Frank Mergenthaler - Chief Financial Officer and Executive Vice President Michael Roth - Chairman, Chief Executive Officer and Chairman of Executive Committee Jerome Leshne - Senior Vice President of Investor Relations

Peter Stabler - Crédit Suisse AG Daniel Salmon - BMO Capital Markets U.S. Benjamin Swinburne - Morgan Stanley Alexia Quadrani - JP Morgan Chase & Co Tim Nollen - Macquarie Research David Bank - RBC Capital Markets Corporation James Dix - Wedbush Securities Inc. Brian Shipman - Jefferies & Company, Inc. John Janedis - UBS Investment Bank Matthew Chesler - Deutsche Bank AG Rich Tullo - Albert Fried and Company

Good morning, and welcome to the Interpublic Group Third Quarter 2010 Earnings Conference Call. [Operator Instructions] Now I'd like to introduce Mr. Jerry Leshne, Senior Vice President of Investor Relations. Sir, you may begin.

Thank you. Good morning. Thank you for joining us. We have posted our earnings release and our slide presentation on our website, interpublic.com, and we'll refer to both in the course of this call. This morning, we are joined by Michael Roth and Frank Mergenthaler. We will begin with prepared remarks to be followed by Q&A. We plan to conclude before market open at 9:30 a.m. Eastern. During this call, we will refer to forward-looking statements of 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 my pleasure to turn things over to Michael Roth.

Thank you, Jerry, and thank you for joining us this morning as we review our results for the quarter and the first nine months of 2010. As a side note, we're calling you from Richmond, Virginia, home of your of our Agency of the Year, the Martin Agency, and we're pleased to be here. And in fact, we had our board meeting here yesterday as well. I'll begin by covering the headlines of our performance, thereafter, which Frank will then take us through the financial results. I'll then return with additional detail about what's taking place at our key agencies and some closing comments. As always, we'll always leave plenty of time for Q&A. In looking at our performance, we're pleased with the third quarter that saw a strong revenue and profit growth. Revenue increased 9.4% in the quarter, both as reported and in terms of organic revenue growth. It's gratifying that contributions came from such a broad range of our portfolio. Our U.S. organic revenue growth was 10%. Key emerging markets, such as India, South Africa, Brazil, and the whole of Latin America, posted strong double-digit organic growth rates. Europe, however, continued to lag. In terms of client sectors, automotive, packaged goods and financial services all posted strong double-digit growth. Health and personal care was up in the mid-single digits, as was technology and telecom, including the fact that we are cycling out at some significant assignment lost last year in the category. At the agency level, there was a strong organic growth at many of our companies. Draftfcb, Lowe & Partners, Mediabrands, Weber Shandwick, Hill Holliday, Mullen, Jack Morton and Octagon. Digital was also a material contributor to our growth in the quarter, with very strong performance at the McCann's MRM unit, R/GA, HUGE, as well as the digital capabilities within our PR firms and the U.S. independent agencies. Overall, we are seeing a fair bit of activity on the new business front, and the pipeline is solid at most of our agencies across all disciplines. On a trailing 12-month basis, we remained net new business positive to the end of the third quarter. The top line performance in the quarter and year-to-date reflects the economic recovery. More important, our growth is the direct results of the investments we made during the past few years in talent and in developing markets and emerging media, as well as the strategic actions we've taken to strengthen and reposition a number of our key agency brands. While the first nine months of the year had been encouraging, and the tone of client conversations has improved, there is still a degree of uncertainty. Now turning to the bottom line, operating income was $100 million, an increase of 72% compared to a year ago. Operating margin was 6.4% compared to 4.1% for Q3 2009, which speaks to our continued operating discipline. The people, systems and tools we put in place to ensure that we can effectively manage the business are clearly working. Earnings per diluted share were $0.08, up from $0.03 in the comparable period last year. This performance further confirms that we are confident that we will deliver on our margin objective of greater than 8% for 2010. Our balance sheet continues to be strong, and we have ample financial resources at our disposal. It's encouraging to see our strength recognized by the rating agencies again, as this morning, Fitch upgraded us to BBB from BB+, a rise of two notches. At this point, let me hand things over to Frank for an in-depth look at our first half performance.

