|As filed with the Securities and Exchange Commission on June 28, 2005  
|-----------------------------------------------------------------------
|                                                                       
|UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
|                                                                       
|FORM 20-F                                                              
|                                                                       

|(Mark One)
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|Commission file number 001-16081
      HAVAS(Exact name of Registrant as specified in charter)
      Republic of France
  (Jurisdiction of incorporation or organization)
      2 allée de Longchamp
  92281 Suresnes Cedex, France
  (Address of principal executive offices)
      Securities registered or to be registered pursuant to Section 12(b) of the Act:  None
      Securities registered or to be registered pursuant to Section 12(g) of the Act:
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                

| | Title
      of each class                                                                                   |  | Name
      of each exchange on which registered
| | ----------------------------------------------------------------------------------------------------------- |  | -----------------------------------------------
| |                                                                                                             |  |                                                
| |                                                                                                             |  |                                                
| | American Depositary
      Shares, each representing one ordinary share, nominal value 0.40 per
      share |  | Nasdaq
      National Market                   

|
|



|Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:   None
        The number of outstanding shares of each of the issuers classes of capital or common stock as of December 31, 2004 : 421,398,323 ordinary shares, nominal value 0.40 per share.
        Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  YesxNoo
      Indicate by check mark which financial statement item the registrant has elected to follow.  Item 17oItem 18x
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|
|



|TABLE OF CONTENTS
|-----------------
|                 

|                                       |                                                             |   |    | Page
|-------------------------------------- | ----------------------------------------------------------- | - | -- | ----
|                                       |                                                             |  
|                                       |                                                             |  
|FORWARD-LOOKING STATEMENTS             |                                                             | 1
|NON-U.S. GAAP FINANCIAL INFORMATION    |                                                             | 2
|NOTE REGARDING DISCONTINUED OPERATIONS |                                                             | 3
|PART I                                 |                                                             |   |   
|ITEM 1.                                | IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS       |   | 4 
|ITEM 2.                                | OFFER STATISTICS AND EXPECTED TIMETABLE                     |   | 4 
|ITEM 3.                                | KEY INFORMATION                                             |   | 4 
|                                       | 3.A Selected financial data                                 |   | 4 
|                                       | 3.B Capitalization and indebtedness                         |   | 6 
|                                       | 3.C Reasons for the offer and use of proceeds               |   | 6 
|                                       | 3.D Risk factors                                            |   | 6 
|ITEM 4.                                | INFORMATION ON THE COMPANY                                  |   | 13
|ITEM 5.                                | OPERATING AND FINANCIAL REVIEW AND PROSPECTS                |   | 23
|ITEM 6.                                | DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES                  |   | 48
|ITEM 7.                                | MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS           |   | 63
|ITEM 8.                                | FINANCIAL INFORMATION                                       |   | 65
|                                       | 8.A Consolidated statements and other financial information |   | 65
|ITEM 9.                                | THE OFFER AND LISTING                                       |   | 68
|                                       | 9.A Listing details                                         |   | 68
|                                       | 9.B Plan of distribution                                    |   | 69
|                                       | 9.C Markets                                                 |   | 69
|                                       | 9.D Selling shareholders                                    |   | 69
|                                       | 9.E Dilution                                                |   | 70

|
|



|          | 9.F Expenses of the issue                                                    |  | 70
|--------- | ---------------------------------------------------------------------------- |  | --
|ITEM 10.  | ADDITIONAL INFORMATION                                                       |  | 70
|          | 10.A Share capital                                                           |  | 70
|          | 10.B Memorandum and Articles of Association                                  |  | 70
|          | 10.C Material contracts                                                      |  | 77
|          | 10.D Exchange controls                                                       |  | 79
|          | 10.E Taxation                                                                |  | 79
|          | 10.F Dividends and paying agents                                             |  | 85
|          | 10.G Statement by experts                                                    |  | 85
|          | 10.H Documents on display                                                    |  | 85
|          | 10.I Subsidiary information                                                  |  | 86
|ITEM 11.  | QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK                    |  | 86
|ITEM 12.  | DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES                       |  | 87
|PART II   |                                                                              |  |   
|ITEM 13.  | DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES                              |  | 87
|ITEM 14.  | MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS |  | 87
|ITEM 15.  | CONTROLS AND PROCEDURES                                                      |  | 88
|ITEM 16.  | [RESERVED]                                                                   |  | 88
|ITEM 16A. | AUDIT COMMITTEE FINANCIAL EXPERT                                             |  | 88
|ITEM 16B. | CODE OF ETHICS                                                               |  | 88
|ITEM 16C. | PRINCIPAL ACCOUNTANT FEES AND SERVICES                                       |  | 88
|ITEM 16D. | EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES                   |  | 89
|ITEM 16E. | PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS       |  | 89
|PART III  |                                                                              |  |   
|ITEM 17.  | FINANCIAL STATEMENTS                                                         |  | 90
|ITEM 18.  | FINANCIAL STATEMENTS                                                         |  | 90
|ITEM 19.  | EXHIBITS                                                                     |  | 90

|
|



|FORWARD-LOOKING STATEMENTS
This annual report on Form 20-F may contain
certain forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which
we refer to as the Exchange Act, relating to our business and the industry and sectors in which we
and our subsidiaries operate. In particular, among other statements, the statements in Item 4 Information
on the Company with regard to management objectives, industry trends, market standing and business
risks, the statements in Item 5 Operating and Financial Review and Prospects with regard
to trends in results of operations, margins and overall market trends, the statements in Item 8 Financial
Information relating to legal proceedings and the statements in Item 11 Quantitative
and Qualitative Disclosures about Market Risk are forward-looking in nature. Forward-looking
statements can be identified by the use of forward-looking words, such as may, will,
project, estimate, anticipate, plan, believe,
expect, intend, continue, potential, opportunity,
objective, goal or the negative of those terms or other variations of those
terms or comparable words or expressions. By their nature, forward-looking statements involve risks
and uncertainties because they are based on our current expectations, estimates, projections and
assumptions concerning events and circumstances that will occur in the future. There are a number
of factors that could cause our actual results and developments to differ materially from those expressed
or implied by these forward-looking statements. These factors include the following:
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|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

| |  | the general
      economic conditions in our principal markets, including any economic disruption
      or uncertainty resulting from geopolitical events or terrorist attacks or
      similar events that may occur in the future;              
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                   
| |  | the level
      of worldwide spending on advertising and communications services by advertisers;                                                                                                                                                  
| |   |                                                                                                                                                                                                                                                   
| |  | our ability
      to retain existing clients and attract new ones;                                                                                                                                                                                
| |   |                                                                                                                                                                                                                                                   
| |  | the unanticipated
      loss of an important client or a portion of an important clients business,
      changes in the advertising and communications services budgets of clients,
      and the financial performance and condition of clients;
| |   |                                                                                                                                                                                                                                                   
| |  | our ability
      to manage our business during the period of transition prior to the installation
      of a new Chairman and Chief Executive Officer and thereafter;                                                                            
| |   |                                                                                                                                                                                                                                                   
| |  | our ability
      to retain key personnel while continuing to control labor costs;                                                                                                                                                                
| |   |                                                                                                                                                                                                                                                   
| |  | the impact
      of competition in our industry;                                                                                                                                                                                                  
| |   |                                                                                                                                                                                                                                                   
| |  | our ability
      to implement our strategy and to successfully integrate businesses we have
      acquired; and                                                                                                                                  
| |   |                                                                                                                                                                                                                                                   
| |  | our ability
      to adjust to the changing trends in our industry.                                                                                                                                                                               

|                                                                                                                                                                                                                           
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Forward-looking
statements speak only as of the date they are made, and we undertake no obligation to update publicly
any of them in light of new information or future events or circumstances, except as required by
law.

|1
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|NON-U.S. GAAP FINANCIAL INFORMATION
Our
audited consolidated financial statements included in this annual report on Form 20-F have been prepared
using generally accepted accounting principles in the United States, which we refer to as U.S. GAAP.
This annual report on Form 20-F may also contain financial information calculated and presented in
accordance with generally accepted accounting principles in France, which we refer to as French GAAP,
as well as financial information calculated on a pro forma basis, including information
that is restated to exclude the impact of specified historical events. Because this financial information
by its very nature is not calculated and presented in accordance with U.S. GAAP, it should not be
viewed as a substitute for, and should be read in conjunction with, our audited consolidated financial
statements and the notes to the financial statements included in this annual report.
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|2
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|NOTE REGARDING DISCONTINUED OPERATIONS
In the fourth quarter of 2003, we completed
the strategic reorganization of our business operations that was announced in September 2003. As
part of our strategic reorganization, our management targeted for sale or cessation of operations
a number of companies that were not engaged primarily in activities within our core areas of competence,
were not strategic investments, did not meet our financial performance criteria or otherwise did
not fit into our new organization. This reorganization was finalized in 2004. Accordingly, we have
reported our discontinued operations in accordance with Statement of Financial Accounting Standards,
which we refer to as SFAS, No. 144, Accounting for the Impairment or Disposal of Long-Lived
Assets. The results of operations of the businesses sold or closed during 2003 and 2004
have been reported as discontinued operations for the years ended December 31, 2004, 2003 and 2002.
(See Note 8 to the consolidated financial statements included in this annual report.) The results
presented in our consolidated financial statements have been adjusted to exclude the impact of discontinued
operations, and the selected financial data set forth in Item 3.A below have been adjusted to reflect
discontinued operations, for the years ended December 31, 2004, 2003, 2002 and 2001.
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|3
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|PART I
ITEM 1.  IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
Not applicable.
ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE
Not applicable.
ITEM 3. KEY INFORMATION
3.A  Selected financial data
The following tables summarize our selected
financial data and are qualified in their entirety by reference to, and should be read in conjunction
with, our audited consolidated financial statements and the notes to the financial statements included
in this annual report. The historical financial data as of and for the years ended December 31, 2004,
2003, 2002, 2001 and 2000 have been derived from our audited consolidated financial statements prepared
using U.S. GAAP.
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|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

|                                                    |                                                          | For the Years Ended December 31, |            
|--------------------------------------------------- | -------------------------------------------------------- | -------------------------------- | -----------
|                                                    |                                                         
|2004                                                |                                                          | 2003                             |            
|                                                    |                                                          |                                  |            
|(in
      millions of euros, except per share data) |                                                         
|                                                    |                                                         
|                                                    |                                                          |                                  | adjusted(1)
|                                                    | Consolidated Statement of Operations Data:               |                                  |            
|                                                    | Net
      revenues                                       |                                  | 1,449      
|                                                    | Operating Income (loss)                                  |                                  | 112        
|                                                    | Income
      (loss) from continuing operations           |                                  | 50         
|                                                    | Net income (loss)                                        |                                  | 33         
|                                                    | Per share
      data :                                   |                                  |            
|                                                    | Operating
      income (loss), basic(3)                  |                                  | 0.33       
|                                                    | Income
      (loss) from continuing operations, basic(3) |                                  | 0.15       
|                                                    | Net
      income (loss), basic(3)                        |                                  | 0.10       
|                                                    | Net
      income (loss), diluted(3)                      |                                  | 0.10       
|                                                    | Dividend
      per share(3)(4)                           |                                  | 0.07       

|    |                                                                                                                                                                                                                                                                                                                                                                                                  
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(1) | 2003 financial data have been adjusted due to the decision not to sell a subsidiary previously reported as discontinued.                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                  
|(2) | 2002 and 2001 financial data have been adjusted to exclude the impact of discontinued operations.                                                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                  
|(3) | Per share data have been adjusted for the 20-for-1 stock split that occurred on May 26, 2000 and have been further adjusted by a factor of 0.93254, reflecting the distribution
of preferential subscription rights to our shareholders, following our share offering with preferential subscription rights, which we sometimes refer to as a rights offering, that occurred on October 19, 2004.
|    |                                                                                                                                                                                                                                                                                                                                                                                                  
|(4) | These amounts reflect the dividend accrued for the year indicated, including, for 2003 and prior years, the                                                                                                                                                                                                                                                                                      

|4
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| | French avoir fiscal (before deduction of any French withholding tax). Actual payment of the annual dividend for each fiscal year occurs following our annual meeting of shareholders in the subsequent year. For an explanation of the French avoir fiscal, see Item 10. Additional Information TaxationFrench taxationTaxation of Dividends on Shares Avoir Fiscal  Tax Credit and Précompte 25% Equalization Tax beginning on page 79 and TaxationTaxation of U.S. investorsTaxation of dividends beginning on page 81.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        

|                                      | As of December 31,                        |            
|------------------------------------- | ----------------------------------------- | -----------
|                                      |                                           |            
|                                      | 2004                                      |            
|                                      |                                           |            
|                                      | (in millions of euros, except share data) |            
|                                      |                                           |            
|                                      |                                           |            
|Consolidated Balance Sheet Data:      |                                           |            
|Current assets                        |                                           | 1,980      
|Total assets                          |                                           | 3,973      
|Financial Debt(3)                     |                                           | 803        
|Shareholders
      Equity            |                                           | 1,154      
|Number of shares
      outstanding(4) |                                           | 421,398,323

|   
|---
|   
|(1)
|   
|(2)
|   
|(3)
|   
|(4)

|                                                                                                                                                                                                                                                                                                                                                                                                  
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exchange rate information
Euro into U.S. dollars.The exchange rate for the euro against
the U.S. dollar at June 27, 2005 was 1.00 to $1.2152 at the noon buying rate. (Source: Federal
Reserve Bank of New York.) The following table sets forth the high, low and average exchange
rates for the euro against the U.S. dollar in each of the last five years and in each of the last
six months.

|5
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|                     | High |        | Low |  | Average (1) | 
|-------------------- | ---- | ------ | --- |  | ----------- | 
|                     |      |        |     |  |             | 
|Euro to U.S. Dollar: | ($)  |        | ($) |  | ($)         | 
|May 2005             |      | 1.2936 |     |  | 1.2349      | 
|April 2005           |      | 1.3093 |     |  | 1.2819      | 
|March 2005           |      | 1.3465 |     |  | 1.2877      | 
|February 2005        |      | 1.3274 |     |  | 1.2773      | 
|January 2005         |      | 1.3476 |     |  | 1.2954      | 
|December 2004        |      | 1.3625 |     |  | 1.3224      | 
|2004                 |      | 1.3625 |     |  | 1.1801      | 
|2003                 |      | 1.2597 |     |  | 1.0361      | 
|2002                 |      | 1.0485 |     |  | 0.8594      | 
|2001                 |      | 0.9535 |     |  | 0.8370      | 
|2000                 |      | 1.0335 |     |  | 0.8270      | 

|   
|---
|   
|(1)

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
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|3.B  Capitalization and indebtedness
Not
applicable.
3.C  Reasons for the offer and use of proceeds
Not applicable.
3.D  Risk factors
You
should carefully consider all of the information set forth in this annual report and in the following
risk factors. The risks below are not the only ones we face. Additional risks not currently known
by us or that we currently deem immaterial may also significantly impair our business operations.
If any of the following risks actually occurs, our business, prospects, financial condition, results
of operations, ability to service and re-finance debt and ability to pay expected dividends to shareholders
could be materially adversely affected. In any such case, the market price of our shares and our
American Depositary Shares, or ADSs, could decline and you could lose all or part of your investment
in our company. This annual report also contains forward-looking statements that involve risks and
uncertainties. Our results could materially differ from those anticipated in these forward-looking
statements as a result of various factors, including the risks we face as described below and elsewhere.
See Forward-Looking Statements on page 1.
Our operating results are highly susceptible to economic conditions, and a downturn in the overall
economy or our industry could seriously harm our performance.
The
amount of money that companies spend for advertising and communications services to promote their
brands, products and services is highly sensitive to fluctuations in general economic conditions.
During economic downturns, companies may find that expenditures on advertising and communications
services are easier to reduce than other expenses related to their operations. As a result, we have
found that our industry may experience a disproportionately adverse impact from a downturn in the
overall economy. In addition, we may face increased pricing pressure during economic downturns.
In
each of 2001 and 2002, the downturn in the overall economy was accompanied by a severe drop in demand
for services in our industry, which had a material adverse affect on our results of operations for
each year. Weakness in demand for our services continued in 2003. Although demand for our services
in 2004 improved substantially, we cannot assure you that the conditions in our industry and the
overall economy will continue to improve in 2005, or that a further decline in our industry or the
economy, or economic disruption or uncertainty resulting from geopolitical events or terrorist attacks
or similar events, will not have a material adverse affect on our prospects, business, financial
condition or results of operations.
We have substantial scheduled debt payments
and may need to refinance some of our debt at maturity.
As of December 31, 2004, the total principal
amount of our outstanding financial debt, which consisted of short-term and long-term bank debt,
two series of convertible and/or exchangeable bonds, and capitalized lease

|6
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|obligations, was approximately 803.2 million. Based on the bonds outstanding at December
31, 2004 from our two series of convertible and/or exchangeable bonds, and assuming no conversion,
exchange or repurchase prior to maturity, we will be required to pay 221.2 million when the
first series matures on January 1, 2006 and an additional 468 million when the second series
matures on January 1, 2009. Our cash flow from operations may not be sufficient to meet these required
payments of principal and interest. We may be required, therefore, to refinance our existing debt,
the terms of which might not be as favorable as the terms of existing debt, if we are able to refinance
our existing debt at all. If principal, premium and interest payments due at maturity on any of our
financial debt cannot be refinanced, extended or paid with proceeds of other capital transactions,
including new equity capital, our cash flow from operations may not be sufficient in all years to
repay all maturing debt.
A continuing default under our credit facilities
could result in the acceleration of payment under various of our other debts.
At December 31, 2003 and 2002, we were
not in compliance with financial ratios under two of our credit facilities, for an aggregate principal
amount of 22.6 million and 33.8 million, respectively. At June 30, 2004, we were not
in compliance with financial ratios under one of our credit facilities for an aggregate principal
amount of 9.6 million. As of December 31, 2004, we were in compliance with all financial
ratios. Although our credit facility banks have waived any default with respect to the past noncompliance,
if they do not grant a waiver in the event of future noncompliance, these defaults could trigger the acceleration of payment
under one or more of our credit facilities. Such an acceleration could result in the acceleration
of payment under our convertible and/or exchangeable bonds due January 1, 2009, which had an aggregate
principal amount and interest of 472.6 million at December 31, 2004. In the event of such an
acceleration under our credit facilities and our convertible and/or exchangeable bonds, we may be
unable to meet our obligations under those debts.
Our typical contracts provide clients with the right to cancel for any reason, which has enabled clients
to move freely to other agencies, and which has resulted and may continue to result in lost revenues.
Our clients typically have the right to
cancel contracts with us for any reason upon prior written notice, usually ranging from 90 days to
180 days. Clients are also generally free to move from one agency to another with relative ease.
As is typical in the advertising and communications services industry, we have lost or resigned client
accounts and assignments in the past for a variety of reasons, including conflicts with newly acquired
clients, and we may continue to lose or resign client accounts in the future for similar or other
reasons. In addition, clients generally are able to reduce advertising and communications services
spending or cancel projects at any time for any reason. Sometimes our clients may withdraw their
products from the market or they may be restricted in their ability to advertise and promote their
products because of regulatory requirements. We may not successfully replace revenues stemming from
clients that leave or significantly reduce their spending on advertising and communications services.
Any loss of one or more of our largest clients could harm our results of operations, slow our growth
and cause a decline in our revenues.
We may be unable to collect balances due from any client that files for bankruptcy or becomes insolvent.
We generally provide advertising and communications
services to our clients in advance of our receipt of payment. The invoices for these services are
typically payable within 30 to 60 days. In addition, we commit to media and production purchases
on behalf of some of our clients. If one or more of our clients files for bankruptcy, or becomes
insolvent or otherwise is unable to pay for the services we provide, we may be unable to collect
balances due to us on a timely basis or at all. In addition, in that event, media and production
companies may look to us to pay for media purchases and production work to which we committed as
an agent on behalf of these clients.
On July 21, 2002, WorldCom, Inc., one of
our clients, now known as MCI, Inc., filed for reorganization under Chapter 11 of the United States
Bankruptcy Code. We provide both advertising and marketing services and media services to MCI. With
respect to media, we had outstanding pre-bankruptcy petition media receivables of approximately $26.4
million as of December 31, 2003 and in parallel, we had outstanding pre-bankruptcy petition media payables for the media space reserved on behalf of MCI of approximately $26.9 million as of December
31, 2003. With respect to commissions and advertising production work, we had outstanding pre-bankruptcy
petition
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--------------------------------------

|7
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|receivables of approximately $10.4 million in our financial statements as of December 31, 2003
and 2002, which were fully reserved as of December 31, 2002.
On August 4, 2003, we entered into an agreement

to compromise the pre-bankruptcy amounts due to us. Under its terms, the agreement became effective

upon MCI emerging from U.S. Chapter 11 protection. The agreement provided for the payment of a
certain
portion of the amount due to us. As a consequence, in 2003 we reversed $6.6 million of
the $10.4
million reserve that we recorded in our financial statements at December 31, 2002.
On April 20, 2004, MCI emerged from bankruptcy

and the agreement became effective. On May 26, 2004, MCI paid us $14.3 million pursuant to the
agreement.
We have distributed a substantial portion of the amount received from MCI to media and
production
vendors. Consequently, as of December 31, 2004, we offset the remaining receivables
against the payables
in our financial statements in a residual amount of $18 million.
We may need to make further impairment
charges, which could have an adverse impact on our reported earnings.
During 2002, we recorded significant goodwill
impairment charges and, in 2003, we recorded additional impairment charges. As of December 31, 2004,
there was approximately 1,827.1 million of goodwill and other intangible assets on our balance
sheet. We periodically evaluate the realizability of all of our goodwill and other intangible assets.
Future events, including strategic decisions of our company, could cause us to conclude that impairment
indicators exist and that the asset values associated with a given operation have become impaired.
Any resulting impairment loss would have an adverse impact on our reported earnings in the period
of such charge.
We are facing increased competition from
existing multinational advertising and communications services companies as well as new competitors
in related industries, which may harm our performance.
The advertising and communications services
industry is highly competitive, and we expect it to remain so. Our principal competitors in the advertising,
communications services and related businesses are other large multinational advertising and communications
services companies, as well as numerous smaller agencies that operate only in a small number of local
markets, regions or countries. In addition, with respect to media planning and media buying activities,
we compete with divisions of other large multinational advertising and communications services companies
as well as specialized media buying and planning companies. We also encounter competition from some
consulting firms that have developed practices in marketing and communications. New competitors also
include smaller companies such as systems integrators, database marketing and modeling companies
and telemarketers, which offer technological solutions to marketing and communications issues faced
by clients. As a result of the increasingly competitive environment, we may lose clients and potential
clients to our competitors, which would negatively affect our growth and harm our business.
We have lost client accounts in the past
and may continue to lose accounts in the future as a result of clients periodically conducting competitive
reviews of their accounts, which may cause our revenues to decline and our business to suffer. For
example, in February 2005 we lost our second biggest client, Intel Corporation, following a competitive
review.
In the advertising and communications services
industry, some clients require agencies to compete for business periodically. We have lost client
accounts in the past as a result of such periodic open competitions. For example, in February 2005
we lost our second biggest client, Intel Corporation, following a competitive review. To the extent
that our existing clients continue to require us to participate in open competitions to maintain
accounts, it increases the risk of losing those accounts, which losses may harm our business and
reduce our revenues.
If we fail to attract and retain qualified
key creative, research, media and account personnel, our operating results may suffer.
Our success depends significantly on the
skills of our creative, research, media and account personnel and their relationships with our clients.
These employees may resign from their positions at any time. Many of these
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|8
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|employees may be difficult to replace. If we lose one or more key personnel, we may not be able to
find suitable replacements and we may lose important clients, which may negatively affect our ability
to sustain and grow our business. In addition, since demand among advertising and communications
services companies for qualified personnel is very high, to retain our personnel we may have to increase
the salaries, bonuses, fringe benefits and other compensation we offer to them, which may negatively
affect our operating results.
The loss of services of one or more
key management personnel may adversely affect our ability to manage and coordinate our diverse group of businesses, which could harm our performance.
We depend on the services of our senior
management team to manage and coordinate the global activities of our three principal operating divisions
and to implement our business strategies. The services provided by our senior management team are
critical to our success, and the members of our senior management team may be difficult to replace.
The members of our senior management team may resign from their positions at any time.
On June 21, 2005, our board of directors brought to an end
Mr. Alain de Pouzilhacs term of office as our Chairman and Chief Executive
Officer, replacing him with
Mr. Richard Colker, one of our directors, as our
interim Chairman and Chief Executive Officer. While our board of directors will
engage immediately in a search for a new Chairman and Chief Executive Officer
for our Company, there can be no assurance about the length of time that the
search process may take, how effective it might be or how effective a new
Chairman and Chief Executive Officer may be. As is often the case in times of
transition, additional members of our management team may resign from their
positions. Loss of the
services of one or more members of our senior management team could seriously disrupt our ability
to manage and coordinate effectively the global activities of our three principal operating divisions
and to implement our business strategies, and may adversely affect our ability to retain key clients.
An important component of our business
strategy has been external growth through acquisitions, which involves numerous risks and could result
in shareholder dilution.
We acquired more than 40 companies in 1999,
more than 35 companies in 2000 and more than 20 companies in 2001. Although the pace of our acquisitions
slowed substantially from 2001 though 2004, we intend to continue to pursue acquisitions in the future
to enhance our capabilities and expand our geographic reach. Acquisitions involve a number of risks,
including:
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

| |  | the difficulty of integrating the activities, technologies and service offerings of the acquired businesses;                
| | - | ----------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                             
| |  | the diversion of our managements resources to difficult integration issues rather than the other aspects of our businesses;
| |   |                                                                                                                             
| |  | the management of physically and culturally distant and diverse entities;                                                   
| |   |                                                                                                                             
| |  | the possible loss of key personnel in the businesses acquired;                                                              
| |   |                                                                                                                             
| |  | the failure of acquired companies to perform as expected; and                                                               
| |   |                                                                                                                             
| |  | the loss or resignation of business due to client conflicts.                                                                

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Failure to overcome these risks or other
problems encountered in any of our acquisitions could negatively impact our growth or lower the quality
of our services, which could reduce customer demand and harm our revenues and operating results.
In addition, we may pay the purchase price
for some of our acquisitions by issuing Havas shares or ADSs, which could result in dilution to our
current shareholders. We may also incur additional debt and contingent liabilities and recognize
increased amortization or impairment expenses related to goodwill and other intangible assets in
connection with our acquisitions, which could negatively affect our financial condition and our operating
results.
Fluctuations in the exchange rates between the
euro and the various currencies in which we conduct business may adversely affect our operating results
and the value of our ADSs.
We record the revenues and expenses of
our local operations in their home currencies and translate these amounts into euro. As a result,
fluctuations in foreign currency exchange rates in markets where we derive

|9
|-



|significant revenues or have significant operations may adversely affect our revenues, expenses and
results of operations as well as the value of our assets and liabilities as reported in euro. Fluctuations
may also adversely affect the comparability of period-to-period results. For example, the value of
the U.S. dollar has declined in relation to the euro over the last three years and at December 31,
2004 and 2003 was approximately 6.9% and 16.8% lower than its value to the euro at the beginning
of 2004 and 2003, respectively. Since each U.S. dollar converted to fewer euro, our revenue expressed
in euro has correspondingly been lower during this period. In addition, the currencies of many Latin
American countries, including Argentina, Brazil and Mexico in particular, have experienced substantial
devaluation and volatility in the past.
Moreover, a decline in the following values
may adversely affect the value of our ADSs:
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

| |  | the U.S. dollar equivalent of the euro trading price of our shares in France, which may consequently cause the trading price of our ADSs in the United States also to decline; 
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                
| |  | the U.S. dollar equivalent of the proceeds that a holder of our ADSs would receive upon the sale in France of any of our shares withdrawn from the depositary for the ADSs; and
| |   |                                                                                                                                                                                
| |  | the U.S. dollar equivalent of cash dividends paid in euro on our shares represented by the ADSs.                                                                               

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Political
and economic instability in Latin American, Asia-Pacific and other international markets may disrupt
our operations and adversely affect our results.
We
derived approximately 8% of our revenues in 2004 from Latin American and Asia-Pacific markets, and
the portion of our revenues from these markets may increase in the future. Both Latin America and
the Asia-Pacific region have experienced periods of political and economic instability, historically
as well as recently, and experience has shown that negative economic or political developments in
one country in a region can lead to or exacerbate economic or political crises elsewhere in the region,
and at times, the global economy. If these conditions were to re-occur, our business could be adversely
affected.
Further,
our current or future international operations are subject more generally to risks relating to, and
might not succeed for a number of reasons, including:
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

|                                                                                         |  | difficulties in staffing and managing foreign operations, as well as in implementing uniform cross-border
information technology systems;
|---------------------------------------------------------------------------------------- | - | -----------------------------------------------------------------------------------------------------------------------------------------
|                                                                                         |   |                                                                                                                                          
|                                                                                         |  | operational issues such as longer customer payment cycles and greater difficulties in collecting accounts
receivable;                    
|                                                                                         |   |                                                                                                                                          
|                                                                                         |  | seasonal reductions in business activity;                                                                                                
|                                                                                         |   |                                                                                                                                          
|                                                                                         |  | language and cultural differences;                                                                                                       
|                                                                                         |   |                                                                                                                                          
|                                                                                         |  | taxation issues;                                                                                                                         
|                                                                                         |   |                                                                                                                                          
|                                                                                         |  | unexpected changes in trading policies and regulatory requirements;                                                                      
|                                                                                         |   |                                                                                                                                          
|                                                                                         |  | issues relating to uncertainties of laws and enforcement relating to the regulation and protection
of intellectual property; and         
|                                                                                         |   |                                                                                                                                          
|                                                                                         |  | general political and economic trends.                                                                                                   
|                                                                                         |   |                                                                                                                                          
|Holders of our ADSs may have limited ability to influence the governance of our company.

