Jerry Leshne - Senior VP of IR Michael Roth - Chairman, CEO and President Frank Mergenthaler - EVP and CFO

John Janedis - Wachovia Securities Craig Huber - Lehman Brothers Troy Mastin - William Blair and Company Alexia Quadrani - Bear Stearns Lucas Binder - UBS Paul Ginocchio - Deutsche Bank Michael Nathanson - Sanford Bernstein Barton Crockett - JPMorgan Dan Salmon - BMO Capital Markets Catriona Fallon - Citi Craig Huber - Lehman Brothers

Good morning, and welcome to the Interpublic First Quarter 2008 Earnings Call. All parties are in a listen-only mode until the question-and-answer portion. (Operator Instructions). This conference is being recorded. If you have any objections you may disconnect at this time. I would now like to introduce Mr. Jerry Leshne, Senior Vice President of Investor Relations. Sir, you may begin.

Good morning. Thank you for joining us. We have posted our earnings release and our slide presentation on our website, Interpublic.com, and we'll refer to both in the course of this call. This morning we are joined by Michael Roth and Frank Mergenthaler. We will begin with prepared remarks to be followed by Q&A, and we plan to conclude before market open at 9:30 a.m. Eastern. During this call, we will refer to forward-looking statements about our company, which are subject to uncertainties in the cautionary statement included in our earnings release and the slide presentation, and further details in our 10-K and other filings with the SEC. At this point, it is my pleasure to turn things over to Michael Roth.

Thank you, Jerry and thank you all for joining us this morning, as we review our first quarter results. As usual, I'll begin by covering some of the highlights of our performance, and Frank will then take us through the results in detail. After his remarks, I'll return with closing comments, before we move on to Q&A. Our performance for the quarter was strong, fueled by continued progress in many areas of our business. Organic revenue growth of 5.1% and we are beginning to see a broader cross section of our companies contribute to our results on this key growth key metric. Operating margin also improved significantly, which demonstrates that the tools and the people we have been putting in place across the organization are leading to more effective cost controls. As a result of our continued improvement on both the top line and in our ability to drive profitability, we narrowed the seasonal first quarter operating loss from $124 million in 2007 to $58 million this year. The loss applicable to common shareholders declined by about half, from $0.29 per share in last years' Q1 to $0.15 this past quarter. In terms of the organic growth result, there are a number of things that bears mentioning. Performance is improving across our portfolio and at our operations outside of the United States. The drivers of domestic organic revenue growth were McCann and the CMG Companies, as well as our U.S. independence. Our media agencies Lowe and Draftfcb all contributed to improved performance in key regions, such as Europe, Asia and Latin America. On our year-end call, back in February, we mentioned that the tone of the business was solid, and that continues to be the case. On that call, we listed some of the wins from the first half of the first quarter, such as Magnum Ice Cream and China Mobile at Lowe, as well at Hyundai/Kia and Cadbury Schweppes in Initiative. We have seen a steady stream of additional activity since then with McCann, MRM and Universal McCann jointly winning Cadillac and Dodge business in China, while Draftfcb picked up the Chevrolet business in the UK and a number of the Kraft food assignments in the international markets. Deutsch won Dr. Pepper, which was a high profile pitch, as was McCann's Staples win in the UK. More recently we are seeing a significant expansion of our relationship with Nokia, which uses a full range of IPG agencies across the marketing discipline. And the Knorr win last week adds an important global brand to Lowe's growing list to Unilever assignments. Of course, it goes without saying that clients remain cautious due to the broader economic concerns. To date, we are not seeing signs of a pull back, but we continued to monitor situation closely, so as to be able to respond quickly should the need arise. Our progress in terms of financial systems and talent has given us better visibility into the organization, and gives us confidence that we have the right tools with which to manage our business. As we built these tools and disciplines, we've also seen a significant improvement in profitability, quarter-to-quarter going back to 2006. As always, Frank will provide an in-depth review of our results. Before I turn it over to him, however, there is one item in which I would like to comment. If you have taken a look at our press release this morning, you will see that we have recognized the provision of $12 million related to the SEC investigation of our past restatements. We now have enough of a basis to make this estimate of monetary liability in connection with this matter, and we'd like to update you on the situation as it currently stands. We are in advanced settlement discussions with the SEC staff. Although we cannot at this time predict with certainty the outcomes of these negotiations or details, the nature of the commission's allegations, we believe that they will concern issues from past periods that we have previously disclosed. As you know, we have devoted considerable resource to replacing staff in the relevant areas of our business. We do not expect that we will need to take any further action as a result of the complaint. We also expect that the Commission will be in a position to make an announcement shortly, regarding the resolution of the serious matter. At that time, we will have a more detailed public statement. As you can appreciate, this puts us in an awkward position this morning, but there is no additional information we can share with you at this time. I would, however, add it will be significant for us to finally put this issue behind us, so that we can continue to focus on growing our business. At this point I would like to turn things over to Frank for the