Thanks, Michael. Good morning. As a reminder, I will be referring to the slide presentation that accompanies our webcast. On Slide 2, you'll see an overview of the quarter. We are pleased with operating results. Q3 revenue was balanced between the U.S. and international. We continue to maintain effective discipline over expenses. In producing a strong profit growth Michael mentioned, we realized over 200 basis points of operating leverage on combined base payroll and temporary labor expenses. We also leveraged occupancy expense by 100 basis points and experienced lower severance expense. Going the other way, in light of strong year-to-date performance at a number of our agencies, we have higher expenses for incentive compensation with contrast to a year ago when we decreased the incentive accrual. We ended the quarter with cash and marketable securities of $1.9 billion on the balance sheet, an increase of $167 million from the year ago level, while having used $287 million to purchase both the majority of our convertible preferred stock and a smaller amount of debt earlier this year. Turning to Slide 3, you'll see our P&L for the quarter. I'll cover revenue and operating expenses in detail on the slides that follow. It's worth noting here that our effective tax rate in the quarter was 35%, which is below our current run rate, due in part to the reversal of valuation allowances in Europe. Turning to operations on Slide 4 beginning with revenue. Revenue in the quarter was $1.56 billion, an increase of 9.4%. Compared to Q3 '09, exchange rates had a negative impact of 0.7% and net acquisitions contribute 0.6%. Our organic revenue change was an increase of 9.4% due to growth with existing clients and net new business across all of our disciplines. Regionally, we are very strong in North America, LATAM, South Africa and the Middle East. We had double-digit growth in auto, financial services and packaged goods, as well as a rebound in tech and telecom. For the first nine months, organic revenue was 5.2%. On the bottom half of the slide, you can see the revenue performance of our operating segments. At our Integrated Agency Networks, organic growth was 8.8%. Growth was strong in both the U.S. and international markets, with leadership by Draftfcb, Lowe & Partners, and Mediabrands. At our CMG segment, revenue increased 12.3% at an organic basis, reflecting double-digit growth in the U.S. and internationally. We had growth across the board at all our principal operating units and disciplines, PR, events and sports marketing. Slide 5 provides a breakdown of revenue by region. In the U.S., the organic increase of 10% was driven by broad participation across client sectors and disciplines. We were led by Draftfcb, Mediabrands and Lowe & Partners, as well as Hill Holliday, Campbell-Ewald, Weber Shandwick, Jack Morton and Octagon. International organic growth was 8.6%. In the U.K., revenue increased 3.9% organically, led by our marketing services specialist agencies. In Continental Europe, the organic decrease was 1%, a level consistent with the second quarter and our expectations. Spending by our multinational clients held up better than that of regional and local clients. Among our largest markets, revenue increased in France with decreases in Germany, Spain and Italy. In Asia-Pac, organic growth was 3.5%. Growth in India, Australia and China was partially offset by a notable decrease in Japan. Asia-Pac x Japan grew 10% organically. Organic growth in LATAM strengthened to 28.8%, an outstanding performance led by our agencies in Brazil, where we saw significant increases by multinational clients across several sectors. Our other markets group grew 27.1% organically, primarily reflecting strong performance in South Africa and the Middle East. On Slide 6, we chart a longer view of our organic revenue change on a trailing 12-month basis. The most recent data point is a positive 1.1%, which the trajectory this year indicative of the recovery we're seeing many markets around the world. On Slide 7, we'll take a closer look at operating expenses. Q3 operating margin was 6.4% compared with 4.1% a year ago. Salaries and related expenses decreased to 64.5% of revenue from 66.1% in Q3 '09. Total SRS is $1.01 billion compared with $944 million, an increase of 6.7%. Underneath that result, there were a number of moving pieces. Base payroll, benefits in taxes, was 53.1% of revenue compared with 56.3% of revenue a year ago, an improvement of 320 basis points. At the same time, we continue to invest prime areas of growth in the portfolio, such as at Mediabrands, Draftfcb, R/GA, MRM and HUGE, as well as public relations. Across our agencies, we are adding digital talent. Headcount at quarter end was 41,200 including the consolidation of DLKW. This is an increase of 2.3% from a year ago. Severance expense was $16 million, which is in a normal range for Q3 compared with $23 million a year ago or 1% of revenue for this year compared with 1.6% a year ago. Incentive expense was 4.2% of revenue compared with 2.7% a year ago. As I mentioned earlier, the comparison reflects higher expense for annual and long-term incentive programs due to strong performance against budget, as well as a decrease in net expense a year ago due to the recession. Temporary labor expense was 3.8% compared with 2.9% a year ago to support growth. All other salaries and related expense was 2.4% of revenue compared with 2.6% last year. Turning to ops and general expense on the lower half of the slide. O&G was $452 million or 29% of revenue compared with 29.8% a year ago. Expenses increased 6.3%, largely due to higher pass-through expenses, which were offset in revenue. Within O&G, we had significant leverage on occupancy expense, which was 8% of revenue compared with 9%. This was a result of revenue growth and decreased rent expense as a result of real estate efficiencies achieved over the past 12 months. Professional fees were 1.6% of revenue compared with 1.9%. Expenses due to travel and entertainment, office supplies and telecom increased slightly as a percent of revenue due to the higher level of business activity. All other O&G was 15.7% of revenue, 30 basis points above last year, primarily reflecting increased pass-through expenses. On Slide 8, we show our operating margin history in a trailing 12-month basis, which was 7.8% at the end of the third quarter. On Slide 9, you see our debt maturity schedule, as of September 30, with total debt of $1.9 billion. We have a senior note maturing of $192 million, maturing in a couple of weeks, which we plan to pay from cash on hand. As a reminder, we also repurchased approximately $200 million in debt in both 2008 and 2009. Our August 2011 maturity is now classified as current and is only $36 million. Turning to the current portion of our balance sheet on Slide 10. We ended the quarter with $1.9 billion in cash and short-term marketable securities on the balance sheet, an increase of $167 million from a year ago. On Slide 11, we turn to cash flow for the quarter. Operations generated $40 million compared with $125 million in Q3 '09. Working capital used $60 million in the quarter, which is a seasonally normal level for the third quarter. Investing activities used $76 million, which includes our purchase of DLKW, compared with the use of $50 million a year ago. Financing activities used $12 million. In summary, on Slide 12, we are pleased with our performance in the quarter and year-to-date. Alongside strong growth driven by the competitiveness of our brands, we continue to manage expenses carefully. Importantly, we are also continuing to invest in growth and efficiency. This will allow us to continue to deliver on the margin expansion and increase profitability that we believe are achievable going forward. Now I'd like to turn the call back over to Michael.