|10
|--



|Holders of our ADSs may have less ability
to influence the governance of our company than direct holders of our shares. Holders of our ADSs
may not receive voting materials in time from our depositary to ensure that they can instruct the
depositary to vote their shares. In addition, our depositarys liability to holders of our ADSs
for failing to carry out voting instructions or for the manner of carrying out voting instructions
is limited by contract.
If holders of our shares or ADSs fail to
comply with the legal notification requirements under French law or our bylaws, they could be deprived
of some or all of their voting rights and be subject to a fine, which could discourage a takeover
of our company.
French law requires any person who acquires
more than 5%, 10%, 20%, one-third, one-half or two-thirds of our outstanding shares or voting rights
to file a report with us within five trading days of crossing the threshold percentage. Any person
acquiring more than 10% or 20% of our share capital or voting rights must include in the report a
statement of the persons intentions relating to future acquisitions or participation in the
management of our company for the following 12-month period. If any shareholder fails to comply with
this notification requirement under French law, the shares or voting rights in excess of the relevant
notification threshold will be deprived of voting power for up to two years on the demand of any
interested party who has suffered a loss. In addition, all or part of the shareholders voting
rights may be suspended for up to five years by the French commercial court, and the shareholder
may be subject to a fine at the request of our chairman, any of our shareholders or the French Autorité
des Marchés Financiers, which we refer to as the AMF.
Under our bylaws, which we refer to in
France as our statuts, any person who becomes a direct or indirect holder of at least 2%, or any multiple of 2%, of our outstanding
shares or voting rights must provide written notice to us within 15 days after such threshold is
crossed. At the request of any one or more of our shareholders owning at least 5% of our share capital,
any shareholder that fails to provide this required notice may be deprived of the voting rights for
all shares in excess of the relevant notification threshold for up to two years and be subject to
a fine.
These requirements and the consequences
of any failure to abide by them could have the effect of discouraging or preventing a change in control
of our company.
Regulatory restrictions in various countries
in which we operate restrict specific types of services we offer to clients, which may harm our revenue
and operating results.
Our agencies are located in numerous countries

with different levels of governmental regulation relating to the advertising and communications
services
industry, including laws or regulations that:
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

| |  | prohibit various practices in our industry;                                                                                         
| | - | ------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                     
| |  | restrict the media, content, form or duration of advertising;                                                                       
| |   |                                                                                                                                     
| |  | restrict the collection, use and disclosure of personal information;                                                                
| |   |                                                                                                                                     
| |  | assess fees, taxes or tariffs on advertisements;                                                                                    
| |   |                                                                                                                                     
| |  | allow individuals or classes of individuals to bring legal action against companies for allegedly violating laws and regulations; or
| |   |                                                                                                                                     
| |  | otherwise harm our business, financial condition and operating results.                                                             

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|For
example, in France, media-buying activities are subject to specific regulations following the adoption
in 1993 of Law No. 93-122, known as the Loi Sapin. The Loi Sapin profoundly redefined
long-standing practices in the media industry in France and in particular the traditional role of
advertising agencies. Since the introduction of the Loi Sapin, advertising agencies in France are
no longer able to purchase advertising space from media providers and then resell the space on different terms to advertisers. In addition, media providers
must bill advertisers directly for advertising space and agencies cannot receive any commissions
or discounts directly from

|11
|--



|media providers. The Loi Sapin has had in the past, and we expect that
it will continue to have, a significant negative financial impact on our media-buying activities
in France.
As another example, in some of the markets

in which we operate, including the United States, there are laws and regulations that impose significant

liabilities upon advertisers and advertising agencies for false or misleading advertising. If any

advertising that we create is found to be false or misleading, we could face potential liability.
As another example, laws and regulations

in the European Union, the United States and a number of U.S. states limit the collection, use
and
disclosure of personal information, including personal information regarding Internet users,
students,
minors and personal health matters. Due to our substantial marketing services business,
which relies
on the collection and use of personal information, these laws and regulations, and
any future laws
and regulations, may substantially harm our operations or significantly reduce
our revenues from
marketing services.
Laws and regulations in France, the United
States and other of our significant markets affecting our services could place us at a competitive
disadvantage relative to other advertising and communications services companies having a larger
portion of their business conducted in countries with less regulation of our industry.
Civil liabilities or judgments against
our company or our directors or officers based on U.S. federal or state securities laws may not be
enforceable in the U.S. or in France.
Holders of our shares or ADSs may not be
able to effect service of process within the United States upon our directors and officers and our
outside auditors. As a result, it may not be possible to enforce, in U.S. courts, judgments against
these persons or against our company based on any civil liability provisions of the U.S. federal
or state securities laws. In addition, civil liabilities based on U.S. federal or state securities
laws may not be enforceable against our company and our directors and officers in France. If an original
action is brought in France, based solely on U.S. federal or state securities laws, French courts
may not have the necessary jurisdiction to grant the remedies sought. Actions for enforcement in
France of judgments of U.S. courts rendered against these French persons would require them to waive
their right under the French Civil Code to be sued only in France. We believe that none of these
French persons has waived this right with respect to actions based solely on the U.S. federal or
state securities laws.
We are subject to corporate disclosure
standards in the U.S. that are less demanding than those applicable to some U.S. companies.
As a French company, we are not required
to comply with the notice and disclosure requirements of the Exchange Act relating to the solicitation
of proxies for shareholders meetings. Although we are subject to the periodic reporting requirements
of the Exchange Act, the periodic disclosure required of non-U.S. companies under the Exchange Act
is more limited than the periodic disclosure required of U.S. companies. Therefore, there may be
less publicly available information about our company than is regularly published by or about other
public companies in the United States.
We will be obligated to adopt new
accounting standards in 2005 that may have a material impact on our French financial statements and
may render a comparison between financial periods more difficult.
In June 2002, the European Union
adopted new regulations requiring all listed EU companies, including Havas, to apply International
Financial Reporting Standards, which we refer to as IFRS, in their financial statements from January
1, 2005. The IFRS norms may have a material impact on important items in our French financial statements,
which could have a material adverse affect on our share price.
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|12
|--



|Recent events affecting
the ownership of our shares and affecting our directors and officers may be
disruptive to our company and may put us at a disadvantage with respect to our
competitors, which could harm our business.


During
2004 and 2005, Bolloré Médias Investissements and its predecessors acquired beneficially
26.8% of our outstanding shares (including 16,929,649 shares beneficially owned
by Sebastian Holdings Inc. which may be considered to be beneficially owned by
Bolloré Médias Investissements according to a Schedule 13D
(Amendment No. 4) filed with the Securities and Exchange Commission on June 16,
2005 by, among others, Mr. Vincent Bolloré, Bolloré Médias
Investissements and Bolloré Investissement). In its Déclaration dIntention filed
with the AMF on June 16, 2005, Bolloré Médias Investissements updated its
intentions declared on January 4, 2005 for a period of 12 months. It indicated that it is
legally presumed to be acting in concert with Vincent Bolloré and companies that he
controls and from June 9, 2005 with Sebastian Holdings Inc., that it intends to maintain
or reinforce its participation without intending to take control of our company alone or
in concert, and that the four directors proposed by Bolloré Group were elected to
our board of directors. In filings with the Securities and Exchange Commission made by Bolloré Investissement,
acting on its behalf and on behalf of Bolloré Médias Investissements, and by
Sebastian Holdings Inc., those companies stated that they had entered into two agreements
on June 9, 2005, one in which they agreed to, among other things, cooperate in the future
with respect to strategic decisions concerning our company, and the second agreement in
which Mr. Bolloré and Sebastian Holdings Inc. agreed that Sebastian Holdings Inc.
may appoint one of the representatives of one of the two legal entities (Bolloré
Investissement and Bolloré Médias Investissements) proposed by
Bolloré Group that was elected to our board of directors at our
shareholders meeting on June 9, 2005. On June 21, 2005, our new board of
directors met and brought to an end Mr. Alain de Pouzilhacs term of office
as our Chairman and Chief Executive Officer, replacing him with Mr. Richard
Colker as interim Chairman and Chief Executive Officer, assisted by a team of
three directors, Messrs. Ed Eskandarian, Fernando Rodés Vilà and
Jacques Séguéla who will have interim responsibility for the
executive functions of our company.
Any perceived uncertainty about the future of our management team, the intentions of
Bolloré Médias Investissements and Sebastian Holdings Inc., or about the
intentions of the four newly elected directors to our board of directors proposed by Bolloré Group, with respect to
the strategic direction or business practices of our company may be of concern to our
current and potential new clients and our current and potential new employees and thereby
may put us at a disadvantage with respect to our competitors, which could harm our
business.

Market sales of Havas shares by Bolloré
Médias Investissements, or the perception that such sales could occur, may adversely affect
the price of Havas shares and ADSs.
Bolloré Médias Investissements beneficially owned
approximately 26.8% of our outstanding shares as of June 16, 2005. In its
Déclaration dIntentionfiled with the AMF on January 4, 2005,
Bolloré Médias Investissements indicated that it may increase or
decrease its share ownership in the future depending on market opportunities and
the evolution of its relations with our management. In a
Déclaration dIntention filed with the AMF on June 16, 2005,
however, Bolloré Médias Investissements indicated that it intends to
maintain or reinforce
its share ownership. Sales of significant amounts of Havas shares or ADSs
in the market, or the perception that such sales may occur, could cause a reduction in the price
of our shares or ADSs.
ITEM 4.  INFORMATION ON THE COMPANY
Overview
We are a global advertising and communications
services company. With our headquarters located in Suresnes, France two operating divisions headquartered in
the United States and the third headquartered in Spain, we believe that we bring a multicultural
approach to our business that distinguishes us from other major advertising and communication services
companies. Through our three operating divisions, we offer a broad range of communications services,
including integrated communications, traditional advertising, direct marketing, media planning and
buying, healthcare advertising and communications, corporate communications, internal communications,
sales promotion, design, television sponsorship, human resources, multimedia interactive communications
and public relations. We have operations in 77 countries through our agencies located in 44 countries
throughout Europe, North America, the Asia-Pacific region and Latin America, as well as contractual
affiliations with agencies in 33 additional countries.
We conduct our business primarily through
the following three principal operating divisions:
Euro RSCG Worldwide.  From its divisional headquarters in New York, Euro RSCG Worldwide manages our principal international
brandEuro RSCG Worldwideand operates our global network of agencies in Europe, North
America, Latin America and the Asia-Pacific region. Through this network, Euro RSCG Worldwide offers
integrated communications services encompassing a broad range of advertising and communications services.
Media Planning Group.  With its divisional headquarters in Barcelona, Media Planning Group provides media planning
and buying services to its clients and operates primarily in Europe, North America, Latin America
and the Asia-Pacific region.
Arnold Worldwide Partners.  Arnold Worldwide Partners has its divisional headquarters in Boston and offers primarily traditional
advertising services to clients through agencies located in the United States, Europe, Canada, Australia
and China. Arnold Worldwide Partners emphasizes creativity in advertising and marketing techniques
and seeks to establish a strong local identity in the markets it serves.
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|13
|--



|Although our company is organized into
three principal operating divisions, we conduct our operations primarily through the following significant
subsidiaries:
|---------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                               

|Name                           |  | Country of formation |  | Our Ownershipand Voting Interest
|------------------------------ |  | -------------------- |  | --------------------------------
|Havas                          |  | France               |  | 100.00%                         
|Havas International            |  | France               |  | 100.00%                         
|Euro RSCG                      |  | France               |  | 100.00%                         
|Euro RSCG C&O                  |  | France               |  | 99.13%                          
|BETC Euro RSCG                 |  | France               |  | 100.00%                         
|Media Planning Publicidade SA  |  | Portugal             |  | 100.00%                         
|Media Planning Group SA        |  | Spain                |  | 100.00%                         
|Havas UK Ltd                   |  | U.K.                 |  | 100.00%                         
|Euro RSCG London Ltd           |  | U.K.                 |  | 100.00%                         
|Herts Tring UK Ltd             |  | U.K.                 |  | 100.00%                         
|Havas Shared Services Ltd      |  | U.K.                 |  | 100.00%                         
|The Maitland Consultancy Ltd   |  | U.K.                 |  | 93.57%                          
|Snyder Communications Holdings |  | U.K.                 |  | 100.00%                         
|Havas North America, Inc       |  | U.S.                 |  | 100.00%                         
|Euro RSCG Healthview, Inc      |  | U.S.                 |  | 100.00%                         
|Euro RSCG Worldwide, Inc       |  | U.S.                 |  | 100.00%                         
|Euro RSCG New York, Inc        |  | U.S.                 |  | 100.00%                         
|Euro RSCG Direct Response LLC  |  | U.S.                 |  | 71.48%                          
|Impact  Group Euro RSCG LLC    |  | U.S.                 |  | 100.00%                         
|Havas Holdings, Inc            |  | U.S.                 |  | 100.00%                         
|Arnold Worldwide LLC           |  | U.S.                 |  | 100.00%                         

|                                                                                                                                            
|--------------------------------------------------------------------------------------------------------------------------------------------
|The following chart depicts the organizational structure of our principal subsidiaries and agency groups, organized by country of operation:
|                                                                                                                                            

|
|

|                                                                                                                                                                                                                                                                                                                                 
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Our total revenues were 1,449 million, 1,525
million and 1,811 million for 2004, 2003 and 2002, respectively, adjusted to exclude the impact
of discontinued operations.
The table below sets forth a breakdown
of our revenues by geographic region, expressed as a percentage of our total revenues for 2004, 2003
and 2002.

|14
|--



|Percentage of Revenue by Geographic Region
|------------------------------------------
|                                          

|Geographic Region(1)(2)    |  | 2004 |  |  | 2003 |  |  | 2002 | 
|-------------------------- |  | ---- |  |  | ---- |  |  | ---- | 
|                           | 
|North America              |  | 40%  |  |  | 42%  |  |  | 44%  | 
|Europe (excluding France ) |  | 31%  |  |  | 33%  |  |  | 32%  | 
|France                     |  | 21%  |  |  | 17%  |  |  | 16%  | 
|Asia Pacific               |  | 4%   |  |  | 4%   |  |  | 4%   | 
|Latin America              |  | 4%   |  |  | 4%   |  |  | 4%   | 

|   
|---
|   
|   
|(1)
|   
|(2)
|   

|We operate in a single category of activity,
advertising and communications services.
History and development of our business
Our company is a société anonyme, a form of corporation organized under the French Commercial Code. Our registered office is located
at 2 allée de Longchamp, 92281 Suresnes Cedex, France, and the telephone number of our office
is +33-1-58-47-90-00. Under our bylaws, our corporate existence terminates on July 15, 2050 unless
extended by the approval of our shareholders at a meeting of shareholders.
We were incorporated in 1968 under the
name Havas Conseil. At that time, our sole shareholder was Havas S.A., a French
media group. Havas S.A.s shareholding declined over time, from 100% in 1968, to approximately
45% in 1972, to approximately 31% in 1998 and to 0% in June 2001. Havas S.A. was acquired by
Vivendi Universal in 1998 and is now known as Vivendi Universal Publishing.
In 1982, our shares were first listed on
Euronext Paris S.A., previously known as the Paris Bourse, which is the French national stock exchange.
Our shares have traded on the Premier Marchéof Euronext Paris S.A., which is the principal trading market for securities in France, since May 1985.
Our ADSs began trading on the Nasdaq National Market System on September 27, 2000.
At the time of our original incorporation,
our business activity was concentrated in France and was focused on traditional advertising and media
buying services. Since the mid-1970s, we have expanded our business significantly, both geographically
and in terms of the breadth of services that we offer. Our expansion has been achieved through internal
growth and the selective acquisition of complementary agencies. Over the last twelve years, the portion
of our total revenues derived outside of France has increased from approximately 52% in 1992 to 79%
in 2004.
Over the past thirteen years, we have made
a number of significant changes to our organization that we believe have substantially expanded our
geographic reach, the scope of our services, and our positioning in an increasingly global market.
These changes have included the following:
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

| |  | In 1992, we acquired the RSCG Group, then a major French advertising group, and merged its RSCG network into our own Eurocom network to create Euro RSCG Worldwide. We chose to merge these two networks to create a single organization with an expanded global reach and an enhanced offering of services. The combination created what we consider to be a world class network capable of accommodating our clients in their local, regional and international businesses.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |  | In 1997, we moved the divisional headquarters of Euro RSCG Worldwide from Paris to New York. This has allowed us to move closer to U.S. advertisers and to the U.S. advertising market, which                                                                                                                                                                                                                                                                                    

|15
|--



| |   | Zenith Optimedia recently estimated to account for 45% of worldwide advertising expenditures in 2004. In addition, we believe our introduction of worldwide branding and a global network linking all members of Euro RSCG Worldwide has raised the level of cooperation among the agencies comprising the Euro RSCG Worldwide network and provided us with greater capabilities in servicing global clients.                                                                                                                                                                                                                                                                                                                                                                                                      
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |  | Beginning in late 1998, we embarked on a strategic acquisition plan to expand and consolidate our businesses and services in various markets worldwide. This resulted in a large number of acquisitions in North America, Europe, South America and the Asia-Pacific region from late 1998 through early 2001. See Principal acquisitions and divestitures below.                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |  | In 1999, we created a new media planning group by combining the media planning and buying activities of Media Planning, S.A., a Spanish company, with our then existing media planning business. We initially acquired 45% of this new group and subsequently acquired the remaining 55% in May 2001. We believe that operating our media planning and buying activities as separate entities rather than solely as departments within our agencies is the most effective structure to capitalize on growth opportunities in the media business. By combining our media planning and buying activities with those of Media Planning, S.A., we believe that we have created a powerful network of media expertise that has the management skills and resources necessary to compete in the media market.            
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |  | In 2000, we acquired Snyder Communications, Inc., a U.S.-based provider of direct marketing, advertising and communications services.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |  | In 2003, we completed a strategic reorganization of our business operations designed around two global networks, Euro RSCG Worldwide for integrated communications and Media Planning Group for media expertise, and a creative force in key strategic countries, Arnold Worldwide Partners. This strategic reorganization was accomplished by integrating almost all of our marketing services companies into Euro RSCG Worldwide to reinforce its integrated communications services offering, selling or closing a number of companies engaged in activities outside our core areas of competence or that otherwise did not fit into our new organization, and refocusing Arnold Worldwide Partners on offering highly creative communications solutions on a local basis in the countries in which it operates.

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|On May 23, 2002, we changed our corporate
name from Havas Advertising to Havas by resolution of our shareholders at
our annual meeting of shareholders. In connection with the change of our corporate name, we also
changed our Nasdaq National Market ticker symbol to HAVS and our web address to http://www.havas.com. Neither our web site nor any information contained on or accessible from our web site shall be deemed
to be a part of this annual report on Form 20-F or incorporated by reference herein.
Principal acquisitions and divestitures
One of the elements of our business strategy
is the targeted expansion and consolidation of our businesses and services in various markets worldwide.
The rate of our acquisitions slowed substantially beginning in 2001 as we reacted to the deterioration
in the global economy and our industry. Acquisition activity has been focused on strengthening our
integrated communications and media expertise, primarily through expansion of the geographic scope
and service offerings of our existing networks.
The total consideration paid in connection
with these acquisitions, including acquisition costs, was approximately 2,360 million in 2000,
636 million in 2001, 22 million in 2002, 12 million in 2003, and 10 million
in 2004.
Over the past three years, we have disposed
of a number of companies, some of which we acquired as part of the Snyder Communications acquisition.
We determined that these companies were engaged primarily in activities outside of our core areas
of competence, were not strategic investments, did not meet our financial performance criteria or
otherwise did not fit into our organization. We disposed of 11 companies in 2001 for a total of approximately
7 million, six companies in 2002 for a total of approximately 3 million, two companies
in 2003 for

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|a total of approximately 8 million, and 26 companies in 2004, for a total of approximately 68
million, in each case net of disposal costs. Substantially all of the companies sold in 2003 and
2004 were disposed of as part of our strategic reorganization announced in the third quarter of 2003.
See Strategic reorganization below.
Business strategy
Our long-term business strategy is to continue
our development into one of the leading global advertising and communications groups with levels
of revenue growth and profitability that are comparable to the best among our principal competitors.
To accomplish this development, we have identified the following key goals:
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                

| |  | Grow revenues from existing clients by capitalizing on opportunities to provide integrated communications;                                                                                                                                                                   
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                              
| |  | Focus on attracting and serving new clients, particularly multinational clients, through an emphasis on coordinating the worldwide efforts of our constituent advertising, media planning and buying, interactive, corporate communications and marketing services agencies; 
| |   |                                                                                                                                                                                                                                                                              
| |  | Expand and consolidate our positions in various markets, including through targeted acquisitions or strategic alliances to take advantage of opportunities to increase the geographic scope and service offerings of our existing networks;                                  
| |   |                                                                                                                                                                                                                                                                              
| |  | Maintain a multicultural approach to our business to better respond to client needs and to attract and retain key personnel; and                                                                                                                                             
| |   |                                                                                                                                                                                                                                                                              
| |  | Improve our financial performance by controlling costs, including through a consolidated purchasing initiative, a rationalization of our holding company and divisional headquarters structures, and a reinforced emphasis on improving operating margins and free cash flow.

|                                                                                               
|-----------------------------------------------------------------------------------------------
|Advertising and communications services
We offer the following principal products
and services:
|                                                                                               

| |  | Integrated communications.  Integrated communications services consist of coordinating traditional advertising services with marketing, interactive, corporate communications and other communications services.                                                                                                                                                                                                               
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                
| |  | Traditional advertising.  Traditional advertising services consist of defining the nature, content and target audience of an appropriate advertising message for the promotion of brands, products or services; creating work product; advising clients in the choice of media to disseminate creative work product; and monitoring the effectiveness of the advertising message and work product through studies and research.
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                
| |  | Direct marketing.  Direct marketing services consist of providing communications, such as direct mail, and related database support that are designed to develop and maintain a measurable contact between the message sender and the receiver.                                                                                                                                                                                
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                
| |  | Media planning and buying.  Media planning and buying services consist of optimizing the efficiency of advertisements by determining the media best suited for reaching the largest and most targeted sample of readers, listeners or viewers and planning and buying media for advertisers.                                                                                                                                   
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                
| |  | Corporate communications.  Corporate communications services consist of providing communications relating to a company, such as annual reports to stockholders, that are intended to make the company better known or improve its image to stockholders, suppliers or the financial markets.                                                                                                                                   
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                
| |  | Internal communications.  Internal communications services consist of providing communications for use within an organization, such as communications designed to disseminate important                                                                                                                                                                                                                                        

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| |   |                                                                                                                                                                                                                                                                             
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   | information or to motivate employees.                                                                                                                                                                                                                                       
| |   |                                                                                                                                                                                                                                                                             
| |  | Sales promotion.   Sales promotion services consist of designing communications that aim to induce consumer purchasing, promote consumer loyalty, increase consumer interest in a product or react to competitive pressures.                                                
| |   |                                                                                                                                                                                                                                                                             
| |  | Design.  Design services are intended to increase the sales of products or services through the design of products themselves, their packaging, the visual identity of companies or the architecture of business establishments.                                            
| |   |                                                                                                                                                                                                                                                                             
| |  | Television sponsorship.  Television sponsorship services are a relatively recent communications specialty and consist of associating a brand or a product to a television program.                                                                                          
| |   |                                                                                                                                                                                                                                                                             
| |  | Human resources.  Human resources services are a specialty provided to companies for their hiring, training, promotion and related internal communications.                                                                                                                 
| |   |                                                                                                                                                                                                                                                                             
| |  | Multimedia interactive communication.Multimedia interactive communication services consist of providing communications using on-line, off-line and interactive multimedia.                                                                                                  
| |   |                                                                                                                                                                                                                                                                             
| |  | Public relations.  Public relations services consist of providing news releases and other communications, and organizing events, to foster a positive understanding of a client and its brands, products or services or to highlight newsworthy events regarding the client.

|                                                                                                                                                                                                                                                                                                                                                                                                                                 
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Strategic reorganization
In the fourth quarter of 2003, we completed
a strategic reorganization of our business operations. Our management believes that the strategic
reorganization has significantly improved our financial performance following the prolonged downturn
in the global economy, and in the advertising and communications services industry in particular,
and has reinforced and improved our performance in:
|                                                                                                                                                                                                                                                                                                                                                                                                                                 

| |  | Delivering high quality integrated communications services to our clients;      
| | - | --------------------------------------------------------------------------------
| |   |                                                                                 
| |  | Developing new business globally, regionally and locally; and                   
| |   |                                                                                 
| |  | Retaining and attracting qualified creative, research, media and account talent.

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|At the time that the strategic reorganization
was announced in the third quarter of 2003, our business was organized into three operating divisions
and a number of specialized agencies that reported directly to our Paris headquarters. By the end
of 2003, a new organization was in place based on two global networks, Euro RSCG Worldwide for integrated
communications and Media Planning Group for media expertise, and a creative force in key strategic
countries, Arnold Worldwide Partners. As a result of the strategic reorganization:
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

| |  | Nearly all of our specialized agencies have been either integrated into Euro RSCG Worldwide or Media Planning Group or, where we determined that they were engaged primarily in activities outside of our core areas of competence, were not strategic investments, did not meet our financial performance criteria or otherwise did not fit into our new organization, they have been sold or closed.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                                                                                       
| |  | A small number of companies within Euro RSCG Worldwide and Arnold Worldwide Partners that we determined were engaged primarily in activities outside of our core areas of competence, were not strategic investments or otherwise did not fit into our new organization have been sold or closed.                                                                                                     
| |   |                                                                                                                                                                                                                                                                                                                                                                                                       
| |  | Almost all of the marketing services agencies that were previously part of Arnold Worldwide Partners have been integrated into Euro RSCG Worldwide. Arnold Worldwide Partners is now refocused on offering highly creative, integrated, idea-driven communication solutions on a local basis in the countries in which it operates.                                                                   

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|For more information on our strategic reorganization,
please see Item 5. Operating and Financial Review and ProspectsOverviewStrategic
Reorganization and Restructuring Plan on page 24.
Organization into three operating divisions
As a result of our strategic reorganization,
our business is now organized into three operating divisions. Set forth below is a summary of each
of these three operating divisions.
Euro RSCG Worldwide
Our Euro RSCG Worldwide division was founded
in 1992 and is our largest operating division and our principal international brand. Since its formation,
the division has progressively expanded into an international network of agencies. This has been
accomplished primarily through acquisitions of independent local agencies around the world. As of
April 30, 2005, Euro RSCG Worldwide had operations in 75 countries through agencies located in 44
countries throughout Europe, North America, Latin America and the Asia-Pacific region, as well as
contractual affiliations with agencies in 31 additional countries.
Euro RSCG Worldwide offers a broad range
of advertising and communications services organized as integrated communications services that combine
traditional advertising and marketing services to support both local and international clients through
its international network of agencies. These services include: integrated communications, traditional
advertising, direct marketing, healthcare advertising and communications, corporate communications,
internal communications, sales promotion, design, multimedia interactive communications and public
relations.
Euro RSCG Worldwides objective is
to provide Creative Business Ideas® to its clients developed through a focus on what we refer
to as the Prosumer, information-empowered, influential consumers who set the pace of the marketplace.
This approach focuses on providing creative ideas not just designed to address clients specific
advertising and communications needs, but also to transform the clients businesses. By bringing
together marketing, communications and technological expertise, and a business approach modeled on
the new behaviors of influential Prosumers, Euro RSCG focuses on developing and implementing strategies
across clients businesses with the goal of adding value and profitability to clients
brands across countries and cultures. To deliver Creative Business Ideas® to clients, Euro RSCG
endeavors to structure its client relationships so that ideas can be channeled through the entire
communications process by a global account team that focuses on delivering integrated marketing and
communications strategies.
In 2002, Euro RSCG Worldwide began an internal
reorganization designed to provide a more integrated multi-disciplinary offering of services to its
clients, which it calls the Power of One. The Power of One brings together agencies in
different disciplines in the same geographic region into one business unit with one set of objectives
and management incentives linked to those objectives. By the end of 2004, Power of One integrated
business units had been implemented in the United States, France, the United Kingdom, and over 20
other countries, as well as in Euro RSCG Life, Euro RSCG Worldwides healthcare marketing unit.
Euro RSCG Worldwide believes that this
new integrated organization is a positive factor in attracting new business and developing business
from existing clients.
Media Planning Group
In recent years, the media services industry
has been affected by the increasing segmentation of the media and audiences, the increasing importance
of high technology and the increasingly global needs of clients. In response to these changes, we
decided to reorganize our media operations as a separate, autonomous operating company, with the
size, geographic reach, expertise and dedicated management we believe is required to succeed in the
industrys new environment. Accordingly, we combined our then existing media planning business
with Media Planning, S.A., a private Spanish-based media specialist, in October 1999. We initially
acquired a 45% equity interest in Media
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|19
|--



|Planning, S.A., which then changed its name to Media Planning Group S.A. In May 2001, we acquired the
remaining 55% of Media Planning Group.
Media Planning Group offers a broad range
of media expertise, including media strategy, media planning and buying, market research and efficiency
measurement, strategic communications development, and interactive and online advertising through
the following three specialized networks:
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                          

| |  | Media Planning, an international media agency network specializing in the planning and purchase of traditional media, as well as the execution of marketing and media strategies.                                                                                                                                                                                
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                                                  
| |  | Media Contacts, an international network specializing in Internet-related media services, including the planning and purchase of online media, the formation of online partnerships, the creation of e-mail marketing campaigns, the implementation of customer relationship management solutions and the design of interactive television advertising campaigns.
| |   |                                                                                                                                                                                                                                                                                                                                                                  
| |  | Arena, an integrated planning network providing communications consulting services across a broad range of media platforms.                                                                                                                                                                                                                                      

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|In addition, Media Planning Group also
includes Havas Sports, an agency created in June 1999 to offer sports marketing services to sports
institutions, federations, clubs, broadcasters and advertisers.
Media Planning Group, which is headquartered
in Barcelona, currently operates in 49 countries through agencies in 22 countries throughout Europe,
North America, Latin America and the Asia-Pacific region, as well as contractual affiliations with
agencies in 27 additional countries.
In the media services industry, we believe
larger media services firms can often leverage their size by obtaining more favorable terms for media
purchases for their clients and are also better able to analyze for their clients the effects of
their planning and purchasing of media due to their greater resources. As a result of these considerations,
Media Planning Group currently intends to continue its growth by consolidating its positions in Europe,
Latin America and North America, and by expanding into new markets in the Asia-Pacific region, primarily
through strategic alliances with, or acquisitions of, local media planning and buying companies,
and/or global or regional joint ventures or strategic alliances with global media planning and buying
companies, with the objective of being able to match Euro RSCG Worldwides global coverage by
the end of 2005.
Arnold Worldwide Partners
Following our acquisition of Snyder Communications in 2000, we combined Snyder Communications
Arnold Communications advertising agency with our then existing Campus network and moved
the headquarters of the operating division from Paris to Boston to create Arnold Worldwide
Partners. Arnold Worldwide Partners consists of a small number of agencies in the United
States, Europe, Canada, Australia and China. These agencies, located in seven countries, primarily
focus on traditional advertising services, emphasize creativity in advertising and marketing techniques
and seek to establish a strong local identity in the markets they serve. We believe that Arnold Worldwide
Partners agencies provide high quality creative work. In 2004, Arnold Worldwide Partners lead
agency in Boston was ranked as the third most awarded advertising agency in the U.S. by Creativity Magazine, and as the ninth most creative advertising agency in the world by the Gunn Report, for the number
of prizes and awards its work received in 2004.
Seasonality
Our business is subject to seasonal effects
and we have generally experienced the greatest level of business in the fourth quarter of each year
and, to a lesser extent, the second quarter of each year.

