IN RE OMNICOM GROUP, INC . SECURITIES LITIGATION Docket …securities.stanford.edu/filings-documents/1024/OMC... · 16.12.2005 · southern district of new york 11 in re omnicom

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF NEW YORK

11

IN RE OMNICOM GROUP, INC .SECURITIES LITIGATION Docket No . 02-CV-4483 (RCC )

DECLARATION OF JOSEPH A. FONTIIN SUPPORT OF THE REPLY MEMORANDUM OF LAWIN FURTHER SUPPORT OF THE AMENDED MOTIONOF LEAD PLAINTIFF NEW ORLEANS EMPLOYEES'

RETIREMENT SYSTEM FOR CLASS CERTIFICATIO N

I, JOSEPH A. FONTI, declare as follows :

I am a member of the Bar of this Court and an associate of the law firm Bernstei n

Litowitz Berger & Grossmann LLP, Counsel for Lead Plaintiff New Orleans Employees'

Retirement System and Lead Counsel for the Class in the above-referenced Action . I submit this

declaration in support of the Memorandum of Law in Further Support of the Amended Motion of

Lead Plaintiff New Orleans Employees Retirement System (1) to certify this Action as a class

action pursuant to Fed . R. Civ . P . 23(a) and (b)(3) on behalf of the Class as defined in the Notice

of Motion ; (2) to certify New Orleans Employees' Retirement System as Class Representative ;

and (3) to appoint the law firm of Bernstein Litowitz Berger & Grossmann LLP as Lead Counsel

for the Class . I am fully familiar with the facts set forth herein .

2. Attached as exhibits hereto are true and correct copies of the following :

Exhibit A : Communicade summary portfolio .xls spreadsheet

Exhibit B: U.S. Return of Partnership hieoine for Seneca

Investments, LLC, signed July 30, 2002

Exhibit C : February 19, 2002 letter from John D. Wren, RandallJ . Weisenburger, and Philip J . Angelastro to Arthur

Andersen LLP

192610

P

Exhibit D June 13, 2002 Chicago Tribune Article entitled"Omnicom Is Counted Out On Its Accounting" by JimKirk

Exhibit E June 13, 2002 New York limes article entitled

"Omnicom Shares Tumble 20%" by Stuart Elliot

Exhibit F June 13, 2002 Financial Time article entitle d

"Omnicom Chiefs Face Investors As Shares Fall,Advertising World's Number Three Tries To LimitDamage Due To Concern Over Accounting Practices"by Stephanie Kirchgaessner

0 I declare that the foregoing is true and correct to the best of my knowledge .

Executed this 16'" day of December, 2005,New York, New York

JOS - A. FONTI

192610

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Exhibit A

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Ccmmunlcade HoidirtosBook Common Bk Val/ % of Warrant Sh+Warr Price/Sh Market Val'/

Company Value Eq Shares Share Outatand Strike Warrants Percent 3/27/01 Non Public Est .

Public Companie s

AGENCY .COM (ACOM) 73. 4)6,063 14 ,760,278 4 .97 35 . 17% - 35 .17% 1 7/ 16 21,217 20 0

Organic (OONC ) 27,648 ,678 15 ,283,101 1 .81 17 .38% - 17 .38% 3/4 11,462,32 6

Razothsh (RAZF) 27,040 ,403 11,915 , 666 2. 27 12 .27% - 12 .27% 1/2 5 ,958 .33 3

Subtotal, public cos 128 ,095,144 - 38 $ 38,558

Private Companie s

oash , Com 15 , 200,000 6, 000,000 2 .53 19 .46% 19 .46% 15,200,000

LlveTech 12 , 500,000 4 ,135,649 0 .02 10 .00% 41,357 4,135,650 20 .00% 12,600,000

Oyster 13, 612,554 4 ,924,000 2 .76 21 .60 % 4,004, 00 455 ,010 20. 93% 13.812 .554

Red Sky 20,107,578 1 0,0 78 ,780 2 . 00 26 .51% 6,700, 658 221,363 26 .94% 20 , 107,57 8

Subtotal private cos 61420132 61 ,420,132

Total, all investments 189,515 , 276 100,058,69 1

Sale Price

Sale P rice 189 015,276

Subtotal, sale pri ce i86,515,276

Net

Closing price on date noted It pudic or cash purchase price? not, except as noted. Werrants are treated as unexercised .

O

C)00W Communicade summary portfolio .xisN 4/27/20053:2° PM

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Communlcada Holdlr%Sock Common Bk Val/ % of Warrant Sh*Warr Valuation Pre-tax Tax exp((Ben) After-tax

Company 4alue Eq Shares Share Outstatd Strike Warrants- Percent Estimate' Unreal G(L) on Unre al G(L) Unreal . G(L) Comments

Private Companies

Caresoft 10499,998 3,937,007 2 .67 16 .25% 2,918,400 768,000 18 .83% 10,499,998 - -

Domain Network 3750,000 134,206 27 .94 20 .0% 20 .10% 3,750,000 -

e%iedidrte 10,5170,000 0,000,000 1 .17 21 .04% - - 21 .04% 10,500,000 - -

Hearmology 6,050,000 5,000,000 1 .01 25,00% - 25 .00% 6,050,000 - -

IpNetwotks 6,013,741 5.000,000 1 .00 18 .08% 300,000 300,000 18 .81% 6,013,741 -

MedlaSpace 10,400,0DO 1,145,926 9 .08 16,241k 1,853,045 214,473 18 .72% 10,400,000 - - -

Ntercept 2,514,585 3,179,044 0 .79 18.82% 504,638 903,075 20 .80% 2,514,585 - -

RecruitSoft 9,500,000 11,508,342 013 '3 .16% 1,749,954 2,891,530 15 .91% 6,643,809 (2,856,101) (999,635) (1,856,466) All stock valued at Series C price/shar e

ReplayTV 3,100,000 274,725 11 .28 0 .13% - 0 .63% 1,002,411 (2,097,529) (734,135) (1,363,394) Estimated proceeds from SBLU seq .

WortdMedlcatLeaders 1E,000,000 2,300,613 6 .95 19 30% 19,8 46 1,98 4,56 1 31 .66% 16,000,07 0

Subtotalprivate cos 7E,328,324 73,374694 (4,953,630) (1,733,771) (3,219,860 )

Total, all investments 7 F,328,324 73 374634 (4,953,630) (1,733 771) (3,219,860 )

Est . Legal and other costs (1,000,000) (350,000) (650,000 )

Subtotal 76,328,324 73 370694 (5,953,63D) ( 2,083,771) (3,869,860 )

Balance sheet liabilities

Accrued fiab4tes - Communicade 6,271,865 6,271,865 2,195,153 4,076,71 2

Communicade Deferred Taxes 44,000,000 44,000,000 15,400,000 26 .600,000

Onmlcom Irrputed InterestESCP cushion

30,514,00 0

24,000,000

30,514,000

24,000,000

10,679,90 08 .400,000

19,834,100

15,600,000

Subtotal, balance sheet Itabs 104,785,865 104,785,665 36,675,053 68,110,81 2

Net (26,457,541) 98 832,235 34,591 282 64,240,95 3

• Purchase price, orceptas noted. warrants are traatad as unexercfssd.

0

C)Communicade summary portfotio .xls

4/27(2005 3 .29 PM

Exhibit B

F

S}3ORT YEAR INITIAL RETURN

-1065 U .S . Return of Partnership Income ,, .5 .F

~ GM~_e AFO~0115 5

r . . . .• .... ., .,ooo, . ., .. . . n ., . .u t r 02 , ;aoi,anaena; 12 31f

2001S

) ~j oo y. 1-- 9 Lte sr paste instructions .

A PrinuD,al Dusnras aeivily Name or parvle3nw D Flnpey . r ru . nGbcatwn numW r

74-2999722INVEST MENTS SENECA INVESTMENTS LLC F D.I . busness .urea8 Pnneip >I prooact or aema Number, su«t, ano rrom or swu no . e > P .O . boa, see paye 1 2 c, M . --bons ,

INVESTMENTS 437 MADISON AVENUE r,oul»>nameepug .I-orC Came. mae number t City nr lover . slate. ano 21P ma. the ~nsrruclipul

523900 NF'W YORK NY 30022 is 290 302 761 .G Check applicable bo>m: (1) 1 X ( In ilia) return (2) Final return (3) U are change ( 4) U Aoases3 change ( S) - Amended retu rn

H Check accounting rnett+od: (1)o Ch (2) ]( Accrual (3) p -E, Other Ispecity) _ _

-

I Number or Schedul es K-1 . Attach one for each person who was a panner at any time our;ng Ine la, year p 2

Caution : Include only trade or business income and eipenses on lines la through 27 bebw. See the instructions for n-ione In/ormarion.

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1 a Gross receipts or sales . . . . . . . . . . . . . . . . . . 1 2b less returns and 238owance: . . . . . . . . . . . . . . . . 1 6 1 c

2 Cost of goods sold (Schedule A, Inc 8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

3 Gloss profb. Subtract Inc 2 horn line 1c . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 4 Ordinary income (loss) from other panrlerships estates, and lasts (anact, scnedude) . . . . . 4

r

`

d Net farm prom Poss) fanacn SCnevue h (Form 1040)) . 5

6 Net gain (loss) from Form 4797, Pan il . line 18 . . . . . . . . . . . . . . . . . . . . . . . . . 6

7 Other income (loss) (aflach schedule) . . . . . . . . . . . . . . . . . . . . 7

8 iota) income floss) . Combine'lines 3 Ihrouoh 7 . 8

9 Salaries and wages (other than Io partners) (less employment credits) . 9

10 Guaranteed payments to partners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 0

11 Repairs and maintenance _ . . . . . . . . . . . . . . . . . . . .

-~° 12 bad debts , , . _ . . . . . .0 13 Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 3

14 i axes and licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 4

1 5 Interest . . . . . . . . . . . . . . . . • - - . . . - - - . . . 1 516 a Depreciation (it required, attach Form 4562) . , . . . _ _ . _ 16 4

to less tleprecietion reported on Schedule A end etsemne re O'1 return 1 bb 116 C

17 Depletion (Do not deduct oil and as depiction.) • . . . . . . . . . . . . . . . . . . . . . . 1 7

o 18 Retirement plans . etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . " a10 Cmployee benefit programs . . . . . . . . . . . . . . . . . . . . 1 9