Thank you, Frank. As you can see, our third quarter showed further evidence of the broader economic recovery in a degree to which we have competitive offering, including growth areas, such as market services, digital, as well as a number of the emerging economy. We are pleased with our performance year-to-date. Our agencies that are seeing growth are investing in talent but we are also keeping close control on our costs. That is why we're confident in our ability to deliver our stated operating margin objective of greater than 8% for this year. This level of performance would represent significant step-up from 2009 margin and would put us back on track to meet our ultimate goal of tier level margins within the next few years. Our momentum in terms of profitability demonstrates that we've put in place the right systems and people to effectively manage our business. The high quality of our professional offering has also allowed us to achieve our goal of competitive organic revenue growth in 2010. Developments at the agencies are key in ensuring that we'll build on that momentum, so what I'd like to do now is cover those areas in greater detail. For the quarter and year-to-date, as was the case in 2009, performance at Draftfcb was outstanding. The leadership of CEO Laurence Boschetto and his team, along with the agencies integrated model, is driving strong results for clients around the world. During the quarter, they've posted wins with electronic arts and a number of existing clients, including new assignments in Asia with Sony and India's Tata group. The appointments of Michael Fassnacht as President in Chicago and Damon Neiman [ph] as CEO in York was two of the network's stronger talents in more prominent roles for which they can add even more value to the organization. Mediabrands was also very strong performer in the quarter. UM won MasterCard in the U.S. It flows through our unit in India with named agency of record for Coke throughout Asia and ECHO shows UM as its global AOR, with regional hubs in the U.S., U.K. and China. Initiative continues to grow its business in step with major clients such as Hyundai Kia and Home Depot, as well as posting key regional wins in Europe with Bang & Olufsen and Unilever Search Assignment in Latin America. Mediabrand ventures to rollout a price globally and to launch business models such as Velociter, which will partner with the early-stage new media companies and startups. The acquisition of CUBOCC is integrating quickly, and we are excited about the JV in India to an Interactive Avenues, a leading local digital agency. The recently launched Mediabrands Shopper Science practice, won business from Home Depot, Boston Market and Coke during this quarter. Lowe's results continue to improve, and the agency will be profitable in 2010. Headline news included the celebration of our 50-year relationship with Unilever and strong performance in that client's business. Our combined Deutsche low global team won a major B2B assignment for Microsoft's cloud computing platform, validating the strategy to combine these agencies. Work on that launch will start shortly. We're also pleased with the integration of DLKW as the agencies are coming together in our Sloane Avenue space. Lowe was also launched open, its retail activation unit, in China and Brazil during the third quarter. At CMG, the work of Weber Shandwick and GollinHarris keeps winning awards and more important, taking market share from our competitors. We PR as an important growth area for the business in an age of social media and believe we have some of the strongest agencies in the industry. Sports marketing performed well, and the events continue to pick up in Q3. Notable wins included new work with Nestlé, Unilever and Verizon. Collaboration is a hallmark of the CMG unit and an credit goes to Harry Simon and his team for creating collegial and successful culture. Our domestic integrated independents are capitalizing on the strength of the U.S. recovery, and we're seeing terrific wins and talent joint agencies, such as the Martin Agency where we are today, Hill Holliday, Mullen and increasingly Gotham. Turning to the McCann Worldgroup. I recently attended the agency's meeting to launch its new global strategic positioning. The work MRM is doing to GM in the digital CRM space globally is growing strongly. The McCann Healthcare offering is also powerful globally, and the addition of W [ph and its creative firepower in Brazil is already leading to new business momentum. Nick Brien and his team are energized and committed to making McCann Worldgroup the world's best marketing solutions network. There have already been notable additions to senior management. A new CFO for the organization from the Mediabrands leadership team, a new global CEO is named for MRM and another promoted into that role at McCann Healthcare. Both will take these units to new levels. A new head of global accounts and a new President for the Midwest have also been brought on recently. Additional strategic and personal moves will doubtlessly be required at the Worldgroup. But we feel confident that we have the right leadership and offerings in place. Before turning to questions, I wanted to close with some remarks about our outlook for the fourth quarter and to reiterate our commitment to putting the balance sheet to work on behalf of our shareholders. Q4 is important to our overall results. The quarter has always had a significant level of variable project spend. This ability to that project business carries with it a degree of uncertainty. Nonetheless, we are very confident in the quality of our offerings. The tone of the business is fundamentally solid, and client's liquidity is strong. However, with comps becoming more challenging and some sectors and client wins cycling stronger Q4 2009 results, we see solid but moderating growth for the balance of the year. IPG's performance in 2008 was its best in nearly a decade. Last year, despite the worst recession any of us have experienced, our strong professional offerings and conservative financial management allowed us to hold on to much of the margin progress we had made and positioned us for the recovery. The first nine months of 2010 had demonstrated our ability to achieve competitive organic revenue and get back on track to score the margin expansion. The tone of the business as we look to 2011 remain solid. Media and marketing continue to grow more fragmented and technology plays, and increasingly large role in consumers' lives. Emerging economies such as LATAM, India, China, Russia and Africa are also proving they're here to stay and represent long-term growth opportunities. All of these factors will work in our favor because the diversified, integrated provider of marketing services like IPG is vital for clients to navigate and to succeed in this complex environment. We will share with you in much greater detail the state of our key offerings and our revenue and profitability goals going forward at an Investor Day to be held in New York in late March of next year. This fundamental belief that our company's long-term future, coupled with all of the work we've done to bolster our financial as infrastructure in recent years have put us in a strong position. Recent performance including the impressive results announced thus far this year, gives us confidence that the strength of our cash flow will allow us to meet the needs for disciplined reinvestment in the business, including talent acquisition, targeted M&A in high-growth competencies and geographies. And furthermore, we will continue to explore additional options for the return of capital for shareholders owners, including share buyback and dividends. We are in a position to consider these actions because we believe and we see results in recent years as part of a sustainable, long-term path to achieving our growth of competitive top and bottom line performance. With that, I'd like to thank you for your time and open the call to questions.