Thanks, Michael. Good morning, everyone. Let me remind everyone that the presentation slides which accompany remarks are available on our website. As Michael indicated in his comments, we are very pleased with the first quarter results and believe they represent a strong start to the year. Among highlights in the quarter, consolidated organic revenue growth was 5.1%, reflecting increased spending by existing clients and balanced geographic growth. We had significantly improved expense leverage from salaries and related expense. Improvement was driven by base salaries and benefits, where we had 100 basis points incremental leverage as a percentage of revenue. Office and general expense decreased from a year ago, which along with our revenue performance, translates into 440 basis points of improvement as a percent of revenue. Michael mentioned the very positive results these factors had in cutting our first quarter operating loss by more than a half. Our Q1 operating margin improved by over 500 basis points. You'll recall that our full year target for margin growth is in the range of 300 basis points, so the year is clearly off to a solid start. Turning to Slide 3, our P&L for the first quarter, I'll cover revenue and operating expense trends shortly. As Michael mentioned, we accrued $12 million for potential settlement relating to ongoing SEC investigation is a component of other expense. Moving ahead on Slide 4, we provide additional detail and revenue. Reported revenue in the quarter was $1.49 billion, an increase of 9.3%. Compared to Q1 '07, exchange rates had a positive impact of 3.8%, while net business acquisitions added 0.3%. The result was organic revenue growth of 5.1% driven by both higher revenue from existing clients and revenue from net new business wins. On the bottom half of the slide, you can see our revenue growth by segment. At our Integrated Agency Networks, reported revenue grew 9.7%, while organic revenue growth was 4.6%. Growth was solid across the board led by advertising, digital and activation disciplines as well as media. At our CMG segment, revenue grew 7.1%; organic revenue growth was 7.7%, with continuing strong performance in public relations as well as event and sports marketing. Slide 5 provides a breakdown of Q1 revenue growth by region. In the US, revenue increased 5.2% organically. As Michael mentioned, we had growth across our full range of advertising and marketing disciplines, as well as from most major client industry groups. This was led by McCann, Deutsch and Hill Holliday. Internationally, reported revenue growth was 15% with a strong currency tailwind. Organic revenue growth was 5%. In the UK, organic revenue growth was 3.7% led by McCann, our media agencies and our event business, primarily attributable to new client wins. In continental Europe, organic growth was 3.6%, led by our media businesses in Lowe, which had higher spending from existing clients. In Asia Pac, Q1 organic revenue growth was 12%. We continued to have strong growth in China and India, with increased client spending and new business wins across three global agency networks. Results in Japan continued to reflect a more challenging economic environment. In Latin America, organic revenue growth was 7%, also led by Lowe and Draftfcb. On Slide 6, we present a longer view of organic revenue growth presented on trailing 12-month basis. This chart effectively demonstrates the trajectory of our business and underscores what Michael mentioned about not focusing excessively on any individual quarter. As you can see, organic revenue growth is trending well. Over the last 12 months, this key measure of vitality was 4.6%. On Slide 7, we move on to a closer look at operating expenses. Salaries and related expense were $1.06 billion in the quarter, 71.7% of revenue, compared with 72.8% of revenue a year ago and improvement of 110 basis points. As you will see in the appendix to our presentation slides, leverage on base salaries and benefits improved 100 basis points and was the largest driver of our improvement. At the same time, temporary help also declined by 30 bases points as a percent of revenue. Even as we become more efficient, we continue to invest behind revenue growth in strategic critical services and in high growth regions of the world. Headcount at quarter end was approximately 43,100, net increase of approximately 1,100 from a year ago, which chiefly reflects our acquisition of Lintas in India in Q2 '07, as well as growth in China and a global investment client Digital Marketing Services and Media. Office and general expenses on the lower half of this slide were $470 million (sic -- see Press Release) in the first quarter compared with $495 million a year ago, a decrease of 4. 1% as reported and a decrease of 6.7% organically. Importantly, O&G expenses were 32% of Q1 revenue, compared with 36.4% a year ago. All major cost categories in O&G decreased as a percentage of revenue. The key drivers included lower professional fees and improved leverage and occupancy expense, as a result of ongoing operating disciplines and cost actions taken in 2007. On Slide 8, we show our operating margin on a trailing 12-month basis. This excludes restructuring and impairment charges in order to capture the trend in underlying results. As was the case with organic revenue growth, this chart shows significant and consistent progress. As you can see, operating margins over the last 12 months was 6.6%. On Slide 9, we turn to cash flow for the first quarter. As you know, Q1 is typically a cash-out quarter due to the seasonality in both revenue and working capital, while we saw the seasonal cash increase in Q4. For the quarter, cash used in operation was $288 million, compared with the use of $383 million in Q1 '07. This significant improvement was due to our decrease net loss in our lower use of cash and working capital. Seasonal use of cash working capital is $241 million, compared to $283 million a year ago. D&A in Q1 was a total of $70 million. Depreciation was $43 million. Amortization of restricted stock and non-cash compensation was $20 million, while amortization and interest expense was $7 million. In the investing activity section, we used approximately $47 million in the quarter. Our financing activities in Q1 included, as previously disclosed, the put of $191 million of our 4.5% convertible debt, which was repurchased from cash on hand. This activity retired $15.4 million [indebted] dilutive share equivalents as well. In total, seasonal cash use in the quarter was $525 million, which is approximately $100 million better than a year ago, excluding the impact of our debt repurchase. On Slide 10, we present the current portion of our balance sheet as of March 31 in '08 and '07. and December 31st. We ended Q1 with $1.5 billion in cash and short-term marketable securities, approximately the same level as a year ago. Our debt maturity schedule as of quarter-end is presented on Slide 11. Total debt at quarter end was $2.1 billion, a decrease of approximately $200 million from both a year ago and year-end 2007 due to our debt repurchase. With our stronger cash generation net debt declined $200 million, as well from the seasonally comparable level a year ago. In summary, on Slide 12, we turned in our best Q1 performance in many years. With that said, we remain cautiously optimistic about our business given macroeconomic pressures. As Michael indicated the tone of our business has remained sound, and actual client spending levels, broadly speaking are in line with our expectations for this point in the year. As important, we continue to leverage improved talent and tools for better financial visibility and control. As a result, our operations are increasingly disciplined and able to drive significant improvement as evident in the results, where -- which we are showing you today. Our Q1 tells us that the year-end turn around is on track. Now, I'll hand the call back to Michael.

