115.9   

$  113.3   

     - Net loss

$(146.7)  

$(148.5)  

     - Loss per share - Basic

$  (0.40)  

$  (0.40)  

     - Loss per share - Diluted

$  (0.40)  

$  (0.40)  

CONSOLIDATED BALANCE SHEET

June 30, 2002

CURRENT ASSETS:

  Cash and cash equivalents

$     537.3   

$     537.3  

  Accounts receivable

4,913.8   

4,911.5  

  Other current assets

       894.9   

       894.9  

TOTAL CURRENT ASSETS

$  6,346.0   

$  6,343.7  

FIXED ASSETS

$     859.3   

$     859.3 

OTHER ASSETS

$  4,495.3   

$  4,478.3 

TOTAL ASSETS

$11,700.6   

$11,681.3  

LIABILITIES AND STOCKHOLDERS' EQUITY:

CURRENT LIABILITIES:

  Accounts payable and accrued expenses

$  5,828.8   

$  5,830.9  

  Loans payable

598.6   

598.6  

  Accrued income taxes

        31.4   

        25.5  

    TOTAL CURRENT LIABILITIES

$  6,458.8   

$  6,455.0  

NON-CURRENT LIABILITIES

$  3,050.2   

$  3,056.7  

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

As
Previously
Reported (a)

As
Restated

STOCKHOLDERS' EQUITY

$  2,191.6   

$  2,169.6  

TOTAL LIABILITIES AND
   STOCKHOLDERS' EQUITY

$11,700.6   

$11,681.3  

December 31, 2001

CURRENT ASSETS:

  Cash and cash equivalents

$     935.2   

$      935.2 

  Accounts receivable

4,674.9   

4,673.2 

  Other current assets

       743.1   

       743.1 

TOTAL CURRENT ASSETS

$  6,353.2   

$  6,351.5 

FIXED ASSETS

$     847.7   

$     847.7 

OTHER ASSETS

$  4,189.6   

$  4,176.1 

TOTAL ASSETS

$11,390.5   

$11,375.3 

LIABILITIES AND STOCKHOLDERS' EQUITY:

CURRENT LIABILITIES:

  Accounts payable and accrued expenses

$  5,876.8   

$  5,879.2 

  Loans payable

453.1   

453.1 

  Accrued income taxes

65.2   

61.5 

  Dividends payable

         36.0   

         36.0 

    TOTAL CURRENT LIABILITIES

$  6,431.1   

$  6,429.8 

NON-CURRENT LIABILITIES

$  3,101.5   

$  3,105.4 

STOCKHOLDERS' EQUITY:

$  1,857.9   

$  1,840.1 

TOTAL LIABILITIES AND
   STOCKHOLDERS' EQUITY

$11,390.5   

$11,375.3 

3.

Earnings (Loss)Per Share
The following sets forth the computation of earnings per share for the three and six month periods ended June 30, 2002 and 2001:

Three Months Ended June 30,

2002
(Restated)

2001
(Restated)

Basic

Net income (loss)

$ 109.0    

$(117.3)   

Weighted average number of common shares outstanding

  375.7    

    368.9    

Earnings (loss) per share

$  0.29    

$  (0.32)   

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

Diluted (a)

Net income (loss)

$109.0    

$(117.3)   

Addback income on assumed conversion of subordinated notes

       --    

           --    

Net income (loss) - diluted

$109.0    

$(117.3)   

Weighted average number of common shares outstanding

375.7    

368.9    

Weighted average number of incremental shares

   in connection with restricted stock

   and assumed exercise of stock options

     6.7    

           --    

Weighted average number of common shares outstanding - diluted

  382.4    

    368.9    

Earnings (loss) per share - diluted

$  0.29    

$  (0.32)   

(a)

The computation of diluted EPS for 2002 excludes the assumed conversion of the 1.8% and 1.87% Convertible Subordinated Notes because they were anti-dilutive. The computation of diluted EPS for 2001 excludes the assumed conversion of the 1.80% and 1.87% Convertible Subordinated Notes, the conversion of restricted stock and assumed exercise of stock options because they were antidilutive.