[Operator Instructions] Our first question today is from Alexia Quadrani with JPMorgan. Alexia Quadrani - JP Morgan Chase & Co: If you could talk about any color you haven't had a quarter progressed and any sort of early read into what you're seeing in October. And the second question, maybe for Frank, is at this point or this stage of the recovery, what do you really see as sort of the leverage for the margin improvement in 2011?

As you know on a monthly progression basis, we don't look at our business that way. And it's certainly a difficult measurement for us, given the comps that we were coming off last year. And I know your question refers to the fact that we constantly saw a month-to-month increase. We didn't quite see that in this quarter, but nonetheless, our results stand for itself in terms of our strong improvement.

With respect to going forward, Alexia, we still believe the strongest leverage is for operating revenues is base salaries. We saw a dramatic improvement for the three months, we've seen it for the nine months. And as we look into 2011, that will continue to be our area of focus to drive greater leverage in that caused bucket. Alexia Quadrani - JP Morgan Chase & Co: And Mike, just going back to your comments, what we should see month-to-month improvement necessarily, you didn't see great variability either in the sense we shouldn't read into that you had a. . .

No. And again, I know your next question, Alexia, is what do we see for the fourth quarter. We continue to see a good tone from our clients. So we should expect a solid quarter in the fourth quarter. Alexia Quadrani - JP Morgan Chase & Co: And you mentioned, I was looking at use of cash. Any sense in terms of timing of maybe a possible announcement on that front?

Yes, as we've always mentioned, what we wanted to see was a sustainable pattern in terms of the economic recovery. And as we get closer to that in the confidence level and the fact that we're not going to be seeing this large double dip that everyone was concerned about. And obviously, the likelihood of that becomes greater for us. But we constantly have to look at that as a possibility.

Our next question is from John Janedis of UBS. John Janedis - UBS Investment Bank: Frank, you referenced the increase in incentive comp. I'm wondering as we move through the fourth quarter and into next year, does that stay elevated above the 3 1/2% to 4% target as a percent of revenue?

No, John, the 3 1/2% to 4% is still a reasonable range. And the way it works is we go to our media reviews, we have better visibility in the back half year. That happens right after the release in the second quarter. So as we get greater degree of comfort level, we adjust our accrual and we feel a number of our businesses are outperforming their budgets so we have to move that accrual up. But that's just the phasing of the accrual. It should still should be in the 3 1/2% to 4% range.

