Jerry Leshne – SVP, IR Michael Roth – Chairman & CEO Frank Mergenthaler – EVP & CFO

Alexia Quadrani – JPMorgan John Janedis – Wachovia Securities Craig Huber – Barclays Capital Peter Stabler – Credit Suisse Meggan Friedman – William Blair & Company Ben Swinburne – Morgan Stanley Matt Chesler – Deutsche Bank Michael Nathanson – Sanford Bernstein Dan Salmon – BMO Capital Markets Tom Singlehurst – Citigroup Todd Morgan – Oppenheimer & Co.

Good morning and welcome to The Interpublic Group first quarter 2009 earnings conference 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 Jerry Leshne, Senior Vice President of Investor Relations. Thank you. You may begin.

Good morning. Thank you for joining us. We have posted our earnings release and our slide presentation on our Web site 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 detailed in our 10-Q and other filings with the SEC. At this point it is may pleasure to turn things over to Mike Roth.

Good morning. Thank you, Jerry and thank you all for joining us as we review our first quarter results. As always I will start by covering the headlines of our performance, Frank will then take us through the full results and after his remarks, I will return with some closing comments before we move on to the Q&As. Although it's not exactly news, the starting point against which to assess our first quarter performance is the difficult economy in which we have been operating which began to impact media and marketing services during the last four weeks to six weeks of 2008. The global recession is taking its toll on many different types of businesses. More important, is how the dramatic effect on consumer confidence. As a result, certain clients have pulled back on the spend, particularly in some key geographic markets and industry sectors. This led to our organic revenue result which was a decrease of 5.6% in the quarter compared to a year ago. So not unexpected and in line with our expectations, this abrupt change in the revenue environment has required that we take aggressive action to monitor and cut costs. That is what's required in order to protect our margins and consolidate the significant gains and profitability made during these past few years. Of course, managing in today's world is not easy. You had to stay very vigilant and move quickly to address issues. As was the case in the fourth quarter last year during this first quarter, we continued to demonstrate that the investments we made on upgrading financial talent and systems are paying off in improved control over the business. We are pleased to see the benefits of our proactive approach to cost management in a seasonal net loss during the first quarter of 2009. That was comparable to the same period in 2008 despite the very challenging top-line environment. As you can see this was also the case with our quarterly EPS performance which was within a penny of last year's first quarter. Unfortunately, in a professional service business times like these invariably requires staff reductions which are very difficult in terms of the human costs involved. Like in the fourth quarter of last year, during the first quarter, we continued to reduce staff across most of our agencies. Consequently, severance expense rose significantly compared to first quarter of 2008. Excluding this expense in both periods, operating margins would have been flat year-over-year despite the reported revenue decrease of over 10%. This underlying performance proves that we've been making the hard, but necessary choices to successfully see the company through this period of uncertainty. Second area in which is vital to stay focused during this tough times is liquidity and financial flexibility. Our balance sheet continues to be strong, thanks to our long-standing conservative approach to strengthening the company's capital structure. We continue to believe that our existing liquidity allows us to handle the 250 million maturities that will come due late this year and in 2010. Therefore, we are confident that our balance sheet combined with our improved cost discipline position us well to move through the current market volatility. A third and last key area of focus given the challenging economy and the fact that we operate in a very competitive industry is our product and our clients. As you will hear from Frank's remarks nearly all of our units made positive contributions to the first quarter results. That's because all of our agencies are totally focused on the needs of their clients and on improving their offering so as to help clients navigate through the current environment. This is what's required for success in the service business. I will have a bit more to say about that what we're hearing in conversations with clients in my closing comments. At this point I will turn it over to Frank.

