Good morning and welcome to the Interpublic Group third 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 Mr. Jerry Leshne, Senior Vice President of Investor Relations. Sir, you may begin.

We have posted our earnings release in 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 our market open at 9:30 am Eastern. During this call we will refer to forward-looking statements about our company. These are subject to uncertainties and 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 my pleasure to turn things over to Michael Roth.

As always, I'll begin by covering the key points of our performance and then Frank will take us through the forward results. After his remarks, I will turn with some closing comments post before we move on to the Q&A. As with the case in the second quarter, our performance in Q3 continues to reflect the impact that the global recession has been having on demand for advertising and marketing services. Organic revenue was down 14.2%, about the same level as last quarter. The principle factors affecting that important metric were also similar to those we share with you on our last call. We were hurt by reductions in scope and certain lost assignments in the text sector including projects in our event business that did not recur this year as well as the unprecedented challenges being faced by the automotive industry. Also, the fact that we posted a very strong Q3 last year posed difficult comparisons. These factors resulted in our making less sequential progress in the quarter than we hope to see. However, it's fair to say that the tone of our conversations with clients concerning the economy is improving. However, we've not seen this yet converted to consistent commitments to new or existing projects. Therefore, it looks as if the pace of the recovery will be gradual and that significantly improving organic revenue performance for the whole of 2009 compared to the first nine months performance will be challenging. Given the macro environment it’s worth noting that some client sectors have held up well in Q3, such as fruit and beverage, consumer packaged goods and retailing. As our teams around the world manage through these challenging times, it was good to see additional evidence in the third quarter of our ability to effectively manage costs. Excluding severance, the organic decrease we reported in Q3 operating expenses was 12.5%. Also excluding severance, salaries and related course were down 11% on a like-for-like basis. Organic office and general course were over 15% lower than last year. I have mentioned before that in our industry, it’s not advisable to take our cost on a pace with the level of revenue declines that we are currently experiencing. We must continue to demonstrate that we have the tools and the discipline to exert strong control on our business. This is what’s required to successfully move the company through this challenging revenue environment and position us for the future growth and profitability. Consolidating the significant progress that we've made in operating margins during the first few years is an important priority for us. On our second call, we gave you a sense of where we thought the year would come out from a margin perspective. At that time we thought that 2009 operating margin excluding incremental year-on-year severance would be between 7% and 7.5%, which you may recall compares to the 8.5% we achieved in 2008. We believe that there is approximately 50 basis points of margin risk to that outlook. We therefore continue to stay focused on cost for the balance of the year which will result in higher severance. Frank will provide more detail on that shortly. Its worth noting that our financial resources continue to be strong and that we have extended our debt maturity profile and further deleveraged the balance sheet this year. I'll have more to say about the performance of our specific agencies and the competitiveness of our service offering across all marketing disciplines, but at this point, I'll turn things over to Frank.