Six Months Ended June 30,

 2002
 (Restated)

2001
(Restated)

Basic

Net income (loss)

$ 168.8    

$(148.5)   

Weighted average number of common shares outstanding

  374.3    

  367.5    

Earnings (loss) per share

$  0.45    

$ (0.40)   

Diluted (b)

Net income (loss)

$168.8    

$(148.5)   

Weighted average number of common shares outstanding

374.3    

367.5    

Weighted average number of incremental shares

   in connection with restricted stock

   and assumed exercise of stock options

     6.8    

        --    

Weighted average number of common shares outstanding - diluted

  381.1    

  367.5    

Earnings (loss) per share - diluted

$  0.44    

$ (0.40)   

(b)

The computation of diluted EPS for 2002 and 2001 excludes the assumed conversion of the 1.8% and 1.87% Convertible Subordinated Notes because they were anti-dilutive. The computation of diluted EPS for 2001 excludes the conversion of restricted stock and assumed exercise of stock options because they were antidilutive.

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

4.

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

A summary of the remaining liability for restructuring and other merger related costs is as follows:

Balance at
December
   31, 2001   

Cash paid
through
June
  30, 2002  

Liability
at June
  30, 2002  

          TOTAL BY TYPE

          Severance and termination costs

$154.0        

$  94.2       

$  59.8       

          Lease termination and other exit costs

  157.1        

  39.4       

  117.7       

          Total

$311.1        

$133.6       

$177.5       

As of June 30, 2002, the Company expects that 7,500 employees will be terminated in connection with the restructuring plan. Of that total, the majority of severance actions have occurred with the remainder to occur by the end of September. A significant portion of severance liabilities are expected to be paid out over a period of up to one year.

The employee groups affected by the restructuring program include all levels and functions across the Company: executive, regional and account management, administrative, creative and media production personnel. Approximately half of the headcount reductions relate to the U.S., one third relate to Europe (principally the UK, France and Germany), with the remainder relating to Latin America and Asia Pacific.

Lease termination costs, net of estimated sublease income, relate to the offices that have been or will be vacated as part of the restructuring. The Company plans to downsize or vacate approximately 180 locations and expects that all leases will have been terminated or the premises vacated or subleased by September 30, 2002. The cash portion of the charge will be paid out over a period of up to five years. The geographical distribution of offices to be vacated is similar to the geographical distribution of the severance charges. Lease termination and related costs include write-offs related to the abandonment of leasehold improvements as part of the office vacancies.

Other exit costs relate principally to the impairment loss on sale or closing of certain business units in the U.S. and Europe. In the aggregate, the businesses being sold or closed represent an immaterial portion of the revenue and operating profit of the Company. The write-off amount was computed based upon the difference between the estimated sales proceeds (if any) and the carrying value of the related assets. The sales and closures had been completed by June 30, 2002.

5.

Long-Lived Asset Impairment and Other Charges
In 2001, the Company determined that the goodwill attributable to certain acquisitions was in excess of its estimates of the entities' future cashflows. As a result, an impairment charge of $303.1 ($263.4, net of tax) had been recorded in 2001. Of the total write-off, $221.4 was recorded in the second quarter of 2001, with the remainder recorded in the third quarter of 2001. The largest components of the goodwill impairment and other charges were Capita Technologies, Inc. (approximately $145) and Zentropy Partners (approximately $16), both internet services businesses. The remaining amount primarily related to several other businesses including internet services, healthcare consulting, and certain advertising offices in Europe and Asia Pacific.

6.

Investment Impairment
During the first quarter of 2001 the Company recorded a charge of $160.1 related to the impairment of investments primarily in publicly traded internet-related companies, including marchFIRST, Inc. (an internet professional services firm), which had filed for relief under Chapter 11 of the Federal Bankruptcy Code in April 2001. The impairment charge adjusted the carrying value of investments to the estimated market value.

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

During the second quarter of 2002, the Company recorded investment impairment charges of $16.2, primarily relating to certain investments of Octagon, a sports marketing company.

7.

New Accounting Standards
In June 2001, the Financial Accounting Standards Board ("FASB") issued Statements of Financial Accounting Standards No. 141, Business Combinations ("SFAS 141"), and No. 142, Goodwill and Other Intangible Assets ("SFAS 142"). These statements were effective for fiscal years beginning after December 15, 2001. Under the new standards, the purchase method of accounting is required for all business combinations initiated after June 30, 2001 and goodwill and intangible assets deemed to have indefinite lives will no longer be amortized but will be subject to annual impairment tests. Other intangible assets will continue to be amortized over their estimated useful lives.

