Randall Weisenburger -- EVP and CFO John Wren -- President and CEO

Jason Helfstein -- Oppenheimer Alexia Quadrani -- JPMorgan Michael Nathanson -- Sanford Bernstein Craig Huber -- Barclays Scott Webermann -- Goldman Sachs Benjamin Swinburne -- Morgan Stanley John Janedis -- Wells Fargo James Dix -- Wedbush Meggan Friedman -- William Blair

Good morning, ladies and gentlemen and welcome to the Omnicom second quarter 2009 earnings release conference call. (Operator instructions) At this time, I would now like to introduce you to today's conference call host, Executive Vice-President, Chief Financial Officer of Omnicom Group, Mr. Randall Weisenburger. Please go ahead, sir.

Thank you, and good morning. Thank you all for taking the time to listen to our second quarter 2009 earnings call. We hope everyone's had a chance to review our earnings release. We posted to our Web site both the press release and a presentation covering the information that we are going to present this morning. This call is being simulcast and will be archived on our Web site as well. Before we start I have been asked to remind everyone to read the forward-looking statements and other information that's included on Page 1 of our investor presentation. And to point out the certain of the statements made today may constitute forward-looking statements and that these statements are present expectations and that actual events or results may differ materially. We are going to begin with some brief remarks from John Wren. Following John's remarks, we will review our financial performance for the quarter and then both John and I will be happy to take questions at the end.

Good morning and thanks for joining our conference call this morning. Given the continued economic downturn, our agency has done a very good job adjusting to the environment. Despite pressure on our top line, I believe we are very well-positioned going forward. The revenue decline in the second quarter was slightly greater than we had anticipated with the greatest pressure occurring in just a few areas. The decline correlates closely to industry sectors under stress and the elimination of discretionary projects and events in individual countries where GDP remains negative. The organic growth decline was pressured by a couple of areas. Automotive was down more than we had anticipated in part because of the reduction caused by the Chrysler bankruptcy although we did see declines in all of our automotive client spending. In several specialty businesses and areas continued to decline. Our recruitment business which we discussed in prior quarters still remains under pressure and will for the next several quarters. Our Yellow Page business which we discussed many times in the past was finally sold but late in the quarter, so it impacted organic growth a bit. Our events in sports marketing businesses were down reflecting as you might anticipate reduction in client spending in these areas. And finally, our not for profit business decline reflecting a reduction in charitable activities. These reductions will take some time to recover. But turning to our core business, organic growth was down about 5.5% during the quarter and that is purely a reflection of a reduction in consumer activity in most the economies around the world. At this point with the exception of those specialty businesses, I believe that the top line pressure has stabilized and while top line growth will still take several quarters to achieve we expect modest economic growth going into 2010 and new business activity will benefit the company. From a cost perspective our agencies have done an excellent job in adjusting to the reset in the economic environment and we are well positioned for any turnaround in the economy when it comes. I am encouraged especially by discussions that I have had primarily in the last six weeks to eight weeks with major global advertisers and I expect that new business opportunities in the second half of this year will exceed prior year activity. At this point I will turn this over to Randy who will go through this in a lot more detail and then we will be available to answer your questions. Thanks.