Yes, I mean we're still converting the revenue which is the heart of your question, John, at an attractive rate. And that one, as Frank indicates, is variable. But for the full year, we'll be consistent with what we said. John Janedis - UBS Investment Bank: And just on the project business. I know it's early and you mentioned that, but can you help us think about where we come from? Meaning, how much has it fallen from maybe 4Q '07 through 4Q '09?

Well, if you remember, if you go back to the calls in '08, when we saw a significant in drop, we put out a number of roughly $75 million in project business in the fourth quarter. So that will give you a range and bearing in terms of significance in the fourth quarter. Obviously, we're not in 2008 now, we're in 2010. So that will give you some level of upside. John Janedis - UBS Investment Bank: From an account perspective, have you then fully recycled some of the pieces of losses from a couple of your larger clients?

No, we still have -- the Microsoft and Verizon business is still running off. We had set about a 1% impact on our organic, and that's still the number. John Janedis - UBS Investment Bank: When does that fully roll off, Michael?

That should roll off by the end of the year.

Our next question is from Brian Shipman with Jefferies. Brian Shipman - Jefferies & Company, Inc.: Just one question on revenue picture and then a cross question. If you could just add some discussion, maybe, to what kind of visibility you're getting into 2011 spending plans from your clients. Is there a discussion -- it's budget time of the year, so is there a discussion on increased budgets or increased spending for next year? Or do you see things sort of flattening out here? And then Frank, on the cost side, you described the third quarter severance of $16 million as normal for the third quarter. There's always going to be severance every quarter, but $16 million sort of appeared high to us given a 10% revenue growth. Is the $16 million a normal quarterly run rate we should expect going forward?

I'll comment on the revenue thing and Frank can comment on severance. The meetings I've been having with our major clients are consistent with what they had said. And that is in a recovering market and certainly as they expand in the emerging markets and we see growth in emerging markets, they're going to spend those marketing dollars to support their brands. So although it's early for 2011, I think absence our hiccup in the overall economy, we're going to continue to see that kind of spend. Our visibility, as you say, we're in the process of budgeting and going through the bottoms-up budgeting for our numbers. But certainly, the tone is solid in terms of '11, and we won't really see -- frankly, once were finished with the fourth quarter, we'll have a better handle on '11. But right now, what we don't see is major cutback.

On the severance question, Brian, we've been out there, in a normal environment, 1% of revenue is a reasonable number. Q3 and Q4 at times, sees greater activity there as people look forward to the next year and how they're going to be bid, the continued expansion of our margins. So again, we still believe that 1% is a reasonable number for modeling.

Our next question is from Peter Stabler with Crédit Suisse. Peter Stabler - Crédit Suisse AG: Question on Europe. I was wondering if you could drill down a little bit more. Michael, I think you mentioned that multinationals were performing better than local clients in that geography yet my understanding was, perhaps incorrectly, that the Microsoft loss and some other tech losses have disproportionately impacted Europe on an organic growth basis. So just wondering if you could give a little color there because your three largest competitors were able to turn the corner on organic growth in Europe in the quarter.

Well, first of all, the U.K. in particular, we did see positive organic growth. So let me pull that out. You remember, in the second quarter, we had a difficult comp that we had to overcome. But in the U.K., it was positive. We're seeing positive growth in trends and the rest of Europe is lagging, if you will. I don't recall saying that we saw the bulk of that Microsoft running through Europe. And I don't think it's true, actually. But again, I think local market is driving the performance there. And we've already said that we've made some personnel changes in Europe. We're focusing on our cost profile in Europe, and there's some work to be done for us in Europe. But obviously, we're encouraged by what we're seeing in the United States and in the rest of the more the world. I think Latin America, I mean, the recovery there and the spend there is terrific. India, we're seeing great growth in India. And obviously, the other markets are offsetting whatever slowness we're seeing in Europe. And frankly, again, we didn't count on a big recovery in Europe. So this is totally consistent with what we had planned. Peter Stabler - Crédit Suisse AG: And in those other geographies that you just mentioned, LATAM and let's say Asia-Pac minus Japan, would you characterize the situation there somewhat differently in so much as local clients are contributing at an equal or better in the multinationals?

Yes, you don't get to those strong double-digit recovery if you're not having local clients action. So I think yes. It think there's a broad range spend in those economies.

Our next question is from David Bank with RBC Capital Markets. David Bank - RBC Capital Markets Corporation: A little bit of a follow up, I guess, on that last question. So Latin America and the rest of the world markets, I mean the acceleration was just extraordinary. So the first question would be, did you kind of see that coming last quarter? Did it actually impact the overall investment into the business in any way, in any meaningful way that sort of impacted margins for the quarter? And are you seeing continued strength to that order of magnitude? Any more color you can give on kind of high 20% growth across those regions would be great.