20 Other deductions ( arfach schedule) . . . . . . . . . . . . . . . . . . . " . . _ . . . . . . . . 2 0

,1021 Total deductions, Add the amounts shown in the far right column for lines 9 through 20 . 2 1

72 Ordinary income (loss) tram trade or business activities . Subtract line 21 from line 8, , 2 2

ign

Here

unae+ penances or Recta,, I nectar h.. I nart eoanvnrd $5.s re Wm, mclvang ac cAmDanyvrg urteauler ana slabrn .nh. . >ne to 1M best of my sno+IMy aant better, II 15 Imo, co rr ect. > n0 Complete . Declaration at Drep >ror l01Cm ben gen ar ai pnner or Irmit>d babiity mmp>ny member) u bawd no > uhlbrm> NO O K/ ~ reDar n anY MOrMe00e. ""' " "

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Si@nawre of general pane .? Or untied FabiIty almpr,y memos Dale

PaidPn,,, .fs lsignnuro ~' ,~ f

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7/25/02 mPle,ed 1.. 1Preoa t . S5N or P11N

041-66-537 6" Firma rome la yowl rm1 t_t WJS Lri77VUJLC_VVYLt(J LLY IEIN ► j,7-4UVGJL9

Use On ly ii sett<mpbyed), pr,on> no.> 1177 AVENUE OF THE AMERICASwa"e'andZIPs°°e

NEW YORE NY _30036_ I 646-471-4000

For Paperarori tt .duetion Act Nolira , see . .Pan ' . instrunions . Form 1065 12001)

. sa.1P tern 1,U0C

SD1386 2532 07/24/2002 18 :00:36 V01-7 2

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CONFIDENTIAL OMC 0054322

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F8736 Application for Automatic Extension of Time°'m

( Fev October 2000)To File U .S. Return for a Partnership , REMIC,

. or for Ce rt ain Trusts ,OMB No. 1545•10Se

bewnmemof no tn:asuryei,nwr Fu' ws SerMC, ► File a separate application lot each return.

Please type NameEmployer toentification number

or print. SENECA INVESTMENTS, LLC 74-2999 72 2F ile by the out

core for tiling Number, street. and room or suite no . It a P.O . bos see instructions .

the netum forwhich a nextension is 4 3 7 MADI SON AVENU Erequested . Set Gryof ro.n. srare , Intl 2G crane . e e rorc.gn aaom>a . tO+e+ cny, pm.wc . of sta +e, Ina m on,,1. Fono,- +ne cwnvy s o.a+~+K. r. ., .n+•~~+v w x.u~ coo.rnsrrucrlons

. NEW YORX NY 1002 2

1 1 reouest an automatic 3-month elrtension of time to file ( check only one) :D Form 1041 [) Form 1041-OFT f} Form 1065 [) Form 1065-B fl Form 106 6

2 It the entity does not have an o ff ice or place of business in the United States , check this box . . . . . . . . . . . . . . . . . . . . ► El

3a For calendar year 20 or other tax year beginning 5 / 1 PO OI , and ending 12/3a 20 0 2

b If this tax year is lot less than 12 months , check reason :U Initial return J Final return' (] Change in accounting period

4 It this extension is requested for Form 1041, Form 1041-OFT, Form 1065-B, or Form 1066, enter the following amounts :

a Tentative total tax from Form 1041, Form 1041-OFT . Form 1065-6 , or Form 1066 (see instructions) . . . S

b Refundable credits and estimated tax payments, including any prior year overpayment allowed as acredit, from Form 1041, Form 1041-OFT, or Form 1065-B (see instructions) . REMICs, enter -0- . . . . . . . 5 _

c Balance due . Subtract line 4b from line 4a . If Zero or less, enter -0 . . Enclose payment . if any. wit hForm 6736 (see instructions) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Caution : Interest willbe charged on any tax not paid by the secular due date of Forms 1041, 1041-OFT, 1065-B, and 1066/rem the due

date unb; the tax is Paid .

General InstructionsSection relerences a re to the Internal Revenue

Code unless otherwise noted.

Purpose of For mUse Furrn 8735 to request an automatic 3-month

extension of time to tile a return tor :

• Trusts filing Form 1641, U .S . Incomelax Return for Estates "Trusts, or Form

1041-O1'T, U .S . Income Tax Return for Qualified

Funeral Trusts .

• Partnerships filing Form 1065, U.S. Return ofPartnership Income, or Form 1 o65-a, U .S .Return of Income lot Electing Large Partnerships .

• Real estate mongage investment conduitstiling Form 1066, V .S . Real Estate MortgageInvestment Conduit ( REMIC) Income lax Return .

It allowed, the automatic extension will extendthe due dale of the return to the 15th day of the3rd month following the month in which the regular

due dale falls . The automatic 3-month extensionperiod includes any 2-month extension grantedunder Reputations section 1 .6081-5 to certainforeign partners hips .

Note : An estate filing Form 1041 shoukt not file

this torn. Instead, n should request an extension

uslno Form 2758, Application for Extension o f

tsa

E1F FELhD1sF. 1

CONFIDENTIAL

Time To Fire Certain Excise, income, inloimarbn,

and Other Returns .

The extension will be allowed it you complete

Form 8736 property, make a proper estimate of

the lax on line 4a (if applicable), and file the termurn time- we will notiry you only if your request for

an extension is not allowed.

For most partnerships, trusts . and REMICs .

an automatic extension will extend the due bate of

the serum to July 15th of the year following the

close of the calendar year.

When To FileFile Form 8736 by the regular due date of th eserum to, which an csienaiun it rcyueo ten Its, i n

the case of certain foreign partnerships, by theexpiration date of any extension of time to filegranted under Regulations section 1 .6061-5) . Theregular due date is generally the 15th day of theatn month following the close of the entity's taxyear.

Additional Extension of TimeTo Fil eIf Form 8736 has already been tiled but more timeis needed, tile Form 8800, Application forAdditional Extension of Time To File U.S . Returnfor a Partnership . REMIC, or for Ceram Trusts .

Except in cases of undue hardship, do not file

Form 8800 unless Form 8736 has already beenfiled. Before an additional extension can be

granted, the entity must show reasonable causefor the additional time needed to file .

Ask for the additional extension early so that Ifit is denied the return can still be filed on lime ,

Where To FileFile Form 8736 with the Internal Revenue Service

Center where the entity will file Its return .

No Blanket Request sFile a separate Form 8736 for each return forwhich ynu arc raquoeting an cretonsion of limo tofile. This extension will apply only to the specific

return checked on fine 1 . 11 does not extend the

time for filing any related returns. For example, anautomatic extension of time to file Form 1065 will

.wl apply to the income tax returns of the partnersof the partnership .

Form 8736 (Few. to 2OXI)

OMC 0054323

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F-10&5 (7oo+( SE2lECA INVESTMENTS LLC 74-2999722 6.w 2Cost o1 Goods Sold (see pace 18 of the instructions )

1 Inventory at beginning of year, , • 1

2 Purchases less cost of items withdrawn lot personal use , , _ , , , , , , , 2

3 Cost of labor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

4 Additional section 263A costs (attach schedule) , , , , , , , , , , , , , , ,, , , , , ,,,, a

5 Other Costs (attach schedule) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

6 Total. Add lines 1 through 5 , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , 6

7 Inventory at end of year _ . . _ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 (

8 Cost of goods sold. Subtract line 7 Irom line 6. Enter here and on page 1, line 2 . . . _ . . , , , , 8

9 a Check all methods used for valuing closing inventory:(f) Cost as described in Regulations section 1 .471-3

(ii) Lower ofdcost or market as described in Regulations section 1 .471-4

(ii) Other (specify method used and attach explanation) ►---------------------------------------- ---

b Check this box it there was a writedown of 'subnormar goods as described in Regulations section 1 .471-2(c) . . . . . ►c Check this box if the LIFO invento ry method was adopted this tax year for any goods (if checked, attach F 970k . ►d Do the rules of section 263A (for properly produced or acquired for resale) apply to the partnership? , ,

orm

Yes X Noe Was there any change in determining quantities, cost, or valuations between opening and closing inventory Yes X No

if Yes," attache lana t

Other Informatio n

1 What type of entity is filing this return? Check the a icable box : Yes N o

a Domestic general partnership to Domestic limited partnershi pB

c X Domestic limned liability company dN

D-'m ile ti-ii .d 6abllty P--hip

e Foreignperlnershlp f Other ► ---------------------------------- -2 Are any partners in this partnership also partnerships?, . . . . . . . . . . _ , . _ X

3 During the partnership's tax year . did the partnership own any interest in another partnership or in any foreignentity that was disregarded as an entity separate from its owner under Regulations sections 301 .7701-2 and

3D1 .7701-3? It yes, see instructions lot required attachment , . . . _ - . , _ , , . - X

4 Is this partnership subject to the consolidated audit procedures of sections 6221 through 6233? 11 `Yes .' see

Designation of lax Matters Panne, below , , , , , , , , , , , , , , , . _ _ , . . . . , . , , _ . , _ . . . . X

.. Dees this partnership meet all three of the following requirements ?

i a The partnership's total receipts lot the tax year were less than 5250 .000',

b The partnership's total assets at the end of the tax year were less than $600,000, an d

c Schedules K-1 are filed with the return and furnished to the partners on or before the due date (includin g

extensions) for the partnership return.

If -Yes,' the partnership is nor required to complete Schedules L . M-1, and M-2 ; hem F on page 1 of Form 1065;or Item J on Schedule K-1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - X

6 Does this partnership have any foreign partners? It -Yes," the partnership may have to file Forms 8804, 880 5

and 6813 . See page 20 of the instructions _ . , , , _ , , , , , , , , _ . . . _ • , , , , , , , , ,, , , , , , X

7 Is this parmeratep a publicly trolled perir,ere hip as defined in sectio n

8 Has this partnership filed, or is it required to hie, form 6264 . Application lot Registration of a Tax Shelter? . , _ , , ,

9 At any time during calendar year 2001, did the partnership have an interest in or a signature or other authorit y

over a financial account in a foreign country (such as a bank account, securities account, or other financia l

account)? See page 20 of the instructions for erceplions and tiling requirements for Form TD F 90-22 .1, It 'Yes, 'enter the name of the foreign country- ► ---- _

1 D During the tax year, did the partnership receive a distribution from, or was it the grantor of, or transferor to, a

foreign trust? It 'Yes.' the partnership may have to file For-in 3520 . See page 20 of the instructions . . . . . . . . . .