Thanks, John. It is safe to say this is a very interesting quarter. While we continued to broadly experience pressure to our top line due to the global recession, it appears that revenue levels have for the most part stabilized and other than a couple of isolated areas that were more negatively impacted than we had anticipated which we will talk about a little more later. Our agencies broadly performed in line or better than we expected. I also think our agencies have done an exceptional job taking the appropriate actions necessary to adjust their cost structures to reflect current revenue levels and market conditions which I believe will position as well going forward. Due to the combination of the continuing overall weak economic environment and the strong U.S. dollar relative to Q2 of last year our revenue declined 17.4% to 2.87 billion. Operating income for the quarter decreased 23% to 398 million. With that, we were largely able to offset the decrease in revenue with aggressive cost actions that began in Q4 of last year and continued through Q2 of this year. These actions, while properly positioning the company for the future have added substantial one-time cost particularly with respect to severance. As a result, our operating margin for the quarter was 13.9% down just under 100 basis points from last year. And our EBITDA margin for the quarter was down about 65 basis points. That translates to about $19 million. Adjusting for the cost of severance actions taken in the quarter which total about $32 million, our EBIT margin was 15% down 40 basis points from the comparable number last year and our EBITDA margin again ex-severance was 17% which was down only about 10 basis points. Year-to-date severance has totaled about $70 million and our EBIT margin ex-severance was 13.3%, down 30 basis points and our EBITDA margin ex-severance was 15.4% which was about flat for the same period. So all in, we believe our agencies have done an excellent job of rapidly adjusting the cost structures to get them along with current market conditions, they have also done an extremely good job of controlling their current discretionary spending levels. Net interest expense for the quarter was $21.9 million, which was up $3.2 million from last year and up about a $0.5 million from the first quarter. The increase versus Q2 of 2008 was primarily the result of having to make supplemental interest payments on our 2,032 notes in July of last year and a decrease in the interest earned on our foreign cash balances combined with the negative FX impact on those earnings. Versus last quarter, the increase was primarily due to lower interest earned on our foreign cash balances. On the tax front, our reported tax rate for the quarter was 34.5% bringing the year-to-date tax rate up to 34.3%, which is up a bit from 33.7% last year. The increase in the tax rate was primarily due to two one-time discrete tax events in Europe that occurred in the quarter. One negative and one positive. The aggregate result of all of this was net income for the quarter declining 24% to $233.4 million and diluted earnings per share in the quarter declined 21% to $0.75 per share bringing the year-to-date total EPS to $1.27. Now, analyzing our revenue performance a bit further. As everyone is aware most major currencies were weaker versus the U.S. dollar compared to the second quarter of 2008. That cause a significant negative FX impact. In the quarter, $235 million or about 6.8% of our revenue decline was the result of FX. Looking ahead, if rates stay where they are we expect FX will be negative between 3% and 4% in Q3 and will turn to be positive between 1.5% and 2.5% in Q4. Growth from acquisitions, net of dispositions added about $5.6 million to our revenue in the quarter or about 2/10th of 1%. We did complete three smallish acquisitions in the quarter, a research agency in China, a media agency that will add to the global network of PHD in Australia, and a full service agency in South Africa which has been the longstanding associate agency of the DDB in the market. Also as John mentioned late in the quarter we finally completed the divestiture of our yellow pages or directory business. Organic growth declined 10.8%, which was about $50 million more than we had anticipated going into the quarter. While almost all of our businesses have been impacted by the recession to some extent, a few areas have been impacted more severally that are worth noting. First, a recruitment marketing business that we talked about for a couple of quarters now was down almost 45% in the quarter and alone accounted for almost 1% of our organic revenue decline. The auto sector as a whole was down 30% organically or about a $105 million. The auto sector was down more than we anticipated driven in part by further reductions at Chrysler while they were in bankruptcy. Our events and sports marketing businesses were also down, almost 40% organically or about $65 million. This is also a bit more than we anticipated. And our not for profit marketing businesses which is a group were down about 40% in the quarter. These areas, the special areas in total account for about 16.5% of our revenues in Q2 of 2008 and in the quarter and Q2 of this year accounted for almost half of our total organic revenue decline. At this point while we don't see these areas rebounding quickly they do appear to have stabilized. Our remaining