It's always hard to budget with 30%, 40% growth. So obviously, we don't do that. We did expect those to be key markets for growth. So just take a look at two transactions that we did in Brazil, I mean with the acquisition of CUBOCC on the digital media side and the addition of W to McCann in Brazil, that certainly was in anticipation of a very strong economic environment there. So we did expect it to be as high as it is? No, It's hard to say. We are seeing an increase in media, okay? And the media spend, obviously, is driving that as well. So everything is all pointing in the right direction in those markets. And therefore, we will continue to invest. Same thing in India. We certainly expected India to be a growth market for us. If you remember, two years ago, we topped off our ownership in our two major units there to 100%. That was all in anticipation of those being key growth markets for us. So we now have the investment in Draftfcb at a 100% and Lowe at 100%. So those markets were expected to recover and grow, certainly, strong. And to be candid with you, we didn't expect us to grow 30%, but we certainly were expecting it to drive a large growth. David Bank - RBC Capital Markets Corporation: In terms of the sustainability, this order of magnitude, any additional thoughts on that?

Well, remember, again, look at comps. Comps are a lot easier. So you don't get 30%, 40% growth in market without some lightning on the comps. And obviously, they're going to get harder for us. So you can't budget for those kind of growth. But we do think that those economies are solid. They're leading in terms of recoveries and growth on a worldwide basis, so we think that should continue, certainly, Brazil, India. We're seeing recovery in the Middle East. South Africa is strong. We have very strong offerings both with McCann as well as Draftfcb in South Africa, and the Middle East is growing. So those are our growth markets for us. We have good presence in those markets, and we will expect that to continue.

Our next question is from James Dix with Wedbush. James Dix - Wedbush Securities Inc.: Two questions for you. First, I'll take another crack at the growth question I guess. Any reason to think that the growth sort of balance for the year won't be -- it's as good as it's been for the first nine months on organic basis? I mean, is there much change in trends at least in that sense? And then I guess, second on margins, do you have any expectation over the longer term in terms of what you're looking for in terms of incremental margins, going forward? They were over 30% in the third quarter, but they were a little higher in the second. I'm just trying to get a sense -- some of your peers lay out the targets along those lines. So I just wanted to see how you were thinking about that.

First of all, the fourth quarter, remember our comps get much more harder. And so to anticipate 10% organic growth in the fourth quarter, given where the comps are, I think that's a stretch, okay? James Dix - Wedbush Securities Inc.: Yes, Michael. I was actually referring for the year-to-date. So for the first nine months, you were like 5% give or take.

Right, I think it's reasonable to assume. We don't see any big major setback, which is why is said our fourth quarter should be solid. But we don't expect 10% organic growth, okay? In terms of margins, we've indicated we expect -- our goal is to get the competitive margins, which are 12%, 13%. Now we're not going to have to occur all at once. So we think that will be over in some period of time, shorter rather long, but that remains to be seen on the full year results. And that's really what we're going to lay out on our Investor Day in March. But certainly, we're positioned to achieve competitive margins as we stated.

Our next question is from Ben Swinburne with Morgan Stanley. Benjamin Swinburne - Morgan Stanley: Michael, could you put into context for us this quarter, year-to-date, sort of McCann versus the overall IPG growth story? I'm just trying to figure out, that's an agency that's obviously critical to you guys and somewhat in transition from a management perspective. I guess, what my thought process is, where are we in that transition process? And as we look to next year, where your comps for the company will be tougher as for the whole industry, does McCann, if the strategy is working, become a nice sort of lift to overall growth rate next year. And then for Frank, just on the balance sheet, I know it's complex, but you just spent a minute talking about the revolver test and how much cash you have available, liquidity available to buy backs stocks as you move into 2011? And I don't know if the rating agency operates hopefully upgrades changes that math for us as we think about your ability to put money to work on the stock in '11.

Well, let me talk about McCann. Obviously, McCann is a significant part of the IPG story. Certainly, it accounts 50% or more of our business. And yes, it's in transition. As I indicated, Nick Brien and the whole group, who just launched a strategic positioning, it was a great event. We had 350 people from all over the world jointly focusing on the go-to-market strategies, where our strengths are, where we have to build and how we're going to collaborate in this challenging environment and putting together into greater offerings. So I was very excited about what was happening at McCann. And certainly, we look to 2010 as a transition year for McCann, as you would expect, if you look at just changes that have already occurred. And we would expect to start seeing improvement in 2011. And that's certainly a key component of our objective of achieving competitive margins because frankly, McCann is a significant factor in that growth. And I'm feeling real good about our offering. Let's face it, McCann is a global force, okay? And as client base and the opportunities, just for the existing client base, is significant to us. And what we have to do is really focus on our offerings and the use of the integrated offerings with respect to that kind of base. And I'm encouraged and I'm excited about what we'll see from McCann as it moves forward in 2011.

And Ben, on your balance sheet question, the things we look at are cash flow generation, cash on hand, of course, and we look at our current credit facility, it's very flexible. So we've been pretty thoughtful and conservative on how we've used our balance sheet. And when a decision is made, we're going to put of this to work to play back to our shareholders. You can expect that to continue to be relatively conservative in the amount that we allocate towards those programs. Benjamin Swinburne - Morgan Stanley: Any update on your expectations, Frank, on the timing of the other agencies? And I don't know if it's logical that you get one upgrade and the other ones follow, but it would seem to be anyway.