Thank you, Frank. As you can see, our performance in the first quarter represents a good start to the year. Growth was balanced from existing and new clients across the marketing disciplines. We continue to see demand for digital, marketing services, integrated solutions and high-value strategic thinking and advertising and media, as well as strong capabilities in the emerging economies. While these are challenging times, the disruptive changes that are affecting media and marketing, represent an opportunity for us to help clients as they look to engage with their customers in an increasingly complex consumer landscape. We have mentioned previously that every one of our agencies is adapting to this new reality. We are successfully integrating digital capabilities and know-how across the operating units, so that the growth in both the IAN and CMG segments reflects increased strength in emerging media. We will keep investing, primarily in talent and professional development to capitalize on the digital marketing opportunity, and we believe that as a result of this, our offerings are increasingly competitive across the board. On past calls, we said that the growth at McCann World Group and CMG is due to the actions taken to strengthen talent and build new services at those units during 2005 and 2006. We have also discussed the strength of our integrated US Independence. And the modern agency model we introduced the Draftfcb, which posted solid third quarter performance. This quarter it is gratifying to tell you that Lowe's results contributed to our improved margins and to see the agency so active and successful on the new business front. It also bears mention our media agencies which saw a dramatic turnaround in 2007 continued to show very good progress in the first quarter. The alignment strategy we introduced in late 2006 is paying dividends with clients and the task force that we put in place late last year to drive synergies is further improving performance at all our media agencies. To build on this momentum, we must stay focused on seeing to it that our units execute against their operating plans. We have to stay close to our clients and be responsive to their needs. We will also continue to be open to strategic opportunities that enhance against our offerings, particular in the digital area and in high-growth markets. And like every type of business at this juncture, we'll continue to monitor the broader economic situation closely. We have consistently -- consistently said as we move through the turnaround, our progress will not be linear. We continue to caution you against using a single quarter to extrapolate future performance. Nonetheless, we are pleased with the results we have shared with you today. Continued progress in organic growth and in cost control is driving significant improvement in our margins. The quarter's performance is further evidenced that we have IPG on the right track, and we remain on track to deliver on a stated financial targets for 2008 and to achieve our ultimate goal of enhancing long-term shareholder value. I thank you. And now, we'll open up the

Thank you. At this time we are ready for the question-and-answer session. (Operator Instructions) Our first, Mr. John Janedis of Wachovia. Your line is open. John Janedis - Wachovia Securities: Hi, thank you. Good morning, guys. Frank, you mentioned growth in the UK. But, I think you've also have historically talked about challenges in the market. Can you give us some specifics on market dynamics? Are you seeing macro-improvement there or is it most assured gains or were there some one-time projects?