During the first quarter of 2002, the Company performed the required impairment tests of goodwill and determined that there was no impairment required to be recognized upon adoption. The Company estimates that, based on its current intangible assets, amortization expense will be approximately $6.0 to $8.0 in each of the next five years.

In connection with SFAS 142, goodwill amortization ceased effective January 1, 2002. The following analysis shows the impact on the Company's statement of operations had SFAS 142 been effective for all periods presented:

Three Months Ended
June 30,

Six Months Ended
June 30,

  2002
(Restated)

2001
(Restated)

  2002
(Restated)

2001
(Restated)

Reported net income (loss)

$109.0  

$(117.3)   

$168.8   

$(148.5)  

Add back: goodwill amortization, net of tax

       --  

   35.0    

       --   

   70.3   

Adjusted net income (loss)

$109.0  

$ (82.3)   

$168.8   

$ (78.2)  

Basic earnings (loss) per share:

   Reported earnings (loss)

$0.29  

$(0.32)   

$0.45   

$(0.40)  

   Add back: goodwill amortization, net of tax

       --  

   0.10    

       --   

   0.19   

   Adjusted earnings (loss)

$0.29  

$(0.22)   

$0.45   

$(0.21)  

Diluted earnings (loss) per share:

   Reported earnings (loss)

$0.29  

$(0.32)   

$0.44   

$(0.40)  

   Add back: goodwill amortization, net of tax

       --  

   0.10    

       --   

   0.19   

   Adjusted earnings (loss)

$0.29  

$(0.22)   

$0.44   

$(0.21)  

In June 2001, Statement of Financial Accounting Standards No. 143, Accounting for Asset Retirement Obligations ("SFAS 143") was issued. SFAS 143 addresses financial accounting and reporting for legal obligations associated with the retirement of tangible long-lived assets and the associated retirement costs that result from the acquisition, construction, or development and normal operation of a long-lived asset. Upon initial recognition of a liability for an asset retirement obligation, SFAS 143 requires an increase in the carrying amount of the related long-lived asset. The asset retirement cost is subsequently allocated to expense using a systematic and rational method over the asset's useful life. SFAS 143 is effective for fiscal years beginning after June 15, 2002. The adoption of this statement is not expected to have an impact on the Company's financial position or results of operations.

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

In August 2001, Statement of Financial Accounting Standards No. 144, Accounting for the Impairment or Disposal of Long-lived Assets ("SFAS 144") was issued. SFAS 144 supersedes Statement of Financial Accounting Standards No. 121, Accounting for the Impairment of Long-lived Assets to be Disposed of ("SFAS 121"), and the accounting and reporting provisions of APB Opinion No. 30, Reporting the Results of Operations-Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions. SFAS 144 also amends ARB (Accounting Research Bulletins) No. 51, Consolidated Financial Statements, to eliminate the exception to consolidation for a subsidiary for which control is likely to be temporary.

SFAS 144 retains the fundamental provisions of SFAS 121 for recognizing and measuring impairment losses on long-lived assets held for use and long-lived assets to be disposed of by sale, while resolving significant implementation issues associated with SFAS 121. Among other things, SFAS 144 provides guidance on how long-lived assets used as part of a group should be evaluated for impairment, establishes criteria for when long-lived assets are held for sale, and prescribes the accounting for long-lived assets that will be disposed of other than by sale. SFAS 144 is effective for fiscal years beginning after December 15, 2001. The adoption of this statement did not have an impact on the Company's financial position or results of operations.

In November 2001, the Emerging Issues Task Force reached a consensus on Issue No. 01-14, Income Statement Characterization of Reimbursements Received for "Out-of-Pocket" Expenses Incurred ("EITF 01-14"). EITF 01-14 establishes that reimbursements received for certain out-of-pocket expenses should be reported as revenue and operating expenses in the statement of operations. Historically, the Company classified reimbursed out-of-pocket expenses as a reduction of operating expenses. The Company has adopted this guidance effective the first quarter of fiscal year 2002.

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

8.