We're in constant dialogue with the quarter net release. In fact, the agencies are briefed before we release, the quarters now released. We'll continue to aggressively push, and we would love to see that the other agencies step up and take shots.

Let me just add. We believe the agencies are wrong. I think the fact is that our financial strength and our balance sheet is outstanding, and it's difficult for rating agencies to upgrade. I think Fitch hasn't moved us since 2008. So it's harder to go up, it's easier to go down. But I think if you look at our leverage, if you look at our cash and you look at our performance, I think we should frankly be at the investment grade. Now do I understand why they're holding off? Sure. They're holding off for the same reason that everyone is concerned about the uncertainty that's out there. They want to see if there is a double dip and is there a change in the business momentum, if you will. But once we start seeing the consistency and the sustainability, I don't believe there's any reason why we shouldn't be upgraded. That's my personal belief.

Our next question is from Tim Nollen with Macquarie. Tim Nollen - Macquarie Research: Two questions please. One, is on your salaries. You said you raised headcount by 2.3% in the quarter. I've seen that point to point yet your organic salary dollar increase in organic is 7.4%. I think I understand that right. And that compares with your organic growth of 9.4%. That salary number seems to be getting up close to where the organic growth increase is. If you could just explain first of all, please, what the differences between the headcount and the salary increase? How much of that is incentive comp versus base pay, maybe? And also, if you weren't to do 7 1/2% in Q4, what should we expect for salaries in Q4 and then beyond. I guess the ultimate question is, can you keep your salaries line increases below your revenue increases?

Tim, as we've mentioned earlier, the key opportunity for us to continue to generate operating leverage off our base salaries. We have roughly 300 basis point improvement this quarter. That's on the chart that we provided the material that we went out this morning. So from our perspective, we believe we continue to see good strong leverage being generated out of the base salaries. And what you saw this quarter was on the incentive side, that's tracking as little north of 4% of revenues, higher than our normal facing, but that's primarily just because we feel more comfortable on the performance of our business for the year, especially against a couple of key agencies that are well in excess of their budgets. So the challenge for us to get to competitive margins is to continue to generate that operating leverage off our base salaries and that's the area of focus for us and we're confident that we can do it. Tim Nollen - Macquarie Research: Second question then is about your tax assets. You're tax rate was a little bit lower than the 40% that you kind of guide us to in the quarter. And I get it out because if you're using some of your NOLs in Europe, if understood that correctly. Could you please clarify that. And also let us know, you've got about $1.5 billion, I believe, of NOLs. When can we expect to see those really start to kick in and see your tax rate come down?

I think an appropriate effective tax rate is low 40s. I think that's what we've guided people to. This quarter was a little bit lower because we were able to do some structural things in Europe that allowed us to reverse the valuation reserve against net operating losses. So in other words, in asset, we now believe will be fully utilized. With respect to the timing I think it's back to the kind of Michael made about Europe and the profitability since that's the key driver of our NOLs. So as we continue to see improvement in our European operations and some of the management changes we've made start to take hold, we'll see greater cash coverage by NOL utilization profitability coming out of Europe. But that's going to be the key driver in ability that rises NOLs in Europe.

Our cash rate was still 25%, currently. And there's no question that the $1.5 billion NOL carryforward is an asset that we hope to use. And I think you got to earn your way out of that. And obviously, the moves that we're making, particularly in Europe, should enable us to do that. Tim Nollen - Macquarie Research: It seems like you're getting close to the point where you can really start to take full advantage..

Yes, exactly, absolutely. When things are profitable, good things happen all around. And obviously, the use of that NOL is something we're looking forward to. Tim Nollen - Macquarie Research: And we'll wait for the share buyback in the dividend increase next.

Our next question is from Matt Chesler with Deutsche Bank. Matthew Chesler - Deutsche Bank AG: Well, it's clear that one of the areas that strengthen your business is on the media side with traction of Mediabrands is having. Can you walk us through, how this is going to translate into your ability to generate cash flow in the business and sort of what impact, and where do you think you might end up for the year while working capital, you think it should be positive? And then if you're looking into next year, if all continues well on that front, whether do you think you'll be able to continue to generate cash there? How many more leverage you still have to sort of squeeze out to more efficiencies elsewhere?