As we have called out in previous quarters, we've made a number of management changes in the UK, and I think what we're seeing now is just that management take hold. And, when you look at other parts of Europe and other markets that we called out, that's been challenged is France, and France actually had a relatively strong quarter. So, I think that changes we have made in management across Europe seem to be taking hold and that's what yielding the improved performance. John Janedis - Wachovia Securities: Okay. Great, thanks. One quick follow-up just on Lowe, Michael.

Yes. John Janedis - Wachovia Securities: You mentioned the Knorr account and some other details there. Are they on plan for the year at this point? And, from a headcount perspective, are you positioned the way you want to be in the US?

Well, first of all with respect to Lowe, they are on plan, and it's very encouraging to see them with the recent business wins. As we indicated, we were looking for Lowe this year to turn profitable, and we are online to do that. As far as headcount, I think as we said before what we continue to do is look to upgrade our talent, particularly in the digital and public relations and growth areas. So, what we'll see is we'll continue to be opportunistic in the marketplace to enhance those offerings. John Janedis - Wachovia Securities: Thank you very much.

Thank you. Operator Our next question; Craig Huber from Lehman Brothers. Your line is open. Craig Huber - Lehman Brothers: Yes, good morning. You clearly made a lot of progress on the top line and costs in this quarter. Can you give us a little more of an update on your margin target goal for your end 8.5% or 9% for the full year? How are you tracking towards that, and how you feel organic growth for the rest of the year and also expenses, the two main categories? Thanks.

I'll let Frank talk about the expenses. But we continue to be on track to achieve our 8.5% to 9% target. Obviously, this first quarter was important for us to get off to a good start. I think our revenue -- organic revenue of 5.1% is certainly consistent with our target. And, if you look at our improvement in terms of costs and margins so far we are continuing on track to achieve that goal.

On the cost side, Craig, as you know our key expense metric is our staff cost ratio. When you look across all of our businesses in the first quarter, everybody made progress against their operating plan with respect to improving those ratios and improving off the year. So we are pleased with where we are coming out of the first quarter. And the other -- on the O&G-side same thing. I think we were pleased with the results we saw in the quart and continue to reiterate where we believe we'll land on margins for the year.

One of the things all of our units that all our units are doing is given everyone's concerns about the economic environment, we are not spending to the higher numbers. In other words, instead of spending dollars in anticipation of a lot of new business wins, if you will, we are being much more cautious in terms of adding to it. So that, I think you are seeing the result of that in the first quarter in the improvements in our salary ratios. And I think that's the wise thing for us to do now, because there is that uncertainty out there, and we just have to monitor that very closely. Craig Huber - Lehman Brothers: Concerning cost for the rest of the year, do you think you will be able to keep these improvements -- these gains if you found the cost for the rest of the year, although relative to your revenues?

We put out there our margin target for the year, and contributing to that margin target are three variables, revenues, improvement and our staff cost improvement, and O&G. I think the controls we put in place and the visibility we have to our business in respect to the cost lines has the entire organization pretty maniacally focused on managing their costs.

I means, this obviously as we said before, Craig is a crucial year for us in the turnaround. And all of our business units when we have our operating reviews with them, the primary focus is how we're going to achieve those margin targets and, whether it be revenue or cost control, they have to put together their plans to show that's what they're going to accomplish. Craig Huber - Lehman Brothers: Finally if I could, when would you give more further consideration to do a significant share buy back given the progress you guys are making on the top and bottom line?

That's why I said this year was an important year for us. We said we had a three-year turnaround plan. 2008 will be the completion of that turn around period if you will. And I think, once we achieve our targets and we continue to strengthen our balance sheet the way we have and be in a very conservative position on our balance sheet, then we will seriously entertain those issues. Craig Huber - Lehman Brothers: Great. Thank you.

Thank you.

You're welcome.

Our next question; Troy Mastin of William Blair and Co. Your line is open. Troy Mastin - William Blair and Company: Morning, thank you. First, I want to ask if there are any significant items that may impact the seasonality of either revenue growth or profitability for the remainder of 2008 as compared to 2007 that you would like to call out?

No, I think the seasonality trend should be relatively consistent, Troy. Troy Mastin - William Blair and Company: Okay, good. And then with organic growth at 5.1% in the quarter, 4.6% on a trailing basis, I would define this as fairly close to pure levels. Looking forward a little bit, may be a tougher environment, is it reasonable to expect relative stability in organic growth over the several quarters, of course not focusing too much on individual quarter?

We said in our prior calls competitive revenue growth, we fixed it 4% to 5%. And, when we say we are sticking to our targets with respect to 8.5%; that is consistent with that. And obviously the trade-off there is, if we see any softness in those numbers we have to focus on the cost side. So, I think, when we say we are on track, it's consistent with both those items. Troy Mastin - William Blair and Company: Okay, good. Maybe I'm getting ahead of myself here. But thinking beyond your targets for 2008 as it relates to margins, I'm curious if you have done much work on the margin side to determine if you can get near peer level margins in the next few years? And given differences in accounting among some of your peers, I'm wondering if you could define for us what peer level margins might be?