11 Was there a distribution of property or a transfer (e .g ., by sale or death) of a partnership interest during the ta x

year? If 'Yes,' you may elect to adjust the basis of the partnership's assets under section 754 by attaching th estatement described under Elections Made By the Partnership on page 8 of the instructions . . . . . . . . . . . . .

12 Enter the number of forms 8865 attached to this return ►

Designation of lax Matters Patinae (cP.e page 20 of the instructions)

Enter below the general partner designated as the tax matters partner (TMP) for the tax year of this return:

Name of Identifying)desig na ted TMP Or OMNICOM GROUP INC . number of TMP 1 3-1 514 B14

Address of Pr 437 MADISON AVENUEdesignated TM NEW YORE NY 10022

Foy 1065 (2ool)

JSA SD138b 1532 07/24/2002 18 :00 .36 V03-'7

CONFIDENTIAL OMC 005432 4

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ror.r, , oe_ toot ) SENECA INVESTMENTS LLC 74-2999722 r-, 2Partners' Shares of Income . Credits - Deduclions . etc .

(a) Distributive share itemsb Total a mourn

1 Ordinary income (toss) from trace or business activities tpage 1 . line 22 )

2 Net income (loss) from rental real estate activities (attach Form 8825)

t j

7

_

3a Gross income from other rental activities 3 .

to Expenses from other rental activities (attach schedule) 31 ,

c Net income. (loss) from other rental activities . Subtract line 3b horn fine 3a

4 portfolio income (loss): a Interest income . . . . . . . . . . . . . . . . . . . . . . ,____________________

843 533 .b Ordinary dividend s

lty incomec Roya

d Net short-term capital gain (loss) (attach Schedule D (Form 1065)) 69 , 976 429 .e (1) Net Ions-term cap tal can (loss) (attach chedule U (f-orm 70b2)) - 63 73 6 4 69 .

(2) 28% rate gars (loss) ► (3) Oualified 5-year gain ►f Other portfolio income (bs) (attach chedule) •

5 Guaranteed payments to panne n

6 Net section 1231 gain (loss) (other than due to casualty or theft) (a tt ach Form 477) ,

.

7 Otherincome loss attach schedule SEE STATF_7ffT1T. ,1 . -1 28 5Charitable contributions (attach schedule)

9 Section 179 expense deduction (a tt ach Form 4562)6 1 0 Ded-lion elated In pnMntin incmm~ (itWnoe) -3 X

11 Other deductions (attach schedule )

12 a Low-income housing credit :

(1) From partnerships to which section 42(j))apii e

(2) Other than on line 12a(1)

YT b Qualified rehabilitation expenditures related is rental real estate actrvines(attach form )458) 17b -

U c Credits (other than credits shown on lines 1 2a ants 17b) reraied io rental teal estate acrvit,ee 17 1d Credits related to other rental activities _ . .

13 Other credits . . . . . . . . . . .. . . . . . . . . . . . . . .

. . . . . . . . . .

12 d

13------- -

14 a Interest esclense on investment debt

>b (1) Investment income included on lines 4a, 4b . 4c, and 4t above

. . . . . . . . . . . tab 1 843 .533 ,

S E 5 (2) Investment expenses included on line 10 above . 14b T 3,129,615 .1Sa Net earnings (loss) fromse8-employment . . . . . . . . . . . . . . . . .

15 a

'c o Gross rarm ng or r 51 l,9 :lorne _ _ . _ _ _ _ _ 151)

E c Gross nonfarm income

1 L a Depreciation adjustment on property placed in service alter 1986 _ , , _ , , _ , , , 16 .

a tb Adjusted gain or toss . . . . . . . . . . . . . . . . . . . 16 e

z 8 c Depletion (other than oil and gas) 1 g c

E n = d (1) Gross income from oii, gas, and geothermal propertie s

(2) Deductions allocable to oil, gas, and geouiermal properlres____________________

e Other adjustments and tax preference items (attach schedule)

1a Name of foreign country or US. possession ►b Gross income from all sources

Gross income sourced at partner leve l

d Foreign gross income sourced at partnershp level :

(t)Pwuve t7}LeNed w+egonrr jeaanh aNeowe) ► (])Gneal knmun

e Deductions allocated and apportioned at partner level :

(1) Interest expense ► (2) Other , • , , , . - , , , , , ,Deductions allocated and apportioned at partnership level to foreign source income :

(1) Msietp(1) iiafeo casgorie> tartarh achedure) ► 13) General Irniraion

-

g total toretyn ridars (uteri. one) : ► Pap Accrued D , , • , . , . , • - -

h Reduction in taxes available for credit (attach schedule)

16 Section 59(e)(2) expenditures : a Type P _ b Amount ►19 tax-exempt interest income20 Other 1>-exempt income . 7 9

21 Nondeductible expenses SEE STATEMENT 1 1 879 .22 Ditributions of monoY (cash and marketable securities ) 45 000 000 .23 Distributions of property other than mone y24 Other item . and a unis r .Q.4 .d to be repo.1ed sec ref • to mnnera ranach ect.odt k)

Fcem1065 (2001 )

ass1rtOX7 .000

501 F6 2592 ()7/24/2002 all-00-36 V01 --1 4

CONFIDENTIALOMC 0054325

I

D

FormloDn (2D01 ) S =CA INVESTMENTS LLC 74-_2999722 rÀt 4Analysis of Net Income (Loss)

1 Net income (loss) . ComDne Schedule K. lines 1 tnwuon 7 in column (b). From the resell, subtract thesum of schedule K . Irnec 8 through 11, 14a, 17_q.c!W 16G . .. _ . . 1 ? K6 A 07 PJ

2 Analysis by ( ii) Inoivioual ( it) Individual t") E><emptr P

I II v) artnershi pIpazsive ) agani2alion (VI) NwnmeefOtherpanncr type : I

Generalpartnen 668 079 .b Limited panthers

Balance Sheets per Books Not required it Question 5 on Sched ule B is answered `Yes . "beginning of tan year End of last yea r

. Assets ( a) (b) (c) Id )1 cash : . . . . . . . . . . . . . _ NONE 15,173 72 57a bade notes and accountsrecevable • NO 914 657

b Less all owance Ior bad debts , , • • • NONE 914 65 73 Inventories

4 U.S . government o bl igation s

5 laa.eoempl secvrilies

6 Other current assets (anach schedule) STMT 2 NONE 46 08 3, .7 Mo rtgage and real estate toaru

E Olhefinveslmems(anachscnedure) STMT 2 NO 272 438,15 2a . eundi,9 . ,..,d ahc, do r~aabre ono NO 4 7 8 5 2

b Less accumulated depreuahon NON NONE 2 , 857 - 39,995low Depielabte asset s

b Less accumulated depletion

11 I and net nt any amndvation ) . . . . . . . .

. 12a Intangible assets (amortizable only) . • • • ,

b Less accumulated areortizallon

13 Other assels (attach schedule) _ • _ . _ STMT 2 NO 1 690,24 414 lontassels . - • • , , • , , • , • • . • • , NONt_7 290,302 76 1

Liabilities and Capit a l

15 Accounts payable • , , NO 7 -76 216 Mong .gn• noes . bolds payable in le ss Irian 1 year

17 Other current lia bi lities (attach schedule) STMT 2 NO 4 117 269 .19 All nontecourse loans

19 Mongpts , cats, tgnas penok it i Tea v Fine

20 Other liabilities ( attach schedule) STHT 2 NONE 4 631 41 821 Pan-s ' capital -aunts

.NONE r28 .526 ;~3 2

22 Total liabilities and capital . NONE 1 290,302 761® Reconciliation of Income (Loss) per books With Income (Loss) per Retur n

(Not required if Question 5 on Sche du le B is answered 'Yes .' )

III

P

P

1 Net income Moss) pem book3 1 526 ,232 . 6 rncorne rtcwocv on books iris year not Inwoeo

2 Income included on Schectote K, Gies i on Schedule K . lines 1 Ihrouoh 7 ( uernize )through 4, 6, and 7, not rec cr ded on mows a 1 a>-e>,empt interest I

this year(temize):_S'JW_2----- 5 656 850 . STAT TENT 3 8 181 8923 Guaranteed payments ( Otter than health

______ _

7 Deductions included on Schedule K. tines I-

insurance). . • . • • . . - • • through 11, 14 a, 17g, and 18b . not charged4 Expenses recorded on books this year not against book income this year (denude) :

included on Schedule K, lines I through Depreciation $11, 14a, 17g .and l8b (Hemaek SEE- STATEMENT- 3 ------- 35,601 .

a Depreclat ionS _______________ 2 ,321 .A travel and entertainment S ----- 1 , B79 . e Add lines 6 and 7 . . . . • . . . . • . . 8 217 693 .

SEE STATEMENT_ 3------- 3 696 ,490 . 9 Income lbss) (Analysis of Net Income (Loss )5 Add lines I through4_ . . . . . . . . . . 10 885 772 .

,

line 1). Subtract line 0 hom line 5 . - 2 668 079 .Anal sis of Partne rsr Cap ital Accounts Not required if Oueslion 5 on Schedule B is answeredYes. '

I Oularice at tielnrilrig or year NU UtsUrtwbons : a Cash ,5' j 3 45 000 0002 Capital contributed dmingyear 325 000

___

000 .

. . . .

Sr Properly

, , .

3 Nei income (loss) per books 1 526 -232 .- , - .

7 Other decnuiies Itemize):4 Other increases fil emin):

__--

. . . . . . . . . .