business areas which account for 83.5% of our revenue are performing fairly well given the economic environment with organic growth rates down only about 5.5%. As for a mix of business, brand advertising accounted for 44.6% of our revenue and marketing services 55.4%. As for their respective growth rates, brand advertising declined 15.5% in the quarter, 8.3% organically, and marketing and services declined 18.9% of which 12.8% was organic. Breaking down our marketing services revenue further, CRM was down 18.7% with negative organic growth of 12.6%. However, within this category our performance was very mixed. Specifically, our events and sports marketing businesses and our not for profit businesses as I mentioned were impacted very significantly. Both of these areas being down almost 40% organically. Excluding their results CRM was down about 8%. Public relations was down 18.5% or 11.8% organic and specialty communications, the tougher sector was down 20% with organic growth down 14.7%. Again, this category includes among others specialty media, recruitment advertising and our healthcare businesses. Specialty media which is primarily our directory, our yellow pages business, as I mentioned given the lack of strategic fit late in the quarter, we finally completed the divestitures. As a result the second quarter reflects only two months of the directory business results. Recruitment advertising probably are most economically sensitive business as I mentioned, was down almost 45% in the quarter and our healthcare businesses had mixed performance. Some doing very well and others less so depending upon their specific client assignments. But overall, the sector performed well with organic revenue down only about 2%. Our geographic mix of business in the quarter was 53.1% U.S. and 46.9% international. In the United States, revenue declined 227 million or 12.9%. Acquisitions net of dispositions reduced revenue by about a million dollars or a little bit less than 1/10 of 1% and organic growth was negative 12.9% or about $226 million. As I previously mentioned, there were a couple areas of business that had a disproportionate impact on our results in the quarter. Of those, our recruitment marketing and not for profit marketing businesses as well as our Chrysler business are almost exclusively in the United States and our events business is weighted more heavily towards the United States as well. Together, those businesses accounted for about half of our U.S. organic revenue decline. International revenue decreased 379 million or about 22%, FX reduced revenue by 235 million or 13.6%, acquisitions added $6.5 million to our revenue, and organic growth was negative 8.8% or about a $151 million. Internationally, we had relatively strong performances in India, China, the Middle East and Latin America while the developed markets of Asia, including Japan and Korea continued to be down sharply and western Europe was mixed, with the UK, France and Germany performing better than average while the other western European markets as well as the developing markets of eastern Europe performed below average. Operating cash flow for the quarter and year-to-date was strong. And our overall working capital performance has been extremely good. I mentioned last quarter we have experienced considerable added working capital pressure due to the overall economic environment and credit environment. However, in response, we have redoubled our own efforts. I am happy to say that due to the considerable efforts on the part of our agencies globally we have more than held our ground to-date and our bad debt losses have been minimal. Our primary sources of cash. Net income adjusted for stock-based compensation and depreciation and amortization totaled $547 million for the first six months. Our primary uses of cash were dividends which totaled 93.5 million. Capital expenditures which totaled 63 million versus 93 million last year. Acquisitions including earn out payments totaled $61 million versus $210 million last year and share repurchases net of new issuances was only $3 million this year versus $344 million for the first half of last year. As a result, we have reduced our overall leverage by about $325 million since the end of last year. As for operating leverage ratios EBITDA to gross interest was down from last year due to the combination of higher gross interest and the decline in EBITDA. However, it remains very strong at 14.2 times and total debt-to-EBITDA improved to 1.4 times given the reduction in our debt balances. It is also worth noting that on July 1st, we completed the issuance of $500 million of 10-year senior notes. We were able to issue those notes at an all end rate of about 6.44% which at the time was a 10-year treasury's plus 275 basis points, plus about 10 basis points in issuance cost. Net proceeds from the issuance were used primarily to repay amounts outstanding under revolving credit facility. We have also included a pro forma cap table as of June 30th on page 12 and a summary term sheet of the issuance on page 13 of the investor presentation. And finally from a liquidity perspective, we finished the quarter in a very strong position with cash and undrawn committed credit facilities totaling just over $2.7 billion and we had uncommitted facilities available totaling an additional $380 million. With that, now I will open the call for any questions.