We had indicated there is no structural region why we can't be competitive with respect to the margins, and that's what we have been driving towards. Clearly, somewhere in the low teens in margin numbers are where we think we can get to. The timing of that obviously is a function of the economy and things like that. But there is no reason structurally why we can't be in those levels whether it be 13% to 14% margin.

And, we've stated, Troy, throughout this turn around, our ultimate objective is to be competitive on growth and margins, not to just achieve our '08 targets. Troy Mastin - William Blair and Company: Okay, good. And then give us a quick update on M&A, given all the credit market issues out there, private equity, so forth activity. How you see the M&A markets today, if you think you'll get more active, if targets look more attractively valued and so forth?

We haven’t seen any major pull backs in price levels in terms of the areas that everyone is interested in, particularly in the digital space and obviously growth and China. We indicated a capital plan of about $150 million, and we will be consistent with that, and obviously, what we said is we are looking for strategic acquisitions, none of which are large in size, but could add to our portfolio. And those areas in particular will it be digital and hopefully in the China and emerging market environment. We added significantly to our portfolio in India this past year. So we are on track in terms of adding to our portfolio of companies. But, I think it's rough out there from a capital point of view and fortunately, and I know your questions are going to be about the ELF. Other than looking at the ELF transaction, there isn't a huge need for us on the capital side. Troy Mastin - William Blair and Company: Okay. Thank you.

You are welcome.

Our next question; Alexia Quadrani, Bear Stearns. Your line is open. Alexia Quadrani - Bear Stearns: Thank you. Just a couple questions. First, on the relatively larger you lost last summer and the accounts that moved around, can you give us a sense of how much that may have impacted the revenue in the quarter, and when you think we'll cycle through those headwinds?

We don't about the specific numbers. But I think given the performance in the first quarter, we are on track to replace whatever client losses we had in 2008. Alexia Quadrani - Bear Stearns: Would it be fair to say that you did counter those headwinds in the quarter, I mean those revenues --.

I would say the answer to that is yes, Alexia. Alexia Quadrani - Bear Stearns: Okay. Any notable trends on how the quarter progressed? I mean it was pretty steady throughout the quarter in terms of organic revenue growth?

Yes, absolutely. And, as I indicated, we don't see any major pull backs. So, like everyone else, we are cautious. But, we haven't seen it.

I mean we saw, Alexia, a strong quarter from existing clients across all major sectors for the most part, and we saw net new business coming on stream and it was pretty evenly weighted throughout the quarter. Alexia Quadrani - Bear Stearns: And with your much improved financial controls now, would you give us a sense of what sort of visibility you may have in terms of organic revenues?

I think quite frankly, we are already in the first update for the year, and our teams are all coming back in, and the level of analysis and visibility they have is dramatically improved. So I think the big question out there, is not visibility into our existing clients or net new business coming on stream, I think the big question is just how the macroeconomic pressures impact our relative clients. And the only way you are going to get visibility to that is just keep talking to your clients.

We are visiting with clients, we're visiting with our agencies, and we speak to the agency heads all the time to get a sense of what they view and what they are hearing in the marketplace. So when we indicated to you that we are keeping to our targets for 2008, all of those are factored into that conclusion. Alexia Quadrani - Bear Stearns: And, I guess Frank, given the comments you guys have made about the macro environment, which is somewhat obvious, would you say that you've seen more involvement in procurement or more pricing pressure lately? Or really no real change?

I think that it is a competitive world out there, Alexia. I don't think we've seen a noticeably ratchet up of procurement and pricing, but it's a competitive work

I think there is no question going in; clients are wanting the same for less as anybody would do in a difficult environment. But given the financial controls now and the contract analysis and being paid for special work and the visibility into what we are doing, we have all the ammunition, if you will, to sit down with our clients and show the value added that we are performing and how we should get compensated. So that's what's going on there is no question that procurement has a very important role to play in terms of fees going forward. And on the other side of it, we now have a lot more ammunition from a financial perspective to sit down with them. And, frankly, we are in a stronger position from a financial point of view to look at clients in the eye and saying we are performing services and we should be paid for it. In the early stages of this turnaround, as we indicated, it was little more difficult for us to push back because we were so sensitive to what was happening in the marketplace. So, I think the fact we are progressing through this turnaround has a domino effect in terms of all of our relationships as we do with our clients. Alexia Quadrani - Bear Stearns: And just one last one. Europe in the quarter, was it profitable?

We don't disclose profitability by region, just revenue. But, I think we are seeing improvements in overall performance in Europe. Alexia Quadrani - Bear Stearns: Okay. Thank you very much.