As a reminder I will be referring to the slide presentation that accompanies our website, and is available on our website. As you have seen in our release this morning, our top line continue to show the full effect of the challenging economic environment. As a result, again 7.6% organic growth a year ago, marketing and advertising reductions by clients led to a revenue decrease of 18% in the quarter while our organic revenue decrease was 14.2%. To varying degrees, these challenges were evident in all disciplines and markets and nearly all client sectors. As Michael indicated, the impact continues to the be greatest in technology and telecom and the auto sectors. A group of large clients in those two sectors drawn from our top 100 accounted for one third of our organic revenue decrease in the quarter. Geographically, our regional revenues reflect the global scope of the fall off of the client spending with the greatest decrease generally occurring in developed markets. I have more detail on this in a minute. Against this difficult backdrop, our operators continue to manage costs effectively and deliver sustained leverage on the most flexible components of our cost structure despite lower revenue. Incentive compensation expense decreased by 38% year-over-year and temporary labor expense decreased 23%. Our base payroll and benefits decreased 12%, a result of severance actions taken over the past four quarters. In O&G controllable expenses for travel, telecom, office supplies decreased by 31% along with lower pass-through expenses, this contribute to incremental leverage on total O&G expense. Q3 operating results include $23 million of severance expense that addressed 2% of our global workforce in the quarter. This compares to $15 million a year ago quarter. Severance actions over the past four quarters have impacted approximately 11% of our workforce. With total expense of $140 million, these actions should produce run rate annual savings of approximately 2X. Q3 operating income was $58 million or 4.1% of revenue, compared with 10.6% a year ago, reflecting the impact of revenue in 70 basis points of incremental severance. Our diluted EPS was $0.03 per share compared with $0.08 in Q3 '08. We completed in nine months with $1.77 billion of cash and marketable securities on the balance sheet, essentially equivalent to a year ago, despite having used approximately $200 million to redeem outstanding debt this year. Turning to slide 3, you can see our P&L for the quarter. I'll cover revenue and operating expenses in detail on the slides that follow. Our tax provision was $4 million 13% of pretax income. There are few one-time items in the quarter that together netted a benefit of $17 million. They involve the recognition of benefits related to closing out a prior period audit and a deduction related to workable securities, partially offset by established evaluation allowance and differed tax assets in Asia Pacific. Turning to a closer look at operations on slide 4, we provide additional detail on revenue. Revenue in the quarter was $1.43 billion, a decrease of 18%. Compared to Q3 '08, exchange rates had a negative impact of 3.9%. There was almost no change due to net effect of acquisitions and divestitures. Our organic revenue change was a decrease of 14.2%, primarily a result of client reductions in scope due to the recession, industry feed pressure and some lost assignments. As was the case in Q2, the tech and telecom and auto sectors weighed heavily on performance in the quarter. Economic conditions also continued to impact on our events and business, which decrease 32% organic against a very strong Q3 '08. Regionally, we continue to see the largest decreases in most developed markets including the UK, Continental Europe, 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, the organic change was a negative 13.8% which was about equally balanced between the U.S. and markets outside the U.S. At our CMG segment, Q3 revenues decreased 16% organically comprised of 12.3% decrease in the U.S. and 23.3% internationally. Slide 5 provides a breakdown of revenue by region, clearly a difficult global picture. All markets were impacted by the global actions of multinational clients and reductions to local project assignments. In the U.S. the organic decrease was 13.4% against an increase of 7.9% in Q3 '08 due to the factors I’ve already discussed. Internationally, revenue decreased 23.7% which includes a significant effect from currency. The organic decrease was about 15.2%. In the UK, revenue decreased 19.5% organically against 21.1% growth a year ago. Growth last year included a large project in our event business that did not repeat this year. In continental Europe, our organic decrease was 16.8%. In the Asia-Pac region revenue decreased 9.7% organically. In Latin America the organic revenue decreased was 9.3%. Our other market segments decrease was 17.9% organically. On slide 6, we present a longer view of organic revenue growth that tracks our trailing 12 month performance. As you can see this clearly registers the impact on our top line of the recession over the past four quarters. On slide 7, we take a closer look at operating expenses. As Michael mentioned, our financial priorities in this environment are lining costs and protecting margins. In Q3, operating expenses decreased 11.8% organically and the excluding higher severance decreased 12.5%. Salaries and related expense were $944 million compared with $1.09 billion a year ago. This is a decrease of 13.7% and 10% organically. Excluding severance from both periods, salaries and related decreased 10.9% organically. As a result of our severance actions, base salaries have decreased $50 million through nine months and headcount has decreased 5,100 employees. Q3 severance expense was $23 million compared with $15 million a year ago or 1.6 of revenue compared with approximately 90 basis points a year ago. Looking to the fourth quarter, our severance actions will increase and step with our more conservative revenue outlook. We now plan incremental severance for the full year to be approximately $50 million higher than the full year 2008 level, approximately 80 to 90 basis points of '09 revenue. As Michael said earlier, we believe there is currently approximately 50 basis points of risk to the outlook we shared on our last call, when we indicated that we thought 2009 operating margin excluding incremental year-on-year at severance would be between 7% and 7.5%. Incentive expense decreased to 2.7% of revenue compared with 3.6% a year ago, reflecting our current performance. Temporary labor expense which has been an area of focus for us, decreased to 2.9% of revenue from 3.1% a year ago. Turning to O&G expenses on the lower half of the slide. In Q3, O&G was $425 million, a decrease of $101 million or 19.2%. The organic decrease was 15.1%. O&G expenses improved to 29.8% of revenue compared with 30.2% due to lower controllable expenses in pass-through costs. Occupancy expense increased to 9% of revenue from 7.6% a year ago due to the reduction in our revenue for the year with nine months. We'll run expenses relatively flexible in the short run; it is an area of focus for us. We continue to develop opportunities to lower and contain expenses around the world, including lease restructurings and improved utilization across all our agencies. Travel, office supplies and telecom expenses were 3.5% of revenue compared with 4.2% in Q3 '08. All other office and general expenses decreased to 15.4% of revenue from 16.5% a year ago due to the decrease in pass-through expenses connected with project assignments and also reflecting lower recruitment, insurance and conferencing costs. On slide 8, we show our operating margin history on a trailing 12 month basis, which was 6.7% for the 12 months ended September 30. Margin expansion to a fully competitive level remains one of our primary financial objectives. On slide 9, you can see our debt maturities schedule, as of the end of Q3. This schedule reflects our $2 billion in total debt which is decreased this year by approximately $165 million primarily as a result of our redemption and refinancing activities in the second and third quarters of this year. Our 2009 short-term debt represents amounts borrowed from relationship banks for local working capital needs outside the U.S. We remain confident that we've redeemed the 2010 nodes out of cash on hand. So we believe we have effectively eliminated any anticipated refinancings through the 2012 potential put of our convertible debt. Turning to the current portion of our balance sheet on slide 10, we ended Q3 with 1.77 billion in cash and short-term marketable securities which were the same level with which we entered the quarter and compares with $1.7 to $1 billion a year ago. This year ago comparison includes the use of approximately $200 million as I mentioned, in our recent debt repurchases. On slide 11, we turn to cash flow for the quarter. Cash from operations was $125 million compared with $34 million in Q3 '08. We were able to offset the impact of lower net income on cash flow through continued strong discipline on our working capital management which has been another area of focus for us. Investing activity is $50 million compared with $150 million in Q3 '08 when we had closed two significant acquisitions. CapEx was $16 million bringing us to $44 million for the nine months. Financing activities used a $112 million which mainly reflects our repurchase of $72 million of 2009 and 2000 debt maturities. Net increase in cash and marketable securities in the quarter was $1 million. In summary, on slide 12, the quarter clearly reflects the challenges presented by economic conditions. Our teams continue to execute very well in expense management in the current business environment, positioning our cost structure to support strong profit growth when the economy turns. As we navigate these challenges, our financial resources remains strong and been enhanced by actions taken during the past six months to further improve liquidity and financial flexibility. Consistent with our near-term revenue outlook which continues to be cautious, we plan to intensify our expense actions over the balance of the year as I outlined earlier. This (inaudible) says 2009 is year of significant challenges, but we are managing through. We believe we remain well positioned for growth when it returns to our market and for the ability to (inaudible) significant margin. Now let me turn it back over to Michael.