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|Competition

The advertising and communications services
industry is highly competitive, and we expect it to remain so. At the holding company level, our
principal competitors are other large multinational advertising and communications services companies,
including WPP Group, The Interpublic Group of Companies, Omnicom Group, Publicis Groupe, and Dentsu.
The actual competition for clients, however, generally takes place at the agency level. Our principal
agency networks in the advertising industry are Euro RSCG Worldwide and Arnold Worldwide Partners,
which compete with other similar multinational agencies and networks of agencies, including McCann-Erickson
Worldwide, BBDO Worldwide, J. Walter Thompson Company, Grey Worldwide, DDB Worldwide Communications,
Young & Rubicam, Ogilvy & Mather Worldwide, Leo Burnett Worldwide and Publicis Worldwide,
as well as numerous smaller agencies that operate only in a small number of local markets, regions
or countries. In addition, for media planning and buying clients, we compete with divisions of other
large multinational advertising and communications groups, as well as specialized media buying and
planning companies.
We compete with these other companies and
agencies to maintain existing client relationships and to obtain new clients and assignments. In
addition, some clients require agencies to compete for business periodically. We believe that we
compete principally on the basis of the following factors:
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

| |  | quality and breadth of services;                 
| | - | -------------------------------------------------
| |   |                                                  
| |  | geographic coverage and diversity;               
| |   |                                                  
| |  | creative reputation;                             
| |   |                                                  
| |  | knowledge of media;                              
| |   |                                                  
| |  | experience and expertise in interactive services;
| |   |                                                  
| |  | relationships with clients; and                  
| |   |                                                  
| |  | size and financial resources.                    

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|We also encounter competition from some
consulting firms that have developed practices in marketing and communications services. New competitors
also include smaller companies such as systems integrators, database marketing and modeling companies
and telemarketers, which offer technological solutions to advertising and communications issues faced
by clients. In addition, the trend among multinational companies towards consolidation of global
accounts also has required us and other companies seeking to compete effectively in the international
advertising and communications services industry to make significant investments. These investments
include additional offices and personnel around the world, through acquisitions or otherwise, and
new and improved technology for linking these offices and people.
Intellectual property
In May of 2002, we purchased all rights
held by Vivendi Universal Publishing to the Havas trademark, except for specified derivative
names of Havas, including Havas Voyages, for 4.6 million. Before that time,
we licensed the use of the name Havas Advertising from Vivendi under annual license agreements.
The name Havas is registered, or is in the process of being registered, in 95 countries
and the European Union.
We also have trademark protections for
each of our three divisional names. Our Euro RSCG Worldwide name is a registered trademark
owned by us and is registered, or is in the process of being registered, in 107 countries. Our Arnold
Worldwide name is a registered trademark owned by us and registered in the U.S. Our Arnold
Worldwide Partners name is a registered trademark owned by us and is registered, or is in the
process of being registered, in seven countries and the European Union. Our Media Planning
Group name is a registered trademark owned by us and is registered, or is in the process of
being registered, in 23 countries and the European Union.

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|Government regulation
Our agencies are located in numerous countries

with different levels of governmental regulation relating to the advertising and communications
services
industry, including laws or regulations that:
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                            

| |  | prohibit various practices in our industry;                                                               
| | - | ----------------------------------------------------------------------------------------------------------
| |   |                                                                                                           
| |  | restrict the media, content, form or duration of advertising;                                             
| |   |                                                                                                           
| |  | restrict the collection, use and disclosure of personal information;                                      
| |   |                                                                                                           
| |  | assess fees, taxes or tariffs on advertisements;                                                          
| |   |                                                                                                           
| |  | allow individuals to bring legal action against companies for allegedly violating laws and regulations; or
| |   |                                                                                                           
| |  | otherwise harm our business, financial condition and operating results.                                   

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|For example, in France, media-buying activities
are subject to specific regulations following the adoption in 1993 of Law No. 93-122, known as the
Loi Sapin. See Item 3Risk FactorsRegulatory restrictions in various countries
in which we operate restrict specific types of services we offer to clients, which may harm our revenue
and operating results.
As another example, in some of the markets

in which we operate, including the United States, there are laws and regulations that impose significant

liabilities upon advertisers and advertising agencies for false or misleading advertising. If any

advertising that we create is found to be false or misleading, we could face potential liability.
As another example, laws and regulations

in the European Union, the United States and a number of U.S. states limit the collection, use
and
disclosure of personal information, including personal information regarding Internet users,
students,
minors and personal health matters. Due to our substantial marketing services business,
which relies
on the collection and use of personal information, these laws and regulations, and
any future laws
and regulations, may substantially harm our operations or significantly reduce
our revenues from
marketing services.
Properties
We lease, and in a few locations own, office
space in various cities in which we do business throughout the world.
In April 2003, we relocated our headquarters
to Suresnes, France, where we leased approximately 228,000 square feet of space for our principal
corporate office and various of our agencies. The lease expires on February 21, 2012. Our previous
headquarters were located in Levallois-Perret, France, where our principal corporate office and various
of our agencies occupied approximately 246,000 square feet. Our lease at Levallois-Perret expired
on April 30, 2003.
Our Arnold Worldwide division headquarters
is located in Boston, Massachusetts, where the division and various of its agencies occupy approximately
200,700 square feet. The lease expires on August 31, 2014.
Our Euro RSCG Worldwide division headquarters
is located in New York, New York, where the division and various of our agencies occupy approximately
137,900 square feet. The lessee under the lease is one of our wholly owned subsidiaries and our company
has guaranteed this subsidiarys obligations under the lease. The lease expires on December
31, 2007.
Our Media Planning Group division headquarters
are located in Barcelona, Spain, where the division and various of our agencies occupy approximately
18,740 square feet. Of this space, the division owns approximately 2,350 square feet and leases approximately
16,389 square feet. The lease expires on October 23, 2005. Upon expiration of the lease, the division
has a right to purchase this space for nominal consideration.

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|In addition to these leases, we have entered
into leases for our principal offices located in the United States, the United Kingdom, France and
over 40 other countries in which we do business. In the United States, we lease office space in over
20 cities. The leases for our U.S. offices expire on various dates ranging from July 2005 to December
2016. In the United Kingdom, we lease office space in over 11 cities. Our U.K. leases expire on various
dates ranging from October 2005 through December 2018. In France, we lease office space in over 10
cities. Our French leases expire on various dates ranging from January 2006 to November 2016.
We believe that all of our facilities are
suitable for their use, and that we generally have sufficient space for our existing needs and expected
near-term growth.
Marketing channels
We market our services, including our integrated
communications services, primarily by evaluating the advertising and communications needs of our
clients and prospective clients and by demonstrating to our clients and prospective clients how we
propose to meet those needs. Our development of strong brands and a global reputation are key elements
of our marketing strategy.
ITEM 5.  OPERATING AND FINANCIAL REVIEW AND PROSPECTS
The following discussion of our results
of operations and financial condition should be read together with our consolidated financial statements
and the accompanying notes included elsewhere in this annual report. When comparing performance between
years, we sometimes discuss non-GAAP financial measures such as organic revenue growth.
OVERVIEW
We are a holding company. We conduct our
business primarily through our three operating divisions, Euro RSCG Worldwide, Media Planning Group
and Arnold Worldwide Partners. Through these operating divisions, we offer a broad range of advertising
and communications services, including integrated communications, traditional advertising, direct
marketing, media planning and buying, healthcare advertising and communicaitons, corporate communications, internal communications, sales promotion,
design, television sponsorship, human resources, multimedia interactive communications and public
relations. We have operations in 77 countries through our agencies located in 44 countries throughout
Europe, North America, the Asia-Pacific region and Latin America, as well as contractual affiliations
with agencies in 33 additional countries. We provide these services to a wide variety of clients,
and are not significantly dependent on any single client or industry group. We operate in one reportable
business segment, advertising and communications services.
Globally, over the past few years, our
industry has continued to be affected by lagging economic conditions, geopolitical unrest, lack of
consumer confidence and cautious client spending. All of these factors contributed to a difficult
business environment and industry-wide margin contraction. We continued to experience difficult economic
conditions even as the industry began to improve in late 2003. In response to these difficult conditions,
we implemented a financial restructuring and a strategic reorganization plan in 2003 to strengthen
our integrated communications capability, simplify our organizational structure and significantly
reduce our cost structure. As part of our strategic reorganization, we closed or sold a number of
companies during 2003 and 2004 that were not engaged primarily in activities within our core areas
of competence, were not strategic investments, did not meet our financial performance criteria or
otherwise did not fit into our new organization. These companies, together with a small number
of other companies we sold in 2004, had aggregate net revenues in 2004 and 2003 of approximately 51.6 million
and 157.4 million, respectively, of which 45.1 million and 152.1 million respectively, is reflected in discontinued operations.
During 2004, as a result of substantially
improved industry conditions and the positive effects of the successful implementation of our restructuring
and reorganization plan, our financial performance improved significantly. Compared with 2003, our
net revenue for 2004 declined by 5%, primarily due to the effects of continued weakness in the U.S. dollar
in relation to the euro. On a constant currency basis, this decline amounted to 1%.
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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|However, our net revenue grew by 2.7% on an organic basis compared with 2003. In addition, our operating
margin improved significantly in 2004.
When we discuss amounts on a constant currency
basis, the prior period results are adjusted to remove the impact of changes in foreign currency
exchange rates during the current period that are being compared to the prior period. The impact
of changes in foreign currency exchange rates on prior period results is removed by converting the
prior period results into euro at the average exchange rate for the current period. Our management
believes that discussing results on a constant currency basis allows for a more meaningful comparison
of current-period results to such prior-period results.
We derive organic revenue change for a
specified period by adjusting reported revenue for the prior period by:
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

| |  | excluding the impact of foreign currency effects over the course of the period to provide revenues on a constant currency basis, as described in the preceding paragraph;                                                                                                                                                                                                        
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                                                                  
| |  | excluding the impact of acquisitions, sales and closures, including closures of departments within companies, that were completed after the first day of the prior period by adding the pre-acquisition revenues of acquired businesses to, and subtracting the pre-sale or pre-closure revenues of sold or closed businesses or departments from, the prior period revenues; and
| |   |                                                                                                                                                                                                                                                                                                                                                                                  
| |  | comparing the resulting adjusted prior period revenue to the reported revenue for the specified period.                                                                                                                                                                                                                                                                          

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
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|Our management believes that discussing
organic revenue, excluding the effects of the above factors, provides a better understanding of our
revenue performance and trends than reported revenue because it allows for more meaningful comparisons
of current-period revenue of our ongoing operations to that of prior periods. Our management also
believes that organic revenue determined on a generally comparable basis is a common measure of performance
in the businesses in which we operate.
Significant events for us during 2004 included:
Capital Increase
In October 2004, we completed a rights
offering in which we issued a total of 122.5 million new shares, representing a capital increase
of approximately 40% compared with our previously outstanding share capital, yielding net proceeds
of 388.9 million. As a result of this capital increase, our strong operating results, and continued
strict controls on our investments, our net debt at December 31, 2004 decreased by 39.9% to 803.2
million compared with December 31, 2003.
Re-Purchases of Convertible and/or Exchangeable
Bonds Due on January 1, 2006
In December 2004, we re-purchased and cancelled
a total of 17,570,404 of our convertible and/or exchangeable 1% bonds, maturing on January 1, 2006.
We paid an average price of 25.17 per bond for a total purchase price of approximately 442.3
million. As a result of these re-purchases, we recorded a loss of 8.7 million. We believe that
this transaction significantly improved our financial flexibility by reducing our refinancing needs
in 2006.
Strategic Reorganization and Restructuring
Plan
In the fourth quarter of 2003, we completed
the strategic reorganization of our business operations that we announced in September 2003. We initiated
the strategic reorganization to strengthen our integrated communications capability, to simplify
our organizational structure, and to promote greater synergies among our agencies by refocusing our
activities around our two global networks, Euro RSCG Worldwide and Media Planning

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|Group, and our creativity-focused division, Arnold Worldwide Partners. Our management believes that
the strategic reorganization has helped improve our financial performance, and reinforced and improved
our performance in delivering high quality services to our clients, developing new business globally,
regionally and locally, and retaining and attracting qualified creative, research, media and account
talent.
As part of our strategic reorganization,
we sold or closed a number of companies that were not engaged primarily in activities within our core
areas of competence, were not strategic investments, did not meet our financial performance criteria
or otherwise did not fit into our new organization. Most of the significant sales and closures occurred
during the course of 2004, although one company was sold and another eight companies were closed
in 2003. These companies, together with a small number of other companies we sold in 2004, had aggregate
revenues in 2004 and 2003 of approximately 51.6 million and 157.4 million, respectively, of which 45.1
million and 152.1 million, respectively, is reflected in discontinued operations.
During the third and fourth quarters of
2003 continuing into early 2004, we also implemented a restructuring plan, primarily in the United
States and the United Kingdom, to reduce costs through headcount reduction and real estate restructuring.
For 2003, we recorded approximately 92.4 million in pre-tax restructuring and other charges
relating to this worldwide restructuring, including 37.8 million to restructure our real estate
lease obligations and 39.3 million to reduce our headcount by approximately 1,150. As of December
31, 2004, reserves associated with this restructuring program were 37.8 million.
Personnel positions were eliminated
or identified for elimination by December 31, 2003. A remaining reserve balance of approximately
3.1 million reflects costs relating to severance and other termination benefits to be settled
in 2005.
The remaining balance in occupancy and
facilities-related reserves of 33.9 million at December 31, 2004 relates to non-cancelable
lease commitments in excess of estimated sublease income for abandoned facilities that will be paid
out over the remaining lease periods. In 2004, we recorded an additional expense of 15.2 million
corresponding to the completion of the plan (the space was identified to be vacated but not yet vacant
at December 31, 2003). We also recorded income of 4.5 million in 2004 due to a 2004 decision
to sublease to some of our subsidiaries part of the UK space left vacant at December 31, 2003.
Discontinued Operations
Our discontinued operations had a pre-tax
loss from operations of 2.9 million for 2004 in the aggregate. We recorded an aggregate loss
on disposal of 75.9 million in 2003 relating to companies we targeted for sale or cessation
of operations in our strategic reorganization and worldwide restructuring program. In 2004, this
amount was restated due to a decision not to sell one of the companies initially included in the
disposal plan related to our strategic reorganization. Consequently, the aggregate loss on disposal
recorded in 2003 has been adjusted to 66.5 million. In 2004, we recorded an additional loss
on disposal of 9.8 million, due primarily to lower sales prices for some of the disposals than
initially expected.
Acquisition of Significant Shareholding
by Bolloré Médias Investissements
During 2004 and 2005, Bolloré Médias Investissements
and its predecessors acquired beneficially 26.8% of our outstanding shares (including
16,929,649 shares beneficially owned by Sebastian Holdings Inc. which
may be considered to be beneficially owned by Bolloré Médias
Investissements according to a Schedule 13D (Amendment No. 4) filed with the
Securities and Exchange Commission on June 16, 2005 by, among others, Mr.
Vincent Bolloré, Bolloré Médias Investissements and Bolloré
Investissement). In its
Déclaration dIntentionfiled with the AMF on June 16, 2005,
Bolloré Médias Investissements updated its intentions disclosed on
January 4, 2005 for a period of 12 months. It indicated that it is legally presumed
to be acting in concert with Vincent Bolloré and companies that he
controls and from June 9, 2005 with Sebastian Holdings Inc., that it intends to
maintain or reinforce its participation without intending to take control of our
company alone or in concert, and that the four directors proposed by Bolloré
Group were elected to our board of directors at our shareholders meeting on June 9, 2005.
 According to a Schedule 13D filed by Sebastian Holdings Inc. and Mr. Alexander
M. Vik with the Securities and Exchange Commission on June 17, 2005,
Bolloré Investissement, acting on its behalf and on behalf of Bolloré
Médias Investissements, and Sebastian Holdings Inc. entered into an
agreement on June 9, 2005 in which they agreed to act in concert with respect
to the voting of their Havas shares at our annual meeting of shareholders on
June 9, 2005 and to cooperate in the future with respect to strategic decisions
concerning our company, including with respect to issues to be considered by our
board of directors. Pursuant to the terms of this agreement,
Bolloré Investissement received a right of first refusal with respect to
any sale of the Havas shares beneficially owned by Sebastian Holdings Inc.,
and, if either party believes that the parties cooperation is no longer a
valid option, Sebastian Holdings Inc. received the right to put all of, or a
portion that constitutes a majority of, the Havas shares it beneficially owns
to Bolloré Investissement
at a price of 5 per share. The term of this agreement is two years. In a
second agreement entered into on June 9, 2005, Mr. Bolloré and Sebastian
Holdings Inc. agreed that it will be possible for Sebastian Holdings Inc.s
participation on our board of directors to take place through the
appointment of one of the representatives of one of the two legal entities
(Bolloré Investissement and Bolloré Médias
Investissements) that had been proposed by Bolloré Médias
Investissements and elected to our board of directors. According
to the Schedule 13D, Sebastian Holdings Inc. has declined for the present time
Mr. Bollorés invitation to appoint one of the representatives of the
two legal entities that had been proposed by Bolloré Médias
Investissements and elected to our board of directors.
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|Management Changes
In January 2004, Jim Heekin was appointed
as Chairman and Chief Executive Officer of Euro RSCG Worldwide. He replaced Bob Schmetterer, who
retired as of December 31, 2003 after 33 years in the industry. Before joining Euro RSCG Worldwide,
Mr. Heekin was Chairman and Chief Executive Officer of McCann-Erickson WorldGroup, part of The Interpublic
Group of Companies, Inc., having been promoted to that position in March 2000, after serving as Chairman
and Chief Executive Officer of McCann-Erickson Worldwide from January 2000 to March 2000.
As part of our reorganization, we have
made various other appointments and changes to our management within our operating divisions. Our
reorganization was designed to simplify our management, while refocusing it on certain specific responsibilities,
including, among others, finance, talent management, client development, innovation, creativity and
efficiency and productivity.

Finally, on June 21, 2005, our new board of directors met following our
shareholders meeting on June 9, 2005 and brought to an end Mr. Alain de
Pouzilhacs term of office as our Chairman and Chief Executive Officer,
replacing him with Mr. Richard Colker as interim Chief Executive Officer,
assisted by a team of three directors, Messrs. Eskandarian, Rodés
Vilà and Séguéla, who will have interim responsibility for
the executive functions of our company pending the recruitment of a new Chairman
and Chief Executive Officer.

OUTLOOK
Our results of operations are dependent
upon:
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|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                

| |  | maintaining and growing our revenue;               
| | - | ---------------------------------------------------
| |   |                                                    
| |  | retaining existing clients and gaining new clients;
| |   |                                                    
| |  | overall economic and industry conditions;          
| |   |                                                    
| |  | continuously aligning our costs to our revenue; and
| |   |                                                    
| |  | retaining and attracting key personnel.            
| |   |                                                    

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|For a discussion of these and other factors that could affect our results of operations and financial
conditions, see Forward-Looking Statements and Item 3. Key InformationRisk
Factors.
As discussed above, in 2004 our overall
financial performance rebounded substantially compared with 2003, although our organic revenue growth
continued to lag behind much of the industry.
Industry forecasters predict world advertising
expenditures in major media will increase by 5% in 2005 at current prices (Source: Zenith Optimedia).
Although we cannot assure you that this forecast ultimately will prove to be accurate, our management
believes that conditions for the industry as a whole in 2005 should continue to be favorable. We
have already achieved some notable successes in new account wins since the beginning of 2005. In
this positive environment, and in spite of the loss of one of our largest clients, Intel Corporation,
in February 2005, and the recent replacement of our Chairman and Chief Executive Officer with an interim
Chairman and Chief Executive Officer,
we remain confident about our prospects in 2005. Our objective is to continue the
positive development of our organic growth globally, particularly, to improve organic growth in the
U.S. and the U.K., and to further improve our profitability through new account wins, the development
of existing clients and a continuing emphasis on cost control.
We believe that a number of industry trends
have had and will continue to have a fundamental impact on our business and prospects. These trends
include:

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| |  | Continued client demand for integrated communications services, which consists of coordinating traditional advertising services with marketing, interactive, corporate communications and other communications services. In response to this trend, we reorganized Euro RSCG beginning in 2002 by bringing together agencies in different disciplines, such as advertising, marketing services, interactive and corporate communications, in the same geographic region, into one Power of One functional business unit having one set of objectives and management incentives;                                           
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |  | Globalization of many industries and the resulting globalization of the advertising and communications services industry and polarization of our industry into a relatively small number of global networks and a large number of smaller local and regional agencies. We have pursued, and continue to pursue, a strategy of expanding and consolidating our positions in various markets, including through targeted acquisitions or strategic alliances to take advantage of opportunities to increase the geographic scope and service offerings of our existing networks in response to this trend;                    
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |  | Continued fragmentation of media audiences and proliferation of media channels, increasing the opportunities to reach consumers, but also increasing the complexity of doing so. As a result of this trend, we continue to invest in market research and efficiency measurement tools and techniques, primarily through Media Planning Group;                                                                                                                                                                                                                                                                               
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |  | Growth of marketing services, as the rapid development of new communications technologies has enabled advertisers to reach their intended audiences using means that are more targeted than traditional mass marketing. In response to this trend, we expanded our marketing services capabilities over the past several years primarily through acquisitions, including the acquisition of Snyder Communications in 2000, and, in 2004 we launched Euro RSCG 4D, a new global marketing services brand integrating under one banner various marketing services agencies within Euro RSCG Worldwide;                        
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |  | Continued evolution of the Internet, interactive television and other emerging media as a new market for advertising and communications services. In response to this trend, we have expanded our multimedia interactive communications services over the past several years, including through acquisitions, such as the acquisition in 2001 of the Snyder Communications interactive professional services business, Circle.com;                                                                                                                                                                                          
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |  | Evolution of media planning and buying from an ancillary service within traditional advertising agencies into a specialized autonomous service. In response to this trend, we created a separate division, Media Planning Group, in 1999 to handle our media planning and buying activities. We believe that operating these activities as separate entities rather than as departments within our agencies is the most effective structure to capitalize on growth opportunities in the media business;                                                                                                                    
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |  | Pressure on fees, particularly as client procurement departments, as opposed to marketing departments, are increasingly involved in negotiating pricing. To counteract this trend, we have sought to increase revenues by expanding the geographic markets in which we represent, and the categories of services we provide to, our clients, to continually adapt our costs to the fees negotiated with our clients, and to attempt to negotiate fees that include incentives based on the effectiveness of our advertising and marketing campaigns; and                                                                    
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |  | Increasing demands by major international clients for exclusivity in their relationships with advertising and communications services groups, calling into question the traditional advertising holding company structure made up of multiple independent international networks representing clients with competing products and services within the same group. As a result of this trend, we decided to make Euro RSCG our unique global advertising agency network, with Arnold Worldwide Partners concentrating its efforts on developing a strong creative presence in local markets in a smaller number of countries.

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|SEASONALITY
Our business is subject to seasonal effects.
We have generally experienced the greatest level of business in the fourth quarter of each year and,
to a lesser extent, in the second quarter of each year. As a result, cash, accounts receivable, accounts
payable and accrued expenses are typically higher on our year-end balance sheet than at the end of
any of the preceding three quarters.
CRITICAL ACCOUNTING POLICIES, ESTIMATES AND JUDGMENTS
Our financial statements contained in this
report have been prepared in accordance with U.S. generally accepted accounting principles, which
we refer to as U.S. GAAP. The preparation of these financial statements requires estimates and judgments
that affect the reported amounts of assets, liabilities, revenue and expenses as well as the disclosure
of contingent assets and liabilities. Our significant accounting polices are described in the notes
to the financial statements. We believe that, of our significant accounting policies, the following
may involve a higher degree of judgment or complexity:
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|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

| |  | revenue recognition;                                                           
| | - | -------------------------------------------------------------------------------
| |   |                                                                                
| |  | allowances for doubtful accounts;                                              
| |   |                                                                                
| |  | restructuring charges;                                                         
| |   |                                                                                
| |  | contingent acquisition obligations;                                            
| |   |                                                                                
| |  | impairment of goodwill;                                                        
| |   |                                                                                
| |  | impairment of long lived assets and accounting for discontinued operations; and
| |   |                                                                                
| |  | deferred taxes.                                                                

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
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|Revenue recognition. Substantially all of our revenue is derived from fees and commissions for advertising
and communication services and for the planning and purchase of media. Revenue is recognized on the
date that the services are performed, costs are incurred for production and the media is aired or
published, and when collection is reasonably assured.
We generally record revenue at the
net amount retained when the fee or commission is earned. In the delivery of some services to our
clients, we incur costs on their behalf for which we are reimbursed. Substantially all of our reimbursed
costs relate to purchases on behalf of our clients of media and production services. We generally
have no latitude in establishing the reimbursement price for these expenses and invoice our clients
for these expenses in an amount equal to the amount of costs incurred. These reimbursement costs,
which are a multiple of our revenue, are significant. However, except in connection with the bankruptcy
of WorldCom, Inc., we have not historically experienced significant losses in connection with media
and production costs. See Item 8. Financial Information  Legal Proceedings  Bankruptcy
of WorldCom, Inc. beginning on page 66.
Some of our contractual arrangements with
clients also include performance incentives that allow us to receive additional payments based upon
our performance for the client, measured against specified qualitative and quantitative objectives.
We recognize the incentive portion of the revenue under these contractual arrangements when these
qualitative and quantitative goals are achieved in accordance with the arrangements.
Allowance for doubtful accounts. We maintain allowances for doubtful accounts for estimated losses that result from the
inability of our customers to make required payments. We base our allowances on the likelihood of
recoverability of accounts receivable based upon past experience, reviews of aging and analysis of
specific

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|accounts.  If economic or specific industry trends worsen beyond our estimates or any of our clients
financial condition becomes tenuous, we will increase our allowances for doubtful accounts by recording
additional expense.
Restructuring charges. During 2003, we recorded significant charges in connection with our strategic reorganization
and worldwide restructuring plan. The related reserves reflect many estimates, including those pertaining
to employee severance and other personnel-related costs and obligations under real estate leases,
net of estimated sublease income. We reassess the reserve requirements to complete our restructuring
plan at the end of each reporting period. Actual experience has been and may continue to be different
from these estimates. As real estate market conditions change, we may have further refinements in
the future, either upward or downward, to the original charge recorded. As of December 31, 2004,
reserves associated with our 2003 and 2001 restructuring programs were 37.8 million and 9.9
million, respectively. As of December 31, 2003, reserves associated with our 2003 and 2001 restructuring
programs were 59.7 million and 15.4 million, respectively. As of December 31, 2002, reserves
associated with our 2001 restructuring plan were 21.2 million. For more information, see Note
7 to our 2004 consolidated financial statements beginning on page F-15 of this annual report.
Contingent acquisition obligations. Certain of our acquisition contracts provide for contingent consideration based on earnings,
which we refer to as an earn-out. We utilize earn-out structures in an effort to minimize our risk
associated with potential future negative changes in the performance of the acquired company. In
addition, owners of interests in certain of our subsidiaries or affiliates have the right, in certain
circumstances, to require us to purchase their interests, which we refer to as a buy-out.
We currently estimate that the amount of
contingent future earn-out and buy-out payments we will be required to make for past acquisitions,
assuming the acquired companies perform over the relevant earn-out and buy-out periods at their current
profit levels, is 99.0 million as of December 31, 2004. The ultimate amounts payable are dependent
upon future results of the acquired companies. In accordance with U.S. GAAP, we do not record a liability
for these items on our balance sheets until the applicable contingency is resolved and the additional
payment is determinable. However, if the contingent consideration is conditioned on the employment
of any selling shareholder, we accrue compensation expense based on the estimated contingent payment.
Actual results for these companies may differ from our estimates, in which case the amounts we are
required to pay may be different than the amounts we estimate. These contingent obligations also
change from period to period as a result of earn-out or buy-out payments made during the current
period, changes in the previous estimate of the acquired companies performances, changes in
foreign exchange rates and the addition of new contingent obligations resulting from acquisitions
with earn-out or buy-out structures completed in the current period. These differences could be material.
See Liquidity and capital resources  Contractual obligations below.
Impairment of goodwill. Beginning on January 1, 2002, in accordance with the provisions of SFAS No. 142, Goodwill
and Other Intangible Assets, we ceased amortizing goodwill or excess basis related to equity-method
investments. Instead, we began testing intangible assets, including goodwill, at least annually for
impairment by comparing the fair value of our reporting units over their carrying values, in accordance
with SFAS No. 142. The fair value of the reporting units has been computed using the discounted
cash flow method, and is based on estimates of future earnings. Actual earnings may differ
from our estimates. The excess of the carrying amount over the fair value is deemed to be impaired
and is written off. In 2002, we completed the transitional and the first annual impairment tests
of goodwill and intangible assets with indefinite lives. As a result, we wrote off a total of 1,483.3
million of goodwill in 2002 of which 1,120.8 million was reflected as Cumulative effect
of accounting change as the last item on the 2002 consolidated statement of operations before
arriving at net income. In 2003, we wrote off 69.5 million of goodwill. There was no goodwill
impairment charge in 2004.
Impairment of long lived assets and accounting for discontinued operations. The long lived assets are reviewed for impairment whenever events or circumstances indicate their carrying
values may not be recoverable. Whenever such events or circumstances arise, an estimate of the future
cash flows is compared to the assets carrying value to determine if an impairment exists pursuant
to the requirements of SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived-Assets.
In accordance with SFAS No. 144, we include
in assets and liabilities held for sale and in discontinued operations the assets and liabilities
that meet certain criteria with respect to our plans for their sale or abandonment.
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|Depreciation and amortization cease when the asset meets the criteria to be classified as held for
sale. A components results of operations are presented as discontinued operations for all periods
if:
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|                                                                                                                                                                                                         

| |  | a planned or completed disposal involves a component of our company whose operations and cash flows can be distinguished operationally and for financial reporting purposes;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                             
| |  | such operations and cash flows will be (or have been) eliminated from our ongoing operations; and                                                                           
| |   |                                                                                                                                                                             
| |  | we will not have any significant continuing involvement in the component.                                                                                                   

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|Operating losses from discontinued operations
are recognized in the period in which they occur. Long-lived assets (or groups of assets and related
liabilities) classified as held for sale, are measured at the lower of carrying amount or fair value
less cost to sell.
Deferred taxes. We record deferred tax assets and liabilities using enacted tax rates for the effect of temporary differences
between the book and tax bases of assets and liabilities. If enacted tax rates change, we will adjust
our deferred tax assets and liabilities through the provision for income taxes in the period of the
change to reflect the enacted tax rate expected to be in effect when the deferred tax items reverse.
A one percentage point change in the enacted tax rates would increase or decrease net income by approximately
0.6 million.
In accordance with SFAS No. 109, Accounting
for Income Taxes, we record a valuation allowance on deferred tax assets when it is more likely
than not that all or a portion of deferred tax assets will not be realized. Forming a conclusion
that a valuation allowance is not needed is difficult when there is negative evidence such as cumulative
losses in recent years. Therefore, cumulative losses weigh much more heavily in the overall assessment.
In 2004, we determined that the positive evidence was not sufficient to overcome such negative evidence
and concluded that it was therefore appropriate to establish a full valuation allowance for our deferred
tax assets related to our U.S. and French tax groups. As of December 31, 2004, the valuation allowance
of these two tax groups amounted to 583.1 million. Nevertheless, we continue to believe that
our business will achieve profitability in future years, and that we will be able to utilize these
tax assets to minimize U.S. and French taxes in the future.
We base our estimates and judgments on
historical experience and other factors that we believe to be reasonable under the circumstances.
Actual results or outcomes may differ from these estimates.