-------------------------- -------------------------- e Aod lines 6 and i , _ , , , , , • , , , , 45 UVV 00 0

5 Add lines t Ihrouch a 32 6 52 6 2 32 - a r alan< e al -d of star. Subuucr In, E hour M,e 5

,

281,526,232 .,;;;Ow 2'em Form 1065 (2001)

501386 2532 07/24/2002 18 :00 :36 V017 5


0

r

SCHEDULED Capital Gains and Losse sp )► Attach to Form 1086 .

otp .nmin~ a arc t,tas„ryInlemat ke+enue Seruicr

Name of panne rs rUD Employer iee nti

SENECA INVESTMENTS LLC '14-2999 'Short-lean Capital Gains and Losses -Assets Held One Year or Les s

(+) Desuiprrob propertybag .. fOD Shan

( b) Dab ocWiwi Ic ) Dale sold IdySxs anu le} Coll u ann bays to Gana Ili-)

a7 G0.Imooth, day . ye ) Imonth . day. year) Ises in .-bons) tore iur.ut4 m. ) lid) mirrtq p))

p 1 1

10

P

p

r

10

2 Short - term capital gain from installment sales from F orm 6252, line 26 or 37 T

3 Short- term capital gain (toss ) from like -kind eachanoes from Form 682 4 3

4 Partnership's share of net short- term capital gain ( loss) . incFadfng specially a llocate d

short- term capital gains ( losses), from other partnerships , estates , and trusts . _ - . - - 4

S Net shun-term capital gain or (loss) . Combine lines 1 through 4 in column (f )

Enter here and on Form 1065 , Schedule K . fine 4d or 7 , 5 69. s 1 onn-Tnrrn Capital Gaina and I esr os - Aisntc Hnid Mnro 'T han r 1 no Vas, .

22©0 1as numb .,

I l Deseriofron or DruRrty

(e.g., 7DD etw mT Co

tb) D,n acao:od

Inn-m. uay . year )Is) Dare ada

rmonm . oar . >.y)to) Saes Pric e

rsee ,r,., vvc eons)1H Coer is ah n, bail

ues hvrucr:wn)(r) Gail . (bas)

llo) m;nus (e))

i9) 28% nib Os n

°i 1~s )'Is ♦ run . txb.

DLTSSLS r,YA7)Asi5 DPUi RZ UEyT -t 3136ef t . -63 736 JI69 . .

7 Long-term capital gain from installment sales from Form 6252, line 26 or 37 78 Long-term capital gain (loss) from Ike-kind exchanges from Form 8624 . , - . 09 Partnership's share of net long-term capital gain (loss), including specially allocate d

long-term capital gains (losses) . from other Dartnershios_ estates and trusle . . . . . . 9

10 Capital gain distributions , , , - , , - _ - _ , - _ - _ . . . . , . , - - - , _ ! 011 Combine tines 6 through 10 in column (g) . Enter here and on Form 1065, Schedul e

K,line 4e(2)or 7 , .,,,, ,12 Net tong-term capital pain or (loss ). Combine lines 6 through 10 in column (I) .

Enter here and on Form 1065 Schedule K . line 4e(1 or 7 . . 12 -63 .136,469 . 1

'28% rat e gain or ( loss) includes all' collectibles gains and losses' (as defined in the instructions).

F or Paperwod Reduction Act Notice, sue the Instructions for F am 1065 .

JSA

1P1041 S.DDG

$01311 2532 D1/211200i )E :00 :36 vol-,

CONFIDENTIAL

schedule D IForm 1065) 200 1

6

OMC 005432 7

11

OMB No. 1V5 -0 17 ;

456 2Form Depreciation and Amortization o 1tRee . March 2002 )

m f t ho d l(including Information on Listed Properly)

l

L::epan r o e rrawry

► Eve separate inltlU[Ibn3 . It Ana[h to your 1a) lrrwm . µ , 6 7_Sharon on returnName( s) tying nk^rbt r

' 1'SENECA INVESTMENTS LLC -2999-122_74

1eusiness a activity to w xh th is tone Wines,

SENECA INVESTMENTS LLC

1 ;,F -5 1 Election To Expense Certain Tangible Property Under Section 179

Note : It you have any listed properly, complete Part V before you complete Part 1.

1 Maximum amount . Set pone 2 of the ns J, uctons for *higher limit he tenan businesses . . . . . . . . . . . . . 1 _ 2 4 '00c .

2 1 oral cost of section 179 properly placed in service (see page 3 Of the nstructions) - . . - - - - 2 f

3 Threshold cost of section 179 property before reduction in limitation . . . . . . . . . . . . . . . . . . . . . . . 3 2 00 000 .

4 heduction in limitation . Subtract line 3 from fine 2 . If zero or lets, enter U- . . . . . . . . . . . . . . . . . . . 4

5 Dollar limitation for tar year . Sublracl fine 4 from line 1 .11 zero or less . Brier -0- . 11 married

filing separatel y, see page 3 0l the insvvnions . . . . . . . . . . . . . . . . _ 5

(a) Dele r iptron of pmpe y (o) C- t lousiness are oM ) (c) Elected met

11

p

r

7 Listed property . Enter the amount from line 29 . . . . . . . . . . . . . . . . . . . . . L7

L 1 dial elected cost of section 179 property . Add amounts in column Ie). tines 6 and 7 - _ - - - a

9 1 entative deduction. Enter the smaller of line 5 or line 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

10 Carryover of disa6owed deduction horn One 13 of your 2000 Form 458? . . . . . . . . . . . . . . . . . . . . 1 0

11 business income limitation . Enter the smaaer of business income InbI less marl zeru) or brie 5 (Set nsuuctions ) 1 1

12 JeCtion 11'1 expense ar-flue . Atld 1hicn 9 cod 10 . bv1 do rant corn, ,.,v. c inn ., G ..< 1t _ ' 2

12 Carryover of disallowed deduction to 2002 . Add lin es 9 and 10, le ss line 12 , , ► 1 3

Note : Do nor use pan /I ./ Fail lit belox for listed property, instead, use Part V.

S eciai De reciation A)iowance and Other De reciation Do not include listed p roperty . )

1 4 Special depreciation allowance lot certain properly (other than listed properly) acquired aher

e 3 of the wtsuuct,ons) . . . . . . . . . . . . . . . . . . . . . . . . . . .see a2001 . . .( gpSeptember 10,ection 168)f))1) election (see page 4 of the instructions) . . . . . . . . . . . . . . . .t t . . 1 5o s11 Properly subjec

16 Other oe reciahon includin ACRS see 4 of the instructions - - I 16

' MACRS De err ecia tion (Do not include listed properly . (See page 4 of the instructions . )Sectton A

laced in service in tad years beginning before 200 1ssetsr1 7 M R i_ 1 71 7pot aon sAC S deduc t

1e If you are electing under section 166(i)(4) to group any assets paced in service during the tar

1

year in19 ont o more ae e a a±>o cr e~w~„u ~• . .Section B - Assets Placed in Service

- - . - - -During 2001 lax Year Using t he General Depreciation Syste m

(a) Ctansitrcaiion or ornpeny

{b) Month antl

year pheed in

nerotca

(c) Bases for uepran anonIt

ufmt55fmre 5lment useonly -Dee rnstnr Cl.ons)

f4) Recoverype ~tl (t) CunrenlC, ir) Method to) Depreciilion rt ducfion

19a 3-year propen)t., S-l", vuuc

c 7-year propert y

d 10-year propert

y 15-ear properly

20- ear property

9 25-year property 25 yrs . Sib

h Residential rental27 .5 yrs . MM S/L

properly 27 .5 yrs . MM S/ L

N nr, .Wrnfa,r .~ 5/021200.1 33,425 . 39yrs . MM Sit. 536 .prope rly -MM S/ L

Section C - Assets Placed in Service During 2001 Tax Year Using the Alternative De reclatlon 5 stem

200 Class Fie sit.

b 12-year 12 s. Sit

c 4D-year 40yrs. MM Sit

;4IIi summary (bee page o of the tnslructIOns. I

21 Listed property. Enter amount from line 28 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

22 total. Add amounts fr om line 12 , lines 14 through 17, Ines 19 and 20 in column (g), and line 21-

Enter here and on the appropriate lines of your return . Pannerships and 5 corporation - see instr . ,

23 For assets shown above and placed in service during the current year ,

enter ihortion of the basis a tt ributable to section 263A costs (23

.sf Per Paperworli krduction Act Notiu, see stparau instructions .102300 0 .000

SD1386 2532 07/24/2002 18 :00 :36 V03-7

CONFIDENTIAL

7 2

Form4562 (2001)( Rev.3-2002)

7

OMC 005432 8

P

111

rorm . 5a212ool tre, .r2oo2t S£NECA INVESTMENTS LLC 74- 2999722 c- 2Listed Property (Include automobiles , certain other vehicles, cellular telephones . certain computers, andproperly used for entertainment , recreation, or amusement .)Moto : Fo,-y vehicle for which you are using the standard rnileb cc tare or cleductino /ease expense. complete ally

24 ;, 24b c9,lt is ( a) through (c) of Section A . all of Section 8. and Section G II applicable

Section A - Depreciation and Other Information ( Caution: See page 8 of the instructions for lirnrts l~assen oer afnomobifesj_e ~ .~ .. . . . .

-(r) N) 6ui ness/ (d) f~ )' 111 (9t mt r )yp p y7 e of rope pet DGt! paud'n v esrmeM Cosf a oe.e.

6N p b pRCiYiprlieco.ery Merhotl/ Depr ciaiv+ 0 ld5letl

eniUe514s1) service ra< trove.., u,. .n

period con- deduction section 17 9)cost

25 Special oeptecraflon allowance for listed property acquired ahe Sepre•nber 10, 2001 .

and used more than 50% in a ualified business use sec page 7 of the instructions 2 5

t

p

27 P , 11Y used 5 0 /, or less in a qualified Wsiness use se! Dade 7 d the in$ ructrons :

Sl l

Sf L

S1 L

2 8 Add amounl5 in column ( h) . lines 25 through 27 . Enter here and on line 31,pane 1 20

29 Add amo-M<_ in column fi) lint 26 . Enter here and on One 7 Dane 1 19

Section B - Information on Use of Vehicle s

Complete thie section Ier vehicles used bye We ptopnetor, panner, or other 'mere man 5'/. owner,' or retared person .

30 total buslnesslinvevmcnt miles throes durin c

the year Id . not Include commutfnq mien -

( a )

Vehicle 1

(b )

Vehicle 2(c )

Vehicle 3

(d)

Vehicle 4

(! )

Vehicle 5

( f)

Vehic le 6

see page 2 of the inswctions ) , , , , , _ . .

31 Intel commulina miles driven du ring the yea r

32 1clot other personal lnoncommutmg )

miles driven . . . . . . . . . . . . . . . . . .

33 total mile s driven Outing the year .

Arfd lines 30 through 32 . . . . . . . . . . . . .

34 Was the vehicle available to personal Vrs No Yes No Yea No Yea No Nips No Yee N o

use during off-duly hours ? _ , , , , , , , . , . ___

3Was the vehle used primaril

y more than 5o++ner o refateo

fff

Section C • Questions for Employers Who Provide Vehicles for Use by Their Employee s

Answer these questions to oelermine it you meet an exception to cornpleling Section 0 for vehicles used by employees who

are not more (iron 6% -nerc or redirect persons (see oane 8 of the inslruclfonsl .