Good morning. As a reminder, I will be referring to the slide presentation as available on our Web site. Beginning with Slide #2, the global recession have resulted in the most challenging revenue environment in many years. Our revenue decreased 10.8% from year ago, reflecting significant pressure on demand for our services as well as the impact of stronger U.S. dollar on year-over-year comparisons. Our organic decrease was 5.6%. At the same time, we continued to manage our expenses effectively, with organic expense decreases in both of our principal operating expense lines. This includes difficult but appropriate severance actions which resulted in severance expense of 42 million, an increase of $28 million from a year ago. Over the past six months, we have incurred approximately $90 million of severance expense related to the separation of approximately 2,800 employees or 6% of our work force. Our seasonal operating loss was 82 million compared with a loss of 58 million a year ago. Excluding severance from both periods our operating margin was flat compared to last year despite the decline in revenue. Our basic and diluted seasonal loss per share was $0.16 compared with a loss of $0.15 in first quarter '08. Turning to Slide #3, you can see our complete P&L for the first quarter. I will cover revenue and operating expenses in detail in the slides that follow. Below our loss from operations interest expense and interest income decreased from a year ago primarily due to lower prevailing short-term interest rates. Our income tax benefit in the quarter was 25 million, which is an effective rate of 25.5%. Our Q1 benefit rate is typically low due to the fact that we have markets outside the U.S., where we have pretax losses without a related P&L benefit. Our full-year tax rate expectations are in the range of approximately 45%. On Slide #4 provide additional detail on revenue. Revenue in the quarter is 1.33 billion, a decrease of 10.8%. Compared to Q1 '08, exchange rates had a negative impact of 7.3% while net business acquisitions added 2.1%. Our organic revenue change was decrease of 84 million or 5.6%, and is primarily the result of decreased spend from existing clients. By sector as you would expect auto and financial services were by far the weakest. Outside of auto and financial, client sectors were in a range of down moderately to up moderately. Regionally, among our major markets, we saw the most significant decreases in Japan and the U.S. On the bottom half of this slide, you can see the revenue performance of our operating segments. At our integrated agency networks, revenue decreased 10.2%. The organic change was negative 5.4% comprised of an 8.4% decrease in the U.S. and 1.5% decrease internationally. Revenue declined across our major agency groups with a notable exception of Draft FCB. At our CMG segment, Q1 revenue decreased 13.8%. The organic decrease was 7%, comprised of 10.8% decrease in the U.S. the organic comparison was flat internationally. Our events business which typically includes large scale business to business forums decreased significantly. Our PR businesses taken together had only a slight organic decrease. Slide #5 provides a break of Q1 revenue growth by region. In the U.S., the organic decrease was 8.8% due to the factors I mentioned. Broad based moderation and spending my clients, the challenges of the auto and financial sectors and weakness in the events business. Draft FCB had solid U.S. growth led by the healthcare sector and direct marketing activity. Internationally, revenue decreased 14.5%, which includes significant effect from currency. The organic decrease was only 1.3%. In the UK where the currency effect was dramatic revenue increased 4% organically led by growth at low. In continental Europe organic decrease was 3.3%. This was partially offset by solid performance in Germany by McCann and media brands as well as some of the smaller markets on the continent. In the Asia-Pac region revenue decreased 6.8% organically. Japan continues to be very challenging due to the economy. Growth in China and India markets slowed. In Latin America, organic revenue growth was 3.4%, led by increases at Draft FCB. Our other market segment increased 16.3% due to our acquisition of MCN in the Middle East in Q3 '08, a decrease 0.3% organically. On Slide #6 we present a longer view of organic revenue growth attracts our trailing 12-month performance. As you can see this clearly registers the impact on the top-line of the recession over the past two quarters. On Slide #7, we take a closer look at operating expenses. As Michael mentioned our financial priorities in this environment, aligning costs and driving margins. And in Q1, operating expenses decreased 4% organically. Excluding severance our operating expenses decreased 5.9% organically, and we maintain flat underlying operating margin year-over-year despite the revenue environment. Salaries and related expenses were 997 million compared with 1.06 billion a year ago. This is a decrease of 6.4% in total and a decrease of 1.8 percent organically including the impact of the higher severance. Excluding severance from both periods salaries and related decreased 4.5% organically. Severance expense 42 million in the quarter compared with 14 million a year ago or 3.1% of revenue, compared with approximately 90 basis points of revenue a year ago. Our severance actions in the quarter directly affected approximately 4 percent of global work force across multiple business units and regions, predominantly in the U.S. and Continental Europe. We expect that our annualized savings will be approximately 2.5 times our Q1 expense. Incentive expense decreased to 3% of revenue compared with 3.8% a year ago. Temporary labor expense decreased to 2.7% of revenue from 3.6% a year ago notwithstanding the lower revenue base. This has been an area of increasing discipline for us as the economy slows and should continue to be a flexible part of our expense base going forward. Other salaries and related expense decreased to 2.1% of revenue from 2.9% a year ago. The decrease was due mainly to lower performance-based bonuses. Turning to office and general expenses on the lower half of the slide, in Q1, our O&G expense was 411 million, a decrease of 64 million or 13.5%. The organic decrease was 8.4%. O&G expenses were 31% of revenue compared with 32% a year ago. Professional fees decreased approximately 7 million to 31 million in the quarter and decreased to 2.3% of revenue from 2.5%. Occupancy expense increased to 9.6% of revenue from 8.8% a year ago primarily due to lower revenue base. Travel expenses, office supplies and other controllable expenses decreased to 4% of revenue from 4.9% a year ago. All other office and general expenses decreased to 15.1% of revenue from 15.8 a year ago mainly due to the decrease in pass-through expenses and revenue in the quarter in connection with our project assignments. On Slide #8, we show our operating margin are trailing 12-month basis over the past few years which represent a period of strong progress for us, margin expansion to a fully competitive level remains one of our primary financial objectives but has obviously made more challenging by the current environment. As you can see our trailing margin is 8.5%, down 20 basis points from yearend. Turning to the current portion of our balance sheet on Slide #9, you can see that we ended Q1 with 1.66 billion in cash and short-term marketable securities compared with 1.51 billion a year ago. This is the highest Q1 ending level in our history. The year-over-year balance sheet comparisons reflect the strong impact from the currency changes which decreased payables and receivables by approximately 10%. In the liabilities section short-term debt includes November maturity of our 5.4% $250 million senior notes. On Slide #10, we turn to the cash flow for the quarter. Cash used in operations was a seasonal use of 557 million compared with 288 million in Q1 2008. The comparison is due to higher use of cash and working capital compared to a year ago, 485 million compared with 240 million. We typically use cash and working capital in Q1 due to the seasonality of our business while typically generating cash from working capital in Q4. Cash use increased this quarter due to the combination of a very strong Q4 '08 working capital result that reverses in Q1, along with lower revenue and billings in the first quarter. As I mentioned, our cash and short-term marketable securities position at quarter-end increased approximately 150 million year-over-year. Investing activities use 25 million compared with 48 million a year ago due to decrease in our capital expenditures to 20 million. Financing activities use 16 million compared to 207 million a year ago when we repaid 191 million of our convertible notes. The net decrease in cash and marketable securities in the quarter was 616 million compared with 525 million in the Q1 2008. Slide #11 depicts our debt maturity schedule as of March 31st. Total debt was 2.1 billion. Our maturities are well spaced going forward with as I mentioned 250 million maturing in November 2009 and the same amount in November 2010. Looking at Slide #12 we continue to be focused on meeting the needs of our clients in this difficult economy. In light of the severity of the recession we're pleased with our financial performance in the quarter. We believe recent results speak to the fact that Interpublic is under control and executing to a high standard across our businesses. We're realizing the benefits of the flexible aspects of our cost structure and we're seeing tangible yield on the investments we've made in services, tools and talent. These are assets that along with our strong financial resources will position us well for the upside when the economy rights itself. Now, let me turn it back over to Michael