(Operator instructions). And our first question this morning comes from the line of Jason Helfstein with Oppenheimer. Please go ahead. Jason Helfstein -- Oppenheimer: Hi, thanks. One slightly longer one and then a shorter one. So historically advertising is a two year cycle with respect to the economy. Since 2009 is the trough with respect to GDP, then in 2010 total advertising marketing presumably should grow in line of modestly below GDP and then outperform in 2011. That's a long term trend. So and then in the interim year which is 2010, typically marketing services direct marketing outperforms branded so I guess as you are thinking about this recession and the recovery, is there any reason to think there is a paradigm shift relative to these historical patterns why marketing services and direct response wouldn't outperform branded advertising in 2010 and then obviously you are seeing some of your specialty businesses particularly weak so the question is once you get passed those difficult compares or once you get pass that those declines do you expect your marketing services business to accelerate relative to branded advertising? And I have got one quick follow-up

This time around is different than every time you get into an economic downturn, it changes a bit. But, sitting here today, I fully expect that your thesis will hold as you get into next year and then beyond. The difference will be our individual performance as new business opportunities come up and what impact they will have.

I think you are also seeing a little bit more blending in some of the reported numbers. Integrated marketing and the way the revenues are being reported and where they are being generated is slightly different than it was probably 10 years ago. Jason Helfstein -- Oppenheimer: Okay. And then just a question on the margins. Obviously you guys are very impressive expense control in the quarter. Any reason why you will not be hold cost flat as we move into the back half of the year which presumably should drive margins even further?

We said before that we think we should be able to hold margins inside of 100 basis points decline from last year. We still think we are able to do that, even with the organic growth where it is at. Jason Helfstein -- Oppenheimer: Thank you.

Thank you.

And we have a question in from the line of Alexia Quadrani with JPMorgan. Please go ahead. Alexia Quadrani -- JPMorgan: Thank you. Thank you, Randy, for all the detail you gave us on organic revenue growth in the quarter. I just have a couple of follow-ups on that. Can you give us any sense really on what is really one-time-ish in the quarter, meaning the impact on Chrysler of the bankruptcy, the yellow pages business. I am trying to get a sense if we should see the similar level decline in Q3 and organic revenue versus Q2 and then also any color on how maybe the organic revenue decline progressed throughout the quarter?

At this point, Alexia, Chrysler did contribute because there was a mandate during the two month period where there was a one-off reduction in our fee income during that period whilst they were in bankruptcy. What do we see? Automotive, there has been a real reduction in activity and a reduction in our labor force and the scope of work that we are required to do. That will take some time to come back in the aggregate. It will come back over time but it will be it. And the worse should have been the second quarter of this year but there is still some challenges ahead.

I think some of the areas that we highlighted, as I mentioned, I don't see rebounding quickly. Events I see those being down, events was hurt by auto and events in general. The auto sector which was down about 30% for us as a category, I don't see the auto sector rebounding quickly in the second half. I hope I am wrong, but I don't see that, I don't read any reports. Doesn't seem like the auto companies think that. Obviously, Chrysler may be a bit better but I think it is still very early in that process and Chrysler is only one of our auto accounts, the whole sector is down. And recruitment advertising again I certainly don't see that picking up in the next, three months or four months. Obviously as we cycle on these numbers, year-over-year, that will be improvement. And I think with the new business activity, our success is already in the first half of the end of last year. I think we will start seeing some of that come through in the second half of this year, which gives us a bit of confidence that the second quarter is probably the low point. But, off of that what sort of a reset of the second quarter I think the threshold to measure from. Alexia Quadrani -- JPMorgan: Was June significantly worse than the beginning of the quarter or not necessarily?

No. I mean, we saw this pressure through the whole entire quarter.

The big step change from Q1 was sort of the full quarter effect of a lot of fee adjustments and statement of work adjustments that occurred in the first quarter and into the second quarter. So that pretty much rolled through the entire quarter. Alexia Quadrani -- JPMorgan: And with regard to severance should we assume it will be a little bit more modest in Q3?