Thank you, Frank. I mentioned in my opening remarks that clients generally remain cautious about committing to new marketing expenditures or increasing spend behind existing efforts. Yet, we've also begun to see an increase in new business activity which earlier this year had essentially ground to a halt in many world markets. Though this isn’t the definitive indicator of an advertising recovery, it certainly is an encouraging sign. We’re equally pleased that a review of all major industry pitches over the past year, shows that not only are we being included in every significant opportunity out there in which are not blocked due to client conflict, we are also winning at a broad cross section of our agencies. This tells me that our offerings are fully competitive and that when the economy recovery does take hold, we will be in a position to return to the levels of competitive organic revenue growth that we achieved during the past two years. Another potential driver of an advertising recovery could be the automotive sector which we’ve recalled out as a contributing factor in our organic revenue decreases in the past few quarters. Now, as the auto industry emerges from what has been a very troubled period, it could represent significant upside providers of marketing services with both existing and new clients. The Volkswagen win in Deutsch is a recent example as is the opportunity to win Cadillac and GM and media brands involvement in the global Hyundai media review. There will likely be increased spend in the category next year as well, which we see as a real opportunity. Turning now to the key third quarter developments within the agencies. (Inaudible) mentioned that Draftfcb remains our top performer in terms of both top line and margin delivery. Their new model is driving results for clients even in these recessionary times. They are taking market share from competitive with whom they jointly serve multinational clients as well as with their successful new business efforts. Recently they promoted Mark Modesto leader out their very successful Chicago agency, to head up all North American operations. At Lowe, the big news has been the alignment we recently announced that brings Deutsch and Lowe together in North America and makes Deutsch a part of the Lowe world wide network. We've been clear in the past about the need for Lowe to have a strong hub agency in the U.S. Given the size of the market and the fact that multinational marketers with outbound global needs, are based here. Since Lowe has made a great deal of progress during the past 24 months, addressing that U.S. has become an even greater priority and opportunity. The combination with the dynamic agency like Deutsch will further strengthen a key area of need for the Lowe network. For Deutsch the benefits are equally apparent, the agency has a great brand, a client focused culture and a fully integrated offering. Wins like PNC Bank, HTC and just last week the highly coveted VW Pitch demonstrate the power of Deutsch's model, but the agency has been unable to pursue or grow client relationships on a global scale. The alignment with Lowe will address this gap and their capabilities. The combination makes sense because it's strategic. It builds on the on the complementary strengths of both companies and creates an organization that can better meet clients needs and compete for new business. We do not believe in putting agencies together for reasons of financial experiencing. During the past few years we've made a limited number of conceded and strategic moves, notably, the merger of Draft and FCB and the creation of media brands. In each case, we've been sensitive to the cultural issues involved and at the same time, stayed highly focused on execution, so as to ensure their proper integration takes place. In both cases, the results we delivered had been very strong in terms of both the client offering and the financial results of the new entity. We think Deutsch and Lowe will prove out in much the same way. The updated media brands, is that there is a great deal of new business activity going on. Spanning a broad range of client industries and all major world regions, Initiative and UM have strengthened their people and their product and each has built very positive momentum in the marketplace. We're also seeing a lot of business innovation within this group such as the launch of Cadreon ad exchange and new digitally enabled offerings in local and shopper market. McCann has felt the brunt of the impact of the issues in the tech and auto sectors that I mentioned earlier. Last quarter we told you about the arrival of Bob LePlae as North American CEO. We recently recruited a senior creative partner and the team posted its first win with the iShares account. Tom [Grula] will likewise bring renewed energy to the New York agency in his role as CEO. There is also new leadership in place in Europe and Asia and plans to strengthen the offering in Brazil. We continue to have confidence in the World Group as one of the industry's leading provider of integrated solutions for global clients. At CMG, Weber Shandwick and GolinHarris are consistently recognized for the outstanding quality of their work which has allowed them to keep outperforming the broader PR sector. We were also pleased with the performance of our sports marketing agency Octagon which had growth in the quarter. In recent months our domestic agencies have been putting up some good wins as well such as Zappos and Mullen, Sun Life Financial and Expedia at The Martin Agency and Match.com at Campbell-Ewald. In the digital arena, new business at huge is strong and RGA has added Taco Bell and the global Master Card business to its string of recent wins. So we are very competitive in this dynamic sector of the business. We have the talent and the tools to return to growth in line with the broader recovery, but there is still uncertainty to what we can expect in 2010. Our target would be to achieve an operating margin of 8% or better in a flat organic growth environment. This will be one of our primary objectives heading into next year and it will be management's job to deliver against such goals. Along with our strong financial resources and the competitive agency offerings across our portfolio, it's also what would allow IPG to capitalize on an economic recovery and deliver long-term value to our clients and our shareholders. With that, I thank you for being with us and I'll open up the floor to questions.