Thank you, Frank. As you can see despite the impact of the broader economic situation on our revenue we demonstrated the appropriate cost discipline and successfully managed margins in the quarter as we did in the fourth quarter last year. We also derived benefits from a diversified model. Latin America and certain European economies, notably the UK and Germany held up well in relative terms. If as many people believe the U.S. ultimately leads us out of the global recession that will clearly be advantageous for us at IPG. Similarly, there is some built-in buffers due to our highly diversified client base. While the automotive and financial service sector were very hard hit other client industries were anywhere from down 1% or 2% to up in the high single digit. In fact in the aggregate, our top 100 clients excluding the two hardest hit categories were actually flat for the quarter. Our diversified service offering is also a plus. Draft FCB is low was both strong contributors in the quarter. Our PR and healthcare marketing agencies are showing resilience and we're still seeing demand in the direct and digital arenas. McCann had some wins in the quarter internationally and initiative kept the momentum going with the MillerCoors consolidation win. Big wins in April include Miller Lite by Draft FCB, Wal-Mart digital by RGA and the retention of the Home Depot by initiative in a number of our specialist media agencies in a very competitive pitch where we also picked up new digital responsibilities. All of which helps to mitigate the broader declines driven by the economy and certain national markets and client sectors. Of course, it goes without saying that the tone we are hearing from our clients remains very measured and cautious. They want to be sure they are getting the maximum value for their marketing spend and they're keeping a close eye on consumer sentiment which seems to be stabilizing. But there is also a clear understanding on the part of most of our clients that under investing in their brands creates significant risk of lost market share in the long-term. Just as we are asking clients not to lose sight of the value of their brands in the midst of this economic storm it's worth mentioning that the state of our brands is very strong. The various (inaudible) agency report card issues by the leading trade publications recently came out and it's fair to say the overall ratings that our companies received are higher than we've seen in a long time. The strength and scale of our overall digital business is beginning to be recognized. We're winning agency of the year recognition in the media, digital, PR and advertising categories in many world markets. This is the ultimate validation of our top strategic priority in the past few years, which has been to invest in talent and professional development across all of our agencies, particularly when it comes to digital and strategic leadership. Going forward, we will continue to focus on delivering customized integrated solutions that draw the best of IPG capabilities from across the various agencies within our holding company. This is what our clients need in an increasingly complex and digital marketing landscape, and what will allow us to play an increasingly important role in the evolving digitally-enabled conversation between marketers and consumers. Of course we will also continue to deploy our improved cost discipline and to ensure that we are managing to our margins. This combination of professional excellence and fiscally conservative management will position us to come through the current period of economic turbulence and to capitalize on future opportunities and step with an economic recovery. At this point I would like to open up the floor to questions.