Thank you.

Our next question; Lucas Binder of UBS. Your line is open. Lucas Binder - UBS: Thank you very much. A couple of quick questions for you then. Michael, I think you mentioned the ELF, and just looking at your balance sheet, can you talk about what the timing is for refinancing the ELF and what the opportunities you see. And then when you look out through 8, 9 and 10, $500 or $600 million of face debt that's coming due, would you use cash on hand to retire that? Would you look to refinance, given how the market is right now?

Well, obviously, the market is pretty tight right now. But the one thing we've always done is we have been very proactive in the marketplace, and we are in dialog right now to see what we can do with respect to the ELF in 2009. Obviously, our goal would be to put together some type of arrangement, which can effectively replace the ELF, if you would. And those are the discussions that we are having. I think the size of the ELF, given our financial performance, is a little bit larger than we may need, but all of that will be factored into what is available out there. The fact we paid off our put if you will from cash on hand, I think is a statement with respect to the improvements that we are making in our overall financial position. And, as we indicated in the past, we were very conservative on our balance sheet, given the fact that we were in a turnaround and then the capital markets were operating with the way they have. And the fact that we were able to pay that from cash on hand proves to be a very prudent thing for us to have done. So, we will continue to look at that. Ultimately, I think the conservative nature of our balance sheet would do us well until this capital market frees up. Lucas Binder - UBS: Thank you. And one follow-up on digital. With regard to the hires that you are making in the space, are you seeing massive cost inflation on the digital side, or is it much more, is it more competitive, and you are able to kind of manage how much the cost of the employees in that space are running you?

There still is a premium for hiring digital people. There's not question about it. And, certainly the higher level peoples are -- peoples? The higher level people are commanding a premium in the marketplace you could see all of us chasing similar people in that environment. Our best strategic is to bring them in at a lower level and train them. So that's what we've been doing. RGA, for example, has an RGA University where they bring in talented people, and they train them. I think the other side of it is kind of interesting and that is, a lot of people are concerned about the economy. So you don't see a lot of these young people moving out? They are getting advice if you have a job and a good one, stay there? So, I think we are seeing some of that. But it's still a very competitive environment. The other aspect of it is the cost profile of our digital offerings. There is no question that the global nature of our business is requiring is to look from a cost profile in terms of how we are providing that digital content and digital work for our clients, and therefore we are looking at how we expand globally to be more efficient with respect of the cost of these different services. Lucas Binder - UBS: Alright, thank you very much.

Welcome.

Our next question Paul Ginocchio, Deutsche Bank. Your line is open. Paul Ginocchio - Deutsche Bank: Thank you. Talk about first quarter net new business wins. Was it a strong quarter or weak quarter for new wins? And then as you look into the second quarter, I think you lost Wachovia, Intel Media, and I guess the Navy is now in mandatory review by the government. So, how was the second quarter looking? And, finally, third question. Looking at one of your largest clients whose has the goal to be 50% online ads (inaudible) three years, they have got obviously a number of holding company has their leading online agency in there as the digital agency record. Could you just talk about how you can hang on to fees as this big client migrates more revenue online? Thanks.

Okay, I'm sorry, Paul. You were breaking up a bit. In terms of net new business for Q1, I think we've had a significant client wins across the board as I indicated in my comments. So the net new business is positive if you will. I think your question was with respect to General Motors, is that it? We've always been competing with, frankly, Digitas at General Motors, even before the Publicis acquisition of Digitas. And, we have frankly, held our own in terms of our engagement at that client, and we continue to bring -- there are different levels of digital work at General Motors. A strong component of it, we have in-house, and we work with them on. And some of the other areas go to Digitas. That's not uncommon in the market place, and we have no difficulty competing with them in the marketplace. So we continue to refine our offering there, we continue to talk to them about our capabilities, and as usual, we'll get some of whom we want. That's the nature of our business. The important thing is that we are in a position to compete on a head-to-head basis with any digital offering that's out there. Paul Ginocchio - Deutsche Bank: Let me just follow up on that. Can you anyway emphasize or give an exposure to online that you're already doing for GM as a percent of your overall business?

No. First of all, we wouldn't tell that you, but the second point is that it's imbedded in everything we do. Paul Ginocchio - Deutsche Bank: Okay.

And that's the whole point. Paul Ginocchio - Deutsche Bank: I mean how is second quarter looking for the [new wins], quarter to date?