Derivative and Hedging Instruments
Interest Rate Swaps
At June 30, 2002, the Company had outstanding interest rate swap agreements covering all of the $500.0, 7.875% notes due October 2005. The fair value of the hedges at June 30, 2002 was an asset of approximately $19.9.

Hedges of Net Investments
The Company has repaid the Euro borrowings that, as of December 31, 2001, had been designated as a hedge of a net investment.

Forward Contracts
As of June 30, 2002, the Company had contracts covering approximately $34.8 of notional amount of currency. As of June 30, 2002, the fair value of the forward contracts was an asset of $3.0.

Other
The Company has two embedded derivative instruments under the terms of the offering of Zero-Coupon Convertible Notes. At June 30, 2002, the fair value of the two derivatives was negligible.

9.

Segment Information
During the second quarter of 2002, the Company reorganized its operations. Prior to the second quarter the Company was organized into four global operating groups: a) McCann-Erickson WorldGroup ("McCann"), b) the FCB Group ("FCB"), c) The Partnership and d) Advanced Marketing Services ("AMS"). In the second quarter, the Company carved out certain operations related to certain sports and event planning activities and combined them to form a fifth global operating group, IPG Sports and Entertainment ("S&E"). Each of McCann, FCB, The Partnership, AMS and S&E operate with the same business objective which is to provide clients with a wide variety of services that contribute to the delivery of a message and to the maintenance or creation of a brand. However, the Partnership and AMS historically have had lower gross margins than the Company average.

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

The five global operating groups share numerous clients, have similar cost structures, provide services in a similar fashion and draw their employee base from the same sources. The annual margins of each of the five groups may vary due to global economic conditions, client spending and specific circumstances such as the Company's restructuring activities. However, based on the respective future prospects of the five groups, the Company believes that the long-term average gross margin of each of these five groups will converge over time and, given the similarity of the operations, the five groups have been aggregated.

10.

Acquisitions and Deferred Payments
During the first six months of 2002 the Company has completed 8 acquisitions. The companies acquired included those in the U.S. and Europe and included healthcare, public relations, direct marketing and research companies. In connection with these acquisitions, the Company paid $43.1 in cash and issued shares with a value of $1.1. Additionally, the Company paid $2.0 in cash and $0.8 in stock for additional ownership interests in companies in which a previous investment had been made. In connection with the acquisitions, approximately $4.5 of cash was acquired.

During the first six months of 2002 the Company paid $165.9 in cash and $42.5 in stock as deferred payments on acquisitions that had closed in prior years. During the first six months of 2001 the Company paid $78.0 in cash and $29.7 in stock as deferred payments on acquisitions that had closed in prior years.

As of June 30, 2002, the Company's estimated liability for earn-outs is as follows:

2002

2003

2004

2005 and after

Total

Cash

$46.9

$120.4         

$72.1

$66.6

$306.0

Stock

  30.6

    26.5         

  10.1

  19.4

     86.6

   Total

$77.5

$146.9         

$82.2

$86.0

$392.6

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

In addition to the estimated liability for earn-outs, the Company has entered into agreements that require the Company to purchase additional equity interests in certain companies (put options). In many cases, the Company also has the option to purchase the additional equity interests (call options) in certain circumstances. The total amount of potential payments under put options is as follows:

Exercisable
as of
June 30, 2002

Not
Exercisable

Total

Cash

$12.4

$167.4         

$179.8

Stock

     4.1

    24.5         

     28.6

   Total

$16.5

$191.9         

$208.4

The expected maturity of the $208.4 is as follows: 2002 - $21.7; 2003 - $60.0; 2004 - $17.0; 2005 and thereafter - $109.7. The actual amount to be paid is contingent upon the achievement of projected operating performance targets and satisfying other conditions as specified in the relevant agreement.

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

The Company also has call options to acquire additional equity interests in companies in which it already has an ownership interest. The estimated amount that would be paid under such call options is $43.5 and, in the event of exercise, would be paid as follows: 2002 - $0.8; 2003 - $17.8; 2004 - $4.9; 2005 thereafter - $20.0. The actual amount to be paid is contingent upon the achievement of projected operating performance targets and satisfying other conditions as specified in the relevant agreement.

11.