Yes. Most of our actions at this point given the level of business have been taken. There is some anticipated severance in the third quarter. And we believe that we have done a very good job of identifying those areas where we can take action. So you should see a far more modest than the third quarter. And hopefully then we are close to done. Alexia Quadrani -- JPMorgan: And just a last question, on use of cash, what are your priorities I guess for use of cash in this market. When do you think will you might see the share buy back resume and what your appetite is for acquisitions right now?

Well, we are well positioned for acquisitions. I think our capital structure is the best in the industry. Our balance sheet certainly is. And we have been very conservative as you know with cash. At this point any sensibly priced acquisition would be prepared to do. And then we are looking at several areas of opportunities. In terms of cash buy back, that something we discussed with the board. We will use our cash in the future as we have done historically. First, we look to acquisitions and then as we generate excess cash flow that's not needed to service debt or other needs, we will look to buy back shares, but I don't see a pick up in that activity in the next three months or four months. Alexia Quadrani -- JPMorgan: Thank you very much.

Thank you, Alexia.

We have a question from the line of Michael Nathanson with Sanford Bernstein. Please go ahead. Michael Nathanson -- Sanford Bernstein: Thanks. I have a couple on cost for Randy. Randy, can you give me a sense of what was severance last year in this quarter?

Yes, we are going to scramble and look for numbers. Give me just one second. I think it was about $15 million. $16 million. Michael Nathanson -- Sanford Bernstein: And then one other question we have is you guys had a ton of costs this quarter, almost $500 million, what percentage of the cost reduction was translation based from the currency decline, was it similar to the change in revenues, is that the way to think about it?

Yes, it pretty much flows through this, probably a little bit of difference, but it would be pretty marginal. Michael Nathanson -- Sanford Bernstein: Okay. And then on incentive comp this quarter, what was the change in your incentive comp accruals year-over-year. Was that a big factor again cost down this quarter?

It was not. Hold on one second. We will find that number. Michael Nathanson -- Sanford Bernstein: Okay.

And actually we did lose the host there as well so probably be just a few moments here to reestablish that line. And again, thanks for standing by. We are just reestablishing our host line. And thank you so much. We do have your line back in the conference at this time.

Thank you. It wasn't that tough a question I wanted to cut you off. It was about $10 million in the quarter. Hello?

Yes. You are in. Sir, I am sorry that we did have to close this line. It will be just a moment to reopen it. Sir, if you could just re-queue as well by pressing the * then one.

You're talking to me.

No, the questioner. We lost him when we answered your line. Michael Nathanson -- Sanford Bernstein: Am I back on?

Okay, you are back on. Michael Nathanson -- Sanford Bernstein: Thanks, Randy.

Sorry about that. We don't know what happened. Michael Nathanson -- Sanford Bernstein: It's hung up on me.

The question wasn't that tough. Michael Nathanson -- Sanford Bernstein: So, basically most of the cost savings in employment were heads, your jobs severed and the benefit from those reductions.

Real adjustments to our cost basis. Michael Nathanson -- Sanford Bernstein: And then lastly let me just play devil's advocate. Listened to (inaudible) this morning, they were slightly more negative on the first half of 2010. And if we are in a situation with first half of '010 is still negative organically with a better second half. Do you think an environment is one where margins can grow and remain so much stable or if this is a multiyear decline in organic revenues, do you think there will be problems in maintaining margin strength this year?

No. But let me comment a little bit on the organic piece, which I think is kind of the case. Basically, been a reset. And I will say organic revenue or revenues, it is a pretty significant step down. I think Q2 is, we are pretty confident is the low point. And the step between Q1 and Q2 was meaningful, so if from these levels our new business activity actually generate positive organic growth off of the sequential quarters off of Q2 but get the year-over-year organic growth would be very difficult given the size of the step down until you get to Q2 of next year, possibly Q1, but that's pretty close. As far as margins go, we have certainly done what we can to adjust our cost structures which is quickly largely labor and discretionary cost based. The more fixed cost or semi fixed cost. Things like real estate, infrastructure cost. We are doing what we can to get those costs readjusted as well but that certainly takes more time. And we have to balance incentives with I will say a rebound in margins because obviously, in this time period, I would have to say that most the people in our agencies are probably working even harder than they ever had to work in making more sacrifices and likely in the current environment because of incentives get paid, somewhat less money. So we have to keep that in mind as well and reward them as the business comes back also. So it's a bit of a balance. Michael Nathanson -- Sanford Bernstein: Thanks, guys.