I think it's kind of early for us to tell. We got a number of items in the items line. There aren't any big items out there in the marketplace. I think you've heard that from all of us on the calls. So I think, you know, on one hand that's good news, and that is, we don't have any big clients up for review. The other side of it is, we are working the marketplace like everyone else. And obviously the one area that we were disappointed in with the Intel Media, we do not believe that that follows that, therefore the rest of our work be creative, and the rest of our services at Intel are at risk. But, we were disappointed in that. We made the finals, and, unfortunately, we didn't prevail. Again it was not material to us from a financial point of view, but it would have been one we would have liked to have held on to. Other than that, we don't see any, we don't have any big clients under review and frankly the big engagements up for review out there were in and we are waiting to see the outcome. Paul Ginocchio - Deutsche Bank: Thanks very much.

You are welcome.

Our next question; Michael Nathanson of Sanford Bernstein. Your line is open. Michael Nathanson - Sanford Bernstein: Thanks. I have a question for Michael and one for Frank. Michael, I know you guys have said this for awhile about getting your margins up to peer levels. But, some of our peers have different mixes, right? You have a very profitable media buying businesses; others have exposure to marketing services that's above yours. When you go back historically before the problem is even hit IPG, your margins always below peers. So, I wondered why now do you think the gap will close given the mixed shift and also historical gap in profitability.

I think it's a fair question. There is no question our media offering as for a period of time, given the issues we had with media, had put us at a disadvantage with respect to the other holding companies. Certainly, their media offerings are larger. What's interesting is now with our new offerings with Nick Brian and Richard Bevins and the new people we have added to our media offering, we are much more competitive both from a buying and planning point of view. Our win at J&J, the Hyundai/Kia, Cadbury Schweppes. Some work we've done with Sony, we continue to work with them. All of these clients it is very competitive, but there is no question we have a competitive offering in the marketplace. And that's the first item that indicates to me that we therefore are cautiously optimistic about our ability to increase our margins, even in those areas. The other side of that is, the media business on the buying side is certainly becoming much more commoditized, and therefore the margins that are inherent in that business are not what they used to be. So, the opportunities there are more in the planning, which is why we've repositioned to be closer aligned with the networks if you will. So that when our clients are looking to us to provide integrated answers to what they are looking for, we have everyone sitting at the table and frankly, that's where the opportunities are. Couple that with the fact that our integrated offerings on a global basis from the World Group and Lowe and Draftfcb are highly competitive in the marketplace. You put that all together with the cost controls and the revenue growth that we're talking about, that's how we see it. Michael Nathanson - Sanford Bernstein: Okay. And then for Frank, congrats if in case the SEC is behind you. But can you remind me again if how much you would save in current professional fees if the SEC issues are resolved? How much would drop out?

Michael, most of the specific fees are in legal fees now. The cost to remediate control weaknesses become Sarbanes-Oxley compliant. We have incurred those, and we are seeing the benefit of achieving those milestones in the reduction of fees over the past three years. The costs -- the burn rate is still going on with the SEC is purely specific legal fees. While they are meaningful dollars to us, they are not material to financial performance. Michael Nathanson - Sanford Bernstein: Okay. Thanks.

You are welcome.

Our next question Barton Crockett of JPMorgan. Your line is open. Barton Crockett - JPMorgan: Okay. Great. Thanks for taking the question. I wanted to get a little bit more color on your view of how you get to these longer term double digit margin goal. And if we were to assume let's say an environment like today, assume not a recession, just something like what you see now. Is it that you keep headcount flattish and revenue growth kind of gets you there? Or is there another kind of [truant] of headcount reduction that you think you need to get through in order to get your long-term margin goal?

Barton, when you look at the portfolio of assets that are public, we have a number of assets that are already at those performance levels. So, there is not a silver bullet answer. It's is getting those assets that aren't perform up to the comps within best of class within the portfolio. The way you do that is you give them tools, you put in disciplines, you get the right people in place, you leverage some of the best in class thinking that goes on at sister agencies. You share business practices. I think all those things are contributing to the one shark we show in the deck, is the progress we have made quarter-on-quarter on trailing 12 months on margin improvement. And we expect that trend to continue.

The other factor here is, as Frank indicated, a number of our agencies are already there. We indicated that when we first started this turnaround that it was important for us to show improvement on media and Lowe and, frankly, in Draft New York as a result of a large client loss last year. Those three components, in and of themselves, when they get back to more competitive margins and things like that will add to that overall. So, when you take media, Lowe and Draftfcb,and add it to the agencies already there, that is how we get Barton Crockett - JPMorgan: Okay, great. I'll leave it there. Thanks a lot.

Thank you.