(Operator Instructions). Our first question of the day comes from Alexia Quadrani with JPMorgan. Your line is open.

First, are you still comfortable with the revenue guidance you gave on the last conference call? And then secondly, if you could walk through maybe some of your major verticals, auto, pharma retail, let us know how they did during the quarter?

Well, first of all, what I said was that in terms of guidance, it wasn’t specifically guidance, what we were saying is that for the first half of the year we thought the rest of the year should be equal to around 10.5%-11% negative revenue. What I said just now, was that the third quarter obviously indicates a trend a little bit worse than that and although its difficult, obviously, we'll shoot to do better but right now, it looks like achieving that target will be a little bit more difficult. As far as the verticals go, I think clearly we've already talked about the tech and telecom. That certainly has a big weight in terms of our performance. There of course there was scope reductions as well as some lost client assignment that we're all aware of, as well as automotive. Our strength continued to be in our healthcare. We believe there is a lot of activity in that environment and the third quarter although was slightly down, we think that’s an important sector for us and we continue to perform well. Food and beverage and packaged goods continue to do well and retail in fact was positive in the quarter. Financial services was negative but again, it only represents about 8% of our sectors and there as you know, Master Card is a significant part of that and it was encouraging to see RGA win the global digital assignment in that area.

Was auto less negative in the third quarter than the second quarter and then specifically on your tech commentary, is the weakness in tech really surrounding just the one major client or is it more than one client?

Well certainly the major client is a big contributor to that, the other one was we recall we did loose some business at Intel as well. So those two accounted for a good portion of it. The rest were normal reductions, given those reductions in scope that we're seeing across the board. As far as auto, I think it's pretty much the same.