(Operator instructions). Our first question comes from Alexia Quadrani of JP Morgan. Your line is open. Alexia Quadrani – JPMorgan: Hi, thank you. Couple of questions. First, could you comment if there are any particular trends in terms of how revenue progressed throughout the quarter and then also what you're seeing any color you may give us what you're seeing early in Q2? And I have a follow up.

Good morning, Alexia. Obviously, January was a difficult month for us. We continued – obviously it's still challenging, but we've seen some improvements in February and March. Clearly, with respect to the rest of the year, we are monitoring very carefully, but gradually we hope to see some gradual improvement, but it's still very difficult to call. And so there is no reason from – I know you don't have a crystal ball, but there is no reason to assume that revenue trends will deteriorate necessarily in the second quarter?

I would say there is no need to compelling evidence to see it. But obviously you have to assume some cautiousness in this environment. And then when you are looking at our agencies, are there still some select few that maybe are still showing improvements in profitability in this difficult marketplace maybe as a result of the turnaround efforts you made over the last couple of years or –?

Certainly, I mean, Lowe was a good example. Obviously, they continue to make strong improvement, particularly in reflecting the numbers that you see in the UK. Draft FCB continues to show improvement with respect to its new client wins and revenues. So we are seeing improvement in a number of our agencies against the difficult environment. Alexia Quadrani – JPMorgan: So would you think it be possible to just sort of maintain this impressive feat in the quarter keeping margins flat ex-severance through the year if the revenue trends persist

Our goal is to try to maintain the level of margin, obviously if there is a big deterioration in revenue as we go through the year it'd become more difficult. But we're certainly taking hard actions to keep that possible.

Alexia, as we said on the fourth quarter call we believe maintaining flat margins with revenues down 2% to 3% was dual beyond that will be challenging especially due to the severance headwinds.

We are pleased with the flow through benefits that we're seeing with respect to the actions that we're taking. And you are seeing that in the result that you see in the first quarter. Alexia Quadrani – JPMorgan: Thank you.

You're welcome.

Thank you.

Thank you. Next is John Janedis of Wachovia. Your line is open. John Janedis – Wachovia: Hi, thank you, good morning. It looks like your European business was flattish during the quarter. There has really been talk about the U.S. weakness flowing into the – those markets. Are you starting to see that early in Q2 and were there certain one-time events in the UK that we should be thinking about?

Well, I think the one time events is new business that's picked up at Lowe with respect to Unilever in particular. And obviously they are also picking up some other new business. Our other agencies are in a number of pitches. I wouldn't call it a trend per se, but obviously, it's helpful to have those kind of wins. John Janedis – Wachovia: Okay. And just on the GM dealer business is that meaningful for you guys? And what are your initial thoughts on the proposed reduction in the U.S. dealer camp by the end of next year?

Well, whatever GM does to assure their viability going forward that we support. With respect to the dealership it's not a material number for us. We do some of the dealers with respect to their local advertising, but the bulk of our revenue stream comes from General Motors. John Janedis – Wachovia: Okay, thanks. Maybe one quick one on Lowe, Michael, how does profitability look there this year? Does it take a step back due to the economy?

Every one of our agencies are looking at maintaining their margins, obviously Lowe in particular, the Saab business, although it's not significant to us overall, may have an impact on Lowe, but we have a couple of new business pitches that hopefully will replace it. So, we are cautiously optimistic that the improvements we've seen at Lowe will continue. John Janedis – Wachovia: Thank you.

That's fair.

Next Craig Huber, Barclays Capital. Your line is open. Craig Huber – Barclays Capital: Yes. Good morning. Thank you. First question, can you just update us further on what your new business wins well here in the first quarter?

In terms of first quarter, obviously, retention of Home Depot was a good win for us, in fact, we picked up some additional business, the MillerCoors media as well as the Draft FCB win was a big win for us. The Wal-Mart digital pitch – actually we had two of our digital agencies in the finals there, MRM and RGA. So, we were pleased with those. McCann picked up in Detroit in the first quarter. So we picked up a win there. So we've had some good wins. And to answer your question we do see a net positive for the year so far. Craig Huber – Barclays Capital: We'll just switch over to severance. What is your expectations for how much severance (inaudible) during the first quarter? I think it's 42 million in the first quarter.

We were very aggressive, Craig, in Q4 and Q1, and we'll continue to gauge revenue and where we think that's going and I think all the teams around the world you have various scenarios planned out and I think you will see us continue to be aggressive on cost actions to the extent the revenue continues to be soft. Craig Huber – Barclays Capital: But is it fair to say you front loaded it (inaudible)?