Great, thank you. We have a question from the line of Craig Huber with Barclays. Please go ahead. Craig Huber -- Barclays: Yes, good morning, thank you. First question, the yellow pages business you guys one you were able to sell, just people can adjust the models, probably would you be willing to just give us what the annual revenues are and what the margins are like?

Margins were pretty low when we sold it. Annual revenues were around $100 million. Craig Huber -- Barclays: It was slightly positive the margins?

Yes. Craig Huber -- Barclays: Okay. And then secondly most quarters you give out relative quarter you give out your net new billings and your winnings in the marketplace, usually targets about a billion dollars, what was that number in the second quarter?

I think it was $938 million. Craig Huber -- Barclays: Okay. And then historically, your company has been generally unwilling to do large even medium size acquisitions and there are decent medium size acquisition out there in the states right now. Do you have any interest of going out of your comfort zone, the small acquisitions?

We never had a problem against larger to medium size acquisitions. We have a problem against expensive dilutive acquisitions. So, it is not a size issue, we are out for our shareholders, not the seller's shareholders. And so, if we can find acquisitions that are fairly priced at fit well with our existing businesses and client based, we are more than interested. Craig Huber -- Barclays: Back a little bit on. Why are you relatively comfortable thinking in the third quarter year-over-year organic revenue decline, probably won't be as severe as a 10.8% number you had in the second quarter. What some factors are the investors to think about?

At this point it's been based upon a review of what we anticipate revenue to be across large geographies and disciplines. Again, we don't see a recovery. What we are saying is that we should have hit the trough in the second quarter of this year. It's going to take couple of quarters before we cycle on that and take couple of quarters before growth returns. Craig Huber -- Barclays: Is there anything else you can point to maybe if selling this under performing yellow page business do you think will help the third quarter so it won't be down as severe as the second quarter number?

There is a handful of small things. Chrysler revenues while they were in bankruptcy were further reduced, the business that you mentioned is a relatively small number than new business activity that we had at the end of last year and the beginning of this year, starts to have a positive impact. And it looks to us that for the most part, we have gone through certainly the bulk of changes and it seems like the project activity probably hit a low point, we believe hit a low point in the first half of the year and think there is opportunities for some recovery, not a lot of recovery, but a bit of recovery, certainly not getting any worse in the second half. Craig Huber -- Barclays: Thank you.

Our next question comes from the line of Scott Webermann [ph] with Goldman Sachs. Please go ahead. Scott Webermann -- Goldman Sachs: Yes, thanks for taking the question. Two if I may. One if you could just give us an update on client fee negotiations, have we cycled through those or clients still pushing back on fees? And then secondly if you could just give us any update on the July 2032 convertible bonds. I believe those are potable in about a week, just curious if you guys have had any discussions with bondholders and how you are thinking about that? Thanks.

First one. Repeat the first part again, I am sorry. Scott Webermann -- Goldman Sachs: Just on the client negotiations on fees.

Well, there are always negotiations going on with some clients in the 5,000 client base that we have. I'd say that most of those conversations occurred in the first half really in the first four months of the year, where we have adjusted in many instances, not only the fees, but the scope of work that we have to perform against those fees. So, most of that is finished. There are always going to be one-off switch or exception to the rule.