37 Do you maintain a written policy statement that prohibits all personal use of vehicles, including commuting, by your employees? . . . _

38 Do you maintain a written policy statement that prohibits personal use of vehicles, except commuting, by your employees?

See page 8 of the instructions for vehicles used by corporate officers, directors . or 1% or more owners _ _

39 Do you treat all use of vehicles by employees as personal use? . . _ . . . . . . . . . . . . . . . .

40 Do you provide more than live vehicles to your employees . obtain information from your employees about

the use of the vehicles, and retain the information receiver? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

41 Do you meet the requirements concerning qualified automobile demonsualion use? (See page 9 of the instruction . )N .,rr• If w,ru an ..wer 1n 37 . 38 . 39. 40 . or 41 is 'Yes' do not comolre Section B lnt the coceed vehicle,

N o

( }Amoniia0m

olacriDlwn of cmhDer, amonixarion Amon¢abf! I

Code period or Amontaetion roeb<pna

J,

t ewentagemw

t""'

42 Amortization of costs that begins durin our 2001 tar ear rs ee oe 9 of the instructions :

O GANI7ATIONAL COSTS 05/02/2001 434 .686_ 709 6 57 .45A

43 Amortization of costs that began belore your 2001 tax year . , , . . . , _ .

A A l ofal . Add e m_ounts in column 11) . See pave 9 of the instructions for where to court 44 57 , 958 .

!Yr«m1562 (2oof) (q.v. 3-2002)

IX22tt, ! .oocc

SUJ38f. 2_32 0?/24/2002 16 .00 .36 V01- ~ g


0

SENECA INVESTMENTS, LLC 74_2999722FORM 1065 SUPPORTING SCHEDULE S

SCHEDULE K - LINE 7 - OTHER INCOME/LOS S

OTHER MISCELLANEOUS INCOME---

WRITE-OFF OF PREVIOUSLY ACCRUED INTERES TINCOME -1,285,599 .

TOTAL, OTHER INCOME'/LOSS -1,285,599

SCHEDULE K - LINE 10 - OTHER DEDUCTIONS FROM PORTFOLIO INCOME/LOSS

SALARIES EXPENSE - - 1,174,074 .PAYROLL TAX EXPENSE 94,476 .DEPRECIATION EXPENSE 536 .RENT EXPENSE 45,053PROFESSIONAL FEES

15,259 .AMORTIZATION OF ORGANIZATIONAL COSTS 57,958 .TRAVEL EXPENSES 68,524 .MEALS & ENTERTAINMENT EXPENSE 1,879 .MANAGEMENT FEES 1,650,000 .

. MOVING COSTS 9,437 .OTHER EXPENSES 12,619 .

TOTAL OTHER DEDUCTIONS RELATED TO PORTFOLIO INCOME/LOSS 3,129,815 .-

SCHEDULE K - LINE 21 - NONDEDUCTIBLE EXPENSE S

TRAVEL AND ENTERTAINMENT EXPENSES - NONDEDUCTIBLE PORTION 1,879 .

TOTAL NONDEDUCTIBLEEXPENSES 1,879.

a

0

0

:rxoe =+.oa ED1366 2532 07/24/2002 18 :00 :36 V07-7

STATEMENT ail

9


I

SENECA INVESTMENTS, LLC 74-2999722

FORM 1065, SUPPORTING SCHEDULE S

scutnm.F 1. - TINE 6 - OTHER CURRENT ASSETS--

BEGINNING-------------

r!nINc-

GOODWILL--

NONE-------------

- -------------

46,083 .

TOTAL OTHER CURRENT ASSETS NONE---------------

46,083 .

rSCHEDULE L - LINE 8 - OTHER INVESTMENTS

--BEGINNING-------------

ENDING------ -

INVESTMENTS NONE-

------- -

272,438,157 .--

TOTAL OTHER INVESTMENTS

--- ---------

NONE

-------------- -

272,436,157 -

SCHEDULE L - LINE 13 - OTHER ASSETS--


ENDING-------- -

OTHER ASSETS--

NONE-------------

----- -

1,690,144 .----- -

TOTAL OTHER ASSETS NONE

------- -

1,690,144 .,=ese~~== ----------- _

SCHEDULE L - LINE 17 - OTHER CURRENT LIABILITIES--


ENDING-

ACCRUED BONUSES NONE

-------------- -

665,000 .

ACCRUED LIABILITIES NONE 167,325 .ACCRUED MANAGEMENT FEES NONE 3,000,000 .

DEFERRED COMPENSATION NONE 284,964 .

TOTAL OTHER CURRENT LIABILITIES NONE 4,117,289 .

SCHEDULE L - LINE 20 - OTHER LIABILITIES--


ENDING

-------- -

OTHER LIABILITIES--

NONE-------------

------

4,631,478 .-------------- -

TOTAL OTHER LIABILITIES NONE 4,631,478 .

SCHEDULE M-1 - LINE 2 - INCOME SUBJ . TO TAX NOT RECORDED ON BOOK S

BOOK/TAX DIFFERENCE ON REALIZED GAIN 5,658,650 .----------

TOTAL INCOME SUBJECT TO TAX NOT RECORDED ON BOOKS

---- -

5,658,850 .

STATEMENT N 2

5D1386 2532 07/24/2002 18 :00 :36 V03-7 1 0


I

D

SENECA INVESTMENTS, LLC 74-2999722FORM 1065, SCHEDULE M-1, SUPPORTING SCHEDULE S

SCHEDULE 11-1 - LISTS 4B - EXPENSES RECORDED ON BOOKS BUJ NUT DEDUCTE D

AMORTIZATION OF RESTRICTED STOCK 319,762 .AMORTIZATION OF ORGANIZATIONAL COSTS 376,728 .ACCRUED MANAGEMENT FEES 3,000,000 .

TOTAL OTHER EXPENSES RECORDED ON BOOKS BUT NOT DEDUCTED-------------- -

3,696,490

SCHEDULE M-I - LINE 6 - INCOME RECORDEDON BOOKS NOT INCLUDED ON SCHEDULE K

UNREALIZED GAIN ON INVESTMENTS 8,181 892, .

TOTAL INCOME RECORDED ON BOOKS BUT NOT INCLUDED ON SCHEDULE K 8,181,892 .

SCHEDULE M-1 - LINE 7A - OTHER DEDUCTIONS IN RETURN NOT ON BOOK S----------------------------------- -STOCK COMPENSATION 26,364 .MOVING EXPENSES 9,437

TOTAL DEDUCTIONS ON TAX RETURN NOT CHARGED AGAINST BOOK INCOME

-------------- -

35,801 .

SCHEDULE M-2 - LINE 6A - CASH DISTRIBUTION S

CASH DISTRIBUTIONS 45,000 ,000 .

TOTAL CASH DISTRIBUTIONS-------------- -

45,000,000 .

0

STATEMENT 13

5D1386 2532 07/ 24/2002 18 : 00:36 V01-i III


0

b

r

0

0

I

0

5c he 0 u le n-1, Item .J - Pnaiysis 01 tanners UapJta l AccountsParnn F. Cawlal Account at P . Capital Conhibwr C . Fanners' Stares of Sch . D . Witnc rawais arW E _ Capital Accwnl at

N . .b. bepinnrn o of" ar Dwing Year M •2 . t inea 3 .4 . and 7 DislribuGOnS Eno of V ea r

1 11 NONE' 325 .000 .000 .1 1 .526 .232 .1 45 .000 .0001 2 59F 7-4, 1

2

JSASENECA INVESTTSENT, LLC 74-2999-22 2

5D1386 2532 07/24/2002 18 :00:36 V01-7 12


It

11

IT

SHORT YEAR INITIAL. RETURNSCHEDULE K-1 Pa rtner's Share of Income, Credits, Deductions , etc . L OMB No . 15 . 5-0099(Form 11D65), I-

See sepante i-nuctionJ .DIP- . nl d me e awry ( ~

. c . .. .« r .. .~L. ..d~ . v ... . oo1 o . y .• ~. a :••~: .4 Ob/ 02 . goo s . . . . 12/31 2001~ ~~ V 1

Panner identifying number ► 13-151481 4 Pa rt nership ' s idenrifyino number ► 74-2999722

Farmer 's hame, address , and ZIP code PARTNER $ I Partnership's name, address, and ZIP code

OMNICOM GROUP INC . SENECA INVESTMENTS, LLC437 MADISON AVENUE 437 MADISON AVENUENEW YORK, NY 10022 NEW YORK, NY 3002 2

A this partner is a U general partner L_( limited partner F Partner' s share of labililies ( see vrstructions) :C1(imeed liability company member Nonrecourse 8 776 52 9

8 What type of entit rs This panner? ► CORPORATION Oualitied ntxuccoune rmanono

C Is This partner a 7 domestic or a loreign partner ? Other -

D I n nr partners pecan Ia1K of. Or .1b "41 Re1oi c `11D~

fly N d G lea enener ,ecis i, ai .on number ii.

Profit sharing , - - %VARIOUS % H Check here it this partnership is a publicl y trade d

Loss sharing %V ARI OU5 % partnership as defined in section 469(kX2 )Ownership of capital %1 00 . 000000 %

E IRE Center where annershi Tried reium :OGDEN I Checr a .cube bores : 1 Final K-1 2 Amended K- 1J Analysis of oartner's capital account :

0

0

,roeg;nnfng cilea ourinr, yea 3 . + • no 1 . F vm lot! . o ;sr•epsn ;nn, year Icomome edumn . la )Seheat,k M-' In-ph 10) )

NONEI 325 000 000 . 1 5 2 6 , 2 3 2 . 1 ( 4 5 000 000- 28I 526 232 .