New accounting pronouncements
In December 2004, the Financial Accounting Standards Board, which we refer to as FASB, issued
SFAS No. 123R, Share-based payment. This statement is a revision of SFAS No. 123, Accounting
for stock-based compensation, and establishes standards for the accounting for transactions
in which an entity exchanges its equity instruments for goods or services. This statement focuses
primarily on accounting for transactions in which an entity obtains employee services in share-based
payment transactions. The application of this statement is required as of the beginning of the first
annual reporting period that begins after December 15, 2005. The adoption of this statement will
have a significant effect on our results of operations that we are still in the process of assessing.
However, the adoption of this statement is not expected to have a material effect on our financial
position or cash flows.

RESULTS OF OPERATIONS
Our financial statements contained in this
report have been prepared in accordance with U.S. GAAP. When comparing performance between years,
however, we also discuss non-GAAP financial measures such as the impact that foreign currency rate
changes, acquisitions/ dispositions and organic growth have on reported results.
Explanation of Key Line Items
Net revenues. Substantially all of our revenue is derived from fees and commissions for advertising and communication
services and for the planning and purchase of media. Revenues are presented net of amounts that our
clients pay to us to cover costs that are incurred on their behalf with third parties, such as for
the purchase of television and radio time or print advertising space and production costs.
Compensation and related costs.   Our compensation costs consist principally of salaries, bonuses and benefits to employees. Compensation
costs do not include stock-based compensation. Compensation costs also do not include earn-out or
buy-out payments made or accrued to employees who were shareholders of businesses we acquired. See
Compensation to former shareholders of acquired businesses below. Compensation
costs include, however, all other compensation paid or payable to such individuals.

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|Compensation to former shareholders of
acquired businesses.  This item consists of earn-out and buy-out payments made or accrued to employees who were shareholders
of businesses we acquired, to the extent that such payments are conditioned on the continued employment
of those employees.
Goodwill and other intangible impairment.  Beginning on January 1, 2002, in accordance with the provisions of SFAS No. 142, Goodwill and
Other Intangible Assets, we no longer amortize goodwill or excess basis related to equity-method
investments, but rather we test these assets at least annually for impairment by comparing the fair
value of the reporting units over their carrying values. Since 2002, we have been applying SFAS No.
144, Accounting for the Impairment or Disposal of Long-Lived Assets, to the other intangibles
which require us to review the intangibles for impairment whenever events or circumstances indicate
their carrying values may not be recoverable. Therefore, since 2002, this item consists of the goodwill
impairment charge as determined at the end of the period as well as the other intangible impairment charge.
Discontinued Operations.  In accordance with SFAS No. 144, the results of operations of the businesses we sold or disposed
of as at December 31, 2004 have been reported as Discontinued in the current and prior
periods.
Restructuring and other charges.  These charges are associated with our strategic reorganization and worldwide restructuring plan in
2003 and our 2001 restructuring plan, and consist primarily of employee severance and other personnel-related
costs in connection with employee terminations, occupancy and facilities-related costs in connection
with asset write-downs and other charges related primarily to lease abandonment, lease terminations
and related exit costs.
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|Results of Operations
        The following table summarizes certain financial information for our company:
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|                                                                        | ( in millions, except
      per share amounts) | 
|----------------------------------------------------------------------- | ----------------------------------------------- | 
|                                                                        |                                                 | 
|                                                                        | 2004                                            | 
|                                                                        |                                                 | 
|Net
      revenues                                                      | 1,449                                           | 
|Operating
      expenses:                                               |                                                 | 
|Compensation
      and related costs                                    | (825)                                           | 
|Stock-based
      compensation                                          | (8)                                             | 
|General
      and administrative non-payroll costs                      | (456)                                           | 
|Compensation
      to former shareholders of acquired businesses        | (3)                                             | 
|Amortization
      of intangible assets                                 | (29)                                            | 
|Goodwill
      and other intangible impairment                          |                                                | 
|Restructuring
      and other charges                                   | (16)                                            | 
|Total
      operating expenses                                          | (1,337)                                         | 
|Operating
      income (loss)                                           | 112                                             | 
|Interest
      expense                                                  | (71)                                            | 
|Interest
      income                                                   | 16                                              | 
|Exchange
      rate gain (loss)                                         | 3                                               | 
|Net
      gain on trading securities                                    | 7                                               | 
|Other                                                                   | (7)                                             | 
|Financial
      expense-net                                             | (52)                                            | 
|Net
      income (loss) from operations before income tax               | 60                                              | 
|Provision
      for income tax                                          | (3)                                             | 
|Minority
      interests                                                | (8)                                             | 
|Equity
      in earnings of investees                                   | 1                                               | 
|Income
      (loss) from continuing operations                          | 50                                              | 
|Loss
      from discontinued operations (net of tax)                    | (17)                                            | 
|Net
      income (loss) before effect of change in accounting principle | 33                                              | 
|Cumulative
      effect of accounting change                            |                                                | 
|Net
      income (loss)                                                 | 33                                              | 
|Per
      common share basic and diluted:                               |                                                 | 
|Income
      (loss) from continuing operations                          | 0.15                                            | 
|Income
      (loss) from discontinued operations                        | (0.05)                                          | 
|Loss
      from cumulative effect of accounting change                  |                                                | 
|Net
      income (loss)                                                 | 0.10                                            | 

|31
|--



|The
following are some of the key factors that drove our financial results in 2004:
Operating Income (loss)
|-----------------------------------------------------------------------------------------------------------
|                                                                                                           

| |  | Organic net revenue increase, primarily as a result of increased demand for our advertising and communications services by our clients, although pressure on fee and commission rates by our clients continued;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                
| |  | Lower foreign exchange rates for 2004, primarily regarding the U.S. dollar versus the euro that resulted in lower euro revenue and expense compared with 2003;                                                 

|                      
|----------------------
|Other Financial Income
|                      

| |  | During 2004, we re-purchased and cancelled a total of 17,570,404 of our convertible and/or exchangeable 1% bonds, maturing on January 1, 2006. We paid an average price of 25.17 per bond for a total purchase price of approximately 442.3 million. As a result of these re-purchases, we recorded a loss of 8.7 million which is reflected as Other financial expense in the consolidated statements of operations.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                       
|-----------------------
|Discontinued Operations
|                       

| |  | In the fourth
quarter of 2003, we completed the strategic reorganization of our business
operations that was announced in September 2003. In accordance with SFAS No.
144, the results of the businesses sold by December 31, 2004 have been reported
as Discontinued in the current and prior periods in this annual
report.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|32
|--



|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|NET REVENUES
We offer advertising and communications
services in 77 countries through our agencies located throughout Europe, North America, the Asia-Pacific
region and Latin America, and through contractual affiliations with other agencies in a number of
countries. The following analysis provides further detail on revenue:
2004 vs. 2003
Our net revenues were 1,448.6 million
for 2004, a decrease of 5% compared with 1,525.1 million for 2003. Our revenues were impacted
by the U.S. dollars continued decline against the euro which was partially offset by increased
demand for advertising and communications services in many regions, reflecting the improved global
economic conditions in most of our major geographic markets. Excluding the currency effect, our revenues
decreased by 1%. Excluding the effects of changes in the scope of consolidation, such as acquisitions
and dispositions (a net decrease of 52.8 million) and currency fluctuations (a net decrease
of 61.7 million), our net revenues increased by 38 million, or 2.7% on an organic basis.
The following table sets forth a geographic
breakdown of our revenues for 2004 and 2003. In preparing the table, we have allocated revenues to
the country or region of the subsidiary realizing the revenues.
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

| | Region(1)                 |  | 2004
      % of
      Total |   | 2003 
      % of
      Total |    
| | ------------------------- |  | --------------------------- | - | ---------------------------- | ---
| |                           |  |                             |   |                              |    
| | North America             |  | 40                          | % |                              | 42 
| | Europe (excluding France) |  | 31                          | % |                              | 33 
| | France                    |  | 21                          | % |                              | 17 
| | Asia Pacific region       |  | 4                           | % |                              | 4  
| | Latin America             |  | 4                           | % |                              | 4  
| | TOTAL                     |  | 100                         | % |                              | 100

|
|

| |                                                                                                                                                                                                                                                                                                                                                                                                                      
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (1) Because our revenues
        from the Middle East and Africa represent less than 1% of our total revenues,
        our geographic breakdown of revenues currently includes, and historically
        has included, revenues in the western part of the Middle East and in Africa
        with those of Europe, and revenues in the eastern part of the Middle East
        with those of the Asia-Pacific region.

|33
|--



|As in 2003, North America, Europe (excluding
France) and France remained our most important regions in terms of revenues in
2004. In France, our business activities performed well over the year, primarily
due to significant new business wins in 2004. In both Europe (excluding France)
and the United States, organic growth during 2004 was slightly positive,
although within Europe (excluding France and the United Kingdom) organic growth
was strongly positive. This performance was partially off-set by a substantial
decline in organic growth in the United Kingdom. In Latin America and the
Asia-Pacific region, organic growth remained strong. In the aggregate, 2004
organic growth
reflected a better than expected performance, primarily at Arnold Worldwide Partners (which posted a record
year for new business), and at Media Planning Group, and in the healthcare and marketing services sectors at Euro
RSCG.
2003 vs. 2002
Our net revenues were 1,525.1 million
for 2003, a decrease of 15.8% compared with 1,811.2 million for 2002. Our revenues were impacted
by reduced demand for advertising and communications services worldwide, reflecting the continued
global economic downturn in most of our major geographic markets and the U.S. dollars decline
against the euro. Excluding the currency effect, the decline was 6.4%. Excluding the effects of changes
in the scope of consolidation, such as acquisitions and dispositions (a net decrease of 12.3
million) and currency fluctuations (a net decrease of 181.1 million), our net revenues decreased
by 92.7 million.
The following table sets forth a geographic
breakdown of our revenues for 2003 and 2002. In preparing the table, we have allocated revenues to
the country or region of the subsidiary realizing the revenues.
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              

| | Region(1)                 |  | 2003
      % of
      Total |   | 2002
      % of
      Total |    
| | ------------------------- |  | --------------------------- | - | --------------------------- | ---
| |                           |  |                             |   |                             |    
| | North America             |  | 42                          | % |                             | 44 
| | Europe (excluding France) |  | 33                          | % |                             | 32 
| | France                    |  | 17                          | % |                             | 16 
| | Asia Pacific region       |  | 4                           | % |                             | 4  
| | Latin America             |  | 4                           | % |                             | 4  
| | TOTAL                     |  | 100                         | % |                             | 100
| |                           |  |                             |   |                             |    

| |                                                                                                                                                                                                                                                                                                                                                                                                            
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (1) Because
      our revenues from the Middle East and Africa represent less than 1% of our
      total revenues, our geographic breakdown of revenues currently includes,
      and historically has included, revenues in the western part of the Middle
      East and in Africa with those of Europe, and revenues in the eastern part
      of the Middle East with those of the Asia-Pacific region.

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|As in 2002, North America, Europe (excluding
France) and France remained our most important regions in terms of revenues in 2003. However, organic
revenue declined sharply in the United Kingdom and was also lower in Europe excluding France. Responding
to this situation, at the end of the first half of fiscal 2003, we identified
50 companies  that were identified as impeding our revenue
and earnings growth. These companies, mainly located in the United Kingdom, the United States and
Northern Europe, were determined to be under-performing due to poor management or inappropriate market
positioning or strategies. As part of our strategic reorganization, these companies have either been restructured with changes in management, closed or sold.
Our operating margin before goodwill impairment
and restructuring charges was negatively impacted by poor revenue forecasting at Euro RSCG, which
late in the year turned out to be over-optimistic. Our revenues were therefore lower than anticipated,
resulting in a cost structure that was too high. In response, we increased our initially planned
headcount reduction under our worldwide restructuring plan to better align our cost structure to
our revenues and we changed our budgeting and internal financial reporting procedures. Margins were
also weakened by the 50 underperforming companies described above.

|34
|--



|OPERATING EXPENSES
Our 2004 operating expenses decreased 306.9
million, or 18.7%, to 1,337.0 million in 2004 from 1,643.9 million in 2003. Our operating
expenses compared with 2003 were impacted primarily by the absence of goodwill and other intangible
impairment in 2004, a significant reduction of restructuring charges in 2004 compared with 2003,
the effects of staff reductions in late 2003 and early 2004 in connection with the implementation
of our strategic reorganization and restructuring plan to reduce our cost structure, and the decline
in the U.S. dollar against the euro.
Compensation and Related Costs and Stock-Based
Compensation
In 2004, our compensation and related costs
and stock-based compensation amounted to approximately 57.5% of revenue, compared with 61.5% of revenue
in 2003. Compensation and related costs and stock-based compensation decreased as a percentage of
revenue as a result of improved revenue due to a better business environment and continued focus
on managing headcount to performance. Compensation and related costs in all periods also were impacted
by salary progression.
2004 vs. 2003
In 2004, our expenses relating to compensation
and related costs and stock-based compensation was 833.1 million, a decrease of 11.2% compared
with 937.9 million for 2003. This decrease was primarily attributable to staff reductions in
late 2003 in connection with the implementation of our strategic reorganization and restructuring
plan to reduce our cost structure and to the effects of currency translation for 35.1 million.
As a percentage of revenue, compensation and related costs and stock-based compensation was 57.5%
for 2004 compared with 61.5% for 2003.
2003 vs. 2002
In 2003, our expenses relating to compensation
and related costs and stock-based compensation was 937.9 million, a decrease of 12.6% compared
with 1,073.5 million for 2002. This decrease was primarily attributable to the effects of currency
translation for 105.4 million and to staff reductions in 2003 in connection with the implementation
of our strategic reorganization and restructuring plan to reduce our cost structure. As a percentage
of revenue, compensation and related costs and stock-based compensation was 61.5% for 2003 compared
with 59.3% for 2002.
General and Administrative Non-Payroll
Costs
2004 vs. 2003
General and administrative non-payroll
costs were 456.0 million for 2004, a decrease of 3.8% compared with 474.2 million for
2003. This decrease was attributable to the effects of currency translation for 25.6 million
partially offset by an overall increase in general and administrative non-payroll costs (including
5.3 million in fees in connection with the preparation of our unsuccessful offer and related
financing to acquire Grey Global Group in September 2004). Expressed as a percentage of total revenues,
general and administrative non-payroll costs were 31.5% for 2004 compared with 31.1% for 2003.
2003 vs. 2002
General and administrative non-payroll
costs were 474.2 million for 2003, a decrease of 14.8% compared with 556.3 million for
2002. This decrease was primarily attributable to the effects of currency translation for
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|35
|--



|60.5 million and to a reduction in occupancy and facilities-related costs and other general and
administrative costs as a result of our restructuring plan. Expressed as a percentage of total revenues,
general and administrative non-payroll costs were 31.1% for 2003 compared with 30.7% for 2002.
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Compensation to Former Shareholders of
Acquired Businesses
Compensation to former shareholders of
acquired businesses was 3.4 million for 2004, 2.5 million for 2003, and 6 million
for 2002.
Amortization of Intangible
Assets
Amortization of intangible
assets was 28.9 million in 2004, 31.1 million in 2003, and 33.4 million in 2002.
Goodwill and Other Intangible Impairment
Goodwill and other intangible impairment
was 99.8 million for 2003 and 362.5 million for 2002 in connection with our adoption
of SFAS No. 142 on January 1, 2002. No goodwill and other intangible impairment was recorded in 2004.
Restructuring and Other Charges
2004 vs. 2003
During the third and fourth quarters
of 2003 continuing into early 2004, we implemented a restructuring plan, primarily in the United
States and the United Kingdom, to reduce costs through headcount reduction and real estate restructuring.
For 2003, we recorded approximately 92.4 million in pre-tax restructuring and other charges
relating to this worldwide restructuring, including 37.8 million to restructure our real estate
lease obligations and 39.3 million to reduce our headcount by approximately 1,150. As of December
31, 2004, reserves associated with this restructuring program were 37.8 million.
Personnel positions were eliminated or
identified for elimination by December 31, 2003. A remaining reserve balance of approximately 3.1
million reflects costs relating to severance and other termination benefits to be settled in 2005.
The remaining balance in occupancy and
facilities-related reserves of 33.9 million at December 31, 2004 relates to non-cancelable
lease commitments in excess of estimated sublease income for abandoned facilities that will be paid
out over the remaining lease periods, ranging from one to nine years. In 2004, we recorded an additional
expense of 15.2 million corresponding to the completion of the plan (the space was identified
to be vacated but not yet vacant at December 31, 2003). We also recorded income of 4.5 million
in 2004 due to a 2004 decision to sublease to some of our subsidiaries part of the UK space left
vacant at December 31, 2003.
2003 vs. 2002
In the fourth quarter of 2003, we completed
the strategic reorganization of our business operations that was announced in September 2003. We
initiated the strategic reorganization to strengthen our integrated communications capability, to
simplify our organizational structure, and to promote greater synergies among the agencies by refocusing
our activities around our two global networks, Euro RSCG Worldwide and Media Planning Group, and
our creativity-focused division, Arnold Worldwide Partners.
We also implemented a restructuring plan,
primarily in the United States and the United Kingdom, to reduce costs. This plan resulted in pre-tax
restructuring costs and other charges in the amount of 92.4 million. This charge includes pre-tax
severance and other personnel-related costs of 39.3 million, pre-tax occupancy and

|36
|--



|facilities-related costs of 37.8 million as well as other charges of 15.3 million including
8.8 million in asset write downs.
The severance and other personnel related
charges of 39.3 million reflected the elimination of 1,158 positions worldwide, most of them
in Europe and North America. The employee groups affected included all levels and functions across
our company. All positions had been eliminated or identified for elimination at December 31, 2003,
and the remaining reserve balance of 25.5 million at December 31, 2003 reflects costs relating
to severance and other termination benefits to be settled in 2004.
We noted that this reorganization would
also affect our 2004 consolidated statements of operations. We anticipated that the completion of
the plan would result in the abandonment and closure of 40 offices representing about 70,000 square
meters principally located in Great Britain and in North America. We also anticipated that lease
terminations would include remaining lease obligations net of estimated sublease income at December
31, 2003. Such termination costs were based upon an estimate of the amounts that we expected to pay
over the terms of these leases, based on our assumptions regarding offsetting sublease income. The
remaining balance in occupancy and facilities-related reserves of 31.8 million at December
31, 2003 relates to non-cancelable lease commitments in excess of estimated sublease income for abandoned
facilities that will be paid out over the remaining lease periods, ranging from one to ten years.
With respect to the 2001 restructuring plan, as local real estate markets evolved, we adjusted our estimated sublease
  income over the related lease terms, resulting in an additional restructuring reserve of 6
  million at December 31, 2003.
FINANCIAL EXPENSE, NET
Other
During December 2004, we re-purchased and
cancelled a total of 17,570,404 of our convertible and/or exchangeable 1% bonds, maturing on January
1, 2006. We paid an average price of 25.17 per bond for a total purchase price of approximately
442.3 million. As a result, we recorded a loss of 8.7 million which is reflected as Other
financial expense in the accompanying consolidated statements of operations.
In December 2003, at a general meeting
of holders of the convertible and/or exchangeable 4% bonds due January 1, 2009, the holders approved
the payment by us of 1.20 per bond, payable in cash in a single installment on January 1, 2004,
in exchange for a waiver of the option they had to cause us to redeem the bonds at its nominal value
plus accrued interest on January 1, 2006, which we refer to as the put. Our total expense
amounted to 51.1 million, including 0.9 million in consulting fees which are reflected
as other financial expense in the 2003 consolidated statements of operations. Based on
the Emerging Issues Task Force, which we refer to as EITF, consensus on issue no. 96-19, Debtors
Accounting for a Modification or Exchange of Debt Instruments, this operation has been accounted
for in accordance with paragraph 16 of statement 125, resulting in a 10.7 million loss which
is also reflected as Other financial expense in the 2003 consolidated statements
of operations.  The aggregate amount
of these convertible and/or exchangeable bonds  outstanding at December 31, 2004 amounted to 472.6 million, comprised of 454.6
million in aggregate principal and 18 million in interest.
During the first quarter of 2003, we repurchased
5,290,000 of our convertible and/or exchangeable 1% bonds due January 1, 2006 resulting in a 12.2
million gain which is reflected as Other financial income in the 2003 consolidated statements
of operations.
OTHER ITEMS
Provision for Income Tax
Provision for income tax was 2.5
million for 2004, compared with 107.6 million for 2003. The decrease was primarily attributable
to the much lower valuation allowance recorded in 2004 (30.1 million) compared with the substantial
valuation allowance recorded in 2003 (164.2 million).
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|37
|--



|Provision for income tax was 107.6
million for 2003, compared with 39 million for 2002. The increase was primarily attributable
to the impact of the deferred tax valuation allowance of 164.2 million, partially offset by
a lower level of earnings before taxes and before goodwill impairment charges.
Minority interests
Minority interests were 8.5 million
for 2004, compared with 5.5 million for 2003. This increase is primarily attributable to the
increase in earnings in 2004 compared with 2003.
Minority interests were 5.5 million
for 2003, compared with 14.8 million for 2002. This decrease is primarily attributable to the
decrease in earnings in 2003 compared with 2002.
LIQUIDITY AND CAPITAL RESOURCES
At December 31, 2004, cash and highly liquid investments
amounted to 534.2 million, a decrease of 126 million from December 31, 2003 of 660.2
million. Our total debt at December 31, 2004 was 803.2 million, a decrease of 532.7 million
from December 31, 2003. We collect funds from clients to pay for media, production and other third-party
expenses incurred on behalf of our clients. As a result, our cash receipts and disbursements substantially
exceed our net revenue related to these activities. The working capital amounts shown on our balance sheet and the cash flows
from operating activities reflect these pass-through of expenses.
Our primary sources of funds in 2004 were
proceeds from our October 2004 rights offering, cash from operations and various revolving lines
of credit.
Our primary uses of cash were to finance
our December 2004 re-purchases of our convertible and/or exchangeable 1% bonds maturing January 1,
2006, general corporate needs, including capital expenditure requirements, dividend payments and
acquisitions, including earn-out and buy-out payments related to prior acquisitions.

We believe that net cash provided by operating activities and
additional borrowing under existing bank facilities will be sufficient to meet our present liquidity needs, including
the repayment of the first series of our convertible bonds that matures on January 1, 2006.

Operating activities
Our net cash provided by operating activities
was 123.2 million, 176.5 million and 240.5 million for the years ended December
31, 2004, 2003 and 2002, respectively. The decrease in 2004 was primarily attributable to the portion of the payments made in connection with our repurchases of  our convertible and/or exchangeable 1% bonds due January 1, 2006 considered to be interest repayments, corresponding to accrued premium and interest at the repurchase date, and the cash
impact in 2004 of restructuring charges taken in 2003, partially offset by higher earnings levels
in 2004 resulting from improved global market conditions compared with 2003.
The decrease in 2003 was primarily attributable
to the lower earnings level in 2003 resulting from continued weakness in client demand for  advertising
and communications services and severance costs and other costs related to our strategic reorganization
and worldwide restructuring program.
The increase in cash provided by operating
activities in 2002 was primarily a result of concerted efforts that we undertook throughout our company
to improve our cash position by reducing costs and improving our working capital management.
Investing activities
We have pursued acquisitions in the past,
and intend to pursue acquisitions in the future, some of which could be significant, to enhance our
capabilities and expand our geographic reach. We generally fund these acquisitions using our shares,
cash or a combination of both.
Net cash provided by investing activities was
130.3 million and 11.5 million in 2004 and 2003, respectively whereas net cash used in investing activities was (514.5) million in 2002.
         Cash provided by investing
activities increased in 2004 due primarily to the sale of substantial highly
liquid investments partially offset by earn-out and buy-out payments related to
prior acquisitions. The proceeds from divestitures in connection with our
strategic reorganization is offset by the cash used for the capital
expenditures.          Cash
provided by investing activities in 2003 reflected the poor activity in terms
of acquisitions, earn-out and buy-out payments and capital expenditures.
          Cash used in
investing activities in 2002 reflected the huge investment in highly liquid
investments in connection with the cash received from the issuance of the
convertible bonds.
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|38
|--



|Financing activities
Net cash used in
financing activities
was (176.6) million, (175.4) million  for 2004 and 2003, respectively
whereas net cash provided by financing activities was 290.2 million in 2002. The  significant amount of cash used
to re-purchase and cancel a total of 17,570,404 of our convertible and/or exchangeable 1% bonds due January 1, 2006 in
December 2004 was partially offset by significant cash generated by our rights offering in
October 2004. The substantial decrease in 2003 was primarily attributable to the fact that in 2002
we had a 450 million convertible and/or exchangeable bond issuance for which there was no comparable
issuance in 2003. The increase in 2002 was primarily due to the significant amount of cash generated
by our issuance of convertible and/or exchangeable bonds in May 2002 for which there was no comparable
financing activity in 2001.
At December 31, 2004, total financial debt,
which consists of bank debt, obligations under our two outstanding series of convertible and/or exchangeable
bonds and capitalized lease obligations, was 803.2 million, a decrease of 532.7 million
from December 31, 2003. This total financial debt was comprised of:
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

| |  | 686.6 million aggregate principal amount and accrued premium and interest under our convertible and/or exchangeable bonds;
| | - | ---------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                            
| |  | 34.2 million in long-term borrowings;                                                                                     
| |   |                                                                                                                            
| |  | 80.4 million in short-term borrowings; and                                                                                
| |   |                                                                                                                            
| |  | 2.0 million in capitalized lease obligations.                                                                             

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Approximately 94.1% of our financial debt
outstanding at December 31, 2004 was denominated in euro, 3.2% was denominated in U.S. dollars and
0.9% was denominated in British pounds.
Convertible and/or exchangeable bonds
At December 31, 2004, we had a total of
686.6 million aggregate principal amount and accrued premium and interest under our unsecured
convertible and/or exchangeable bonds outstanding, comprised of 214.0 million aggregate principal
amount and accrued premium and interest under our convertible and/or exchangeable 1% bonds issued in
December 2000 and 472.6 million aggregate principal amount and interest under our convertible and/or exchangeable 4% bonds issued in May 2002.
In February 1999, we issued 1,223,405 unsecured
convertible and/or exchangeable bonds due January 1, 2004, each with a nominal value of 188,
for an aggregate principal amount at issuance of 230.0 million. We received net proceeds of
225.3 million from this issuance. The coupon rate of the bonds was 1.0% per annum, payable
annually in arrears on January 1 of each year, and the gross yield to maturity was 1.75% per annum,
assuming no conversion, redemption or re-purchase occurs prior to maturity. The implicit interest
rate, including issue costs, was 2.18% per annum. The bonds had a maturity date of January 1, 2004.
As of December 31, 2003, 769,448 million bonds had been converted into 15,389,004 Havas shares. As
of that date, our 89.4 million in aggregate principal amount and accrued premium and interest
under these bonds was comprised of 85.3 million in aggregate principal amount, 3.2 million
in accrued premium and 0.9 million in interest through that date. We paid 89.4 million
to redeem the outstanding bonds at their maturity on January 1, 2004.