Debt
The Company's term loan agreements contain financial covenants that set minimum levels for net worth and for cash flow as a function of borrowed funds and maximum levels of borrowed funds as a function of net worth (as defined in these agreements). During the three months ended June 30, 2002, as a result of decreased cash flows and certain non-recurring charges for past quarters, the Company required and received amendments related to its financial covenants in the term loan agreements. In connection with the amendments, the Company agreed to a 0.5% increase in interest rates pertaining to $148.8 outstanding under the term loans. The Company believes that the additional interest payable is not material to the Company's financial position. At June 30, 2002, the Company was in compliance with all of its financial covenants in the term loan agreements, as amended.

In addition, the Company has obtained waivers of certain provisions contained in its revolving credit agreements and term loan agreements relating to the restatement described in Note 2 to the Company's Consolidated Financial Statements.

12.

Commitments and Contingencies
The Company is involved in legal and administrative proceedings of various types. While any litigation contains an element of uncertainty, the Company believes that the outcome of such proceedings or claims will not have a material adverse effect on the Company.

The Internal Revenue Service (IRS) is currently examining the Company's federal income tax returns for 1994 to 1996. While the audit is not complete, the IRS has recently indicated its intention to challenge certain of the Company's tax positions. The Company believes that its tax positions comply with applicable tax law and intends to defend its positions vigorously. The ultimate disposition of these matters could require the Company to make additional payment to the IRS. Nonetheless, the Company believes that it has adequately provided for any foreseeable payments related to these matters and consequently does not anticipate any material earnings impact from the ultimate resolution of these matters.

13.

Subsequent Events

Debt and Certain Liquidity Matters

As of September 30, 2002, the Company had two revolving credit facilities provided by a syndicate of banks (the "Revolving Credit Facilities") in an aggregate amount of $875.0, which are utilized to fund the Company's ordinary course business needs. The Revolving Credit Facilities bear interest rates at either a bank's base rate or LIBOR, at the Company's option. Furthermore, the interest rate on base rate loans is affected by the facilities' utilization levels, and the interest rate on LIBOR loans is affected by utilization levels and the Company's credit ratings. Based on the Company's credit ratings (as of November 19, 2002) of BBB and Baa3, as reported by Standard & Poor's and Moody's Investors Services, Inc., respectively, the interest rate for base rate loans is 4.25% and the interest spread with respect to LIBOR loans is 1.0%. At September 30, 2002, approximately $103.5 was borrowed under these facilities, and as of November 15, 2002, approximately $48.7 was borrowed. The Revolving Credit Facilities include financial covenants that set maximum levels of debt as a function of EBITDA and minimum levels of EBITDA as a function of interest expense (as defined in these agreements). As of September 30, 2002, the Company was in compliance with both of the financial covenants in the Revolving Credit Facilities.

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

The Company's note purchase agreements with The Prudential Insurance Company of America (the "Prudential Agreements") also contain financial covenants that set minimum levels for net worth and for cash flow as a function of borrowed funds and maximum levels of borrowed funds as a function of net worth (as defined in these agreements). Due to the impact on the Company's net worth resulting from (a) lower operating profit in the current quarter and (b) restructuring charges and lower operating profit in prior periods resulting from the restatement involving total charges of $181.3 described in Note 2 hereof, to the Company's Consolidated Financial Statements. The Company required and received waivers related to its financial covenants in the Prudential Agreements as of September 2002.

In addition, the Company obtained waivers of certain other provisions (excluding financial covenants) contained in its Revolving Credit Facilities and in certain of its term loan agreements, including the Prudential Agreements, which related to the restatement of total charges of $181.3. In connection with the waivers for its Revolving Credit Facilities, the Company agreed to an increase in interest rates and commitment fees payable to the lenders. In connection with the waivers for the Prudential Agreements, the Company agreed to increase the interest rates on the $148.8 outstanding under the Prudential Agreements. As a result, the interest rates (as of November 19, 2002) on the notes issued pursuant to the Prudential Agreements were increased to range from 7.55% to 9.51%. In addition to the increase in interest rates on the Prudential Agreements and the Revolving Credit Facilities, the Company paid fees to the lenders as additional consideration for their granting the waivers and amendments discussed above. The impact of the fees paid and the increased interest rates will not be material to the Company's financial position, cash flows or results of operations.