Ip) Ci eki orle, .nat . iUm bbl ''"ô"^r .Cmo I iob c.i- b)_ :

1 Ordinary income (loss) from trace or business activities 1 sre a ea F m rP e , . :o1, a S h bb K 1it l t2 Net income (loss) from rental real estate actrvrttea --- _ _ _ i c ar .am ,

Net income (loss) from other rental activities - - _ - - 3

• Fortlolio income ( loss):a Int erest . . . . . . . . . . . . . . . . . . . . . . . . . . . . ° a 843 533 . Sch . 6, Pont,fine 1

v b Ordinary dividends - - - a b Sch . U . Pan It, line Lc Royalties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A c Set. E, Pan t. line

E d Net short-term capital pain (loss) . . . . . . . . . . . . . . . . A d 6 9 97 6 4 2 9 . Sch . D . boa S . cal . (I)e (1) Net long-term capital Cain (loss)- _ - - - _ I••f11 - 63 736 669 . Sch . D . li ne 12, cot . (f)

(2) 28% role gain (loss) . . . . , . _ . . _ • .t7) . Sch . D . line 12, col. (g )

(3)Ouatified5-year gain . . . . . . . . . . . . . . . . . . . •e13 i

I Other portfolio income (loss) (attach Schedule) _ . _ 41 1 r m .r nn y,ponr b.. d se,,, ..uw,.

3 G--teed payments to partner See e .pe E or Pam. .

Net sedwn 1231 gain ( loss) (other than clue to casualty or then ) .6 E 1nS roc ;on • 10' xs` d"b K- 1} IFnm T065 ) .

7 , .Other income os: aracnarnedme S 1 7 1 [85 599 . E^• ~^wo~.a.h»a1~ ..m .

it Charitable contributions (see instructions) (otlach schedule) 6 Sch. A, line 15 or 1 6

9 Section 179 expense deduction . . . . . . . . . . . . . . . . 9 s« Papa 7 .no 6 d

•.•10 Deductions related to portfolio income (attach schedule) 10 3 12 9 815 . Fats lo,' PYtneri I IFl

K5ch 4a 1 F 1[~i

- (~J . u e - ( orm 065)

ons attach scheduleOther deduct 1 1

12e Low-income housing credit .

(1) From section 420)(5 ) partnerships . . . . . . . . . . . . . 1r 1 Form 8586, line 5

(2) Other Than on line 12a(1) , - - 2af2 (

a b Oualif.ed rehab ilit ation expenditures related to rental real estate

.

activities „ _ . 2 b

c Credits (other than credits shown on lines 12a and 12b) related See pap. e d Fanersto rental real estate activities

'12C lnsuuclons it. SeCeduk K•1

d Credits related to other rental activities

• . • . • . . . . ,

1 2 dIF am 1065).

3 Other credits , 1 3Tor raprrworr rWu[nun rcr nonct , at ms uunans rot corm labs . Schedule N .1 IF nrrn 1065)200 1

Jst.tP1 se s .ooc

SD1366 2552 07/24/2002 38 :00:36 V01-7 13

CONFIDENTIALOMC 0054334

D

SENECA INVESTMENTS, LLC 74-299972 2SCH K-1 SUPPORTING SCHEDULES PARTNER* I OMNICOM GROUP INC .

ITt:M J, CULUMN(L) - RECD CILIATiON OF INCOT-m

INCOME (LOSS) FROM SCH K-1, LINES I - 7 5,797,894 .

LESS : DEDUCTIONS FROM SCH . K-1, LINES 8 - 11, 14A, 17G 18E 3,129,815 .------------- -

TOTAL INCOME PER SCHEDULE K-1

-

2,666,079 .

LESS : INCOME INCLUDED ON SCH . K-1, NOT RECORDED ON BOOKS :DOOK/TAX DIFFERENCE ON RF-XLI2ED GAIN 5,656,250 .

LESS : EXPENSES RECORDED ON HOOKS, NOT INCLUDED ON SCH . K-1 :

DEPRECIATION 2',321 .TRAVEL AND ENTERTAINMENT 1,879 .AMORTIZATION OF RESTRICTED STOCK 319,762 .AMORTIZATION OF ORGANIZATIONAL COSTS 376,728 .ACCRUED MANAGEMENT FEES 3,000,000 .

PLUS : INCOME RECORDED ON BOOKS, NOT INCL . ON SCH . K-1 :

UNREALIZED GAIN ON INVESTMENTS 8,181,892 .

PLUS : DEDUCTIONS ON SCH . K-1 ., NOT CHARGED AGAINST BOOKS :

STOCK COMPENSATION 26,364 .

MOVING EXPENSES 9,437 .----------- - -

TOTAL INCOME PER ITEM J, COLUMN(C)

- -

1,526,232 .

LINE 7 - OTHER INCOME

OTHER INCOME INCLUDED IN ITEM J, COLUMN(C) :

WRITE-OFF OF PREVIOUSLY ACCRUED INTEREST

INCOME -1,285,599 .---------------

TOTAL OTHER INCOME -1,285,599 .

I

LINE 10 - OTHER DEDUCTIONS RELATED TO PORTFOLIO INCOME

-------------- ---------SALARIES EXPENSE 1,174,074 .

PAYROLL TAX EXPENSE 94,476 .

DEPRECIATION EXPENSE 536 .

RENT EXPENSE 45,053 .

PROFESSIONAL. FEES 15,259 .AMORTIZATION OF ORGAN]ZATIONAL COSTS 57,959 .

TRAVEL EXPENSES 68,524 .

MEALS b ENTERTAINMENT EXPENSE 1,879 .

MANAGEMENT FEES 1,650,000 .MOVING COSTS 9,437

OTHER EXPENSES 12,619 .

-TOTAL DEDUCTIONS RELATED TO PORTFOLIO INCOME 3,129,815 .

STATEMENT t,1

5F?ppp 1 pfX.

SD3386 2532 07/24/2002 18 :00:36 VOI-7 15


0

6

SENECA INVESTMENTS, LLC 74-2999122

SCH K-I SUPPORTING SCHEDULES PARTNER # 1 OMNICOM GROUP INC .

LINE 23 - NONDEDUCTIBLE CYLNSE S

TRAVEL ?NDENTERTAINMENT EXPENSE NONDEDUCTIBLE 1,879

TOTAL NONDEDUCTIBLE EXPENSES 1,879-

p

0

r

0

0

STATEMENT 12

e~f SD1366 2532 07/24/2002 18 :00:36 V01-7 16


[]

I

SNORT YEAR INITIAL. RETURN

SCHEDULEK'1 Partner's Share of income, Credits, Deductions , etc . OK46 KI,, iStS .ppoc(Form 1065 ) ► See "Par.t t, instructions . t1 1 01y .ar beoimm~o l15 /OL . 1oUt . ano endingll / .~1 /2 O0 ]1 met0.' 'Se a F rca{e ntlat year 7001 or to> i

Partner 's ictolitying number ' 06-1 61 66E30 (Pannershi 's identif ino number ► 74-2999722

Partner's name . address , and ZIP code PARTNER t 2 Partnership' s name , address . and ZIP cod e

PEGASUS E-SERVICES HOLDINGS, LLC SENECA INVESTMENTS, LLC99 RIVER ROAD 437 MADISON AVENUE

COS COP, CT 06807 NEW YORK, NY 1002 2

I

I

I

I

I

I

A This partner is a u general partner U limited partner F Fanner' s share of liabilities (see nstructions) :

Z limited liability company member Nonrecours e

D What type of enlily isthis ganner? ► LIMI TED LI AB C Oualt d nomecoune fr ong

C 1s Ibis partner a j domestic or a j torergo partner? Othe r

D Enter oanntre p•Qnria W: P'otF ieipmt ►Iihang, (li ) EnO of G 18, she lter repasuauon number jl~

Yee,

Profit shar,nc 1VAR70S)S 1 H Check here if this partnership is a publicy trade d

toss shanng %VAR1010 S / partnership as defined in section 469(kX2) , . . . . . C~

Ownership of capital % . NONE %i

E IRS Center where partnership filed retum:OGDEN I Chen s h czdr oo>e! : 1 1 Final K-1 1 1 Amerced Kr 1

lal eaunalaaouni ar Ib)e,ouatc<ni emre k fit F-n ars sn .<danc I~t W~TO ., w•Y1 anC rel caot~ mortal er+o u

- e. o~nn~np rn na nun I 3. .,>r.di .r~,oe~ .^9 yea c r,,,Nw< µ7

us.uu„„o,~

r.a,i e.n.~ .>nnsu )m .o..gn la ) f

NONE NONEr NONE

hn ~°mn rb) en .< ma ..(a1 mu .mmrK >

1 Ordinary income (loss) from trade or business activurer . 6 dF rv,er ,P.

2 Net income (loss) from rental real estate acit iires , , , . . _ , 2 iP

tnnrc Lr» w 6cneaok K- ttFam io6. ;

3 Net income (loss) from other rental activities , . , , . , . 3

4 Portfolio income floss) :

a interest ~a Sch . E . Pan I . line 1- -

b Ordinary dividends - - - - - 46 I Sch . 6 . Pan It. lin e

J . . . . . . . .c Royalties 4 c Sch. E . Pan I . line. . . . . . . . . . . . . . . . .

If Net short-term capital gain l toss) - 4d Sob . 0 . Ii., S . r. U_ (t )

E

. . _

e (1) Net long-term capital gain (oss) 0 .11) Scn . D .Gne 17 . mi . Ir 1.

(2) 213% rate gain (loss) •e121 Sch . D . fne 12. coL 15 )C _ - - -

(3) Ouatitied 5-year gain . . Ae(3)' rs

-I Other portfolio income (loss) (attach schedule) 41 I E^'^>^ pd°°•'° ~~ ••'°m. . . _ _ _ .

.S Guaranteed payments to partner 5_

5>. e .g. 6 a c.rner e. . . . . . .

6 Net section 1231 eain Itoss) Cotner Man out w casuany a then) _ 6In>~ru<lon~ b Sc he4uk K- t

> IFpm 10657.

7 Other income loss aftacn Schedule 7

6 Charitable contributions (see instructions) (attach schedule) 8 Sch . A. line 15 a 1 6

z r

-

. . . . . . . . . . . . . .9 Section 179 expense deduction 9 See page . 1 aria a d

0 -°

. .

10 Deductions related to portfolio income (attach schedule) to S~h.eub K IF a,o065 )

11 Other deductions attach Schedule 1 1

12a Low-income noustng credn:. . . . . . . . . .(1) From section 42(j)(5) partnerships as i Form 13586 . line 5

. . .