As I said we were very aggressive with Q4, I mean, we severed approximately 2800 people, which is roughly 6% of our work force, so we think that we've taken a lion share based on what we know today Craig Huber – Barclays Capital: My last question please. On General Motors, just given the concern up there among your investor base, worst case scenario, if General Motors just half of bankruptcy, and absolutely worst case, assuming entire operations General Motors shuts down, what would be the cash impact your company realizes which roughly about 5% probably of your top line, where will your cash hit on the working capital and working progress type stuff?

We quantified on the Q4 call, an exposure of approximately 150 million and that's comprised of receivables work in process, and committed media, we think that number is still a relatively good number.

And again we can't comment on what happens when you go through bankruptcy. There is a lot of flexibility in bankruptcy in terms of who gets paid, when they get paid and what amount. So the number that Frank just gave you assumes a very conservative assumptions and hopefully that won't be the case, but we are using that for guidance. Craig Huber – Barclays Capital: Will that include in worst case again if you had to shut down your Detroit operation, (inaudible) severance smaller too?

No. That does not assume shutting down our Detroit operations, and I think it's – again I don't mean to speculate, but once all this clears through and General Motors gets through whatever the process is going to be, there is still going to be a demand to market automobiles and we are well positioned to continue our partnership with General Motors and going forward we would expect to continue that relationship.

And, Craig, for the most part, our Detroit agencies have other clients than General Motors. Craig Huber – Barclays Capital: I just wanted to hear the worst case. Okay, thank you.

You're welcome.

Next Peter Stabler, Credit Suisse. Your line is open. Peter Stabler – Credit Suisse: Good morning. Thanks a lot. Returning to auto and financial services could you give us a sense of those two large categories? How they might split between IAN and CMG, is it proportional to the size of the segment or was it somewhat disproportional?

It's probably proportional. We don't have that data readily available, but I know that both segment service those individual sectors.

And auto and transportation, we have a number of businesses in there, it's about 13% financial services to-date, and in financial service a significant portion of that is Master Card. Peter Stabler – Credit Suisse: And you mentioned that the other categories were essentially flat, so we can include healthcare and retail in there? That's –

Actually, healthcare and retail were sectors that were quite positive. We've seen a good resilience, if you will, with respect to both categories. Clearly, on the retail side we do Kohl's and Wal-Mart, and on the healthcare, J&J, GSK among other companies. So that sector has been performing well for us. Peter Stabler – Credit Suisse: Great. Thanks very much.

You're welcome.

Next is Meggan Friedman, William Blair & Company. Your line is open. Meggan Friedman – William Blair & Company: Hi. Where you have clients who have cut back on spending, how is this split? Is it primarily a pull back in project-based spending or are they renegotiating contracts?

It's – obviously, everyone starts out with the assumption they want the same for less, but most of our clients understand that this is a business and we have to maintain our margins as well. So part of the process is reductions in scope. We have to show how we can be more efficient. Obviously, lot of the headcount reductions that we see go towards the efficiency of us meeting the demands from our clients. So it's a combination. But I would say the bulk of it is scope type of requirements. Meggan Friedman – William Blair & Company: And then you mentioned that growth slowed in China and India. Can you maybe provide an updated outlook for performance in the emerging markets? Do you think that trends there are just widening the developed market or are you expecting continued marketing investments there?

Yes, I think it's pretty clear that with respect to those markets, they will continue to be strong environments – look, on a global basis there has been cut backs and that's no surprise. We certainly are not pulling back with respect to our investments in China and India and Brazil and Russia, because we think in the future those are going to be key markets. Those are where our clients are going to be and we have to be positioned to support them. Meggan Friedman – William Blair & Company: Okay. And then one housekeeping question. The statement about the annual savings from the severance would be about 2.5 times the Q1 expense? Is that from the Q1 and Q4 actions or just for Q1?

That is an annual run rate for the aggregate savings. Meggan Friedman – William Blair & Company: Okay, great, thank you.

You're welcome.

Next Ben Swinburne, Morgan Stanley. Your line is open. Ben Swinburne – Morgan Stanley: Thanks. Good morning, guys. Two questions if I may. One on the balance sheet side – I don't know if you'd be willing to comment about. Any changes you're making to payment terms or how you're attacking sequential liability concerns as you move through the year. Obviously there's – I'm sure increased focus on all these areas of working capital on your end. And then stepping back and looking at auto for the team, I don't know if you'd be willing to comment on how large a category that is for you and what the trend has been over the last couple of quarters. We've seen to be stepping away from the worst case and looking at potential upside scenarios. You're seeing massive government intervention on the auto sector, not just in the U.S. but across the globe. Any views on GM and other larger clients in the U.S. outside the U.S., where you might see pick up in auto sales which might lead to more brand launches and how that might flow through your business as we look in the back half of the year?