From the bond standpoint, the bond is potable at the end of July. We have not had discussions with bond holders. We are currently evaluating the right economic answer to potentially offer as a supplemental interest payment to bond holders. I don't know that the bond holders will accept it. Obviously, we have the revolver, a large piece of the revolver, earmarked to replace those bonds if they put back to us, that revolver for people that that aren't immediately aware of it. (inaudible) in 2011 so it's a good replacement. Our challenges, borrowings under the revolver, we borrow right now at between half of 1% and say 6/10 of 1%. It's at 30A LIBOR plus 17 basis points. That alone would not be sufficient to keep the converts outstanding. There are some other economic benefits for potentially keeping the converts outstanding for another year. So we are debating offering a supplemental interest payment certainly larger than half of 1% what the number is, we are not sure yet, we will put out an announcement some time in the beginning of next week. Scott Webermann -- Goldman Sachs: That's great, thank you.

We have a question from the line of Benjamin Swinburne with Morgan Stanley. Please go ahead. Benjamin Swinburne -- Morgan Stanley: Thanks, good morning. You talked on the prepared remarks about core revenue declines or core business declining 5.5% organically if you could just clarify exactly what's in that, what excluded for core and then more interestingly how did that trend, what was the trend in the first quarter and do you also expect as you commented that 2Q would be the bottom for organic declines overall, is that for the case with this core organic number? And then I have one follow up.

I didn't quite phrase it as core. What I said is we had a few areas. Four that I mentioned that were more severely down. So severely down or disproportionately down that I thought it was worth analyzing them and then talking about the two pieces of businesses. So, it wasn't, auto is one the sectors that I carved out. Benjamin Swinburne -- Morgan Stanley: I got you.

Clearly core piece of business for us and cut across many of our disciplines. But the areas that I outline was recruitment marketing which I would argue is not core. It was down about 45% in the quarter. The auto sector as a whole which is about 13% of our revenue, it was down 30% organically. Our events and sports marketing business was down about 65 million or 40% organically, and our not for profit marketing business which I would probably argue is not core, was down about 40% in the quarter. So those four sectors accounted for about 16.5% of our business in Q2 of 2008. And since they were down pretty heavily, obviously they didn't account for 16.5% of our business this year. But that group accounted for almost half of our total organic decline. And the remaining 83.5% of our business was only down 5.5%. I didn't do that analysis for Q1. It would have been a similar result. Benjamin Swinburne -- Morgan Stanley: Okay. And then if I could just ask on a couple of categories. You did say that auto would be tough for a while. But I was wondering if the cash for clunkers program at all is big enough to matter with (inaudible) will have ad spend associated with it over the next couple months? And then I don't know if you have a view on the retailers, how big your retail exposure has been. Any body language or tone or conversation with those advertisers around the holidays, back to school, Christmas, would be interesting as well?

I don't think the cash for clunkers going to move our revenue line very much as that project goes into effect now. Hopefully, it will benefit the auto companies which will have a longer term impact on their confidence and spending. So I don't see anything moving out our needle. And Randy is looking for the data on the second point.

Retail was down pretty good in the quarter, about 15 -- we could pick it offline.

Retail is actually up for us in the quarter. I have to dig behind why was probably a combination of new business as well as the performance in the sectors all. Benjamin Swinburne -- Morgan Stanley: Got you. Okay. Thanks.

Thank you.

Our next question comes from the line of John Janedis with Wells Fargo. Please go ahead. John Janedis -- Wells Fargo: Hi, thank you. Randy, just a bit of a follow up to an earlier comment you made. I'm wondering when organic revenue ultimately turns positive, can you maybe share your thoughts on the margin opportunity here? So assuming it's the margin decline and that 100 basis point range on organic, down in the high single this year. I'm just trying to understand if there is, there is a lot of investment in people to be made or if you can get the margin all back and more in a recovery year. Thanks.

Not sure I understand the question fully.

I am not sure I fully understand it either. Our margins are somewhat depressed by the severance cost that we have to take. The severance cost in and of themselves won't repeat if business is growing again. So there is a bit of a benefit there. We did record and we have been recording some incentives probably, the incentives we have been recording is reflective of the business performance that we see unit by unit. When there is a recovery in growth coming back our incentives cost will increase from where they are now. So as we get to positive growth we will able to restore our margins.