. . . . . . . . . . . . . . ..(2) Other than on line 12a(1) »I 7. .

b Qualified rehabilitation expenditures related to rental real estate

V . . . . . . . . .. cttvitiea . 1 2 b. . . . . .. . . . . . . . .

c Credits (other than credits shown on lines 12a and 12b) related See pace 8,Y Penner ,

to rental real estate activities 12c lens, ar tuna lu Srherm rk N- tIf toes ).

d Credits related to other rental activilies 12da m

9 Other credit. . . . . . . . . . . . . . . . . .. - . - - - - - - 1 3

for Faprwotlt Reduction Act Notice , See tnrtruclion5 tar F or m 1065. Scneau, . n -1 porn , .EC) tou t

Jsa

SDI 386 2532 07/24/ 2002 18 :00:36 V01-7 17


6

1

11

0

k-, r F nn., 1 m 5t 2on1 PD5 r12rla f.' 7 Pr( S t7 F- F - cFRVI rr P M[11 n rn l_'C 71r p, 2

(a) Distributive share item (b) Amount( c) 1040 filers enter the

amount i n co lumn (b) on:

14 a Int erest expense on inves t ment debts • , , • , . . . • _ , . 142 . F orm 4952 . Knel t

(1 ) Investment income in cl uded on lines 4a . 4b, 4c, and 41 5 . . P .P . 9 of Fanners

(2) Investment expenses included on line 10 . +• enuInslnrclona b Schiro k K- 1IFon toast .

15 a Net earnings ( loss) lrom sell-employment • • . . . . . . . . 152 • Scb. SE. Section A or B

> b Gross farming or fishing income' . ' ' ' ' ' ' '

15b ( Sr . page!) of Fmu,ee r

o c Gross rloniarm irimme -

.15c

1-4-1-2 tv Schtll. K. tItorm 10651 .

16 a Depreciati on adjustment on properly placed in service after 198E 16 a

b Adjusted gain or loss , • - - - - - - - - - - - - - - - - - - 1 L bSOe pqe e P r-_iWr_

c Depletion ( other than oil and cas) - - 16cbr Sd a 4 K t~

F 5 I d (1) Gross income from oil, aas . and oeo th ermalproperties •

(2) Deductions allocable to oil, gas, and geothermal properties

, F,t+l i

-.d

~e .uIFm^ 1065) rind

'"F"~'b^F ' a Fonê751

a ° e Ot her adjustments and lax reference items attach schedule 16 r

17 a Name of foreign country or U .S . possession ► _

b Gross income f rom all sources • , • . . , _ • . , _ . . , - - 17 b

c Gross income sourced at partner level , • • _ . . • _ . . _ - ____________________

ss income sourced at pannershp level:d Foreign cr o

(1) Passive . _

.

(2) Listed calegories (attach schedule)

(3) General limitation

_

rtV Deductions allocated and appenioned at partner level :

(1) Interest expense . . . . . . . . . . . . . . . . . . » . nll ~.__......._._

Form 1 116 . Pa rt I

(2) Other 1 : .IJ 1

..

LLI Deductions allocated and apponronec at pa rt nership level t o

foreign source income :

(1) Passive . . . . . . . . . . . . . „ ril l

(2) Listed categories ( anaCh schedule) _ - ,Jfr] t

(3) General limitation . . . . . _ . . , Jr~a l

g Total foreign lanes ( check one)_ ► Paid Accrued . 1 t 7 ol - Form 111C . Pan 11

h reduction in races available fo, aMil ann h odredvle 1 7h Form t 116 . l ine 1 2

l t Section 59 ( e )( 2) expenditures : 2 1 ype ► _ _ _ _ __ _-

b Amount

ben P .Q. B OFrnn .r .I"frnxiom 1o Sched ii . K- tIF- 1065).

is lax-exempt interest income - _ - - - 19 Form 7 040, lira P b

20 Other tax-exempt income . . . . . . . . • . . . . . . . . . - 2 0

= 21 Nondeductible expenses . . . . . . . . . . . . . . . . . . . 21 S ru prrpn 9 r,tl 10 dP otter'! In .c-, 1 e

p 22 Distributions of money ( cash and marketable securities ) . . . 22 scn. oor. n•1 if a,n 1955) .

23 Distributions of prope rty other than money . . . . . . . . . 2 3

24 Recapture of low-income housing credit :

a From section 42 (j)( b) pa rt nerships . . . . . . . . . . . . . . 245 F r 8611 li 8b Other than on line 24a 24b

o m , ne

25 Supplemental inlormalion required to be reported separately to each partner (attach additional schedules P more space is

needed) :

0

o

E

n

7rn

Schedule K-1 IForm 1065) 2001

III

;s SENECA INVESTMENTS, LLCrJ3ec x .006SD3386 2532 07/24/2002 18 .00:36 V01-`t 18


11,

Seneca investments, LLC

EJN : 74-299972 2

FYE: December 31, 2001

Election to Amortise Organizational ExpendituresIRC Section 709(b )

Seneca Investments, L1,C hereby elects under Section 709(b) of the Internal RevenueCode to amortize its organizational expenditures over a period of 60 months beginning onMay 2d, 2001, the date on which the active conduct of business began .

Description Amount

Organizational Costs 1434,bh6

10

0

CONFIDENTIALOMC 005433 9

0

Senet;n Investments, LLC

FEIN : 74-2999722

)Y'E : 32/31/2001

Statement of Election to Amortize New Business Startup Costs

Seneca Investments. LLC elects under the provisions of Internal Revenue Code Sec .195 to treat new business stamp costs as deferred expenses and to amortize suchexpenses over a period of 60 months beginning on May 2°d, 2001, the date the taxpayer

began business .

P

0

PCONFIDENTIAL

OMC 0054340

P

SPnPra investmenLS . LLCFIN :74-2999U2FYE . : 12/311200 1

RECURRING ITEM EXCEPTION ELECTIONUNDER SECTION 46 ]

The taxpayer hereby elects under the provision of Code Section 461 (h)(3) and Reg .1 .461-5, to adopt the recurring item exception as a method of accounting, with respect toall types of items .

1

1

CONFIDENTIALOMC 005434 1

0

Exhibit C

b

P

Omnicom Group Inc .

February 19, 200 2

Arthur Andersen LLP

1345 Avenue of the AmericasNew York, NY 1010 5

We are providing this letter in connection with your audit of the consolidated financialstatements of Omnicom Group Inc_ (the "Company") as of December 31, 2000 and 2001and for the three years ending December 31, 2001 for the purpose of expressing an

opinion as to whether those financial statements present fairly, in all material respects,

the financial position, results of operations, changes in equity, and cash flows of theCompany in conformity with accounting principles generally accepted in the United

States . We confirm that we are responsible for such fair presentation in those financial

statements .

We confirm, to the best of our knowledge and belief, as of the date of this letter, thefollowing representations made to you during your audit of the financial statementsreferred to above .

The financial statements are fairly presented in conformity with the accountingprinciples referred to above .

P

~. We have made available to you all financial records and related data.

3 . There have been no communications from regulatory agencies or lendersconcerning noncompliance with or deficiencies in financial reporting practices .

4. There are no material transactions that have not been properly recorded in theaccounting records underlying the financial statements .

5. There has been no-

a) Fraud involving management or employees who have significant roles ininternal control .

1 b) Fraud involving others that could have a material effect on the financialstatements .

D

437 Madison Avenue, New York, N .Y 10022 . (212) 415-3600 Telex 428245 Fax (212) 415-353 0

Confidential OMC 00097900

II

P

Arthur Andersen LLPFebruary 19, 2002Pate 2

6. The Company has no plans or intentions that may materially affect the carryingvalue or classification of assets and liabilities .

7 . The following have been properly recorded or disclosed in the financialstatements:

a) Related-party transactions, including sales, purchases, loans, transfers, leasingarrangements and guarantees (written or oral), and amounts receivable from orpayable to related parties .

b) Guarantees, whether written or oral, under which the company is contingentlyliable .

c) Significant estimates and material concentrations known to management thatare required to be disclosed in accordance c+ iili the AICPA's Statement ofPosition 94-6, Disclosure ofCertain Significant Risks and Uncertainties .[Significant estimates are estimates at the balance sheet date that could change

materially within the next year . Concentrations refer to volumes ofbusiness,

revenues . available sources of supply, or markets or geographic areas for

which events could occur that would significantly disrupt normal finances

within the next year . ]

There are no-

a) Vinlations or possible violations of laws or regulations whose effects should

be considered for disclosure in the financial statements or as a basis for

recording a loss contingency .

b) Unasserted claims or assessments that our lawyer has advised us are probableof assertion and must be disclosed in accordance with Financial AccountingStandards Board (FASB) Statement No . 5 . .-lccoiurri,rg foi' Contingencies .

c) Other liabilities or gain or loss contingencies ( including those relating to oralguarantees ) that are required to be accrued or disclosed by FASB Statement

loo . 5 .

The Company has satisfactory title to all owned assets, and there are no liens orencumbrances on such assets nor has any asset been pledged as collateral .

10 . The Company has complied with all aspects of contractual agreements that wouldhave a material effect on the financial statements in the event of noncompliance .

1 1 . 1 he accounting records underlying the financial statements accurately and fairlyreflect, in reasonable detail . the transactions of the Company .


Arthur Andersen LLPFebruary 19 . 2002Page 3

12 . The unaudited interim financial information for the quarterly periods of 2000 and2001 has been prepared and presented in conformity with accounting principlesgenerally accepted in the United States applicable to interim financial informationand with Item 302(a) of Regulation S-K . The accounting principles used toprepare that information are consistent with those used to prepare the auditedfinancial statements .

I The disclosures in the financial statements about operating segments are inaccordance \. ith the FASB statement No . 131 .

14 . With respect to Seneca Investments LLC ("Seneca") organized by Omnieom and

Pegasus Partners 11, L . P . ("Pegasus") and its wholly -owned subsidiary PegasusPartners ("Partners "), we nuke the following representations :

a) Pegasus and Partners are unrelated entities with respect to Omnicom and itssubsidiaries and affiliates .

b) Neither Onnicom nor its management or employees have a financial interestin Pegasus or Partners .

c) Pegasus through Partners has made an equity investment in Seneca as the100% owner of Seneca 's common stock for 512 .5 million with a call on afurther 512 . 5 million . Such equity is at risk and not guaranteed by Omnicom .

d) The Relevant Documents referred to in the Jones Day letter of Februa ry 6,2002 with respect to Seneca constitute the complete terms and relationshidbetween Omnicom , Pegasus , Pa rtners and Seneca . There are no sideagreements or other letters of understanding .

c) The Certificate of Omnicom Group Inc . (Exhibit A- 2 to the Jones Day letterof February 6 . 2002 ) is incorporated by reference into this generalrepresentation letter .