|39
|--



|In December 2000, we issued 32,817,012
unsecured convertible and/or exchangeable bonds, each with a nominal value of 21.60, for an
aggregate principal amount at issuance of 708.8 million. We received net proceeds of 694.9
million from this issuance. The coupon rate of the bonds is 1.0% per annum, payable annually in arrears
on January 1 of each year, beginning January 1, 2002, and the gross yield to maturity is 4.25% per
annum, assuming no conversion, redemption or re-purchase occurs prior to maturity. The implicit interest
rate, including issue costs, is 4.67% per annum. The bonds have a maturity date of January 1, 2006.
Each bond currently is exercisable at any time at the option of the holder for 1.13 Havas shares,
subject to specified anti-dilution adjustments, which exercise may, at our option, be a conversion
for newly issued shares, an exchange for treasury shares or a combination thereof. In accordance
with French law, the conversion/exchange ratio has been adjusted from 1 to 1.02 to 1.035 and then
to 1.047 due to the distribution of a portion of paid-in capital in connection with our payment of
our annual dividend to shareholders on June 11, 2002, June 18, 2003 and June 17, 2004, respectively,
from 1.047 to 1.13 due to our rights offering in October 2004 and from 1.13 to
1.147 as a result of the distribution of a portion of paid-in capital in
connection with our payment of our annual dividend to shareholders on June 14,
2005. For a discussion of the future
distribution of paid-in-capital in connection with our payment of dividends to shareholders, see
Item 8. Financial Information Dividend Policy on page 68. The bonds have a redemption
value at maturity of 25.44 per bond, or approximately 117.78% of their nominal value. We have
the option to redeem all, but not less than all, of the outstanding bonds between January 1, 2004
and December 31, 2005, at an early redemption price that guarantees the holder of the bond a yield
to maturity equivalent to the rate the holder would have obtained upon redemption at maturity, if
the product of (1) the conversion/exchange ratio and (2) the arithmetic mean of the closing prices
of Havas shares on Euronext Paris during 20 consecutive trading days chosen by us from among the
40-trading day period preceding publication of a notice of early redemption, exceeds 115% of the
early redemption price. We also have the option to redeem, all, but not less than all, of the bonds
at their nominal value plus accrued interest at any time when less than 10% of the bonds issued remain
outstanding. In connection with this issuance, we agreed not to issue bonds with any preference over
these bonds, or reduce our share capital or alter the way we allocate profits. As of December 31,
2004, no bonds had been converted into Havas shares.  In December 2004, we re-purchased
and cancelled a total of 17,570,404 of these bonds, and during 2003, we re-purchased and cancelled 5,290,000 of these bonds. As of December 31, 2004, our remaining 214.0 million
aggregate principal amount and accrued premium and interest under these bonds was comprised of 186.1
million in aggregate principal amount, 25.9 million in accrued premium and 2.0 million
in accrued interest through that date. Assuming no conversions, redemptions or repurchases, an additional
7.2 million of premium would accrue on these bonds through maturity.
On May 22, 2002, we issued 41,860,465 unsecured
convertible and/or exchangeable bonds, each with a nominal value of 10.75, for an aggregate
principal amount of 450 million. We received net proceeds of approximately 443.5 million
from this issuance. The coupon rate of the bonds is 4.0% per annum, payable annually in arrears on
January 1 of each year, beginning January 1, 2003, and the gross yield to maturity also is 4.0% per
annum, assuming no conversion, redemption or re-purchase occurs prior to maturity. The implicit interest
rate, including issue costs, is 4.26% per annum. The bonds have a maturity date of January 1, 2009.
Each bond currently is exercisable at any time at the option of the holder for 1.13 Havas shares,
subject to specified anti-dilution adjustments, which exercise may, at our option, be a conversion
for newly issued shares, an exchange for treasury shares or a combination thereof. In accordance
with French law, the conversion/exchange ratio has been adjusted from 1 to 1.02 to 1.035 and then
to 1.047 due to the distribution of a portion of paid-in capital in connection with our payment of
our annual dividend to shareholders on June 11, 2002, June 18, 2003 and June 17, 2004, respectively,
from 1.047 to 1.13 due to our rights offering in October 2004 and from 1.13 to
1.147 as a result of the distribution of a portion of paid-in capital in
connection with our payment of our annual dividend to shareholders on June 14,
2005. For a discussion of the future
distribution of paid-in-capital in connection with our payment of dividends to shareholders, see
Item 8. Financial Information Dividend Policy on page 68. The bonds have a redemption
value at maturity equal to their nominal value. We have the option to redeem all, but not less than
all, of the outstanding bonds between January 1, 2005 and December 31, 2008 at their nominal value
plus accrued interest if the product of (1) the conversion/exchange ratio and (2) the arithmetic
mean of the closing prices of Havas shares on Euronext Paris during 20 consecutive trading days chosen
by us from among the 40-trading day period preceding publication of a notice of early redemption,
exceeds 125% of the nominal value of the bonds. We also have the option to redeem, all, but not less
than all, of the bonds at their nominal value plus accrued interest at any time when less than 10%
of the bonds issued remain outstanding. In connection with this issuance, we agreed not to give any
other bonds any preference over the bonds, or reduce our share capital or alter the way we allocate
profits. As of December 31, 2004, 930 bonds had been converted into our shares. As of December 31,
2004, our remaining 472.6 million aggregate principal amount and accrued interest on these bonds was
comprised of 454.6 million in aggregate principal amount and 18.0 million in accrued interest through that date.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------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|In December 2003, at a general meeting
of holders of the convertible and/or exchangeable bonds due January 1, 2009, the holders approved
the payment by us of 1.20 per bond, payable in cash in a single installment on January 1, 2004,
in exchange for a waiver of the option they had to cause us to redeem the bonds at its nominal value
plus accrued interest on January 1, 2006, which we refer to as the put. Our total expense
amounted to 51.1 million, including 0.9 million in consulting fees, which are reflected
as Other financial expense in our 2003 consolidated statements of operations. Based on
the EITF consensus on issue No. 96-19, Debtors Accounting for a Modification or Exchange
of Debt Instruments, this operation was accounted for in accordance with paragraph 16 of statement
125, resulting in a 10.7 million loss which was reflected as Other financial expense
in our 2003 consolidated statements of operations.
For a discussion of our convertible and/or
exchangeable bonds as of December 31, 2004, see Note 10 to our 2004 consolidated financial statements
beginning on page F-18 of this annual report.
Long-term borrowings
As of December 31, 2004 and 2003, we had
outstanding long-term borrowings of 34.2 million and 40.4 million, respectively. The
weighted average interest rate on these long-term borrowings was 4.2% and 3.3% at December 31, 2004
and 2003, respectively. Of the total outstanding long-term borrowings at December 31, 2004, 26.2
million was due within one year, 7.6 million was due in 2006, 0.2 million was due in
2007, 0.1 million was due in 2008 and 0.1 million was due after January 1, 2009. 7.9
million of the outstanding long-term borrowings as of December 31, 2004 bore interest at fixed rates,
and 26.3 million bore interest at variable rates.
In June 1999, one of our indirect, wholly
owned subsidiaries, Havas North America, Inc., formerly EWDB North America, Inc., borrowed $30 million
from Banque Nationale de Paris, New York Branch. In connection with this loan, we agreed to deposit
with Banque Nationale de Paris, New York Branch, $30 million to allow Havas North America to borrow
the funds. The loan bears interest at a rate equal to the London Inter-bank Offered Rate, or LIBOR,
plus a margin. The deposit earns interest at a rate of LIBOR less a margin. The deposit and loan
mature simultaneously in six equal annual installments from June 4, 2001 through June 5, 2006 and
the borrowing and collateral deposit have therefore been reduced to $10 million at December 31, 2004.
In order to hedge the currency risk with respect to our U.S. dollar deposit, we also entered into
a currency and interest rate swap arrangement, which we refer to as CIRCUS, with Banque
Nationale de Paris. The CIRCUS has the effect of transforming our U.S. dollar deposit of $10 million
into a euro deposit of 9.5 million that earns interest at the European Inter-bank Offered Rate,
or EURIBOR, less a margin. The maturities of the CIRCUS are identical to those of the deposit in
terms of dates, currency and amounts. As of December 31, 2004, we recorded an exchange rate gain
on the CIRCUS in the amount of 2.2 million and an exchange rate loss on the deposit in the
amount of 2.2 million. As of December 31, 2003, we recorded an exchange rate gain on the CIRCUS
in the amount of 0.01 million and an exchange rate loss on the deposit in the amount of 2.4 million.
On January 19, 2000, one of our indirect,
wholly owned subsidiaries, Havas UK plc, formerly Evelink plc, issued a £40.0 million unsecured
convertible bond due July 19, 2007 to Banque Nationale de Paris S.A. This convertible bond bears
interest at a rate of 7.6% per annum and is convertible, at the option of the holder, at any time
from January 19, 2000 through January 19, 2007 into 117,131 ordinary shares of Havas UK, subject
to specified anti-dilution adjustments. In conjunction with the bond issuance, we guaranteed the
obligations of Havas UK under the bond.
Also on January 19, 2000, Havas UK issued
a warrant to Banque Nationale de Paris S.A. authorizing the holder of the warrant, upon payment of
£40.0 million, to purchase 117,131 Havas UK shares on January 19, 2007. The right to purchase
Havas UK shares under the warrant will lapse if the conversion rights of the £40.0 million convertible
bond issued on January 19, 2000 are exercised. In addition, our wholly owned subsidiary, Havas International
S.A., formerly Havas Advertising International S.A., and Banque Nationale de Paris S.A. (as the initial
holder of the bond) entered into a forward sale agreement under which Havas International paid £25.2
million to Banque Nationale de Paris S.A. for the future purchase of the Havas UK shares issuable
on conversion of the £40.0 million convertible bond, and Banque Nationale de Paris S.A. agreed
to convert, or arrange for a third party to convert, the £40.0 million convertible bond into
Havas UK shares on January 19, 2007 (or prior to January 19, 2007 under specified circumstances)
and to sell, or arrange for a third party to sell, those shares to Havas
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------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|International.  The number of shares subject to the forward sale agreement will be determined
by dividing £40.0 million by the Havas UK share price on the date Banque Nationale de Paris
S.A. sells, or arranges for a third party to sell, the Havas UK shares to Havas International.
In 2004, one of our German
subsidiaries made a fixed cash deposit of 3.5 million with an international bank in order to
secure fixed term loans granted by this bank to certain of our other subsidiaries in Germany for
the same amount and maturity. The deposit has been classified as restricted deposits under Other
assets.
In December 2004, we
entered into a 150 million floating rate credit agreement with a pool of banks in France consisting
of:
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

| |  | a 100
      million amortization loan, with a final maturity on November 30, 2007, dedicated
      to finance the repurchase and/or the redemption of our convertible and/or
      exchangeable 1% bonds maturing on January 1, 2006; and
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                           
| |  | a 50
      million revolving credit facility, maturing on October 31, 2008, dedicated
      to our general financing needs.                                                                                                              

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Neither of these credit lines were used in 2004.
For a discussion of our long-term borrowings
as of December 31, 2004, see Note 10 to our 2004 consolidated financial statements beginning on page
F-19 of this annual report.
Short-term borrowings
As of December 31, 2004 and 2003, we had
outstanding 29.7 million and 52.9 million, respectively, in short-term borrowing arrangements.
The weighted average interest rate on these short-term borrowings was 2.7% and 2.6% at December 31,
2004 and 2003, respectively.
In addition, through some of our subsidiaries,
we had outstanding 50.7 million and 46.2 million, respectively, in borrowings under various
lines of credit as of December 31, 2004 and 2003, respectively. These lines of credit bear interest
at the prevailing market rates in the countries of the subsidiaries. Where required, we guaranteed
the repayment of borrowings by our subsidiaries. We had unused lines of credit available under short-term
and overdraft borrowing arrangements of 152.2 million and 159.3 million at December 31,
2004 and 2003, respectively.
For a discussion of our short-term borrowings
as of December 31, 2004, see Note 10 to our 2004 consolidated financial statements beginning on page
F-18 of this annual report.
Financial covenants
We and our subsidiaries are subject to
various financial covenants under our borrowing arrangements. In addition, we frequently guarantee
significant loans of our subsidiaries.
The financial covenants under our 150
million floating rate credit agreement, which are applied to our company on a consolidated basis,
include:
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          

| |  | a ratio of
      net debt to operating income before amortization and reserves on assets
      of less than an amount between 3.0 and 2.0 to one depending on the period;
      and             
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                 
| |  | a ratio of
      operating income before amortization and reserves on assets to net financial
      expenses of greater than an amount between 4.0 and 7.5 to one depending
      on the period.

|                                                                                                                                                  
|--------------------------------------------------------------------------------------------------------------------------------------------------
|The financial covenants applicable
to our borrowing subsidiaries, which are applied to the applicable subsidiaries financial statements,
include:

|42
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| |  | A ratio of earnings before interest and taxes and amortization to interest expense of greater than three to one;                
| | - | --------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                 
| |  | A ratio of total debt to equity of less than 2.5 to one;                                                                        
| |   |                                                                                                                                 
| |  | A ratio of earnings before interest, taxes, depreciation and amortization to interest expenses of greater than three to one; and
| |   |                                                                                                                                 
| |  | A ratio of total debt to earnings before interest, taxes, depreciation and amortization of less than 3.0 to one.                

|                                                                                                                                         
|-----------------------------------------------------------------------------------------------------------------------------------------
|Under one of our subsidiaries loans,
we are subject to the following financial covenants applied to our company on a consolidated basis:
|                                                                                                                                         

| |  | A ratio of net financial debt to equity of less than 0.8 to one; and                                               
| | - | -------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                    
| |  | A ratio of earnings before interest and taxes and amortization to net financial result of greater than five to one.

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|At December 31, 2003, we were not in compliance
with financial covenants under two credit facilities, for an aggregate principal amount of 22.6
million and at June 30, 2004, we were not in compliance with financial covenants under one credit facility for a principal amount of 9.6 million. See Item 3 Key InformationRisk FactorsA continuing default under
our credit facilities could result in the acceleration of payment under various of our other debts. However,
the credit facility banks waived any default with respect to the noncompliance.
As of December 31, 2004, we and our subsidiaries
were in compliance with all financial covenants related to all of the borrowings described above.
Capital lease obligations
We lease premises and equipment under both
capital and operating leases. As of December 31, 2004 and 2003, assets held under capital leases
were 5.1 million and 11 million, respectively. Net rental expense for all operating leases
was 86.1 million, 106.7 million and 135.1 million in 2004, 2003 and 2002, respectively.
For a discussion of our capital lease obligations
as of December 31, 2004, see Note 17 to our 2004 consolidated financial statements on page F-32 of
this annual report.
Share and bond repurchases
We repurchased 27,600, 104,400 and 363,148
of our shares in the open market in 2004, 2003 and 2002, respectively. The aggregate purchase price
of these shares was 0.1 million, 0.4 million and 1.6 million in 2004, 2003 and
2002, respectively. In 2004, we used 19,878 of our treasury shares to pay a portion of the 2003 board
fees to our directors, and we used 188,268 of our treasury shares to pay a portion of the purchase
price of two small acquisitions. In 2003, we sold 89,400 of our treasury shares in the open market
for an aggregate sale price of 0.4 million.
In December 2004, we re-purchased and cancelled
a total of 17,570,404 of our convertible and/or exchangeable 1% bonds, maturing on January 1, 2006.
We paid an average price of 25.17 per bond for a total purchase price of approximately 442.3
million. These bonds were convertible into a total of 19,854,557 shares at the conversion exchange
ratio of 1 to 1.13 in effect on December 31, 2004.

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|In 2003, we repurchased in the secondary
market and cancelled 5,290,000 of these bonds. We paid an aggregate purchase price of 109.7
million. These bonds were convertible into a total of 5,475,150 shares at the conversion exchange
ratio of 1 to 1.035 in effect on December 31, 2003.
In 2002, we repurchased in the secondary
market and cancelled 1,342,046 of these bonds. We paid an aggregate purchase price of 24.2
million. These bonds were convertible into a total of 1,368,887 shares at the conversion exchange
ratio of 1 to 1.02 in effect on December 31, 2002.
Our future repurchases of bonds or shares,
if any, will depend on the prevailing market conditions, our liquidity requirements, applicable contractual
restrictions and other factors. The amounts involved may be material.
Other
We may declare dividends upon the recommendation
of our board of directors and the approval of our shareholders at their annual general meeting. Under
the French Commercial Code, a companys right to pay dividends is limited in some circumstances.
At our annual meeting of shareholders
held on June 9, 2005, our shareholders approved a resolution, among others, to
authorize a dividend payment of 0.07 per share. This amount reflects both the gross and net
dividend since the French avoir fiscal tax credit was phased out in 2004. We paid the dividend to shareholders on or about
June 14, 2005. Under the terms of the anti-dilution provisions of our two series of convertible and/or
exchangeable bonds, the applicable conversion/exchange ratio was adjusted as of that date to
reflect the component of the dividend payment that represents a distribution of a portion of paid-in
capital. In addition, under the terms of the anti-dilution provisions of our option plans, the number
of options and exercise prices for outstanding options under our plans were adjusted on that date
to reflect the component of the dividend payment that represents a distribution of a portion of paid-in
capital. In the future, we also may submit for the approval of our shareholders resolutions to authorize
dividend payments that represent distributions of a portion of paid-in capital.
In 2004, we paid a dividend of 0.075
per share, of which 0.05 represents the net dividend and 0.025 represents the French
avoir fiscal tax credit. In 2003, we paid a dividend of 0.135 per share, of which 0.09
represented the net dividend and 0.045 represented the French avoir fiscal tax credit. In 2002,
we paid a dividend of 0.255 per share, of which 0.17 represented the net dividend and
0.085 represented the French avoir fiscal tax credit.

The changes in our dividends over the
last several years corresponds with our Boards policy of adjusting our dividend in relation
to the results of our operations and the pay-out ratios (the amount of dividend compared to net earnings
before goodwill amortization) and yields (the amount of dividend compared to the share price on the
last day of the previous fiscal year) of our principal competitors.
Treasury policies
Our policy is for our subsidiaries worldwide
to hold cash and highly liquid investments in the currency of their principal operating expenses.
Our policy is to implement cash pooling
arrangements among our subsidiaries in the countries in which the size of our operations justifies
these arrangements. These pooling arrangements are intended to reduce bank financing and optimize
interest income in these countries.
For a discussion of our use of derivative
securities in connection with foreign currency and interest rate risk as of December 31, 2004, see
Item 11. Quantitative and Qualitative Disclosure About Market Risk beginning on page
86 of this annual report and Note 19 to our 2004 consolidated financial statements on page F-33 of
this annual report.
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|44
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Contractual obligations

|The following table summarizes our contractual obligations and commercial commitments at December 31, 2004.
|-----------------------------------------------------------------------------------------------------------
|                                                                                                           

|Contractual
        Obligations                |  | Payments Due by Period
      (in  millions) | 
|---------------------------------------------- |  | -------------------------------------------- | 
|                                               | 
|                                               |  | Total                                        | 
|                                               |  |                                              | 
|Long-term debt obligations                     |  | 34                                           | 
|                                               |  |                                              | 
|Capital (finance) lease obligations            |  | 2                                            | 
|                                               |  |                                              | 
|Operating lease obligations                    |  | 531                                          | 
|                                               |  |                                              | 
|Stock option plan obligations                  |  | 7                                            | 
|                                               |  |                                              | 
|Pension plan obligations                       |  | 26                                           | 
|                                               |  |                                              | 
|Estimated obligations under earn-outs/buy-outs |  | 99                                           | 
|                                               |  |                                              | 
|Convertible and/or exchangeable bonds          |  | 687                                          | 
|                                               |  |                                              | 
|Other commercial commitments                   |  | 184                                          | 
|                                               |  |                                              | 
|                                               |  |                                              | 
|Total                                          |  | 1,570                                        | 

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Estimated obligations under earn-outs/buy-outs. As noted above, in connection with business combinations, we typically enter into agreements with
some or all of the selling shareholders or the selling entity that provide for future earn-out
payments and, in the case of partial acquisitions, put and call buy-out payments. The
earn-out and buy-out payments are generally based upon a formula using a multiple of future earnings,
with the multiple in some cases increasing when organic growth or profitability exceed specified
thresholds. In determining the estimated obligations under both earn-outs and buy-outs, the applicable
earn-out or buy-out formula has been applied to the latest available earnings data or estimates.
The payment date for our buy-out obligations has been assumed to be the date the applicable buy-out
put provision can first be exercised, or in less than one year if the buy-out obligation first becomes
exercisable when the minority shareholder leaves our employ. We cannot assure you, however, that
these estimated obligations will not be exceeded in any specified period.
Stock option plan obligations. Some of our subsidiaries have granted stock options to some of their employees with respect to the
stock of the applicable subsidiary. The exercise price is usually based on a multiple of current
earnings of the subsidiary at the award date, which we refer to as the multiple. Such
options are generally

|45
|--



|exercisable five to seven years after the award date and require continuing employment. The parent
companies of such subsidiaries have the option to buy back the shares if and when acquired by the
employees and the employees have the option to put these shares to such parent companies. The buyback
price is generally based upon the multiple applied to the earnings level of the subsidiary when the
option is exercised. The employees are required to put the shares to the applicable parent company
when they leave the employ of the subsidiary. In determining the estimated obligations under these
stock option plans, the applicable multiple has been applied to the latest available earnings data
or estimates.

In addition to the stock option plan
obligations set forth in the table, in 2004 one of our subsidiaries granted stock options
with respect to its shares to some of its employees. These options are generally
exercisable four to five years after the award date and require continuing employment. The
parent company of the subsidiary is required to buy back the shares when acquired by the
employees at a price based on the estimated market value of the subsidiary at the buyback
date. The buyback price, which may be significant, will be settled in new or existing shares
of Havas, unless payment in Havas shares is not possible for legal or regulatory reasons.

Pension plan obligations.In accordance with the laws and practices of each country, we participate in employee benefits pension
plans offering death and disability, retirement and special termination benefits. Those plans provide
benefits of various types from flat currency amounts per year of service to final pay plans integrated
with social security and multi-employer plans. For defined benefit pension plans, accruals and prepaid
expenses are determined using the projected unit credit method.
Convertible and/or exchangeable bonds.Convertible and/or exchangeable bonds reflects the aggregate principal amount outstanding as of December
31, 2004 under our two outstanding series of convertible and/or exchangeable bonds, together with
accrued premium and interest on these bonds through their respective maturity dates, assuming no
conversion, exchange or repurchase from January 1, 2005 through maturity.
Other commercial commitments. Other commercial commitments reflects the following commercial commitments that we have given:
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

|Other Commercial
      Commitments Given     |  | Payments Due by Period
      (in  millions) | 
|-------------------------------------------- |  | -------------------------------------------- | 
|                                             | 
|                                             |  | Total                                        | 
|                                             |  |                                              | 
|Security for media space buying              |  | 24                                           | 
|                                             |  |                                              | 
|Marketing rights                             |  | 2                                            | 
|                                             |  |                                              | 
|Guarantees related to businesses disposed of |  | 69                                           | 
|                                             |  |                                              | 
|Other commitments                            |  | 89                                           | 
|                                             |  |                                              | 
|Total                                        |  | 184                                          | 

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Security for media space buying. In certain countries, particularly in the United Kingdom and Asia, media space buying operations
carried out by agencies are secured by the company, as required by local practices. The security
provided is reflected in the table.
In addition to the contractual obligations set forth in the table, we make commitments when we purchase
media time and space from various media suppliers on behalf of our clients. The liability for the
media is generally recorded on our balance sheet when the client is billed, usually in the month
that the underlying advertising appears. Consistent with industry practice, we frequently are required
to reserve, or commit to purchase, media time and space with the media suppliers well before a commercial
is aired or a publication reaches the market. The duration of these commitments vary depending on
the type of media purchased and the terms of the particular purchase. The

|46
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|duration of any commitment generally ranges from a few days to a year. These commitments are only entered
following the specific authorization of clients who, in turn, commit to reimburse us. In practice,
clients fulfill their commitments to us which enables us, in turn, to fulfill our commitments. There
are, however, instances where a client may seek to alter its commitments to purchase media. It is
generally industry practice that media suppliers seek to accommodate the clients wishes, in
part, because the media suppliers generally wish to work to maintain good, on-going relations with
clients, such as those we represent, and large buyers of media like us.
We guard against loss in respect of our media commitments in various ways. We consider the creditworthiness
of our clients and set relevant terms of business appropriately, and may purchase credit insurance
in some instances. In some markets, we are also protected on our commitments if a client does not
fulfill its underlying obligations by agency law concepts.
Marketing rights. Marketing rights reflects commitments related to one of our subsidiaries that acquires exclusive
marketing rights from soccer clubs for periods generally ranging from one to seven years, and then
re-sells those rights to sponsors. These marketing rights agreements typically provide for payments
to be made on a monthly basis during the exclusive marketing rights period. At December 31, 2004,
the aggregate amount payable under these agreements was 1.7 million, and our subsidiary had
received commitments from sponsors for 0.5 million.
Guarantees related to businesses disposed
of.In connection with our sales of companies and businesses, including sales as part of our strategic reorganization, we
have given representations and warranties to the acquirors regarding the sold companies and businesses
and agreed to indemnify the acquirors in certain circumstances. The amounts indicated in the table
reflect our maximum indemnification obligations under the terms of the relevant agreements. The indemnification
obligations in these agreements are generally capped at the amount of the applicable sales price
and limited in time to between one and two years following the date of sale,
except for certain topics such as tax risks which generally extend for the
relevant statute of limitations period (for example, seven years in the United
Kingdom). As a result of the extended duration of the indemnification
obligations related to these topics, the majority of these indemnification
obligations have been classified as more than 5 years.
Other commitments.In order to allow our subsidiaries in the United Kingdom to use electronic banking payment systems,
we were required to provide guarantees to certain banks in an aggregate amount of 89.2 million.
Future cash needs
We expect that our cash on hand, cash flows
from operations and existing revolving lines of credit will be sufficient to meet our near-term cash
requirements. In making this determination, we have taken into account
expected near-term uses of cash, including working capital, capital expenditures, including acquisitions, debt
service, contractual obligations and dividend payments.

Based on the bonds outstanding at December
31, 2004 from our two outstanding series of convertible and/or exchangeable bonds, and assuming no
conversion, exchange or repurchase prior to maturity, we will be required to pay 221.2 million
when the first series matures on January 1, 2006 and an additional 468 million when the second
series matures on January 1, 2009.
At our annual meeting of shareholders held on May 26, 2004, our shareholders
approved a resolution to authorize us to issue convertible debt by entering into the convertible
bond market.
Continuing interest in WCRS Limited
On April 1, 2004, we sold an indirect 75.1%
interest in WCRS Limited to the management of WCRS Limited and other investors. We retained a 24.9%
interest in WCRS, which interest we account for using the equity method. At any time after June 30,
2008, and in specified circumstances earlier, we have the right to require WCRS to repurchase our
24.9% interest for cash at a price based on a multiple of past financial performance. In specified
circumstances, WCRS has the right to require us to sell our 24.9% interest at the same price, but
subject to a minimum of £3 million.
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|ITEM 6.  DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
Our board of directors
In accordance with French law, our affairs
are managed by our board of directors and by our chairman and chief executive officer, who has full
authority to manage our affairs and has broad powers to act on our behalf within our corporate purpose
and to represent us in dealings with third parties, subject only to the powers expressly reserved
to our board of directors or our shareholders by law, by our bylaws or by decision of our board of
directors or our shareholders.
Under our bylaws, our board of directors must consist of between three and 18
directors. Our board of directors currently consists of 18 directors. At our
annual meeting of shareholders held on June 9, 2005, Mr. Thierry Meyer was not
re-elected to our board and Mrs. Laurence Parisot and Mr. Pierre Bouchut and the
four nominees proposed by Bolloré Médias Investissements
(Bolloré Investissement, represented by Mr. Cédric de
Bailliencourt, Bolloré Médias Investissements, represented by Mr.
Marc Bebon, Mr. Vincent Bolloré and Mr. Thierry Marraud) were elected to our
board. Our bylaws provide that each director is elected for a term of three
years, and is eligible for re-election when the term expires. The board of
directors has the power to appoint and remove the chairman and chief executive
officer at any time.

There are no family relationships among our executive
officers or directors, other than with respect to Leopoldo Rodés
Castañe, who is the father of Fernando Rodés Vilà, and with respect to Cédric de
Bailliencourt, who is the nephew of Vincent Bolloré. Mr. Vincent
Bolloré indirectly controls Bolloré Group, Bolloré
Investissement and Bolloré Médias Investissements. According to a
Schedule 13D (Amendment No. 4) filed with the Securities and Exchange Commission
on June 16, 2005, Bolloré Investissement indirectly controls
Bolloré Médias Investissements. According to a Schedule 13D filed by Sebastian Holdings Inc. and Mr.
Alexander M. Vik with the Securities and Exchange Commission on June 17, 2005,
Bolloré Investissement, on its behalf and on behalf of Bolloré
Médias Investissements, and Sebastian Holdings Inc. entered into an
agreement on June 9, 2005. In the agreement, they agreed to vote in favor of the
other partys nominee resolutions at our companys annual meeting
of shareholders and to cooperate with each other with respect to the strategic
decisions concerning our company, including with respect to issues to be
considered by our board of directors. In a second agreement, Mr.
Bolloré and Sebastian Holdings Inc. agreed that it will be possible for
Sebastian Holdings Inc.s participation on our board of
directors to take place through the appointment of one of the representatives of
one of the two legal entities (Bolloré Médias Investissements and
Bolloré Investissements) that had been proposed by Bolloré
Médias Investissements and elected to our board of directors. According to
the Schedule 13D, Sebastian Holdings Inc. has declined for the present Mr.
Bollorés invitation to appoint one of the representatives of the two legal
entities that had been proposed by Bolloré Médias Investissements
and elected to our board of directors. As of the date hereof, Sebastian Holdings
Inc. has no representation on our board of directors.
Set forth in the table below is information
regarding the members of our board of directors as of June 21, 2005.
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|Name                                                                                                                      |  | Position |  | Age |  | Principal Occupation                                                                                                              |  | Director Since |  | Term Expires | 
|------------------------------------------------------------------------------------------------------------------------- |  | -------- |  | --- |  | --------------------------------------------------------------------------------------------------------------------------------- |  | -------------- |  | ------------ | 
|                                                                                                                          | 
|Alain
      de Pouzilhac (1)(2)                                                                                           |  | Director |  | 60  |  | Former
      Chairman of the
      Board of Directors and
      Chief Executive Officer,
      Havas                              |  | April 1989     |  | 2006         | 
|Bolloré
      Investissements,
      represented by
      Cédric de Bailliencourt                                         |  | Director |  | 35  |  | Chief
      Executive Officer,
      Bolloré Investissement                                                                       |  | June 2005      |  | 2008         | 
|Bolloré
      Médias Investissements,
      represented by
      Marc Bebon                                               |  | Director |  | 57  |  | Chairman,
      Bolloré 
      Médias Investissements                                                                             |  | June 2005      |  | 2008         | 
|Vincent
      Bolloré                                                                                                     |  | Director |  | 53  |  | Chairman
      of the 
      Board of Directors,
      Bolloré Investissement                                                     |  | June 2005      |  | 2008         | 
|Pierre
      Bouchut                                                                                                      |  | Director |  | 49  |  | Executive
      Vice-President
      Finance Control & Legal
      Affairs, Schneider Group                                       |  | June 2005      |  | 2008         | 
|Michel
      Boutinard 
      Rouelle (2)(3)                                                                              |  | Director |  | 59  |  | Vice
      President
      (Newspapers and 
      Periodicals Department),
      La Poste                                         |  | March 1997     |  | 2005         | 
|Leopoldo
      Rodés Castañe (2)                                                                                          |  | Director |  | 70  |  | Chairman
      and President,
      Media Planning Group;
      Vice Chairman, Banco 
      Urquijo                               |  | May 2001       |  | 2007         | 
|Alain
      Cayzac                                                                                                        |  | Director |  | 64  |  | Executive
      Vice President 
      and Chief Communications
      Officer, Havas                                               |  | June 1992      |  | 2006         | 
|Richard
      Colker (4)                                                                                                  |  | Director |  | 59  |  | Interim Chairman
        and Chief
        Executive Officer, Havas;Managing Partner,
        Colker, 
        Gelardin & Co.     |  | June 1995      |  | 2006         | 
|Ed Eskandarian
      (4)                                                                                                  |  | Director |  | 68  |  | Executive
      Vice President,
      Havas; Chairman and 
      Chief Executive Officer, 
      Arnold Worldwide 
      Partners |  | September 2000 |  | 2007         | 
|Pierre
      Lescure (2)(5)                                                                                               |  | Director |  | 59  |  | Chairman
      and Chief 
      Executive Officer,
      AnnaRose Production                                                      |  | June 1994      |  | 2007         | 
|Thierry
      Marraud                                                                                                     |  | Director |  | 63  |  | Chief
      Financial Officer,
      Bolloré Group                                                                                |  | June 2005      |  | 2008         | 
|Jacques
      Mayoux (2)                                                                                                  |  | Director |  | 80  |  | Vice-Chairman,
      Goldman 
      Sachs Europe                                                                                  |  | August 1988    |  | 2006         | 
|Laurence
      Parisot                                                                                                    |  | Director |  | 45  |  | President,
      French
      Institute of Public
      Opinion; Chairman
      and Chief Executive
      Officer, Optimum        |  | June 2005      |  | 2008         | 
|Fernando
      Rodés Vilà (4)                                                                                             |  | Director |  | 44  |  | Executive
      Vice President,
      Havas; Chief Executive 
      Officer, Media Planning
      Group                           |  | January 2001   |  | 2006         | 
|Jacques
      Séguéla (4)                                                                                                 |  | Director |  | 71  |  | Executive
      Vice President 
      and Chief Creative Officer, 
      Havas                                                    |  | June 1992      |  | 2008         | 
|Patrick
      Soulard                                                                                                     |  | Director |  | 53  |  | Deputy
      Chief Executive 
      Officer of the Investment 
      Banking Division, Société
      Générale                     |  | December 1999  |  | 2007         | 
|Société
      Centrale 
      Immobilière et
       Foncière (SOCIF),
      represented
       by Clément Vaturi (3)(5) |  | Director |  | 64  |  | Chairman
      of the Board, 
      Immobilière Hôtelière S.A.                                                                    |  | August 1988    |  | 2007         | 

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| |    
| | ---
| | (1)
| |    
| | (2)
| |    
| | (3)
| |    
| | (4)
| |    
| | (5)
| |    

|The following are summary biographies of each of the members of our board of directors and our principal
executive officers:
Alain de Pouzilhac.Alain de
Pouzilhac was our Chairman and Chief Executive Officer until our
board of directors brought an end to his term of office on June 21, 2005.
Mr. de Pouzilhac will continue to serve as a director on our board of
directors and has agreed to give our company the benefit of his advice and counsel. Mr. de Pouzilhac began
his career at Publicis Conseil, a French advertising company, in 1969 as an
Assistant Account Executive. In 1970, he joined the French advertising company
DDB as account executive. In 1982, he was appointed Chairman and Chief Executive
Officer of Havas Conseil, one of our subsidiaries. Between 1984 and 1989, he
served as Chairman of HCM, an advertising joint venture comprised of Havas
Conseil and Marsteller, Inc. (an agency affiliated with the U.S. advertising
company Young & Rubicam, Inc.), and HCMs successor, HDM, an
advertising joint venture comprised of Havas Conseil, Dentsu and Marsteller. Mr.
de Pouzilhac was appointed our Chairman and Chief Executive Officer in 1989. He
also currently serves on the Board of Directors of Kaufman & Broad (France),
a French real estate developer.