In general, we think our 2007, 2008 margins, EBITDA margins are pretty good margins where we are able to invest pretty heavily in our own business and developing the business, growing the business for organic growth. Attract and retain the best talent. And generating a great return for shareholders and a good return on capital. I don't see a recovery automatically accelerating margins past those levels. Obviously if we were in a very significant I will say boom period, more like in the 2,000 time frame, margins were up another 100 basis points or so from those 2007 levels, I guess I don't anticipate 2,000 economic environment coming back quickly. John Janedis -- Wells Fargo: Thank you.

Thanks. We have the next question from the line of James Dix with Wedbush. Please go ahead. James Dix -- Wedbush: Good morning, gentlemen. Just two questions. First, looking at 2010, are there any particular items of your business which we expect clearly to bounce back stronger, either because of the easier comp against the new level business which has been reset or something else that you are seeing. And then, Randy, just a follow up on your point on regaining. It sounds like you think you can regain the 2007, 2008 level of margins, be in the investible time horizon. Do you see the same for regaining, the level of organic growth you had at that time or do you think it's going to be harder to get back to the 2007, 2008, level of organic growth than margins?

Well, I think we are experiencing a reset and in our case, some of the specialty businesses that we have more negatively impacted us than the general economic environment that we face. We will cycle through on those businesses as we get into next year. Overall, looking forward, historically, our businesses, we have been able to grow slightly better than GDP. And I would fully anticipate that as you move into 2010, we will reflect our historic performances as we move forward from revenue point of view. I don't see any single sector exploding in a way to impact the numbers very, very significantly. It's going to be an overall reflection of our portfolio and the diversity of clients that we have around the world.

I think that's certainly right, the digital space, the sector growth rates that probably occurred in 2007, 2008, digital was faster growth, emerging markets are faster growth. Digital overall is a harder and harder thing to capture. Our view is that digital affects all of our businesses and it's really ingrained, Jason's early point about some of these things is integrated marketing really has changed the way some of these numbers are being collected versus what they were a few years ago. But those digital trends are very positive for us and we think they will continue. James Dix -- Wedbush: Thank you.

Thank you. I think we have got time for one more question, assuming there is one more question out there.

Yes, we do have a question in queue and it comes from the line of Meggan Friedman with William Blair. Please go ahead. Meggan Friedman -- William Blair: Hi, thanks for taking my question. If you can provide a little more color on how you are handling the client request for renegotiations. Can you maybe put this into a historical perspective just the worst you have ever seen in such a concentrated time period and how should we be thinking about this impacting the industry structurally if at all.

I can't speak. I should be able to speak for the industry, but I can speak or Omnicom. In most instances, where, as I said, most of these conversations occurred in the first four months of this year, they are not an everyday discussion item at this point in the year. Most of the declines were accompanied by scope reductions where the amount of work that we were required to do, decreased because of clients reduced spending. You see that reflected in the severance actions that we've taken. In most cases, with very few exceptions, we don't have a 100% of clients spend when you go through our 5,000 clients. In most cases, where clients are looking for efficiencies or looking for other ways to save. The conversation is accompanied by, can you give us additional parts of the business which we are not currently servicing in order to make any overall reduction in activity more efficient for both you the client and for us. So, there is an ongoing dialogue. Even where there is an affirmative response to that it sometimes takes months to get that base and to transition it over, so the process is slow. I think given the portfolio of companies we have, the quality of the companies that we have, in most cases, we are successful when we sit down and have those kinds of conversations. Meggan Friedman -- William Blair: Thank you.

Well, thank you all for taking the time to listen to our call. And if we missed any questions we will be happy to try to answer them offline as well. Thank you all very much and have a great day.

Thank you. And ladies and gentlemen, that does conclude the conference for today. Thanks for your participation and for using AT&T's Executive Teleconference. You may now disconnect.