Let me talk about Mediabrands from a business point of view. I'll let Frank talk about the cash flow impact of it. I think one of the exciting things that's going on in our company, if you remember a number of years ago, all the changes that we made in Mediabrands and the excellent talents we brought in our Matt Freeman, Matt Siler, Richard Devine, Jackie Keller [ph] , all these people that we've added to Mediabrands clearly, we're seeing results in terms of new business wins an increase in scope from existing clients. It's really helpful to us in terms of client relations as well as profitability and of course, cash flow. There's no question that what's happening in the marketplace, that's what we've talked about in terms of integrated offerings. If we're not having integrated offering that combines the new media, the media offering as well as creative and all the different things that we bring to the table, that's what clients are demanding and that's the point of making the kind of investments we've made in Mediabrands. And we see a number of our clients, the media part of our business is driving our business. And then we're using that as the portal, if you will, to bring in the other resources. So I think, certainly, media has a main seat at the table now. I remember in the early days, media was always sort of in the back of the table and the last to present. Now it's part of the front and all the integrated offerings that we're having. So we're very excited about what's happening on the media side and our offerings in the Mediabrands. And particularly, initiative in UM and the diversified. So new social media and networking are all part of that. And all the new things that are out there, which our agencies use as a key competitive advantage in the marketplace. So we're excited about it.

And from a cash flow perspective, Matt, you're very well aware. As media grows, it's cash generated. We're not going to guide to where working capital in the fourth quarter, because that's the point in time and it's very volatile. For the year, we'll be cash flow positive from an operating perspective, and we'll also going to be taking care of some maturities this quarter. And we deligate the first in the first quarter, I think the aggregate number for those two is $500 million. So from a cash perspective, we feel pretty good going into the fourth quarter. Matthew Chesler - Deutsche Bank AG: And then back on the incentive topic for just a moment. It looks like the quarter there was a true-up based on your revised expectations for the business. Does that catch you up for the fourth quarter as well based on a reset of your expectations for the balance of the year? And then position you're in good shape and hit your margin targets or just sort of say, elevated.

It's 3.5% to 4% revenue for the year is the right number. So we can see where we are for nine months. and that's going back into the fourth quarter. I mean It's not a one-quarter catch-up you project where we're going to be for the year and then you step up your accruals so that we appease the carries over the fourth quarter. But we still believe 3.5% to 4% is a reasonable number.

Our next question is from Dan Salmon with BMO Capital Markets. Daniel Salmon - BMO Capital Markets U.S.: I'm going to go away from the earnings report and ask about the reports that I think confirmed by one side, at least. You're switching over providers from Donovan to MediaBank for back office software. Can you give us a little bit of color on that decision? And then maybe looking ahead, if you give us some thoughts on how those sort of traditional tools can come together with some of those things you're doing elsewhere in technology, particularly on the media buying front and places like Cadreon?

Well, clearly, I think we've been on the front ending and leading the pack, Cadreon and all the media buying opportunities that we see. That's why we formed diversified Mediabrands and diversified and brought Matt Freeman in to focus on the new media. And obviously, these platforms are an important part of us distinguishing ourselves from the competition. Clearly, our relationship with Microsoft and the work we're doing with them in terms of the various platforms that are out there are being very helpful in terms of our growth in servicing our clients. This switch from Donovan, I mean, we're always looking for best platforms and what's best in the marketplace. We're never read it from one to the other. But when we make a decision like that, it obviously factors in where we think the business is going, and which of these platforms are best suited for us in the marketplace. And frankly, the people who are living with that day to day are the ones who drive that decision. That's not a decision that comes from corporate, but obviously, to make that kind of switch focuses on the needs of their business and where they see it going.

Dan, it's also worth noting from a technology perspective, our strategy is set by our technology board that's comprised of corporate leadership, participation from the agencies. So as we move to greater leverage of share function, share technology in things like back office in some of our other systems, this is that a debate internally. And I think we're now making decisions with the collective view as opposed to kind one-off decisions with them at the agency level.

Our final question today is from Rich Tullo at Albert Fried and Company. Rich Tullo - Albert Fried and Company: Martin Agency and Mr. Adams they do great work down there and that's probably one of the more undiscovered agencies in the country. Is it fair to say, FX is going to be a favorable tailwind in 2011 if rates remain at current levels?

Rich, I don't think we can comment on that yet. For the year, it's going to be -- for 2010, it's relatively negligible. But right now, we're just starting -- we're in the middle of the planning process. We haven't informed to be on where FX is going to be as of, yet. Rich Tullo - Albert Fried and Company: And kind of a related question, as we look at McCann and the turnaround, where the growth is going come from in 2011, is that more of a global story than a U.S. story?

Well, clearly, McCann has a very strong presence in the U.S. But a significant part of the McCann client base is global multinational clients. So I think the answer is it's both, and obviously, there's strength in terms of servicing multinational clients and the distribution and offerings across the world that they provide is critical to the success. So I think it's both and certainly the multinationals are leading the pack on that. And thank you for all participating and I agree, the Martin Agency is -- I think it's no longer a hidden drill of being recognized as the Agency of the Year. So we're delighted to be down there, and we look for forward to the next call. Thanks for your support.

Thank you. This does conclude today's conference. Thank you for participating. You may disconnect at this time.