And just the last question on net new business, you think your deficit has narrowed since the second quarter call?

Yeah actually, we think on the trailing 12 months is positive and I think we're gaining ground, so that by year-end, although we think it might be slightly negative, but it wont be negative to the tune of what I’ve seen out there people publishing. So, we're encouraged by the new business wins in the third and fourth quarter. There are couple of big ones out there that were still in the fray if you will, particularly on the media side. We had the Unilever a global media pitch and we have the Hyundai/Kia pitch. Again, on Hyundai/Kia we do North America already and that’s not up for review. So both of those pitches we view as an opportunity for us and we don’t have a lot at risk with respect to either of those.

Our next question comes from John Janedis with Wells Fargo. You may ask question.

Can you just clarify the margin guidance further? Does that mean the full year including severance is expected to be in the [56 to 61] range? And if so, can you give more specifics on what changed since the guidance from July, what areas in the business that you expect to improve that didn’t?

It's similar to the question Alexia asked in terms of what's changed. Frankly, what's changed is again, the level of uncertainty as to the outcome. Frankly, it's difficult in this environment to predict with certainty either the revenue side or the margins side. We thought it would be prudent for us to put some fences around it if you will, and it's really based on the fact that we have a number of new pictures out there. We have some new business wings that were not sure as to the timing and when the revenue will come in and frankly, the visibility into some of our revenue streams is difficult in this environment specifically on the project basis as well as the events and some of the scope issues that we've had. So, what we’ve said is, that we put 15 points of risk on the margin in terms of the excluding severance. So if you put these severance numbers back in and as Frank indicated, we expect severance to be higher throughout the full year. In fact on year basis, we think severance should be about $50 million higher than where we were in 2008. So, that brings you down to the numbers you were talking about in taking the risk if you will. And on the revenue side the same thing, all we did was take our performance through the first nine months and said look, we need a good improvement in the fourth quarter to get back to what we said in terms of negative 10.5% and 11% and we thought it would be good to put out some caution in terms of our ability to achieve that, but the truth is, the fourth quarter always has been a big quarter for us, and unfortunately that’s the quarter that we have surprises both negative and positive in the past.

And John just to confirm, in the second quarter call we called out the incremental severance year-on-year was projected to be $35 million. We're now moving that number to $50 based upon some of the softness and concerns bout revenue. So we'll continue to be aggressive in the fourth quarter on taking severance actions.

And then so, in terms of the tone then Michael, at this point, have you seen much of an increase in client commitments for '10 versus may be this quarter last year for '09?

We are in a process of doing our planning for 2010 right now. We're not complete I think anecdotally, what we're saying is that certainly, I believe the worst is over. I said that, and I think we we're seeing evidence that before I start raising the flag in terms of full recover, I have to see more consistency. Certainly some clients are looking to increase. They certainly indicate that it's their intention to spend behind their brands and we are working very closely with them. But as we solidify our plans for 2010 and more importantly as our clients solidify our plans for 2010, we'll give you more color on the outlook if you will.

And then one last one for Frank, historically you've talked about a target of around 60% for the salaries and related line, with the caveat that revenue growth is a [lever] in here. Has anything changed structurally in the business like cost-per-talent that would make you rethink that number?

No. John, I still think that’s an appropriate target.

We manage our business to achieve it, but obviously in this environment and I indicated it would be a mistake for us to take actions that bring us to a level that if we believe there is a recovery on the horizon, that we shouldn’t have the appropriate talent and resources to meet those needs. And certainly clients are asking, do you have the resources available to meet our demands and that’s the reason we'll question and we have to be able to be in a position to answer that.

Our next question comes from Matt Chesler with Deutsche Bank. You may ask your question.

So, I am just wondering if to any extent, any change in the relationship between clients and the agencies and the agencies is having anything to do with sort of the change in your view towards the end of the year.

Well, it's an interesting question. We can spend an hour talking about it. There's no question that clients are looking for more for less. So part of it has to do with tightening of the fee structure and how we respond to our own efficiencies to keep our margins. That’s part of the uncertainty. Obviously, there is also uncertainty on the specific events in terms of whether there are going to spend now or it’s a timing item for 2010. And certainly, there's an issue of clients and how they're going to look at how they approach some of these issues and I know there is a question about some of these jump falls that are out there, I might as well put it on the table and that really isn’t the fact as I went into our putting out 50 basis point risk. It's more of the general tone of how clients are approaching our business.