Cédric de Bailliencourt.
Cédric de Bailliencourt is currently Chief Executive Officer of
Bolloré Investissement, a French holding company. Mr. de Bailliencourt, a
graduate of the Institut d'Etudes Politiques de Bordeaux and who holds a DESS
degree in Political and Social Communications from Université
Paris I Sorbonne, currently serves as Chief Executive Officer of Financière
de lOdet, a holding company and the parent company of Bolloré
Investissement and as Director of Equity Interests and Communications for the
Bolloré Group which he joined in 1996. He is also a director of
Société des Chemins de Fer et Tramways du Var et du Gard and of
Forestière Equatoriale, the permanent representative of Bolloré S.A. on
the board of directors of Financière Moncey and the permanent
representative of Financière V on the board of directors of
Société Anonyme Forestière et Agricole, holding
companies with interests in various sectors, including transportation and
agriculture.

Marc Bebon.
Marc Bebon is currently Chairman of Bolloré Médias Investissements, a French holding company.
Mr. Bebon started his career in the investment bank Louis Dreyfus.
He served as treasurer of the Sulzer Group, a Swiss technology corporation.
He is also currently Chief Treasury and Financing Officer of the Bolloré Group which he joined in 1982.

Vincent Bolloré.
Vincent Bolloré is currently the Chairman of the Board of Directors of
Bolloré Investissement, a holding company with interests in transport,
manufacture and distribution in which Mr. Bolloré is the majority
shareholder. Mr. Bolloré started his career at Banque de lUnion
Européene, from 1970 to 1976, and was Deputy Director at Compagnie
Financière Rothschild, from 1976 to 1981. In 1981, he became Chairman and Chief
Executive Officer of Bolloré S.A., a diversified company that operates in
the industry and service sectors. He currently serves as Chairman of the Board
of Directors of Financière de lOdet, a holding company and the parent
company of Bolloré Investissement, and as Chairman and Chief Executive
Officer of Bolloré S.A. He serves on the Boards of Directors of Natexis Banques
Populaires, a large French retail banking network, Vallourec, an integrated
industrial group, Mediobanca, a leading investment bank in Italy and
Financière Moncey, a holding company with interests in various sectors, and is also an Advisor to the Banque de France, the
French central bank. He is also the permanent representative of Bolloré
Participations on the boards of directors of Société Anonyme
Forestière et Agricole, Société des Chemins de Fer et
Tramways du Var et du Gard, Société Industrielle et
Financière de lArtois and Compagnie des Tramways de Rouen,
holding companies with interests in various sectors.

Pierre Bouchut.
Pierre Bouchut is currently the Executive Vice-President, Finance Control & Legal Affairs, of the Schneider Group, a world leader in electricity and automation management.
Mr. Bouchut, a graduate from the HEC School of Management and who holds a masters degree in applied economic sciences fromParis Dauphine, began his career with Citibank Paris.
In 1987, he was appointed Vice President in charge of the Corporate Finance Department of Bankers Trust France SA.
From 1988 to 1990 he acted as a consultant for McKinsey & Company in the areas of Corporate Finance and Integrated Logistics.
From 1990 to 2005, he held a variety of positions with Casino Group, a leading food retailer, including Chief Financial Officer, Director and Chief Executive Officer from 1998 to 2005.

Michel Boutinard Rouelle.Michel Boutinard Rouelle is currently Vice President (Newspapers and Periodicals Department) of La
Poste, the French national postal service, a position he has held since June 2003. Mr. Boutinard
Rouelle, a graduate of the Institut dEtudes Politiques de Paris and the Ecole Nationale dAdministration
(ENA), began his career in government and public affairs, holding a variety of national, regional
and local offices in France from 1971 to 1988, including Chief of Staff of the Mayor of Paris from
1977 to 1979 and Counsellor to the Prime Minister from 1986 to 1988. From 1989 to 1999, Mr. Boutinard
Rouelle held a variety of positions with Vivendi Universal Publishing, a French media group, and
its affiliates. These positions included Vice President of Vivendi Universal Publishing from 1997
to 1998 and Chairman and Chief Executive Officer of Vivendi Universal Publishings affiliate
Havas Media Communication from 1995 to 1999. From 1999 to 2002, Mr. Boutinard Rouelle acted as a
free-lance management consultant. He also currently serves as Chairman of Etablissement de Communication
et de Production Audiovisuelle de la Défense, a state-owned company linked to the French Ministry
of Defense, and serves on the Board of Directors of Union Générale Cinématographique,
a French movie theater company.
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|Leopoldo Rodés Castañe.Leopoldo Rodés Castañe is currently Chairman of Media Planning Group, a position he has held
since 1999. Mr. Rodés Castañe founded Tiempo, an advertising agency, in 1958, and was its
Chairman and Chief Executive Officer until 1984. In 1985, Mr. Rodés Castañe also founded
and became President of Barcelona 92, an organization created to promote the bid
of Barcelona as the host city of the 1992 Summer Olympic Games. From 1986 through 1992, he served
as a member of the executive committee of Summer Olympic Games of Barcelona, known as COOB
92. From 1994 to 1996, he was a member of the International Advisory Board of Repsol,
S.A., a Spanish oil and gas exploration and development company, and served as Vice Chairman of Banco
Urquijo, a Spanish financial institution, until 2004. Mr. Rodés Castañe was President
of Media Planning, S.A. from 1978 through 1999. He also currently serves on the Board of Directors
of the Sogecable, S.A., a Spanish pay television company, Gas Natural SA, a Spanish gas and
electricity marketing, transport and distribution company, Caixa dEstalvis I Pensions de Barcelona,
a Spanish financial institution, and Christies International Europe, a European auction house,
and as Chairman of Mutua Asepeyo, a Spanish insurance association, Invermay S.I.M.C.A.V., a Spanish
investment company, and Fundació Museu dArt Contemporani de Barcelona. Mr. Rodés
Castañe is the father of Fernando Rodés Vilá.
Alain Cayzac.Alain Cayzac is currently one of our Executive Vice Presidents and our Chief Communications Officer.
Mr. Cayzac, a graduate of Hautes Etudes Commerciales (HEC) and of Berlin University, began his career
as an Assistant Brand Manager and then Brand Manager at Procter & Gamble. In 1972, he was one
of the founding Associate Directors of the advertising agency RSCG. He was appointed Chairman of
RSCG in 1984. Following the merger in 1992 of RSCG and our predecessor Eurocom to form Euro RSCG,
Mr. Cayzac was named chairman of Euro RSCG France. From 1996 to 1997, he served as Chairman and Chief
Executive Officer of Euro RSCG Worldwide. He was appointed as one of our Executive Vice Presidents
in 1997. Mr. Cayzac is also Chairman of the Association Sportive, or Sports Association, of the Paris
Saint-Germain (PSG) professional soccer team. He previously served for three years as member of the
executive committee of the Mouvement des Enterprises de France (MEDEF), a confederation of French
businesses and for five years as Chairman of AACC, the French association of advertising agencies.
He currently serves on the Board of Directors of Groupe Amaury, a press group.
Richard Colker.
Richard Colker was appointed as interim Chairman and Chief Executive Officer on June 21, 2005. Mr. Colker is also currently Managing Partner of Colker, Gelardin & Co., a private investment banking
partnership in the United Kingdom. Mr. Colker has held this position since 1990. A graduate of
Michigan State University, Mr. Colker began his career in 1969 at Wells Fargo Bank N.A., a financial
institution. From 1973 to 1976, he was a manager in the Corporate Finance Department of Wells Fargo
Ltd., a merchant banking affiliate of Wells Fargo Bank. From 1976 to 1983, Mr. Colker served as Vice
President of Banque de la Société Financière Européenne, a French financial institution.
From 1983 to 1990, Mr. Colker served as Managing Director, Investment Banking, and a Member of the
London Management Committee of the investment bank Kidder, Peabody International Limited and its
affiliate, Kidder, Peabody & Co., and a Member of the Board of Directors of another affiliate,
Kidder, Peabody Italia S.p.A. Mr. Colker has been one of our directors since June 1995.
Ed Eskandarian.Ed Eskandarian is currently one of our Executive Vice Presidents and the Chairman and Chief Executive
Officer of Arnold Worldwide Partners. Mr. Eskandarian was appointed by our board
of directors at a meeting on June 21, 2005 as one of the members of a team of
three directors who will take responsibility for the companys executive
functions during the transitional period of our company until a new Chairman and Chief
Executive Officer is appointed. Mr. Eskandarian, a graduate of Villanova University and Harvard
Business School, began his career as a scientist working for NASA. In 1971, Mr. Eskandarian became
senior vice president of Humphrey Browning MacDougall, an advertising agency, and in 1981 he became
President and Chief Executive Officer of that agency. When London-based WCRS acquired Humphrey Browning
MacDougall in the mid-1980s, Mr. Eskandarian continued as Chairman and Chief Executive Officer of
the newly formed WCRS Diversified Communications. In 1990, Mr. Eskandarian purchased Arnold Advertising,
and has served as its Chairman and Chief Executive Officer since that time.
Jim Heekin. Jim Heekin is currently the Chairman and Chief Executive Officer of Euro RSCG Worldwide. Jim Heekin
was appointed Chairman and Chief Executive Officer of Euro RSCG Worldwide in January 2004. Mr. Heekin,
a graduate of Williams College, began his advertising career in 1975 in the Research Department of
J. Walter Thompson. He joined the Brand Management Department of General Foods in 1978 and remained
there until 1980, when he joined Bozell Worldwide as an Executive Vice President. He returned to
J. Walter Thompson in 1985, and in 1988 was appointed General Manager of J. Walter Thompson New York
and elected to the agencys Worldwide Board of Directors. Mr. Heekin joined McCann-Erickson
in 1993 as Regional
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|Director of McCann North America. In April 1998, he was named Worldwide Executive Vice President, Regional
Director of the Europe/Middle East/Africa region of McCann-Erickson Worldwide, part of The Interpublic
Group of Companies, Inc. He became the Chairman and CEO of McCann-Erickson Worldwide in January 2000,
and the Chairman and CEO of McCann-Erickson WorldGroup in March 2000.
Pierre Lescure.Pierre Lescure is currently Chairman and Chief Executive Officer of AnnaRose Production, a cinema production
company. From 2001 to April 2002, he was Co-Chief Operating Officer of Vivendi Universal, where he
was in charge of its television and film business unit. Mr. Lescure, a graduate of the Centre de
Formation de Journalistes in Paris, began his career in journalism, holding a variety of positions
in French radio and television from 1965 to 1984. From 1984 to April 2002, he held a variety of positions
with Canal+ Group and its affiliated companies, including Chairman and Chief Executive Officer of
Canal+ Group. Mr. Lescure currently serves on the board of directors of several companies, including
the Supervisory Board of Lagardère, a French media group, the French newspaper Le Monde and Thomson, a French provider of products and services for the media and entertainment industries.

Thierry Marraud.
Thierry Marraud is currently Chief Financial Officer of the Bolloré Group,
a diversified conglomerate with activities in services, industry and finance.
Mr. Marraud, a graduate of the EDHEC and who holds an MBA from the IMD in
Switzerland, started his career as Financial Director of Pont à Mousson, a
company leader in ductile cast-iron. From 1984 to 1995, he held a variety of
positions with Saint-Gobain, a company leader in the production, processing and distribution of materials,  and served as Chief Financial Officer from 1986 to 1989. In 1995, he was a member of
the Executive Committee of Crédit Lyonnais, a major French financial
institution. From 2000 to 2002, he acted as Chairman of the Board of Marsh SA,
the French subsidiary of Marsh Inc., a leader in insurance and risk management.

Jacques Mayoux.Jacques Mayoux is currently Vice-Chairman of Goldman Sachs Europe. Mr. Mayoux, a graduate of Hautes
Etudes Commerciales (HEC) and the Ecole Nationale dAdministration (ENA), began his career in
government, holding a variety of offices within the French Ministry of Finance beginning in 1952.
He served as Chief Executive Officer of Crédit Agricole, a major French financial institution,
from 1963 to 1975, Chief Executive Officer of Sacilor, a French steel company, from 1978 to 1982,
and Chairman and Chief Executive Officer of Société Générale, a French financial
institution, from 1982 to 1986. Since 1986, Mr. Mayoux has served on the board of directors of several
companies. He currently serves on the Board of Directors of Altra Banque. He is also Honorary Chairman
of Société Générale.
Thierry Meyer.Thierry Meyer was one of our directors and the chairman of our compensation and selection committee until June 9, 2005. From 1995 to 2002,
he was an advisor to Alcatel, a French telecommunications company and a number of other multinational
companies, principally in the field of telecommunications. Mr. Meyer, a graduate of Universite Libre
de Bruxelles and Harvard University, began his career at Philips Electronics N.V., a Dutch electronics
company, in its marketing department in 1964. From 1969 through 1995, he served in many capacities
for Philips Electronics, including Chairman and Managing Director of several of its international
divisions.

Laurence Parisot.
Laurence Parisot is currently the Chairman and Chief Executive Officer of the French Institute of Public Opinion (IFOP), a market research group, and the Chairman and Chief Executive Officer of Optimum, the French leader in cupboard doors.
Mrs. Parisot, a graduate of the Institut dEtudes Politiques de Paris and who holds a Masters in Public Law and a DEA (equivalent to an M-Phil) in Politics, began her career as a researcher.
In 1986, she became Chief Executive Officer of the Institut Louis Harris France, a survey institute.
Mrs. Parisot is a member of the Executive Committee and of the Office of the Executive Committee of the MEDEF (Mouvement des Entreprises de France),
a confederation of French businesses, of the Economic and Social Committee, a constitutional assembly, of the Advisory Board of Ernst and Young, of
the Supervisory Board of Euro Disney SCA since 2000, and of the Supervisory Board of Michelin SCA since 2005.

Fernando Rodés Vilà.Fernando Rodés Vilà is currently one of our Executive Vice Presidents and the Chief Executive
Officer of Media Planning Group. Mr. Rodés Vilà was appointed by our board of directors at a meeting on June 21, 2005 as one
of the members of a team of three directors who will take responsibility for the
companys executive functions during the transitional period of our company
until a new Chairman and Chief Executive Officer is appointed. Mr. Rodés Vilà, a graduate of UCB University and of Gresham
College in London in Economics and Finance Management, began his career in banking. In 1985, he joined
Manufacturers Hanover Trust, a financial institution, as the Director of Capital Markets in Barcelona.
In 1989, he became Director of company banking services at Banco Español de Credito, a Spanish
financial institution. Mr. Rodés Vilà was appointed Chief Executive Officer of Media Planning,
S.A. in 1994. In 1999, concurrently with the combination of our media services with those of Media
Planning, S.A., Mr. Rodés Vilà was appointed as the Chief Executive Officer of Media Planning
Group. Mr. Rodés Vilá is the son of Leopoldo Rodés Castane.
Jacques Séguéla.Jacques Séguéla is currently one of our Executive Vice Presidents and our Chief Creative
Officer. Mr. Séguéla was appointed by our board of directors at a meeting on June 21, 2005 as one
of the members of a team of three directors who will take responsibility for the
companys executive functions during the transitional period of our company
until a new Chairman and Chief Executive Officer is appointed.
Mr. Séguéla, who has a Ph.D. in Pharmacy, began his career as a reporter for Paris-Match
and then for France-Soir. In 1969, he created RSCG, which merged with Eurocom in 1992 to create Euro
RSCG Worldwide. Mr. Séguéla is the author of numerous books on advertising and related
matters and has been involved in several political campaigns in France and abroad. He also serves
as Chairman of the Supervisory Board of Emotion Pictures, a French film production company, and as
a Director on the Board of Directors of Compagnies du Monde, a French travel agency.
Patrick Soulard.Patrick Soulard is currently Deputy Chief Operating Officer of the Investment Banking Division of Société
Générale, a position he has held since 1999. Mr. Soulard, a graduate of the Institut dEtudes
Politiques de Paris and the Ecole Nationale dAdministration (ENA), began his career in government,
holding a variety of offices within the French Ministry of Finance from 1977 to 1986. From 1986 to
1995, he held a variety of positions with Banque Nationale de Paris, a French financial institution,
including Director of Financial Affairs and Industrial Holdings, and Manager of Banexi, a subsidiary
bank. Mr. Soulard joined Société Générale as a Senior
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|Banker in 1996. He is also currently a director of Foncières Financières de Participation,
an investment company, and Boursorama, an on-line brokerage in France.
Clément Vaturi.  Clément Vaturi has served as Chairman of the Board of Immobilière Hôtelière,
a French hotel real estate development company, since 1983. Mr. Vaturi is also majority shareholder
of Immobilière Hôtelière. Mr. Vaturi received his Bachelor of Science, Civil Engineering,
from the Massachusetts Institute of Technology and his Master of Science, Industrial Management,
from the Sloan School of Management at the Massachusetts Institute of Technology.
Jacques Hérail.Jacques Hérail is currently one of our Executive Vice Presidents and our Chief Financial Officer,
positions he has held since 1996. He also currently serves as Senior Vice President of Snyder Communications.
Mr. Hérail, a graduate of Sciences Economiques, the Institut dEtudes Politiques and the
Ecole Supérieure des Sciences Economiques et Commerciales (ESSEC), began his career at the accounting
firm Arthur Andersen in 1976. In 1984, he was appointed Chief Financial Officer of HCM and later
served as Chief Financial Officer of HDM. Between 1989 and 1996, he served as Executive Vice President
and Chief Financial Officer of Euro RSCG Worldwide.
Executive committees
Our management relies on two executive
committees chaired by our chief executive officer.
Financial and strategic executive committee. This committee is made up of our chief executive officer, chief financial officer, the chief
executive officers and chief financial officers of each of our divisions, our chief communications
officer, chief creative officer, chief performance officer and worldwide general counsel. The committee
focuses on the strategy of the company and on monitoring budgets and operations. In 2004, it paid
particular attention to our cost control programs. In addition, the committee concentrated on methods
to accelerate the commercial momentum of our agencies worldwide. It was also naturally a partner
in the work and decisions on acquisition projects and, more generally, all projects of a strategic nature.
Creative executive committee.This committee is made up of our chief executive officer, chief creative officer, chief performance
officer, the chief executive officers of each of our divisions, and the leaders of the creative teams
in all the categories of our communications activities. The existence of an executive committee dedicated
to creation is an additional testament to the importance we place on creativity. The committee ensures
that the needs of the creative teams are considered at the highest level of our company. It is invested
in the search for new talent, analyzes both the successes and failures of the creative teams, judges,
classifies and distributes the best work in-house, and selects the campaigns that will be entered
in award competitions.
Our audit committee
Our board of directors has a standing audit committee. The purpose of the audit committee is to:
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

| |  | make recommendations concerning the engagement of independent public accountants;                                                                    
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                      
| |  | review with our management and independent public accountants the plans for, and scope of, the audit procedures to be utilized and results of audits;
| |   |                                                                                                                                                      
| |  | approve the professional services provided by the independent public accountants;                                                                    
| |   |                                                                                                                                                      
| |  | approve all related party transactions; and                                                                                                          
| |   |                                                                                                                                                      
| |  | review the adequacy and effectiveness of our internal controls.                                                                                      

|52
|--



|The current members of our audit committee
are Messrs. Boutinard Rouelle and Vaturi, each of whom are independent under Nasdaq
independence criteria. Mr. Colker resigned from the audit committee on June 21,
2005 upon his appointment by our board of directors to perform the functions of
Chairman and Chief Executive Officer on an interim basis until a permanent
Chairman and Chief Executive Officer is appointed by our board of directors.
Our board of directors intends to appoint
a third member to our audit committee in the near future.
 At a meeting in April 2005, our board of directors
determined to review the membership of the audit committee following our annual shareholders meeting on June 9, 2005 so as to include an audit committee
financial expert on the committee and with the objective of having an audit committee
comprised only of directors who are independent under both Nasdaq criteria and the independence criteria
of the French report of the working group chaired by Daniel Bouton, Promoting Better Corporate
Governance in Listed Companies, which we refer to as the Bouton Report.
Our compensation and selection committee
Our board of directors has a standing compensation
and selection committee. The purpose of the compensation and selection committee is to:
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

| |  | examine and present recommendations concerning the compensation of each of our executive officers;                                                                             
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                
| |  | examine the methodology of attributing stock options to our executive officers, taking into account the performance of each executive as well as the performance of our shares;
| |   |                                                                                                                                                                                
| |  | review compensation mechanisms having an impact on our outstanding share capital;                                                                                              
| |   |                                                                                                                                                                                
| |  | present a range of board and committee fees to be paid to the members of our board of directors; and                                                                           
| |   |                                                                                                                                                                                
| |  | issue recommendations regarding candidates for our board of directors and top executives and succession plans for our chief executive officer.                                 

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|The current members of our compensation and selection committee are Messrs.
Lescure and Vaturi, both of whom are independent under Nasdaq
independence criteria. Mr. Thierry Meyer, who has been chairman of our
compensation and selection committee, was not re-elected to our board of
director at our annual meeting of shareholders on June 9, 2005. At a meeting in April 2005, our board of
directors determined to review the membership of the compensation and selection
committee with the objective of having a compensation and selection committee comprised only of
directors who are independent under both Nasdaq criteria and the independence
criteria of the Bouton Report and to appoint a chair to the
committee.
Our strategic planning committee
The purpose of our strategic planning committee
is to assist and make recommendations to our board regarding the medium and long-term strategic
goals for our company. Our strategic planning committee:
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

| |  | examines annual budgets, semi-annual reviews, as well as medium and long-term strategic plans;                                                 
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                
| |  | reviews and evaluates the terms of proposed acquisitions and divestitures, and makes recommendations regarding these transactions to our board;
| |   |                                                                                                                                                
| |  | reviews the financial planning and financial structure of our company; and                                                                     
| |   |                                                                                                                                                
| |  | evaluates strategic alternatives for our company and its operating divisions.                                                                  

|                                                                                                                                                                                                                
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|The current members of our strategic planning
committee are Messrs. Rodés Castañe, Lescure, Mayoux, de Pouzilhac and Boutinard Rouelle,
a majority of whom are independent under Nasdaq independence criteria.

|53
|--



|Compensation of our directors and officers
Compensation of our executive officers
Our compensation and selection committee
reviews the compensation packages of our executive officers annually. The compensation policy that
has been established by our compensation and selection committee is designed to motivate our executive
officers and to closely align their interests with those of our shareholders. The policy is based
on the following principles:
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

| |  | The various components and the total amount of the compensation packages are determined based on benchmarking analyses, to ensure that they remain competitive;              
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                              
| |  | A significant proportion of compensation for the executive officers (including stock options) is variable and depends on the fulfillment of performance targets; and         
| |   |                                                                                                                                                                              
| |  | The performance targets are based either on the intrinsic performance of our company or the relevant division, or on our companys performance in relation to its peer group.

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Our
board of directors intends to review the membership of our compensation and
selection committee in the near future and this compensation committee may modify
the principles outlined herein established by the previous compensation and selection committee.


Components of compensation
packages.  The compensation packages of our executive officers, with
the exception of Mr. Richard Colker, our interim Chairman and Chief Executive
Officer who will receive a special compensation arrangement currently being
negotiated to reflect his interim position, comprise
a fixed salary, an annual bonus, a long-term incentive payment (for a minority
of executives) and stock options. For 2005 all performance criteria indicated
are based on French accounting standards and will be adapted to meet the new
IFRS accounting standards applicable to our company starting in 2005.

1)Fixed salary. Fixed salaries are determined by reference to market rates of pay for comparable positions. No salary
increases have been awarded to our executive officers for 2005.

2)Annual bonus. Annual bonuses are determined based primarily on quantitative criteria, such as:
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

| |  | Operating margin (earnings before interest, taxes and goodwill amortization expressed as a percentage of revenue);
| | - | ------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                   
| |  | Organic growth;                                                                                                   
| |   |                                                                                                                   
| |  | Free cash flow; and                                                                                               
| |   |                                                                                                                   
| |  | Working capital requirements.                                                                                     

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|These targets are set at either group or
division level, depending on the executives position in the organization. As a general rule,
30% to 50% of the portion of an executive officers target bonus conditioned on financial criteria
is linked to operating margin, 30% to 50% to organic growth and 25% to 40% to the cash criteria.
Annual bonuses are also partially based
on both quantitative and qualitative non-financial criteria. In principle, no more than 25% to 30%
of the total target bonus is linked to such non-financial criteria.
Depending on the executives
position and the division, the total annual bonus, assuming that all the targets are met, represents
between 50% and 100% of the individuals salary. If the targets are exceeded, the bonus may
represent up to a maximum of 200% of base salary.
a) 2004 Bonuses. After a difficult year in 2003, our company made a solid recovery in 2004. As a result, most of the
performance objectives achieved by our executive officers were either in the high range of the target
bracket or, in a majority of cases, in the maximum range of the targets to be achieved. Consequently,
the amounts of the corresponding bonuses are close to their maximum levels, reversing the trend of
the previous two years where bonuses were low or zero.

|54
|--



|b)2005 Bonuses. The 2005 bonuses for our executive officers are based on the same general principles described above.
Non-financial criteria, which by exception were not applied in 2004, were reintroduced for the 2005
bonuses. In addition, as in 2004, a minimum level of earnings before interest, taxes and goodwill
amortization is required to trigger any eligibility for a bonus based on financial criteria. However,
as opposed to 2004 where the threshold was expressed as a percentage of revenue, in 2005 it is replaced
by an absolute value, to be more in line with the expectations of shareholders and the financial
community.
3) Long-term Incentive Plan (LTIP).  The compensation and selection committee decided to introduce a long-term incentive plan beginning
in 2004 for a minority of our executive officers who are the most directly able to influence our
financial results. The purpose of this plan is to reward longer term performance. The plan is intended
to act as an incentive for the executives concerned while also creating value for shareholders. Incentive
payments are based on our performance compared with that of our five main competitors (Omnicom Group,
The Interpublic Group of Companies, WPP Group, Publicis Groupe, and Aegis Group) and they also take
into account the level of our net debt. This benchmarking mechanism is designed to ensure that only underlying
performance is rewarded, and not the possible benefits of an improvement in economic conditions.
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

| | The performance condition is based on a comparison
of the cumulative growth in earnings before interest, taxes and goodwill amortization between 2004
and 2006 compared to our five main competitors.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|If the trigger criterion linked to control
of our net debt is met, our cumulative growth in earnings before interest, taxes and goodwill amortization
between 2004 and 2006 must be in third place or better compared with our main competitors for a
LTIP payment to be due, with the amount of the LTIP payment decreasing significantly from first to
third place.
Given the size of Euro RSCG Worldwide
within our company and the compensation committees desire to improve our financial performance
over time, the committee decided to extend the benefit of a LTIP to Jim Heekin, the chairman and
chief executive officer of Euro RSCG Worldwide. In his case, the LTIP will be based on growth in
earnings before interest, taxes and goodwill amortization as a percentage of Euro RSCGs total
revenue and organic growth at Euro RSCG Worldwide between 2004 and 2006.
4) Stock options.
a)For 2004.  It is important to distinguish between the stock option policy conditioned on performance objectives
that was initiated in 2002 by the compensation committee for our executive officers, and the exceptional
stock option grant on December 1, 2004 covering our executive officers and other key officers.
i)Conditional stock option program.Under our stock option policy for executive officers, stock option grants are generally tied to attainment
of our cash earning per share targets and our stock price performance in relation to that of our
five principal competitors (previously six principal competitors, including Grey Global Group, which
was acquired by WPP Group in March 2005). For options to be granted, our stock price performance
must rank among the top three in this peer group. The number of options granted decreases significantly
from first place to third place. This stock option policy was implemented beginning in 2002.
In application of our policy, none of our
2003 executive officers received stock options related to our 2003 fiscal year due to our 2003 stock
price and earnings performance.
In 2004, with respect to the
condition linked to our share price performance in relation to our principal competitors, the compensation
committee decided to maintain Grey Global Group in the panel, even though the Grey share price benefited
from a very strong speculative effect linked to its sale. Without Grey, our relative share price
performance in 2004 would have ranked third (instead of 4th with Grey included), which would have
triggered option grants under this criterion. As a result of maintaining Grey in the panel, no options were due under this criterion.

|55
|--



|On the other hand, the target for cash earnings per share was achieved in 2004. Consequently, a total number
of 795,000 options corresponding to this performance should have been granted in the first half of
2005. However, all our executive officers waived this allotment following the exceptional option
grant on December 1, 2004.
ii) Exceptional option grant of December 1, 2004. This plan, involving 2,600,000 options for our executive officers and 9,800,000 options in total,
was entirely exceptional and was intended to reward the executive officers and other key employees
of our company for their hard work during our 2003 restructuring and the resulting strong recovery
in 2004. In addition, the compensation committee believed it was vital to continue to motivate and
reinforce the loyalty of these executives and key employees in the face of destabilizing conditions
in the second half of 2004 created by uncertainties surrounding the intentions of Bolloré Médias
Investissements, our largest shareholder. This exceptional grant was made as part of the compensation
committees ongoing desire to reconcile to the greatest extent possible its principal objectiveto
protect the interests of our company and its shareholderswith the goal of maintaining the loyalty
of senior executives under these specific conditions. These two objectives are, however, closely
linked insofar as the durability and the growth of our company are based on the talent of its key
employees and, for many of them, on their strong personal relations with clients.
b)For 2005
i) Conditional stock option program

The compensation committee indicated that it intends to continue
its stock option program in the same general proportions as in the past, not counting the exceptional
grant on December 1, 2004.
ii)Performance conditions
Because of the introduction of IFRS accounting standards beginning in 2005, the performance conditions
related to equity-based compensation for executive officers were reviewed, and as of 2005, the compensation committee determined that they
will be structured as follows:
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|56
|--



| |  | The exercise
      of a portion of the options (1/3 to 50%) granted to our executive officers
      would be conditioned on the growth in our average fully diluted cash earnings
      per share over a 3-year period compared with our five main competitors.
      Our cumulative growth in fully diluted cash earnings per share over such
      3-year period must be in third place or better compared with our five main
      competitors for any options to be available to our executive officers, with
      the number of available options decreasing significantly from first place
      to third  place.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |  | The exercise
      of the remainder of the options (50% to 2/3) granted to our executive officers
      would be conditioned on the 3-year change in our average ratio of operating
      income to revenue.                                                                                                                                                                                                                                                                                                                                                                                                            

|                                                                                                                                                                                                                                                                                                                                                                                            
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|In
        each case, it is the exercise of the options that would be conditioned and not the grant.
      Directors
        fees
      Beginning
        in 2003, we changed our policy on directors fees. The fixed annual
        retainer amount was reduced by 25% to 30,000 and we added a variable
        retainer amount. The variable retainer amount is based on two criteria:
|                                                                                                                                                                                                                                                                                                                                                                                            

| |  | the directors
      attendance at board and committee meetings, with a payment amount equal
      to 2,000 for each meeting attended, or 3,000 per meeting for
      committee chairmen; and      
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                      
| |  | growth
      in our annual operating margin, for which the variable retainer payment
      amount ranges from 0% to 40% of the fixed retainer amount plus the attendance-based
      variable amount.