15 . Year-end accrual for the employer's contribution to the domestic Profit sharing,-301(k) and similar plans of subsidiaries shown below have been made for the yearended December 31, 2001 as follows :

10

D

11

BBDO Worldwide 5 9,902,526DDB Worldwide Communications Inc . 11,738,727

TBWA Worldwide 1,821,000DAS 10,833,143

Omnicom Management Inc . 1,200,000


C

Arthur Andersen LLPFebruary 19, 2002Page 4

11

16 . Year-end accruals for bonuses for domestic subsidiaries were reviewed andapproved by the undersigned as follows :

BBDO Worldwide $ 18,057,199DDB Worldwide Communications Inc . 15.590,305TBWA Worldwide 11,597,909O.N1G 950.345DAS 14,996,165Omnicom Management Inc . 11,507,223

r17 . No events have occurred subsequent to the balance-sheet date and through the

date oftlJs Ictter that ~ .ouid require adjustment to or disclosure in the financial

statements .

6

QLt 1S_1

, olr t D . Wren

f Executive Officer and Presiden t

Inrlull J. 1Vetsertbtrtger

Executive !ice President anti Chief Financial Officer

7 .

Philip J. ~ingelasrro !,Controlle r

I

0


Exhibit D

Copyright 2002 Chicago Tribune CompanyChicago Tribune

June 13, 2002 ThursdayNORTH SPORTS FINAL EDITIO N

SECTION : BUSINESS ; ZONE : N ; On marketing, etc . ; Pg . 3

LENGTH : 731 word s

HEADLINE ; Omnicom is counted out on its accounting

BYLINE : Jim Kirk

BODY:

Omnicom Group CEO John Wren sharply defended his advertising holdingcompany's accounting practices and denied there is boardroom dissension in thewake of a published report that sent shares of the company spiraling downward .

The sharp drop in Omnicom 's stock--the industry's star perfomer--on Wednesdaywas the talk of the ad industry, in which most of the big agency networks are ownedor in the process of being bought by the industry's largest holding companies .

Omincom's shares fell nearly 20 percent to $62 .28, an improvement from a drop of25 percent in early trading . The shares fell following a report in the Wall StreetJournal that said Robert J . Callander, the head of the company's audit committee,resigned from the board last month after questioning whether certain disclosureswere made to the board about the off-loading of certain investments and thebuyback of two Internet firms .

The article focused on the disclosure of Omnicom 's investment in an Internetholding company called Seneca set up to house more than a dozen of Omnicom'sInternet acquisitions .

The Journal reported that Seneca acquired additional stakes in some of theOmnicom firms and in return, Omnicom receives preferred stock in Seneca . Oneadvantage of the maneuver, the report stated, was that it allowed the company toavoid the possibility of writing down the value of its investments in some of thefirms.

In defending the company, Wren said the article was filled with "numerousinaccuracies" and said the only thing new was "innuendo . "

No doubt weighing heavily on the mind of investors Wednesday was the timing of thestory, coming on the heels of several accounting scandals and a sudden scrutiny ofaccounting practices across several industries .

The story and Omnlcom 's subsequent stock dive were enuuyh to pull down sharesof much of the industry .

While defending Omnicom , Wren said that the company would make its financia l

0

reporting more transparent .

"Our integrity . . . is paramount," he told analysts during a conference call . "Thiscompany has never taken charges, never swept anything over the side, and we'vetried to do our best in terms of transparency and disclosure . "

Reddi-wip real moment coming : What do you do with your Reddi-wip? ConAgraFoods wants to know . The company this week launches an aggressive marketingcampaign for its topping. The company is launching a Reddi-wip "real moments"sweepstakes, giving consumers a chance to win a cash prize for the best Reddi-wipmoment . The company will take the program on the road to major cities and willlaunch a new ad campaign in late summer with the tagline, "Let the Fun Out . "

Koenig goes to Sony : Derek Koenig, most recently director of advertising and brandmanagement at Riverwoods-based Discover Card, is heading to Park Ridge, N .J .-based Sony Electronics to become director of consumer segment marketing . He's oneof three directors reporting to Sony vice president Ken Dice . Dice and Koenigpreviously worked together at Leo Burnett .

Marketing changes at Whirlpool : In a restructuring at Whirlpool Corp ., Timothy Yaggi' was promoted to senior vice president and general manager, brand portfolio group,

North America . Yaggi had previously served as vice president, Whirlpool an dKitchenAid brands, North America . Yaggi will have responsibility for Whirlpool's NorthAmerican portfolio of brands as well as North American sales and marketingoperations .

John Alexander was named vice president and general manager of the Whirlpoolbrand, reporting to Yaggi . Also, Karim Lalani was named vice president and generalmanager, Sears Sales and Marketing, North America, responsible for Whirlpool'sbusiness with Sears, Roebuck and Co .

On the move : Fred Smith, co-founder of the former Leap Partnership, may beheaded to Publicis in Mid America as chief development officer of the agency,reporting to agency chief Barry Krause, sources said . . . . Deborah M . Pimsner toMidwest manager of Premiere magazine on June 25 . She most recently worked atHealth magazine as account manager . . . . Carole Widmayer, formerly a publisher atCahners Publishing, joins Schafer Condon Carter as an account director on itsGeneral Mills business .

Correction- Apologies to former 7_ Walter Thompson media executive Shari Wall, whoshould have been listed among other media executives in town named AdvertisingWoman of the Year . She was honored in 1991 .

GRAPHIC : PHOTOPHOTO : (Carole ) Widmayer .

rLOAD - DATE : June 13, 200 2

0

Exhibit E

11

Omnicom Shares Tumble 20% The New York Times June 13, 2002 Thursda y

Copyright 2002 The New York Times CompanyThe New York Time s

June 13, 2002 ThursdayLate Edition - Fina l

b SECTION : Section C ; Column 1 ; Business/Financial Desk ; Pg . 1 1

LENGTH : 299 word s

HEADLINE : Omnicom Shares Tumble 20 %

BYLINE : By STUART ELLIOT T

BODY :

The Omnicom Group, the large advertising agency company, scrambled yesterdayto repair damage caused by a newspaper article critical of its accounting practices .

But the damage control, which included a lengthy conference call with analysts and astatement of support from Omnicom directors, proved ineffective, at least in theshort term .

Omnicom stock dropped sharply in heavy trading, falling $15 .28, or 19 .7 percent, toclose at $62 .28, on a day the Dow Jones industrial average rose more than 100points .

It was the biggest one-day fall for Omnicom 's shares since the company wasformed in 1986 . Shares of the two principal rivals, the Interpublic Group ofCompanies and the WPP Group, also declined sharply .

The article, which appeared in The Wall Street Journal, had been talked about onMadison Avenue for more than a week as word began circulating that the newspaperwas examining how Omnicom transferred much of its dot-corn holdings to acompany named Seneca Investments and how Omnicom accounted for payments toexecutives of the agencies it acquired .

Omnicom shares fell 18 percent last week, but rebounded this week after TheJournal published an article on Monday that analysts considered benign . Yesterday'sarticle, along with an article in The Financial Times raising similar questions, thentriggered the rout .

In the conference call, two Omnicom executives disputed The Journal's article butagreed to provide more information to shareholders .

We feel there are numerous inaccuracies and in some instances improper innuendosin the article," said John D . Wren, president and chief executive of Omnicom, whichowns agencies like BBDO Worldwide and DDB Worldwide .

Steven Goldstein, a spokesman for Dow Jones & Company, which publishes TheJournal, said, "We stand by our story . "

URA: http : //www .nytimes .co m

1

1

0

Exhibit F

b

Copyright 2002 The Financial Times LimitedFinancial Times ( London, England )

June 13, 2002 ThursdayLondon Edition 1

SECTION : COMPANIES & FINANCE THE AMERICAS ; Pg. 30

LENGTH : 422 word s

HEADLINE : Omnicom chiefs face investors as shares fall ADVERTISING WORLD'SNUMBER THREE TRIES TO LIMIT DAMAGE DUE TO CONCERN OVER ACCOUNTINGPRACTICES :

BYLINE : By STEPHANIE KIRCHGAESSNE R

DATELINE : NEW YOR K

BODY :

Omnicom executives yesterday scrambled to contain the damage as shares in theworld's third-largest advertising company lost more than one quarter of their valueamid concern over the company's accounting practices .

John Wren, Omnicom 's chief executive, and Randall Weisenburger, chief financialofficer, were set yesterday to address investors in a conference call in response tomedia reports that questioned how the company accounted for its aggressiv eacquisition strategy and failed internet investments .

Reports have also highlighted the recent departure of a board member who hadinitiated an internal probe into Omnicom 's relationship with auditor Andersen .

Shares in Omnicom , which tumbled 16 per cent on rumours of accountingimproprieties last week, slid another 25 per cent to Dollars 58 .40 in midday trade .

Several Wall Street analysts have lined up to defend the company over the pastweek . Lauren Rich Fine, an analyst at Merrill Lynch, said the company calculated itsgrowth rate in an "appropriate" manner, although "it is more aggressive than its peergroup" .

Omnicom is the latest in a long list of companies to be put under the accountingspotlight since the fall of Enron .

While the energy and telecoms sectors have been rife with investigations intocompanies such as Dynegy and Global Crossing for their revenue recognitionpractices, the media and advertising sectors have so far been spared such intensescrutiny .

Unlike those companies, Omnicom has not been accused by regulators or industryinsiders of any wrongdoing and it is not understood to be under investigation by theSecurities and Exchange Commission .

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It has been the company's bullish stance and continued sales growth, even in theface of the worst decline in advertising revenue, which has raised eyebrows amonginvestors . Questions into the company by industry executives and analysts havefocused on whether Omnicom has relied on an overly aggressive method ofaccounting to achieve its growth .

Like rival WPP, Omnicom relied on the strength of its aquisition muscle to grow intoan advertising powerhouse. Doubts over how those deals were accounted for werefuelled when the head of the company's audit committee, Robert Callander, resigned .

Mr Callander's departure was understood to be linked to a deal Omnicom struckwith Craig Cogut, the financier, in which Omnicom 's internet investments werehived off into an investment company called Seneca in exchange for non-convertiblepreferred stock . Mr Callander questioned the Seneca deal .

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