Right then, could you address the environment for building up your businesses through acquisitions right now. Has sellers expectations come down to a more realistic level and just talk a little bit more about what your priorities are and how likely we are to see you add over the next couple of quarters.

Clearly in this environment, any of our agencies that come forth with a strategic transaction gets a more thorough analysis in terms of what the returns are and the need for it. That said, we are still in the market. We are looking at potential transactions to fill holes and that’s not going to stop, and we have it built in to our models, have it built into our plans and we certainly have the financial wherewithal to make those happen. In terms of order of magnitude, as you see in the numbers that Frank took you through, our CapEx, we are being very tight in terms of how we spend it. I think when the recovery starts coming and we see more consistency, I'd like to see us returning to levels of $100 million and $150 million. But again, it's on a case-by-case basis. We do see some transactions, particularly may be in Latin America and some digital properties that are smaller, that might fit nicely into our portfolio, but the due diligence and the strategic rational has to be strong for us to go forward.

And Matt we haven’t seen a dramatic fall or decline in pricing multiples. In fact we walked away from a couple of things that we thought that the multiples were still off market.

Our next question comes from Ben Swinburne with Morgan Stanley. You may ask your question.

Michael I wanted to ask you about two initiatives or decisions you've made over the last couple of quarters. Cadreon has got a lot of press and I was curious how your clients have reacted to that initiative. How they might be using it in any update or color you can give us on that front. And then on the Lowe Deutsch merger, you've seem to discuss that instead of revenue opportunities in terms of the securities, there is profitability factor that went into that decision or if that factors in to how you guys look at next year. I know Lowe at least historically has been one of your lower margin agencies, I mean that’s not the case anymore, but just wanted to get similar color on that front, and then I have one quick follow-up for Frank.

Okay. Let me do the Lowe and Deutsch. First of all, as I indicated, we don’t do these transactions purely as a cost saving benefit. Obviously, there could be consolidations, but frankly in this environment the bigger picture is more important. So what was driving that transaction was the strategic fit and the opportunity to grow both businesses. Lowe has continued to perform better, it's still not at the levels of competitive margins and we still have to work on that. But there will be some savings. Let me not say, obviously, when you look at transactions like that to the extent there are facility savings that’s part of what we're looking at and certainly, there will be savings as a result of this. The fact that we're going to move the Lowe offices into Deutsch on by definition, hopefully will give us savings. So certainly, there is a savings component in the transaction. But let me make it clear. The savings component was not the reason for doing this transaction, but we will at the same time, look at opportunities to improve profitability as a result of that. Cadreon is interesting in that, this is a market place that’s changing everyday and its being shared with our client base and frankly right now the reception is very good, because frankly this is an area that there are also sorts of different cats and dogs out there, and the fact that we can put forth an offering that clients are being receptive to, it gives us an opportunity, who want to have a dialogue with clients as well as to show the investments that we're making in our business. So we're excited about the our opportunity. It's too soon to tell and call it a big victory, but I think the reaction to the Ad Exchange has been very positive and we hope to make a success of that as we move forward.

Great and just Frank, the quick housekeeping interest expense has done quite a bit sequential. I don’t know if this is a new run rate if that was a function of (inaudible). Any color there would be helpful.

It's primarily the role of the (inaudible).

Let me take this opportunity. Media Brands has continued to invest in a whole bunch of new media opportunities in terms of bringing talented people to meet the needs of the clients. There is not question that on the media side, the more tools and resources you could bring to the table, the more affected you're going to be with the relationship with your clients. And I think, one of the impressive things that happened at Media Brands both working with Initiative as well as UM, is the investments they made in digital, in content, in the ability to provide the analytics that are going to be necessary to compete in the market place. You may have seen some recent announcements in initiatives for example, in terms of investing in insights, before the results as opposed to just looking at insights after. This is the kind of stuff that’s going on in Media and we have to be there with our clients. I might also add that we've announced a partnership with Microsoft, which will be very helpful in terms of the analytics side as well. So, I think all the things we're doing in the marketplace is to give an indication that we believe its our responsibility to bring value to our clients and that’s an area that really provides tremendous opportunity to strengthen the relationship and provide a revenue base.

Our next question comes from Matthew Walker with Nomura. You may ask your question.