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|In
        the past, 8,000 of the fixed annual retainer amount was paid
        in Havas treasury shares which could not be sold for as long as the director
        remained on our board of directors. As of 2005, regulatory changes limiting
        the use of shares repurchased under our share buyback program will no
        longer permit this practice. Directors fees will therefore now be
        paid entirely in cash, but as a replacement policy each director will
        undertake to hold a minimum of 3,000 Havas shares throughout his term.
      Based
        on our 2004 operating margin, our directors received a variable retainer
        payment equal to 40% of the fixed retainer amount for 2004, in contrast
        to 2003 when the minimum operating margin target was not achieved and
        therefore our directors received no variable retainer amount based on
        the operating margin criterion.
      In
        addition, beginning in 2004, directors fees paid to our executive
        officers, which were previously part of, and not in addition to, their
        annual compensation packages, were simply eliminated.

|57
|--



|The tables below set forth the following
information with respect to each of our directors and executive officers for 2004, which
does not include the new non-employee directors elected at the annual meeting of
shareholders on June 9, 2005:
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                

| |  | gross compensation for 2004, which includes all regular compensation, benefits in kind and contingent or deferred compensation accrued in 2004, even if payable at a later date; and
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                     
| |  | stock option grants in 2004 and stock option exercises in 2004.                                                                                                                     

|                                             
|---------------------------------------------
|Compensation Table for 2004 (1)              
|                                             
|Employee Directors and
    Executive Officers
|                                             

|In                        | Base Salary
      (2) |  | Variable
      Compensation
      (3) |  | Other
      Compensation(4) |     | Board and
      Committee
      Fees |  | Total      | 
|-------------------------- | --------------------- |  | ------------------------------------- |  | --------------------------- | --- | ------------------------------------ |  | ---------- | 
|Alain de Pouzilhac         | 1,000,000             |  | 1,733,333                             |  | 5,117                       |     | N/A                                  |  | 2,738,450  | 
|Alain Cayzac               | 450,000               |  | 390,000                               |  | 6,290                       |     | N/A                                  |  | 846,290    | 
|Ed Eskandarian             | 602,304               |  | 962,964                               |  | 12,151                      |     | N/A                                  |  | 1,577,419  | 
|Jacques Hérail             | 700,000               |  | 786,667                               |  | 6,777                       |     | N/A                                  |  | 1,493,444  | 
|Leopoldo Rodés Castañe (5) | 900,000               |  | 470,250                               |  | 94,827                      |     | N/A                                  |  | 1,465,077  | 
|Fernando Rodés  Vilà       | 600,000               |  | 996,304                               |  | 215,530                     | (6) | N/A                                  |  | 1,811,834  | 
|Jacques Séguéla            | 450,000               |  | 900,000                               |  | 6,273                       |     | N/A                                  |  | 1,356,273  | 
|Jim Heekin (7)             | 722,765               |  | 562,151                               |  | 374,787                     | (8) | N/A                                  |  | 1,659,703  | 
|                           |                       |  |                                       |  |                             |     |                                      |  |            | 
|TOTAL                      |                       |  |                                       |  |                             |     |                                      |  | 12,948,490 | 

|                      
|----------------------
|Non-employee Directors
|                      

|In                                         | Fixed Board
      Fees |  | Variable 
      Board
      and
      Committee
      Fees |  | Total Board and
      Committee Fees |  | Other Compensation |  | Total   | 
|------------------------------------------- | ---------------------- |  | ---------------------------------------------------------- |  | ------------------------------------ |  | ------------------ |  | ------- | 
|Michel Boutinard Rouelle                    | 30,000                 |  | 50,000                                                     |  | 80,000                               |  | N/A                |  | 80,000  | 
|Richard Colker                              | 30,000                 |  | 47,000                                                     |  | 77,000                               |  | N/A                |  | 77,000  | 
|Pierre Lescure                              | 30,000                 |  | 27,200                                                     |  | 57,200                               |  | N/A                |  | 57,200  | 
|Juan March(9)                               | 12,500                 |  | 9,800                                                      |  | 22,300                               |  | N/A                |  | 22,300  | 
|Jacques Mayoux                              | 30,000                 |  | 33,000                                                     |  | 66,000                               |  | N/A                |  | 66,000  | 
|Thierry Meyer                               | 30,000                 |  | 41,000                                                     |  | 71,000                               |  | N/A                |  | 71,000  | 
|Patrick Soulard                             | 30,000                 |  | 26,000                                                     |  | 56,000                               |  | N/A                |  | 56,000  | 
|SOCIF                                       | 30,000                 |  | 26,000                                                     |  | 56,000                               |  | N/A                |  | 56,000  | 
|Clément Vaturi 
    representative of SOCIF | N/A                    |  | 22,000                                                     |  | 22,000                               |  | N/A                |  | 22,000  | 
|                                            |                        |  |                                                            |  |                                      |  |                    |  |         | 
|TOTAL                                       |                        |  |                                                            |  |                                      |  |                    |  | 507,500 | 

|   
|---
|   
|(1)
|   
|(2)

|58
|--



|    | for Jim
      Heekin, who received an increase in his base salary effective January 1,
      2004 when he became Chairman and Chief Executive Officer of Euro RSCG Worldwide.                                                                                                                                                                 
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                               
|(3) | Reserves
      for LTIP accruals are included in variable compensation only in the year
      in which the beneficiaries become definitively vested in the LTIP benefit.                                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                                               
|(4) | Includes
      benefits in kind, as well as retirement benefits.                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                               
|(5) | Mr. Rodés
      Castañe is Chairman of Media Planning Group. His compensation is not
      reviewed by our compensation and selection committee and results from a
      January 2001 agreement entered into in connection with the 2001 acquisition
      of the 55% of the shares of Media Planning Group that we did not already
      own.
|    |                                                                                                                                                                                                                                                                                                                                               
|(6) | Includes
      75,000 related to expatriation expenses and 60,000 paid as part
      of a defined contribution retirement plan.                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                               
|(7) | Jim Heekin
      is not one of our directors but he is one of our executive officers and
      his compensation is therefore reviewed by our compensation and selection
      committee.                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                                               
|(8) | Including
      321,229 paid as part of a defined contribution retirement plan.                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                               
|(9) | Mr. March
      ceased to be a member of our board of directors and our compensation and
      selection committee as of May 26, 2004.                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                                                                                                                                               

|                                                                                                                                                                                                                
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|In
addition to contributions to defined contribution retirement plans, as of December 31, 2004, amounts accrued for retirement
or similar benefits for our directors and executive officers totaled1.6 million.

|                                                                             
|-----------------------------------------------------------------------------
|Options of Executive Officers of HavasGranted in 2004 or Exercised in 2004(1)
|                                                                             

|                       | Number of Options Granted In
      2004 |         | Exercise
      Price per
      Share () |      | Grant Date |         | Expiration Date |         | Number of
    Options
    Exercised in
    2004 |   | Exercise
      Price per Share () |     | Grant Date |     | Options Exercised Prior to 2004 and Not Sold in 2004 |        
|---------------------- | --------------------------------------- | ------- | ---------------------------------------- | ---- | ---------- | ------- | --------------- | ------- | ----------------------------------------------- | - | ---------------------------------- | --- | ---------- | --- | ---------------------------------------------------- | -------
|                       |                                         |        
|                       |                                         |         |                                          |      |            |         |                 |         |                                                 |   |                                    |     |            |     |                                                      |        
|Alain de Pouzilhac(2)  |                                         | 700,000 |                                          | 4.17 |            | 12/1/04 |                 | 12/1/11 |                                                 | 0 |                                    | N/A |            | N/A |                                                      | 358,880
|Alain Cayzac           |                                         | 200,000 |                                          | 4.17 |            | 12/1/04 |                 | 12/1/11 |                                                 | 0 |                                    | N/A |            | N/A |                                                      |        
|Ed Eskandarian         |                                         | 300,000 |                                          | 4.17 |            | 12/1/04 |                 | 12/1/11 |                                                 | 0 |                                    | N/A |            | N/A |                                                      |        
|Jacques Hérail         |                                         | 500,000 |                                          | 4.17 |            | 12/1/04 |                 | 12/1/11 |                                                 | 0 |                                    | N/A |            | N/A |                                                      | 124,440
|Fernando Rodés Vilà    |                                         | 300,000 |                                          | 4.17 |            | 12/1/04 |                 | 12/1/11 |                                                 | 0 |                                    | N/A |            | N/A |                                                      |        
|Leopoldo Rodés Castañe |                                         | 0       |                                          | N/A  |            | N/A     |                 | N/A     |                                                 | 0 |                                    | N/A |            | N/A |                                                      |        
|Jacques Séguéla        |                                         | 250,000 |                                          | 4.17 |            | 12/1/04 |                 | 12/1/11 |                                                 | 0 |                                    | N/A |            | N/A |                                                      |        
|Jim Heekin (3)         |                                         | 350,000 |                                          | 4.17 |            | 12/1/04 |                 | 12/1/11 |                                                 | 0 |                                    | N/A |            | N/A |                                                      |        

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|   
|(1) | The number
      of options granted in 2004 and the exercise price per share indicated in
      the table do not reflect the anti-dilution adjustment due to our distribution
      of paid-in capital on June 14, 2005. As a result of that distribution, after
      June 14, 2005, the number of options granted is multiplied in each case
      by 1.01508914 and the exercise price per share is multiplied by 0.98513516.                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|(2) | In addition,
      Alain de Pouzilhac receives an annual grant of 300,000 options from 2002
      through 2005 as compensation for renouncing a substantial part of the benefits
      to which he was entitled under a retirement plan established in 1978. On
      May 26, 2004, Mr. de Pouzilhac received 300,000 (334,505 after anti-dilution
      adjustments related to our distribution of paid-in capital in June 2004,
      our rights offering in October 2004 and our distribution of paid-in
      capital in June 2005) options under this annual grant for 2004. These options
      have an exercise price of 4.46 (3.99 after anti-dilution adjustments
      related to our distribution of paid-in capital in June 2004, our rights
      offering in October 2004 and our distribution of paid-in capital in June
      2005) per share and expire on May 26, 2014.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|(3) | Jim Heekin
      is not one of our directors but he is one of our executive officers and
      his compensation is therefore reviewed by our compensation and selection
      committee.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

|59
|--



|In addition to the compensation set forth
in the table above, some of our directors who are executive officers are entitled to severance benefits
under their employment agreements with us. Our company entered into severance
and non-competition agreements with Mr. Alain de Pouzilhac on June 28, 2005,
the terms of which may be found in exhibits 4.7, 4.8 and 4.9 attached to this
report.
Share ownership
As of June 16, 2005, all our directors
and executive officers as a group (21 persons, including both SOCIF and Clément Vaturi, Bolloré Médias Investissements
and Marc Bebon, and Bolloré Investissement and Cédric de Bailliencourt) beneficially
owned 121,901,260 shares, or 28.4% of our outstanding shares (including 113,917,172
shares, or 26.8% of our outstanding shares, held by
Mr. Bolloré, Bolloré Médias Investissements and Bolloré Investissement, which includes 16,929,649
shares beneficially owned by Sebastian Holdings Inc. that Bolloré
Médias Investissements may be considered to beneficially own), but not including 9,393,989 shares, which
represented approximately 2.2% of our outstanding shares on that date, owned by companies controlled
by the families of Leopoldo Rodés Castañe and Fernando Rodés Vila. As of that date,
none of our other directors or executive officers beneficially owned more than 1% of our outstanding
shares.
Employees and labor relations
Our business is highly dependent upon the
skills of our creative, research, media and account personnel and their relationships with our clients.
Many of our employees have employment contracts, some of which contain covenants not to compete.
Our senior management employees also are generally bound by covenants not to compete. Those employees
who are not subject to covenants are typically able to move within the industry with relative ease.
Competition with our competitors for qualified personnel is intense, and we, like our principal competitors,
are vulnerable to any failure to attract or retain qualified personnel. We believe the compensation
arrangements for our key employees are highly competitive with those of other advertising and communications
services companies.
The tables below set forth our total number
of employees by geographic location. The figures in these tables are based on the average number
of employees employed during the year by each of our agencies as of December 31, 2002, 2003 and 2004:
Employees by Geographic Location
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

|Year Ended December 31, |  | Total Number 
    of Employees |  | Europe |  | U.S.  |  | Asia Pacific |  | Latin America | 
|----------------------- |  | ------------------------------ |  | ------ |  | ----- |  | ------------ |  | ------------- | 
|2002                    |  | 18,864                         |  | 10,430 |  | 5,588 |  | 1,739        |  | 1,107         | 
|2003                    |  | 16,343                         |  | 8,055  |  | 5,409 |  | 1,583        |  | 1,296         | 
|2004                    |  | 14,898                         |  | 7,174  |  | 5,057 |  | 1,394        |  | 1,273         | 

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Some of our U.S. employees in one of our
subsidiaries are covered by collective bargaining agreements with two separate labor unions. In
Europe, membership of our employees in labor unions varies from country to country, and a number
of countries prohibit us from keeping records of union membership. We are subject to various collective
bargaining agreements in Europe. In most continental European countries, collective bargaining agreements
are imposed by law on the entire industry. We believe that our relationship with the labor unions
is good.
As of December 31, 2004, our principal
collective bargaining agreements are as follows:

|60
|--



|Country       |  | Number of Covered Employees |  | Expiration Date
|------------- |  | --------------------------- |  | ---------------
|             
|Argentina     |  | 195                         |  |                
|Austria       |  | 62                          |  |                
|Belgium       |  | 131                         |  |                
|Brazil        |  | 192                         |  |                
|France        |  | 2,539                       |  |                
|Italy         |  | 81                          |  |                
|Italy         |  | 55                          |  |                
|Italy         |  | 11                          |  |                
|Portugal      |  | 117                         |  |                
|Portugal      |  | 142                         |  |                
|Spain         |  | 698                         |  |                
|Spain         |  | 235                         |  |                
|United States |  | 45                          |  |                
|United States |  | 47                          |  |                

|    |                                                                                                                                                                   
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | A
      new collective bargaining agreement is currently being negotiated. The existing
      agreement has been extended pending the outcome of the negotiations.
|    |                                                                                                                                                                   
|(2) | This
      collective bargaining agreement has been verbally agreed but is not yet
      signed.                                                                  
|    |                                                                                                                                                                   

|Option plans
The annual shareholders meeting of May 21, 2003 authorized the board of directors to grant to employees or board members of the
company and its subsidiaries, as chosen by it, options to subscribe to shares of the company, up to maximum of 2.5% of the capital on an annual
average valued over a period of three years ended July 21, 2006. The meetings of May 26, 2004 and June 9, 2005 did not grant any new authorization. At December 31, 2004, the
number of options authorized and not yet granted was 5,712,265.
 As of December 31, 2004, options to purchase an aggregate of 37,057,658 Havas shares were outstanding,
including options to purchase an aggregate of 9,278,505 Havas shares held by our mandataires sociaux, which includes our directors and executive officers other than Jim Heekin at that date, but excluding the converted
SNC and Circle.com options described below. All of the options we granted are subject to specified
anti-dilution adjustments, including anti-dilution adjustments in the event of a rights offering
and distributions of a portion of paid-in capital. As a result of our rights offering on October
19, 2004 and our distribution of a portion of paid-in capital in connection with our payment of our
annual dividend to shareholders on June 11, 2002, June 18, 2003, June 17, 2004 and June 14, 2005, the number of
options and the exercise prices for outstanding options under all our plans except the converted
SNC and Circle.com options were adjusted on those dates. Information in this section and the following
table and footnotes to the table reflects the adjustments prior to December 31, 2004, but excludes the
adjustments on June 14, 2005. On June 14, 2005, there was a further adjustment
made. All of the options reflected in the following table and footnotes except
the converted SNC and Circle.com options should be multiplied in each case by 1.01508914 and the exercise price per share
should be multiplied by 0.98513516 in order to reflect the adjustments made on June
14, 2005. For a discussion of the possible future distribution of paid-in-capital
in connection with our payment of dividends to shareholders, see Item 8. Financial Information
 Dividend Policy on page 68.
Our board of directors will fix the number
of Havas shares and the exercise price for option grants, which we refer to as plans, under our shareholder
authorizations in accordance with the laws in effect at the time the board of directors decides to
grant the options. At that time, our board of directors also will establish the conditions for exercising
the options and the periods during which the options may be exercised.
Our shareholder authorizations typically
permit our board of directors to grant options to purchase up to an aggregate percentage of our issued
shares from time to time. Each shareholder authorization is effective for a specified period from
the date of authorization or until all of the options authorized have been granted. On May 21, 2003,
our shareholders gave our board of directors authority for a period of 38 months to grant options
to purchase up to an annual average over the term of the authorization of 2.5% of the then issued
Havas shares, including treasury shares, from time to time, provided that the aggregate number of
shares purchasable under options outstanding from time to time may not exceed 12% of the then issued
Havas shares, including treasury shares. As of December 31, 2004, the only new options that
may be granted by the board are options to purchase shares under our May 2003 shareholder authorization.
Upon the completion of the acquisition
of Snyder Communications in September 2000, all outstanding options to purchase shares of SNC common
stock of Snyder Communications were converted into options to purchase an aggregate of 9,494,613
Havas ADSs, of which options to purchase an aggregate of 2,412,997 Havas ADSs were outstanding as
of December 31, 2004. These options are not considered to be part of any of our option plans, are
not subject to anti-dilution adjustments and do not affect the calculation of the limits on option
grants described above.
In addition, upon the completion of the
acquisition of Circle.com in June 2001, all outstanding options to purchase shares of Circle.com
common stock of Snyder Communications were converted into options to purchase an aggregate of 273,220
Havas ADSs, of which options to purchase an aggregate of 78,762 Havas ADSs were
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|61
|--



|outstanding as of December 31, 2004. These options are not considered to be part of any of our
option plans, are not subject to anti-dilution adjustments and do not affect the calculation of the
limits on option grants described above.
The table below shows information relating
to our various options plans and the converted SNC options and Circle.com options as of December
31, 2004:
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                 

|                                                                       |  | 6/19/1997 Plan (2) |  | 2/25/1999 Plan |  | 6/17/1999 Plan |  | 9/30/1999 Plan |  | 12/02/1999 Plan |  | 3/02/2000 Plan |  | 5/23/2000 Plan |  | 10/23/2000 Plan |  | 3/01/2001 Plan |  | 5/22/2001 Plan |  | 2/14/2002 Plan (3) |  | 12/12/2002 Plan |  | 3/24/2003 Plan |  | 7/4/2003 Plan |  | 12/10/2003 Plan |  | 5/26/2004 Plan |  | 12/01/2004 Plan |  | Converted SNC Options |  | Converted Circle.com Options | 
|---------------------------------------------------------------------- |  | ------------------ |  | -------------- |  | -------------- |  | -------------- |  | --------------- |  | -------------- |  | -------------- |  | --------------- |  | -------------- |  | -------------- |  | ------------------ |  | --------------- |  | -------------- |  | ------------- |  | --------------- |  | -------------- |  | --------------- |  | --------------------- |  | ---------------------------- | 
|Date of shareholders meeting authorizing plans                        |  | 6/19/1997          |  | 6/19/1997      |  | 6/19/1997      |  | 6/19/1997      |  | 6/19/1997       |  | 6/17/1999      |  | 6/17/1999      |  | 6/17/1999       |  | 5/23/2000      |  | 5/23/2000      |  | 5/22/2001          |  | 5/22/2001       |  | 5/22/2001      |  | 5/23/2002     |  | 5/23/2002       |  | 5/23/2002      |  | 5/23/2002       |  | 8/25/2000             |  | 5/22/2001                    | 
|                                                                       |  |                    |  |                |  |                |  |                |  |                 |  |                |  |                |  |                 |  |                |  |                |  |                    |  |                 |  |                |  |               |  |                 |  |                |  |                 |  |                       |  |                              | 
|Date of board meeting granting options                                 |  | 6/19/1997          |  | 2/25/1999      |  | 6/17/1999      |  | 9/30/1999      |  | 12/02/1999      |  | 3/02/2000      |  | 5/23/2000      |  | 10/23/2000      |  | 3/01/2001      |  | 5/22/2001      |  | 2/14/2002          |  | 12/12/2002      |  | 3/24/2003      |  | 7/04/2003     |  | 12/10/2003      |  | 5/26/2004      |  | 12/01/2004      |  | 8/25/2000             |  | 5/22/2001                    | 
|                                                                       |  |                    |  |                |  |                |  |                |  |                 |  |                |  |                |  |                 |  |                |  |                |  |                    |  |                 |  |                |  |               |  |                 |  |                |  |                 |  |                       |  |                              | 
|Number of shares over which options granted (1)                        |  | 6,635,639          |  | 806,049        |  | 338,468        |  | 227,066        |  | 977,345         |  | 1,009,219      |  | 454,257        |  | 4,325,218       |  | 4,915,835      |  | 3,727,137      |  | 6,753,575          |  | 32,076          |  | 2,967,152      |  | 345,560       |  | 1,647,607       |  | 411,916        |  | 10,108,000 (14) |  | 9,494,613             |  | 273,220                      | 
|                                                                       |  |                    |  |                |  |                |  |                |  |                 |  |                |  |                |  |                 |  |                |  |                |  |                    |  |                 |  |                |  |               |  |                 |  |                |  |                 |  |                       |  |                              | 
|Number of shares over which options granted to our mandataires sociaux |  | 3,431,563          |  | 368,329        |  |               |  |               |  | 568,408         |  | 327,382        |  | 454,257        |  |                |  | 1,676,760      |  | 106,847        |  | 1,570,562          |  |                |  | 222,164        |  | 329,104       |  |                |  | 329,532        |  | 2,250,000       |  |                      |  |                             | 
|                                                                       |  |                    |  |                |  |                |  |                |  |                 |  |                |  |                |  |                 |  |                |  |                |  |                    |  |                 |  |                |  |               |  |                 |  |                |  |                 |  |                       |  |                              | 
|Number of mandataires sociaux receiving options                        |  | 5                  |  | 2              |  |               |  |               |  | 2               |  | 2              |  | 1              |  |                |  | 7              |  | 1              |  | 7                  |  |                |  | 1              |  | 1             |  |                |  | 1              |  | 6               |  |                      |  |                             | 
|                                                                       |  |                    |  |                |  |                |  |                |  |                 |  |                |  |                |  |                 |  |                |  |                |  |                    |  |                 |  |                |  |               |  |                 |  |                |  |                 |  |                       |  |                              | 
|Exercisable date                                                       |  | 6/19/2002          |  | 2/25/1999      |  | 1/01/2000      |  | 1/01/2000      |  | 1/01/2000       |  | 1/01/2001      |  | 5/23/2000      |  | 10/23/2000      |  | 3/01/2001      |  | 1/01/2002      |  | 1/01/2003          |  | 1/01/2003       |  | 3/24/2004      |  | 7/04/2004     |  | 12/10/2004      |  | 5/26/2005      |  | 12/01/2004      |  | 9/29/2000             |  | 7/02/2001                    | 
|                                                                       |  |                    |  |                |  |                |  |                |  |                 |  |                |  |                |  |                 |  |                |  |                |  |                    |  |                 |  |                |  |               |  |                 |  |                |  |                 |  |                       |  |                              | 
|Expiration date                                                        |  | 6/19/2006          |  | 2/24/2006      |  | 6/16/2006      |  | 9/29/2006      |  | 12/01/2006      |  | 3/01/2007      |  | 5/22/2007      |  | 10/22/2007      |  | 2/29/2008      |  | 5/21/2008      |  | 2/13/2009          |  | 12/11/2009      |  | 3/24/2010 (7)  |  | 7/4/2013      |  | 12/10/2010 (10) |  | 5/26/2014      |  | (12)            |  | 9/13/2010             |  | 8/03/2010                    | 
|                                                                       |  |                    |  |                |  |                |  |                |  |                 |  |                |  |                |  |                 |  |                |  |                |  |                    |  |                 |  |                |  |               |  |                 |  |                |  |                 |  |                       |  |                              | 
|Exercise price per share (1)                                           |  |  4.05             |  |  6.71         |  |  8.00         |  |  9.56         |  |  13.81         |  |  24.33        |  | 22.01         |  |  15.62         |  | 13.64         |  |  13.06        |  |  7.57             |  |  4.36          |  |  2.43         |  |  3.67        |  |  3.99          |  |  4.06         |  |  4.17          |  |  8.55(15)            |  |  139.17(16)                 | 
|                                                                       |  |                    |  |                |  |                |  |                |  |                 |  |                |  |                |  |                 |  |                |  |                |  |                    |  |                 |  |                |  |               |  |                 |  |                |  |                 |  |                       |  |                              | 
|Discount from average market price                                     |  | 5%                 |  | 5%             |  | 5%             |  | 5%             |  | 5%              |  | 0%             |  | 0%             |  | 0%              |  | 0%             |  | 0%             |  | 0%                 |  | 0%              |  | 0%             |  | 0%            |  | 0%              |  | 0%             |  | 0%              |  | N/A                   |  | N/A                          | 
|                                                                       |  |                    |  |                |  |                |  |                |  |                 |  |                |  |                |  |                 |  |                |  |                |  |                    |  |                 |  |                |  |               |  |                 |  |                |  |                 |  |                       |  |                              | 
|Vesting rules                                                          |  |                   |  |               |  |               |  |               |  |                |  |               |  |               |  |                |  |               |  |               |  | (4)                |  | (5)             |  | (6)            |  | (8)           |  | (9)             |  | (11)           |  | (13)            |  |                      |  |                             | 
|                                                                       |  |                    |  |                |  |                |  |                |  |                 |  |                |  |                |  |                 |  |                |  |                |  |                    |  |                 |  |                |  |               |  |                 |  |                |  |                 |  |                       |  |                              | 
|Number of shares issued on exercise as of 12/31/2004                   |  |                   |  |               |  | 20,000         |  |               |  | 24,000          |  |               |  |               |  |                |  |               |  |               |  |                   |  |                |  | 105,228        |  |              |  |                |  |               |  |                |  | 1,777,036             |  |                             | 
|                                                                       |  |                    |  |                |  |                |  |                |  |                 |  |                |  |                |  |                 |  |                |  |                |  |                    |  |                 |  |                |  |               |  |                 |  |                |  |                 |  |                       |  |                              | 
|Number of shares over which options terminated as of 12/31/2004        |  | 2,229,041          |  | 6,000          |  |               |  |               |  | 20,000          |  |               |  |               |  | 1,556,302       |  | 1,249,437      |  | 1,014,418      |  | 1,862,591          |  | 27,629          |  | 458,548        |  |              |  | 51,627          |  |               |  |                |  | 5,304,580             |  | 194,458                      | 
|                                                                       |  |                    |  |                |  |                |  |                |  |                 |  |                |  |                |  |                 |  |                |  |                |  |                    |  |                 |  |                |  |               |  |                 |  |                |  |                 |  |                       |  |                              | 
|Number of options outstanding as of 12/31/2004                         |  | 4,406,598          |  | 800,049        |  | 318,468        |  | 227,066        |  | 933,345         |  | 1,009,219      |  | 454,257        |  | 2,768,916       |  | 3,666,398      |  | 2,712,719      |  | 4,890,984          |  | 4,447           |  | 2,403,376      |  | 345,560       |  | 1,596,340       |  | 411,916        |  | 10,108,000 (14) |  | 2,412,997             |  | 78,762                       | 