Well, auto and transportation is 13%, to give you a sizing of it. Yes, let's face it that with respect to General Motors, we provide the bulk of work for Chevy. And if you – no matter who you are listening to at General Motors, the launches coming up with Chevy are a critical component of General Motors going forward and therefore it's a critical component for us with the work that we do for them going forward. So we are positioned – which is why I said, once General Motors gets through all of this, we will be very well positioned with respect to working with them as they come through this. And certainly the corporate work as well as Chevrolet are critical components of that.

On the payment terms, it's a topic that becomes more front and center. Clients are constantly trying to adjust payment terms. We've been I think very disciplined in holding to the existing terms of the contractual arrangements. We're very aggressive with respect to payments that go beyond terms. I think that the teams around the globe have done a good job in making sure we collect according to the terms. And sequential liability is something that was not at the forefront of client discussions. It is now and we got sequential liability with a number of key vendors and some vendors we don't. So it's an area that we're going to try and push very hard for, because we feel strongly about it when we're acting as an agent as opposed to a principal. But in today's environment, everybody is very much aware of the liquidity concerns out there, so everybody is fighting for their cash protection.

There is no one blanket answer to that, of course so all of our units and all of our clients. Obviously our Treasury group work closely with our clients. We monitor credit risks. We watch it on a daily basis in terms of where the money is going and where we're exposed so. This is a time to be very proactive in this and we are in fact doing that very much. Ben Swinburne – Morgan Stanley: Thanks a lot.

Welcome.

Next Matt Chesler, Deutsche Bank. Your line is open. Matt Chesler – Deutsche Bank: Hi, good morning. Just a few questions. Just want to go back to the question on the emerging markets. Can you just comment on your progress in penetrating some of the markets like China? To what extent the business there that you have working for multinational clients looking to expand in market as opposed to certain national clients as well?

Yes, it's a good question. We continue to target both, but right now, I would say the dominant part of our business is multinationals. We have the strategy of going towards locals in some of the outlying cities, if you will. But in this environment, because of the slowdowns, it's a little more difficult to see traction on that, but that certainly will be part of our strategy going forward. With respect to India, we have a very strong presence in India. And we continue to invest in that both on the media side as well as all of our global networks have very good presence in India. And there we are optimistic that once this goes through we will be very well positioned in terms of the recovery. Brazil, we have very solid offerings in Brazil and we are well positioned there. And with respect to Russia, we have a very strong partner in Russia, although they are going through some difficult times right now. We met with them recently and they're doing similar things with respect to what we're doing in terms of keeping an eye on our cost profile, but they're well positioned to respond to the demands of the marketplace. And of course, our acquisition of MCN in the Middle East positions us very well to capture recovery on a global basis. Matt Chesler – Deutsche Bank: Frank, you guys mentioned that ex-severance the margins were roughly flat year-over-year? Did you guys receive any benefit in the quarter from lower incentive accruals?

The only thing that's out there, Matt, is we trued up some assumptions on our long-term incentives. And back in the debt, you can see – you can do the calculations so there was a reduction of something like $8 million or $10 million in long-term incentives that we think will normalize through the rest of the year. It had to do with truing up forfeiture rates, which we were probably too conservative with what we assumed in prior years. Matt Chesler – Deutsche Bank: How do you see that progressing throughout the year, to the extent that the revenue environment becomes – remains pretty difficult throughout the year in a challenging scenario? What do you think happens to your ability to offset the revenue declines with that line item?

Certainly, that's one of our key levers with respect to if our profitability deteriorates, but we have a conservative plan with respect to going forward. And frankly, so far, we're pretty much on plan in terms of where we thought this was going to unfold. And if it deteriorates further, then bonuses and incentives are part of our levers. Matt Chesler – Deutsche Bank: Do you think that this particular lever is sufficiently powerful enough to fully offset severance? Partially offset it or more than offset it?

We've got an operating plan. That operating plan has a bonus pool that's been approved by our board. And we will measure performance of our operating groups against their respective plans. To the extent they are at their plan, they will be awarded their pools, below their plan, they won't. We don't view it as an offset to severance.

The flow-through on severance is a cost benefit and that's the number we gave you. So there is separate and distinct opportunities, if you will. Matt Chesler – Deutsche Bank: You talked about the annualized run rate, the savings, do you think that you will realize that fully in the current fiscal year or does some of that still?

No, we took – you saw the actions we took in the fourth quarter, the actions in the first quarter, lot of those folks were still on our payroll at the end of the quarter and they maybe in early second quarter. So I think you're not going to see that full effect of that until '010.