Just a couple of question please. One is on the geographic splits. If you it on by geography, you have been working few months. U.K. I think you've explained with regards to the bigger vendor you have last year. Could you just maybe walk us through what happened in Continental Europe, Asia and particularly Latin America, which was obviously at the four and now is in? And the second question is on people like Microsoft and Google who have been hiring creative types, if you can give us your thoughts on that?

Well, let me comment on that and I'll ask Frank to take you through the geographic question. I have always said this, I don’t believe they maybe hiring creative types, but it's to help in their business model, but I don't believe the creative work that frankly, any of the holding companies performs on behest of our clients is going to be replaced by either Microsoft or Google. I think the ability to recruit talent to work in an environment that provides the various client sectors if you will, the innovative ideas that go throughout our organization, I think is going to be very difficult to replicate in frankly in Microsoft and at Google. I think its important for them to have creative insights in their marketplace but the big idea if you will, that drives an important part of our business will continue to come from the holding companies and from the creative agencies, because frankly, we have the ability to recruit the type of people that want to work in that environment and provide the type of challenges on a regular basis. So, I don’t believe they're going to replace us in terms of the big idea. Obviously they have strengths in the data, in the analytics and we should be working closely with them to make sure that we're optimizing what our clients are looking for.

Matthew on a geographic side, when you look at the United States, the softness in tech and auto hurt the U.S. quite a bit, not only in the quarter but year-to-date. Outside the U.S., in the UK, you pointed out that we had a significant event that didn’t repeat there other than that but the UK was actually while down, not that bad. In continental Europe, we saw softness in Germany, France, Spain, very much in Italy. In Asia-Pac, we actually had a pretty good quarter in Japan which has been very slow to recover there, well familiar long recession and most of the decline is coming from multinationals in some of the higher-end markets like China and South East Asia. And I think you are seeing the same thing in Latin America where you have got global MNCs pulling back on spend. And in all the other markets, the biggest component to that is probably Middle East where we've got a very strong agency in MCN in that region quite soft especially in the divine market. And I think that that our expectation is we'll see that recover in the near term.

We just recently went through our leadership program where we brought (inaudible) in leaders if you will, in future starts in the United States and it was from all the geographic regions that Frank just mentioned and here what we want to make sure is that, we have the integrated offering and that all of our people are familiar with all the resources that we have at IPG to bring to the table. So we are attacking this issue on a global basis, and what we want to make sure is that all of our people are aware of all the resources we have at IPG and within the particular brands and agency networks and get them to really focus on all of the great resources we have.

Can I just get quickly follow-up on your points about the multi-nationals, there is a point that a publicist made as well with regards to places like China. Is it not a little bit (inaudible) where consumers are relatively strong, so we see multinationals calling back spend?

Yeah, I think there is a lot of inconsistencies in that market. In terms of the competition in our business, there are 100,000 agencies in China. So it’s a very different market than what we were frankly accustomed to, and it is somewhat counterintuitive because it’s the cost of doing business there. You have to be there because of just the large population that’s there, but it’s the competitive nature of it, but I think you have to be there and you have to invest and you have to make a difference. So I think that’s the approach everyone's taken. It's difficult to make a big splash there because of the size of it, but you still have to have an offering and compete effectively.

Matthew, our view is that this is more macro-economic driven. You've got multinationals pulling back in the short-term but our clients are still very committed to those markets and our view is they will return too aggressively investing behind market share growth when there is visibility that global picture improves.

Yeah and the local businesses in China, obviously that’s a huge growth opportunity and that’s where you're going to see a fair amount of focus.

Our next question comes from Peter Stabler with Credit Suisse. You may ask your question.

Wanted to have the question about the event business, clearly it's an area that is under-performing across the entire peer group… and the Octagon quarter results not withstanding, do you think there is any reason to believe that the long-term prospects for this business have dimmed. My understanding is that it's often a difficult aspect of marketing to measure a return on investment and I am wondering whether you’re sensing any sort or dimming of enthusiasm for the event marketing business.