Our next question Dan Salmon of BMO Capital Markets. Your line is open. Dan Salmon - BMO Capital Markets: Great. Thanks for taking the call. My question's mostly with regards to mixed shift both in client spending and on your cost side. I think in one of your earlier answers you covered the hiring dynamics pretty much in detail. But in terms of the budgets with clients, moving beyond strengthened digital as a broad bullet point, can you shed some light on the techniques and channels that are getting more attention, getting less attention. I know you guys have done work at the social marketing techniques longer than most. I'm wondering how the emerging techniques are being reacted to here as economic uncertainty and caution sets in with some of the budgets. Thank

There is no question our clients are looking to us to help them navigate through the fragmented media environment. Certainly, the work we are doing with Ansible on Mobile is an important piece of that. We are a priced media and the work they are doing with our clients and our agency helps them navigate through the Internet. What's interesting, I just gave a talk recently. In the 1980s, early on, if you wanted to reach 80% of the market, all you had to do was run three network ads, and you reached 80% of the market. Now, you have hundreds of different media outlets that you have to be responsive to, whether it be outdoor, Internet, mobile, viral. So what we've done is starting with, for example, the emerging media lab, where we test and focus on a lot of the new media. We have to be in a position to bring all the different opportunities to our clients, and that is what they are looking to us to be able to do, and that's why the improvements we have seen in our media offering coupled with the integrated offerings that our networks are bringing to the table, that's what clients are demanding us to bring to the table. And being able to work either whether it's the fully integrated work like McCann, World Group or Draftfcb or Lowe or parking with our other agencies as we do on a number of engagements, like Computer Associates or Nokia; that's how we have to be able to respond to the marketplace. And, yes, we are seeing a greater percentage of increase in the spend in the new media. And we have to be able to, not only provide the resources, we have to provide the tools to analyze the impact of that, which is why the marketing account built practice, the ROI techniques that we have in all of our different units are important in terms of helping our clients allocate the spend. I mean, that's the Holy Grail of our business, and that is, you work with your client to see how they can maximize the dollars that they are spending through all these fragmented media, and that's where we are going to see wins. Dan Salmon - BMO Capital Markets: Okay, great. That is very helpful. Thank you.

Thank you.

Our next question, Catriona Fallon of Citi. Your line is open Catriona Fallon - Citi: Hi, good morning. There was certainly strong improvement internationally with some nice growth there. Can you speak to whether you were able to recognize some of the NOLs internationally, and when you expect that you might be able to start recognizing some of the international NOLs?

Catriona, we recognize them on an annual basis. We are seeing certain market turnarounds that have a fair amount of losses attached to them. I think that we've guided people to an effective tax rate in the prior year of 55%, We probably dropped that down to something more like 50 to high 40s, and that's is primarily because certain markets now have access to some of those losses. So, again the biggest contributor is going to be improved profitability. We are starting to see it, but it's very early on to see material moves in our NOLs. Catriona Fallon - Citi: Okay. And then also on the acquisition front, it looks like acquisitions were a positive contributor to the quarter versus we have been kind of working through some reclassifications over the past couple of quarters. What kind of impact do you expect from acquisitions through the rest of the year?

I think the acquisitions you are referring to was the additions in India, the impact that that had where we topped off our ownership to 100% at Lowe and Draftfcb. The type of acquisitions that we are looking for in 2008, you are not going to see a significant impact on a short-term basis. These are tactical and strategic; they are not of large components. Our goal is not to be dilutive with any of these small acquisitions, but I wouldn't be looking to see a major improvement in P&L in the short-term basis as a result of that. Catriona Fallon - Citi: Okay and then just one quick follow-up for Frank. What else is in the other income line besides the $12 million provision for the SEC?

Catriona, there is certain liabilities established as a result of our restatement as those liabilities mature due to statute limitations in certain jurisdictions. They come back through other income. Catriona Fallon - Citi: Okay.

And we disclosed I think there is a fair bit of robust disclosure in the [queue]. Catriona Fallon - Citi: Great, thank you.

You are welcome.

Our last question, Mr. Craig Huber of Lehman Brothers. Your line is open.

Is that two questions, Craig? Craig Huber - Lehman Brothers: Yes, I have a follow-up if I could. Your media buying operation made a lot of progress last year on new account Windsor. Just curious was the organic revenue growth for media buying positive here in the first quarter?

Our media businesses were organic, positive. Yes, Craig.

Yes, it's not just buying. I think the answer to that question is --

Buy and planning.

Buying and planning Craig Huber - Lehman Brothers: Okay, same question for Lowe. Obviously, you struggled with that for many, many years. Is that term positive on the organic side?

Lowe showed growth in the first quarter.

Right. And incidentally Lowe in particular on the international front is --

Is a contributor.

Is a good contributor. Craig Huber - Lehman Brothers: But, overall, it was positive?

Yes. Craig Huber - Lehman Brothers: Great, thank you.

You're welcome.

Okay. Well, I thank you all for participating. Obviously, we are quite pleased with the results for this quarter. And we look forward to hopefully, having positive calls for the rest of year. Thank you.

Thank you. That concludes today's conference. All lines may disconnect. Once again that concludes today's conference, all lines may disconnect.