And plus severance on a geographic basis is different. In terms of some of the foreign countries, it's much more difficult to recoup the benefit, if you will, over a longer period of time because of the social laws that are in existence. So what you are hearing is more of a blended benefit. So the timing of it is different by location. Matt Chesler – Deutsche Bank: Okay. And then just finally, Frank, you guys have done a very exemplary job of improving your working capital over the past couple of years. Clearly, in the quarter, working capital was a bit higher seasonally and relative to last year. How do you feel about stable working capital for the current year given the tough environment?

I think that we had a very strong Q4 with growth and businesses like media that are cash flow generated from a working capital perspective to the extent you managed it well. I think we managed it well. Couple that with a softening of our billings and media revenue in Q1 caused the fairly significant swing. I think we have been pretty clear in a growing business we believe that working capital should be a generator of cash. When your business isn't growing, especially media, it's very difficult and your balance sheet starts to unwind. So without giving any guidance on working capital for the year, Michael made the comment in his remarks about our view on liquidity, and we still believe that we got sufficient liquidity that allows us to take care of the maturities in '09 and '010. Matt Chesler – Deutsche Bank: Thank you.

You're welcome.

Next is Michael Nathanson, Sanford Bernstein. Your line is open. Michael Nathanson – Sanford Bernstein: Thanks. I have a couple. First one is going to be both Frank and Michael. When you looked at your goal of getting back to peer level margins, I wondered how much was downturn effect the long-term goal given that you are on a pretty good cost savings now that may have helped you to hit that goal. Can you talk about how this affects you?

Well, I think we saw this coming before when we extended our turnaround objectives. We still have it as a major goal. And what's happening frankly is the margins of our competitive set is coming down also. So there's two things happening. One is the margins of the sector are coming down and so the goal is changing a little bit. But certainly this is going to take a little bit longer for us to achieve it, because you can't just do this by taking costs out of your business. There has to be an uptick, if you will, on the revenue side. You just can't keep taking costs out without affecting the long-term viability of your business. And we are very conscious of that. So I think the decisions we are making with respect to severance as well as keeping our eye on our cost profile does not impact our ability. In fact, it helps us in terms of our ability to narrow that gap. But we want to make sure we have the talent and resources to be in place when the recovery starts to hit. So I think we continue to be well positioned to do that. It's still a critical component of our long-term plan. It's just been extended out little bit given the overall macroeconomic environment.

We are very pleased with the job the team is doing around the world in controlling costs in this environment, which to Michael's point, when it turns we think that will be very, very positive for us.

: Michael Nathanson – Sanford Bernstein: I wonder, I guess I'll come back to you on this when you sat down and look at the turnaround plan, you knew you had some cost levers maybe in G&A and rent and other places. I wonder if I could fast forward into, hey, let's look forward and say, present you with the turnaround story a year from now. What levers would be there on the natural levers as a turnaround?

: Michael Nathanson – Sanford Bernstein: Efficiency, sorry.

What will happen is as the revenue starts to improve, our margin expansions should flow through as long as we don't do anything stupid. And that is as the economy turns around, if all of a sudden, we start adding a whole bunch of costs on top of it, you don't get the expansion opportunity. But right now we are positioned so that when the revenue starts flowing through, we should a better bang for our dollar, and that's how this works. So it's not just you take costs out and automatically that it flows through. I mean it's a combination of revenue as well as costs and that's why it's important to look at your cost profile and do it intelligently not just slash for the sake of slashing. Michael Nathanson – Sanford Bernstein: May I just follow up on cash flow for Frank? When looking at investing activities you took CapEx down a ton this quarter. One question would be sustainable rate. And then to both you guys, you are seeing WPP and Omnicom actually not buying anything right now. They're out of the acquisition game. I wonder given your balance sheet, given maybe the competitive intensities dropping on the M&A side, does that entice you at also? I like to know those two questions.

I mean, Frank indicated in the remarks, our CapEx has dropped to around $100 million. And we are doing that on a back end basis. So we are very cautious in terms of spending our CapEx dollars. Enticing is always a nice word in terms of opportunities. Frankly, we will continue to look at opportunities on a very select basis in those areas whether it be geographic or disciplines, but we don't see any big holes out there. So there is no need for us to run out and do transactions just because they may be cheap. By the way, the companies that may be attractive right now don't view themselves as cheap. So I think the delta between the bid and the ask on some of these transactions will continue to be out there and I think the sellers still have a ways to go before they realize that the markets have changed. Michael Nathanson – Sanford Bernstein: Okay. Thank you.

You're welcome.

Next is Dan Salmon, BMO Capital Markets. Your line is open. Dan Salmon – BMO Capital Markets: Good morning, guys. One quick one. I know it's not a big part of your business, but could you comment maybe give us a little color on the performance of some of your traditional media services businesses, agencies like NSA and what not? Thanks.