No. Not at all I think, frankly one is a reality aspect of it. It’s the easiest thing to turn off. So when people were cutting back, it was easy to cut the events and certainly the environment didn’t help where everyone was looking at events as somewhat of a negative thing to do. I think we're starting to see that turn. I think there is no question that there is a place in any marketing service program for events. It has a real impact. I think we can show that it moves the needle and clients certainly embrace it in terms of the opportunity. For example in the automotive business, there is nothing more important than getting someone in the car and experiencing it. So I think that part of the business will continue and it continues to serve a very important part. And frankly the tone is improving in that business and we are starting to have more dialogue. It may be just the timing issue between 2009 and 2010, but I believe that business and we have among the best in class between Jack Morton and Momentum. I think we have great resources and the fact that we're modernizing the event business. It use to be that when you look at the event business, all we were doing was one particular event and it was the mechanical aspect of the event that was driving the business. In today’s world we combine digital offerings with the event offering and we make it an integrated offering with PR Digital, the event business and all the different marketing services. So we're not just talking about, it's not your old event business right now, it’s a much more modern approach to it and I think these are real place for us in the marketplace.

Could you comment a little bit about vertical exposure? We know that auto is a big player in event, but what other categories are, and disproportional skewed to event?

Well I think the tech and telecom was very specific the way it skewed us in the third quarter. As I indicated in my remarks, that one of the components in the third quarter was a big event. In fact in the U.K. in tech and telecom, so that one has an important component to it. Auto it has an important component to it and certainly packaged goods and consumer products has historically been an important part of it.

Our next question comes from the Bill Bird, Banc of America-Merrill. You may ask your question.

By year end, what would your employee count be down year-over-year, net of hires?

Well we said, the number, we've taken about 5,100, and remember, we go in and out. So its going to be hard for us to predict exact headcount reductions, because what we do is in this environment to the to the extent we can change and add talent, its an opportunity for us. So I cant really commit to talent number in terms of headcount.

Bill, we're down 11% from over the past four quarters and we said we're going to be aggressive into the fourth quarter this year. So, we'd expect to see that number continue to rise.

I think right now we're in the 40,000 employee range. So give or take that should be where we are at.

Okay and then I guess just bigger picture, how do you think about improving profit per employee?

Well, obviously profit per employee will be driven by our increase in our overall margins I mean that's our goal. So I think, let me just say at this point. We haven’t gone off to our goal of achieving competitive margins and competitive revenue. That continues to be the primary driver for our company and frankly we were well on track to achieving that until this economy hit us. So I think with the position we are taking is very simple that is, we've got to get back to those run rate and that's where our objectives are and the way to get to the revenue per employee is to include the revenue and profitability and in the rest is a mechanic. And we keep a very close eye on the headcount. I mean, if you look at the severance, the fact that we have incremental severance should give you an indication that we are managing to the margins and as the business picks up, that’s when you'll see an improvement in the profit per employee.

Our next question comes from David Bank with RBC Capital. You may ask your question.

As I look at the business right now and what’s happening I see three kind of primary head wins for you, one is obviously the economic factors, the second is the winning and loosing a share and the third is what’s happened in terms of fee structure and scope of business. If I go back and I look at what you said on the last call and I realized its impossible, it’s a very difficult question to address and we appreciate you being so constructive. You kind of saw the second half being like the first half which would have implied 700 or 800 basis point improvement from 3Q to 4Q sequentially, something really changed there. And so my question is, is the thing that really changed, if you look at those three bucket share, kind of fees and economic backdrop, what is the biggest thing that changed and I realized you're not giving an absolute number. So, maybe you're being conservative in your outlook and we really all appreciate that. But if you look at the grand scheme of things, what is the biggest thing that changed in your outlook?

Well I think it’s a combination of the economic and the scope. I think you can't talk about one without the other, what's driving this scope of reductions is in fact the overall economic environment. Clients have the same pressure, as frankly we have in terms of delivering on our margins and not withstanding the fact that we are a firm believer. I know its self serving that investing in the brands in a difficult environment is the way you improve your business. Clients look on a much more short-term perspective. So I think that was the biggest factor that led to the numbers that you're seeing. The fact that I referenced the new business opportunities and the fact that we were in all the pitches and we're winning our fair share and then some goes to the issue of whether we have the talent and the resources to compete and I think the answer to that is yes. So, until we see a recovery in the overall economic environment. It's going to be difficult to see consistency in that improvement and I think that’s what everyone is waiting for and hopefully 2010 will be the year that we start seeing that kind of recovery and we are very well positioned from a cost profile, from an offering profile to bring our margins up at a rate to reach the competitive margins that is our primary objective.

Denise we'll need to wrap up now please.

Thank you at this time that ends today’s conference call.

Welcome. Thank you all for joining us and obviously we do appreciate the support and we look forward to sharing with you our results for the full year coming up. Thank you.

Thank you. At this time all parties may disconnect.