Well, NSA is actually part of the media business right now and obviously it's challenged, but there is a demand for that. I think what we've done across the board is right-size all of our businesses for the demand in their respective disciplines. So NSA is one of those where frankly it's a unique offering and therefore, as our clients need that type of work done, we are well positioned to do that. Again, I think, we are approaching this on a basis of demands in the marketplace and our resources that are necessary to provide it. Whether it be traditional media, whether it be traditional advertising, digital, I think we've positioned our company to be very competitive across the board. I think that's what you have to do in this environment. So when it does turnaround, we are well positioned to do that. Traditional advertising continues to be an important segment of the business, and in fact, what's happening is clients are spending money on more proven areas as opposed to a lot of the riskier ones. I think the fact that we have strength in some of those markets do us well. Dan Salmon – BMO Capital Markets: Thank you.

Next Tom Singlehurst of Citi. Your line is open. Tom Singlehurst – Citigroup: Good morning. Tom Singlehurst with Citigroup. I just wanted to go back to the fees, the fee related revenues. Omnicom yesterday sort of painted those as being naturally more late cycle in terms of the commission and project based revenues. I was wondering, a, whether you agree with that fee, whether we're going to see more pressure in the area. I'm surprised to see (inaudible) that the advertisers want a happy negotiation on a less for less basis. WPP this morning was saying conversations they have been having were much more of a more for less or at least same for less. And I can't see why they wouldn't be pushing for that. Any color would be great.

Look, ultimately, even on new business pitches, ultimately the issue is quality of the work and the type of work you're doing. Fee – you don't see a lot of our business just being put off because of fee negotiations. In the end, it sort of the last thing that comes to the table, and that is how much is this going to cost. But unless you have the quality of the services and the people to meet their needs, you don't get to fee discussions. Frankly, in this environment, it's a logical discussion to have on incentive-based compensation. I personally think that's where some of these negotiations could really lead itself to, and frankly that's something that I think this industry should be looking at, because if you are really moving the needle and you are providing value services, then it's something that I think should be reflected in how you get compensated. So I don't think its one type of discussion that you're having on fees. Clearly they like the same for less. Everybody would like that. And that's a component of it. But scope and efficiencies are also part of it. And again, if you have a good relationship you are providing quality work, clients are going to continue to want to maintain that.

Tom, the Michael's point, procurement is still out there, very aggressive. So it's not as if we are walking to fee discussions and everything is just all pleasantries. If we are going to reduce, let's just take scope down. So it's a very competitive environment out there right now.

And when you do have a blanket fee reduction, it's necessary for us to focus on the efficiencies. So if you end up in a situation where you are providing the same amount of work for less, we have to make sure that we are most efficient in delivering that type of work, and that's what you see happening in this market. Tom Singlehurst – Citigroup: Is it something that's exclusively happening on accounts when they repitch or something just crops up?

No, I think this is ongoing. This is – this environment – by the way it's true on us on the other side as well. We go to our vendors the same as people come to us. And that is in this environment, if you are not asking the question of value versus costs and what you are paying, you're not being looking out for best interest of your company. So it's a normal question to be asked, and we have a whole bunch of people that sit down with them and discuss it. Its part of the environment we're in.

And we're seeing clients out there who are somewhat reluctant in signing annual contracts right now just because of the uncertainty on their sides and what they're willing to commit to. So it's definitely been somewhat of a new dynamic force in the first quarter. But again I think as we move through the year and there's more clarity on the part of clients and their budgets that translates into the remuneration for us. Tom Singlehurst – Citigroup: Very clear, thank you.

Welcome.

Our final question comes from Todd Morgan, Oppenheimer. Your line is open. Todd Morgan – Oppenheimer & Co.: Thank you, good morning. Just to touch back quickly on the working capital change in the quarter. Obviously, you talked a little bit about that, but I don't know if you can help us any further with perhaps the portion of the working capital change you might have infused to the revenue decreases and what portion is really perhaps accruals or other sort of timing issues?

Yes, just, Todd, maybe an estimate, probably 60% of the move in the quarter was what we would have expected given how the normal working model works Q4 to Q1. So the other 40% is probably indicative of the environment in Q1.

And again, if you look at our total cash position this quarter first quarter versus first quarter of last year, we've shown an improvement and I think that you have to look at this on a longer term basis and that's how we look at it. Todd Morgan – Oppenheimer & Co.: That's fair. Thanks a lot, sir.

Thank you. Well, thank you for joining us this morning and we appreciate your support and we look forward to meeting with you again on our second quarter results.

Thank you for participating in today's conference. You may disconnect. Have a great day.