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | As a result of our
        rights offering on October 19, 2004 and our distribution of a portion
        of paid-in capital in connection with our payment of our annual dividend
        to shareholders on June 11, 2002, June 18, 2003, June 17, 2004 and June 14, 2005, the
        number of options and the exercise prices for outstanding options under
        all our plans except the converted SNC and Circle.com options were adjusted
        on those dates. Information in this table reflects these adjustments prior to December 31, 2004 but excludes the adjustments made on June 14, 2005.
        For a discussion of the possible future distribution of paid-in-capital
        in connection with our payment of dividends to shareholders, see Item
        8. Financial Information  Dividend Policy on page 68.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|(2) | Upon exercise
      of the options under this plan, option holders receive treasury shares rather
      than newly issued shares. On March 3, 2004, our board of directors decided
      to postpone the expiration date of these options from June 19, 2004 to June
      19, 2006.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|(3) | This plan
      includes grants under two separate programs: the second half of the 2001
      option program and the first half of the 2002 option program.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|(4) | 2,251,191
      of these options became exercisable in 2003, 2,251,192 in 2004, and all
      the options will be exercisable in 2005.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|(5) | 10,692
      of these options became exercisable in 2003, 10,692 in 2004 and all the
      options will be exercisable in 2005.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

|62
|--



|(6)  | 989,050
      of these options became exercisable on March 24, 2004, 989,051 on March
      24, 2005 and all the options will be exercisable on March 24, 2006.                                                                                                                                                                                                                                                                                                                       
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|(7)  | For French
      residents the expiration date is March 24, 2013.                                                                                                                                                                                                                                                                                                                                                                                                                     
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|(8)  | 115,186
      of these options became exercisable on July 4, 2004, 115,187 will become
      exercisable on July 4, 2005 and all the options will be exercisable on July
      4, 2006.                                                                                                                                                                                                                                                                                               
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|(9)  | 549,202
      of these options became exercisable on December 10, 2004, 549,203 will become
      exercisable on December 10, 2005 and all the options will be exercisable
      on December 10, 2006.                                                                                                                                                                                                                                                                                
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|(10) | For French
      residents the expiration date is December 10, 2013.                                                                                                                                                                                                                                                                                                                                                                                                                  
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|(11) | 137,305
      of these options became exercisable on May 26, 2005, 137,306 options become
      exercisable on May 26, 2006, and all the options will be exercisable on
      May 26, 2007.                                                                                                                                                                                                                                                                                           
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|(12) | Sub-plan
      A, consisting of 9,800,000 options, expires on December 1, 2011, sub-plan
      B, consisting of 300,000 options, expires on December 1, 2009, and sub-plan
      C, consisting of 8,000 options, expires on December 1, 2014.                                                                                                                                                                                                                                         
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|(13) | For sub-plan
      A, 4,900,000 options became exercisable on December 1, 2004, 2,450,000 become
      exercisable on December 1, 2005, and all the options will be exercisable
      on December 1, 2006. For sub-plan B, all of the options may be exercised
      on December 2, 2008. For sub-plan C, 2,666 options became exercisable on
      December 1, 2004, 2,667 become exercisable on December 1, 2005, and all
      the options will be exercisable on December 1, 2006.
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|(14) | 9,800,000
      of these options were granted as part of our exceptional option grant of
      December 1, 2004. See Compensation of our directors and officersCompensation
      of our executive officersComponents of compensation packagesStock
      optionsExceptional option grant of December 1, 2004.                                                                                                                                                                 
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|(15) | Represents
      the weighted average exercise price of $11.57 converted into euro at the
      noon buying rate of 1.00 = $1.3538 on December 31, 2004.                                                                                                                                                                                                                                                                                                                             
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|(16) | Represents
      the weighted average exercise price of $188.41 converted into euro at the
      noon buying rate of 1.00 = $1.3538 on December 31, 2004.                                                                                                                                                                                                                                                                                                                            

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Some
of our subsidiaries have granted stock options to some of their employees with respect to the stock
of the applicable subsidiary. The exercise price is usually based on a multiple of current earnings
of the subsidiary at the award date, which we refer to as the multiple. Such options
are generally exercisable five to seven years after the award date and require continuing employment.
The parent companies of such subsidiaries have the option to buy back the shares if and when acquired
by the employees and the employees have the option to put these shares to such parent companies.
The buyback price is generally based upon the multiple applied to the earnings level of the subsidiary
when the option is exercised. The employees are required to put the shares to the applicable parent
company when they leave the employ of the subsidiary. In determining the estimated obligations under
these stock option plans, the applicable multiple has been applied to the latest available earnings
data or estimates.
ITEM 7.  MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
The following table shows, to our knowledge, as of
June 16, 2005, except as otherwise indicated below, the number of Havas shares and the percentage
of outstanding Havas shares owned by:

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| |  | each person
      known to us to be the owner of more than 5% of the outstanding Havas shares;
      and
| | - | --------------------------------------------------------------------------------------------------------
| |   |                                                                                                         
| |  | our directors
      and executive officers as a group.                                                  

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|All of our shareholders
have the same voting rights with respect to the Havas shares that they hold. (However, see Item
3. Key Information  Risk Factors  Holders of our ADSs may have limited ability to influence
the governance of our company on page 10.) As of June 16, 2005, we held 4,525,197
shares as treasury stock. These Havas shares do not have voting rights. As a result, the percentage
of the issued Havas shares owned by each of our shareholders translates into a slightly greater percentage
of total voting rights.
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                

|Identity of Person or Group                                                                                                                                     |  | Numberof
      Shares |  | Percentage
      of Issued
      Shares |   | Percentage
      of Voting
      Rights |  
|--------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------------- |  | --------------------------------------- | - | --------------------------------------- | -
|                                                                                                                                                                |  |                       |  |                                         |   |                                         |  
|Bolloré Médias Investissements(1)                                                                                                                               |  | 113,916,072           |  | 26.5                                    | % | 26.8                                    | %
|Sebastian Holdings Inc.(2)                                                                                                                                      |  | 17,269,649            |  | 4.0                                     | % | 4.1                                     | %
|All directors and executive officers of Havas as a group (21 
     persons, including SOCIF, Bolloré Médias Investissements
     and Bolloré Investissement)(3) |  | 121,901,260           |  | 28.4                                    | % | 28.7                                    | %

|   
|---
|   
|(1)
|   
|(2)
|   
|(3)

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|See also
Item 5. Operating and Financial Review and Prospects  Overview  Acquisition
of Significant Shareholding by Bolloré Médias Investissements.

As of December 31, 2003, FMR Corp. Fidelity International
Limited and the Johnson family, which could be deemed to control Fidelity International Limited,
owned 39,148,962 of our shares, which represented approximately 12.8% of our issued shares and 13.1%
of our voting rights. As of February 27, 2004, based on information provided to us by FMR Corp.,
Fidelity International Limited and the Johnson family, in a notification of holdings pursuant to
Article 356-1 of the Law of July 24, 1966, as amended, FMR Corp., Fidelity International Limited
and their respective direct and indirect subsidiaries owned 30,433,867 of our shares, which represented
approximately 9.9% of our issued shares and 10.2% of our voting rights. As of December 31, 2004,
to the best of our knowledge, these entities owned less than 5% of our issued shares.
As of December 31, 2002,
Putnam Investment Management, LLC and The Putnam Advisory Company, LLC, owned 36,414,301 of our shares,
which represented approximately 11.9% of our outstanding shares and 12.3% of our voting rights. As
of February 25, 2003, based on information provided to us by Putnam Investment Management, LLC and
The Putnam Advisory Company, LLC in its notification of holdings under the EC Directive 88/627 on
the Disclosure of Interest of Shares, these two entities owned 30,082,256 of our shares, which represented

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|approximately 9.9% of our outstanding shares and 10.1% of our voting rights. As of April 15, 2003,
based on information provided to us by Putnam Investment Management, LLC and The Putnam Advisory
Company, LLC in its notification of holdings under the EC Directive 88/627 on the Disclosure of
Interest of Shares, these two entities owned 14,126,405 of our shares, which represented approximately
4.6% of our outstanding shares and 4.8% of our voting rights. As of December 31, 2003, to the best of our knowledge, neither entity
owned 5% or more of our issued shares.
To our knowledge, as
of December 31, 2004, approximately 29.6 million, or 7%, of our outstanding shares (including
shares represented by ADSs) were held by shareholders in the United States. In addition, to our knowledge,
there were approximately 355 registered ADR holders in the United States as of May 27, 2005.
Transactions involving directors, executive officers and shareholders of Havas
Transactions involving the Rodés Family.  Media Planning Group and its subsidiaries have entered into the following transactions with
members of the families of Fernando Rodés Vilà, one of our directors and executive officers
and the chief executive officer of Media Planning Group, and Leopoldo Rodés Castañe, one
of our directors and the father of Fernando Rodés Vilà, and or entities controlled by them.
In October 1991, the predecessor
to Media Planning Group entered into an agreement with Gestora de Viviendas S.A. under which Gestora
de Viviendas provides client development services to Media Planning Group and its subsidiaries in
exchange for commissions on new clients developed by it. Under this agreement, Media Planning Group
paid Gestora de Viviendas commissions of 325,472, excluding taxes, for these services provided
in 2004. This agreement was terminated as of December 31, 2004. Fernando Rodés Vilà and
Leopoldo Rodés Castañe, together with other members of their families, are controlling
shareholders of Gestora de Viviendas.
Gestora de Viviendas is a major shareholder
of Vigilancia y Sistemas de Seguridad, S.A., a company that provides security services. Vigilancia
y Sistemas de Seguridad provides security systems and personnel to Media Planning Group, for which
Media Planning Group paid it 422,503, excluding taxes, in 2004. Media Planning Group expects
to pay Vigilancia approximately the same amount in 2005 for these services.
Gestora de Viviendas also controls In-Store
Media, a company that provides point of sale advertising services and space, such as
in-store backlight posters, floor media advertising, in-store radio and shopping trolley advertising.
Media Planning Group purchases media space and services from In-Store Media on behalf of its clients
as part of their advertising campaigns. Media Planning Group paid In-Store Media 1,703,265,
excluding taxes, on behalf of its clients in 2004. Media Planning Group expects to pay In-Store Media
approximately the same amount on behalf of its clients in 2005 for these services.
Media Planning Group receives legal services
from the Spanish law firm of Rodés & Sala Abogados, S.L. Media Planning Group paid an annual
retainer fee of 120,000 to Rodés & Sala for general legal services in 2004 and expects
to pay an annual retainer fee of approximately 180,000 to Rodés & Sala for general
legal services in 2005. In addition, Rodés & Sala was paid a total of 113,295, excluding
taxes, for legal services provided to Media Planning Group and other subsidiaries of our company
in Spain in 2004 and has billed Media Planning Group and other subsidiaries of our company in Spain
a total of 27,680 excluding taxes, in legal fees for 2005 through May 31. Gonzalo Rodés
Vilà, the brother of Fernando Rodés Vilà and the son of Leopoldo Rodés Castañe,
is a partner in Rodés & Sala. In addition, Gonzalo Rodés Vilà serves as secretary
of the board of directors of Media Planning Group. Gonzalo Rodés Vilà was paid 48,000
for his services as secretary of the board in 2004 and has been paid 20,000 for such services
in 2005 through May 31.

In
addition, our company has used in the past and expects to use in the future the
investment banking services of Goldman Sachs Paris Inc. et Cie. Mr. Jacques
Mayoux, one of our directors, is a vice-chairman of Goldman Sachs Europe, a Goldman Sachs
affiliate.

Our company
has also used and expects to use in the future the banking services of
Société Générale. Mr. Patrick Soulard, one of our directors,  is the head of
the Investment Banking Division of Société Générale.


ITEM 8.   FINANCIAL INFORMATION
8.A Consolidated statements and other financial information
8.A.1 See Item 18 Financial Statements.
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|8.A.2 See Item 18 Financial Statements.
8.A.3 See Report of Independent Public Accountants, page F-2.
8.A.4 We have complied with this requirement.
8.A.5 Not applicable.
8.A.6 Not applicable.
8.A.7 Legal proceedings
Bankruptcy of WorldCom, Inc.
On July 21, 2002, WorldCom, one of our
clients, now known as MCI, Inc., filed for reorganization under Chapter 11 of the United States Bankruptcy
Code. We provide both advertising and marketing services and media services to MCI.
With respect to the media, we act as an
agent for MCI and as an intermediary in the transfer of the clients payments to the applicable
media suppliers, which is consistent with the concept of sequential liability adopted
by the American Association of Advertising Agencies in 1991 as its standard for the industry. We
had outstanding pre-bankruptcy petition media receivables of approximately $26.4 million as of December
31, 2003 and in parallel, we had outstanding pre-bankruptcy petition media payables for the media
space reserved on behalf of MCI of approximately $26.9 million as of December 31, 2003.
With respect to commissions and production
work, we had outstanding pre-bankruptcy petition receivables of approximately $10.4 million in our
financial statements as of December 31, 2003 and 2002, which were fully reserved as of December 31,
2002.
On August 4, 2003, we entered into an agreement

to compromise the pre-bankruptcy amounts due to us. Under its terms, the agreement became effective

upon MCI emerging from U.S. Chapter 11 protection. The agreement provided for the payment of a
certain
portion of the amount due to us. As a consequence, in 2003 we reversed $6.6 million of
the $10.4
million reserve that we recorded in our financial statements at December 31, 2002.
On April 20, 2004, MCI emerged from bankruptcy

and the agreement became effective. On May 26, 2004, MCI paid us $14.3 million pursuant to the
agreement.
We have distributed a substantial portion of the amount received from MCI to media and
production
vendors. Consequently, as of December 31, 2004, we offset the remaining receivables
against the payables
in our financial statements in a residual amount of $18 million.
Currently, no media vendor is pursuing,
nor have any waived, any claim against us for any MCI payables, and it is not currently possible
to determine what actions, if any, will be taken in connection with the MCI bankruptcy proceeding,
or the possible outcome of any such actions, or the amount of any loss to us that might result. Consequently,
although a loss is possible, we cannot at this time reasonably determine the probability of any loss
or the magnitude thereof. Therefore, no reserve has been recorded in our financial statements.
One production vendor filed a complaint
against the Company seeking to recover approximately $64,000. This matter has been settled by paying
the production vendor the same percentage of its claim as we were paid and as we paid other vendors.
In May 2005, The Screen Actors Guild filed
an action against one of our subsidiaries, Euro RSCG New York, Inc., seeking to recover an unspecified
amount payable with pension and welfare and other benefits, together with interest and penalties
thereon, with respect to certain celebrity performers who appeared in commercials which were produced
on behalf of MCI pre-bankruptcy. We intend to defend this matter vigorously.
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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|American Student List class action lawsuit
On February 18, 2004, a purported class
action lawsuit was filed in the United States District Court for the Middle District of Florida against
American Student List LLC, one of our subsidiaries. The lawsuit alleged that American Student List
obtained, disclosed and used information from the Florida Department of Highway Safety and Motor
Vehicles in alleged violation of the U.S. Drivers Privacy Protection Act. The named plaintiff
sought to represent a class of 876,665 individuals whose personal information from Florida Department
of Highway Safety and Motor Vehicles records was obtained, disclosed or used for allegedly impermissible
uses by American Student List without the express consent of the individual. The lawsuit sought certification
as a class action, liquidated damages in the amount of $2,500 per alleged violation of the Act, as
well as punitive damages, attorneys fees and costs, and injunctive and other relief. After
dismissal of the lawsuit for a procedural error, American Student List settled the case with the
named plaintiff, ending the litigation.
Snyder Communications LP class action lawsuit
Former employees of Snyder Communications
LP have filed a purported class action lawsuit in the Texas State Court. The motion to certify the
purported class of former employees in Texas was granted by the Texas trial court in January 2002,
affirmed on appeal by the Texas intermediate appellate court in November 2002 and was reversed by
the Texas Supreme Court on appeal. The lawsuit alleged, in substance, that Snyder improperly denied
commission payments to former employees in connection with alleged sales activities. The litigation
was dismissed with prejudice by the Texas State Court in March 2005 and the lawsuit with the named
plaintiffs has been settled.
Circle.com litigation
On June 4, 2001, two holders of Circle.com
common stock filed a purported class action lawsuit in Delaware Chancery Court against Snyder Communications,
our company and each director of our company and Snyder Communications. The lawsuit sought a preliminary
and permanent injunction or, alternatively, monetary damages. The lawsuit alleged that our company
and the board of directors of Snyder Communications breached their fiduciary duties owed to the Circle.com
stockholders when considering and negotiating the proposed merger of Snyder Communications with one
of our subsidiaries by failing to create an independent negotiating structure, failing to seek truly
independent advice, concealing material information from the Circle.com stockholders, and unfairly
timing the proposed merger to the disadvantage of the Circle.com stockholders. On February 6, 2004,
the Delaware Chancery Court dismissed the lawsuit without prejudice.
Verizon settlement
A case involving claims by Snyder Communications
for declaratory relief as to alleged indemnification obligations set forth in their agreements with
Verizon Select Services and counterclaims by Verizon for indemnification, declaratory relief and
damages was filed in April 2001, as a result of two investigations by Florida agencies into the parties
business and marketing practices. Verizon demanded that Snyder Communications indemnify it for all
liabilities, costs and expenses incurred as a result of the two Florida Investigations. In their
December 2001 Settlement Agreement, our company and Snyder Communications agreed to pay an aggregate
amount of $1,052,500 to Verizon in a series of installments. The final payment was made on February
15, 2003.
American Student List consent order
In September 2002, American Student List
LLC, one of our subsidiaries, signed a consent order issued by the U.S. Federal Trade Commission
relating to the use of information collected from a survey conducted by the National Research Center
for College and University Admissions, which we refer to as NRCCUA. For a number of years, American
Student List provided funding for a portion of the out-of-pocket expenses incurred by NRCCUA in connection
with its post-secondary education planning survey. The FTC argued that the disclosures made by NRCCUA
to the high schools that distributed the surveys to students, and the disclosures in the survey completed
by the students, were inadequate to advise the schools and students that the results of the survey
would be used for
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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|marketing and non-educational uses. American Student List signed the consent order without admitting
that it engaged in any deceptive practices that violate the law. The consent order became effective
on January 31, 2003.
In addition to the foregoing, we are party
to various other legal and arbitration proceedings arising in the ordinary course of business, including
matters relating to current and former vendors, clients and employees. None of these other proceedings
has had or is expected to have a significant effect on our financial position or profitability.
8.A.8 Dividend policy
We may declare dividends upon the recommendation
of our board of directors and the approval of our shareholders at our annual general meeting. Under
the French Commercial Code, a companys right to pay dividends is limited in some circumstances.
At our annual meeting of shareholders held
on May 26, 2004, our shareholders approved a resolution, among others, to authorize a dividend payment
of 0.075 per share, of which 0.05 represents the net dividend and 0.025 represents
the French avoir fiscal tax credit. We paid the dividend to shareholders on or about June 17, 2004. Under the terms of the
anti-dilution provisions of our two series of convertible and/or exchangeable bonds, the applicable
conversion/exchange ratio was adjusted as of that date to reflect the component of the dividend payment
that represents a distribution of a portion of paid-in capital. In addition, under the terms of the
anti-dilution provisions of our option plans, the number of options and exercise prices for outstanding
options under our plans were adjusted on that date to reflect the component of the dividend payment
that represents a distribution of a portion of paid-in capital.
At our annual meeting
of shareholders held on June 9, 2005, our shareholders approved a resolution, among others,
to authorize a dividend payment of 0.07 per share. This amount reflects both the gross and
net
dividend since the French avoir fiscal tax credit was phased out in 2004. We paid the dividend to shareholders on or about
June 14, 2005. Under the terms of the anti-dilution provisions of our two series of convertible and/or
exchangeable bonds, the applicable conversion/exchange ratio was adjusted as of that date to
reflect the component of the dividend payment that represents a distribution of a portion of paid-in
capital. In addition, under the terms of the anti-dilution provisions of our option plans, the number
of options and exercise prices for outstanding options under our plans were adjusted on that date
to reflect the component of the dividend payment that represents a distribution of a portion of paid-in
capital. In the future, we also may submit for the approval of our shareholders resolutions to authorize
dividend payments that represent distributions of a portion of paid-in capital.
ITEM 9. THE OFFER AND LISTING
9.A Listing details
The principal trading market for Havas
shares is Compartiment A of the Eurolist of Euronext Paris S.A. (which resulted from the merger of the Paris,
Brussels and Amsterdam stock exchanges on October 27, 2000), a self regulatory organization responsible
for supervision of trading in listed securities in France. Havas shares have been traded on the Paris stock exchange
 since October 23, 1982. The Havas shares are quoted under the symbol HAV. Prior
to this date, Havas shares were not publicly traded. Havas shares are currently included in the SBF
80, SBF 120 and SBF 250 indices.
Havas shares are also quoted on the Nasdaq
National Market System under the symbol HAVS. In addition, we sponsor ADSs in the
United States with J.P. Morgan Chase & Co. (formerly known as Morgan Guaranty Trust Company),
as depositary. Each Havas ADS represents one Havas share.
The table below indicates the range of
the high and low prices in U.S. dollars for the ADSs on Nasdaq from September 27, 2000, the date
Havas ADSs began trading on Nasdaq, to May 31, 2005. The table below also
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|provides the high and low prices in euro for the Havas shares on Euronext Paris from 2000 to May 31,
2005. The high and low market prices have been adjusted to reflect our 20 for 1 stock split on May
26, 2000.
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                 

|                                                |  | Nasdaq
      price per ADS |       | Euronext Paris
      price per Share(1) |  
|----------------------------------------------- |  | -------------------------- | ----- | --------------------------------------- | -
|Period                                          |  | High                       |       | Low                                     |  
|                                                |  |                            |       |                                         |  
|                                                |  |                            |       |                                         |  
|Annual information for the past five years:     |  |                            |       |                                         |  
|                                                |  |                            |       |                                         |  
|2000                                            |  | $                          | 16.50 |                                         | $
|2001                                            |  | $                          | 17.20 |                                         | $
|2002                                            |  | $                          | 9.49  |                                         | $
|2003                                            |  | $                          | 5.86  |                                         | $
|2004                                            |  | $                          | 6.62  |                                         | $
|                                                |  |                            |       |                                         |  
|Quarterly information for the past two years:   |  |                            |       |                                         |  
|                                                |  |                            |       |                                         |  
|2003                                            |  |                            |       |                                         |  
|First quarter                                   |  | $                          | 4.60  |                                         | $
|Second quarter                                  |  | $                          | 5.04  |                                         | $
|Third quarter                                   |  | $                          | 5.69  |                                         | $
|Fourth quarter                                  |  | $                          | 5.86  |                                         | $
|                                                |  |                            |       |                                         |  
|2004                                            |  |                            |       |                                         |  
|First quarter                                   |  | $                          | 6.62  |                                         | $
|Second quarter                                  |  | $                          | 5.89  |                                         | $
|Third quarter                                   |  | $                          | 5.66  |                                         | $
|Fourth quarter                                  |  | $                          | 5.85  |                                         | $
|                                                |  |                            |       |                                         |  
|2005                                            |  |                            |       |                                         |  
|First Quarter                                   |  | $                          | 6.48  |                                         | $
|                                                |  |                            |       |                                         |  
|Monthly information for most recent six months: |  |                            |       |                                         |  
|                                                |  |                            |       |                                         |  
|December 2004                                   |  | $                          | 5.70  |                                         | $
|January 2005                                    |  | $                          | 5.70  |                                         | $
|February 2005                                   |  | $                          | 5.83  |                                         | $
|March 2005                                      |  | $                          | 6.48  |                                         | $
|April 2005                                      |  | $                          | 6.27  |                                         | $
|May 2005                                        |  | $                          | 6.39  |                                         | $

|                                                                                                                                                                                                                                                                                                               
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) Euronext has applied an adjustment coefficient of 0.93254 to the price prior to September 27, 2004, in order to take into account the impact of the distribution of preemptive subscription rights to our shareholders on that date in connection with our rights offering that closed on October 19, 2004.
|                                                                                                                                                                                                                                                                                                               
|9.B Plan of distribution
Not applicable.
9.C Markets
See Item 9.A Listing details.
9.D Selling shareholders
Not applicable.                                                                                                                                                                                  

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|9.E Dilution
Not applicable.
9.F Expenses of the issue
Not applicable.
ITEM 10. ADDITIONAL INFORMATION
10.A Share capital
Not applicable.
10.B Memorandum and Articles of Association
Under Article 2 of our bylaws, our corporate
purposes are to:
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                   

| |  | provide advertising and communication services in all forms;                                                                                               
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------
| |  
| |  | provide all forms of services, including technical, financial, commercial or administrative studies;                                                       
| |  
| |  | engage in any activities of production, sale or distribution, particularly in sectors that are developing rapidly or have great communication power;       
| |  
| |  | manage, acquire, construct, develop or improve real property or related assets or rights and conduct studies relating to such real estate transactions; and
| |  
| |  | carry out industrial, commercial or financial, real estate or securities transactions directly or indirectly related to our corporate purposes.            

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|We may also acquire interests in other
businesses, regardless of such businesses purposes.
Directors
Our bylaws provide that our board must
be composed of at least three members but not more than 18, except for exceptions provided by law.
Each member of our board is required to own at least one of our shares for so long as he, she or
it serves as a director. Members of our board serve three-year terms and are eligible for reappointment
upon the expiration of their term of office. There is no requirement under the French Commercial
Code or our bylaws that directors serve concurrent terms. Accordingly, fewer than all of the members
of our board will ordinarily stand for reelection at any particular shareholders meeting. One-third
of our directors must stand for re-election every year, and no more than one-third of our directors
may be over the age of 70. Our board elects a chairman from among our directors. The chairman has
responsibility for management of our company unless our board elects to appoint
a managing director (directeur général)
with full authority to manage our company, as well as one or more assistant managing directors (directeurs
généraux délégués) not to exceed five, to assist the managing director.
Our board has appointed Richard Colker as interim managing director (directeur général).
Our board is authorized to meet at its
discretion, upon notice from its chairman or vice chairman. If our board has not met for more than
two months, directors representing one-third of our board may require that our chairman convene a
meeting.
Under the French Commercial Code, the prior
approval of our board is required before one of our directors, executive officers or shareholders
holding more than 10% of our voting rights (or any company that controls such

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|shareholder), whom we refer to collectively as interested parties, may enter into a transaction with
us that cannot be reasonably considered in the ordinary course of business and the product of an
arms-length negotiation. Similar limitations apply to any transaction between our company and another
company which has one or more officers or directors in common with our company. The transaction must
also be approved by our shareholders at the following annual shareholders meeting. Any interested
party must inform our chairman as soon as it has knowledge of the transaction and may not vote at
the board or shareholder meeting called to authorize the transaction, nor may the shares of an interested
party be taken into account in determining the outcome of the vote or whether a quorum is present.
In the event the transaction authorized by the board is not approved by our shareholders at a shareholders
meeting, it will remain enforceable by third parties against our company, but our company may in
turn hold the interested party and, in some circumstances, the other directors liable for any damages
it may suffer as a result. In addition, the transaction may be canceled if it is fraudulent.
For transactions that can be considered
within our ordinary course of business and the product of arms-length conditions, an interested party
must provide a copy of the governing agreement to the chairman of our board, who will then provide
a summary of these transactions to the members of our board and the statutory auditors.
Certain transactions between our company
and one of its directors are prohibited under the French Commercial Code.
Rights, preferences and restrictions applicable
to our shares
Dividends
Dividends on our shares are distributed
to shareholders on a pro rata basis. Outstanding dividends are generally payable to shareholders
on the date of the shareholders meeting at which the distribution of dividends is approved,
subject to any conditions imposed by the shareholders at the meeting. In the case of interim dividends,
we make distributions to our shareholders on the date of the board meeting in which the distribution
of interim dividends is approved. The dividend payment date is decided by the shareholders at an
ordinary general meeting or by our board in the absence of such a decision by the shareholders. Under
the French Commercial Code, we must pay any dividends within nine months of the end of our fiscal
year unless otherwise authorized by court order. Dividends on shares that are not claimed within
five years of the date of declared payment revert to the French government.
We may only distribute dividends out of
our distributable profits, plus any amounts held in reserve which our shareholders decide to make
available for distribution, other than those reserves that are specifically required by law or our
bylaws. Our distributable profits consist of our unconsolidated net profit in each fiscal year, as
increased or reduced by any profit or loss carried forward from prior years, less any amounts which
French law or our bylaws require to be placed in a reserve account.
In addition, the French Commercial Code
requires us to allocate 5% of our unconsolidated statutory net profit for each year to a legal reserve
fund before we may pay dividends with respect to that year. Funds must be allocated until the amount
in the legal reserve is equal to 10% of the aggregate nominal value of our issued and outstanding
share capital. This restriction on the payment of dividends also applies to our French subsidiaries
on an unconsolidated basis. Our legal reserve may only be distributed to our shareholders upon our
liquidation, and the legal reserve of each of our French subsidiaries may only be distributed to
their respective shareholders upon their liquidation.
The French Commercial Code also prohibits
us from distributing dividends when our net equity is or would become as a result of any such distribution
less than the amount of our stated capital increased by reserve funds required by law or our bylaws.
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|Voting rights

In general, each of our shares carries
the right to cast one vote on all matters submitted to a vote of shareholders.
Liquidation rights
If our company is liquidated, any assets
remaining after payment of our debts, liquidation expenses and all of our remaining obligations will
be distributed first to repay in full the nominal value of our shares. Any surplus will be distributed
pro rata among our shareholders in proportion to the nominal value of their shareholdings.
Preferential subscription rights
According to the French Commercial Code,
if we issue additional shares, or other specific kinds of additional securities, current shareholders
will have preferential subscription rights to those securities on a pro rata basis. These preferential
rights will require us to give priority treatment to those shareholders over other persons wishing
to subscribe for the securities. The rights entitle the holder to subscribe to an issue of any securities
that may increase our share capital by means of a cash payment or a set-off of cash debts. Preferential
subscription rights are transferable during the subscription period relating to a particular offering.
These rights may also be traded during the subscription period usually by transfer from one account
to another. A two-thirds majority of our shares entitled to vote at an extraordinary general meeting
may vote to cancel preferential subscription rights with respect to any particular offering. French
law requires our board and the statutory auditors to present reports that specifically address any
proposal to cancel preferential subscription rights. In the event of a cancellation, the relevant
securities issuance must be completed within the period prescribed by law.
Our shareholders may also decide at an
extraordinary general meeting to give existing shareholders a non-transferable priority right to
subscribe for the new securities during a limited period of time. Our shareholders may also waive
their own preferential subscription rights with respect to any particular offering.
Amendments to rights of holders
The rights of our shareholders can be amended
only by action at an extraordinary general meeting of shareholders. Two-thirds of the shares voting
must approve any proposal to amend shareholder rights, except that a unanimous vote is required to
increase liabilities of shareholders. The voting and quorum requirements for this type of special
meeting are the same as those applicable to an extraordinary general meeting, except that the quorum
requirements for a special meeting are 50% of the voting shares, or 25% upon resumption of an adjourned
meeting.
Ordinary and extraordinary meetings
In accordance with the French Commercial
Code, there are two types of shareholders general meetings: ordinary and extraordinary.
Ordinary general meetings of shareholders
are required for matters that are not specifically reserved by law to extraordinary general meetings,
such as:
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|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

| |  | electing, replacing and removing members of the board of directors;
| | - | -------------------------------------------------------------------
| |   |                                                                    
| |  | appointing statutory auditors;                                     
| |   |                                                                    
| |  | declaring dividends or authorizing dividends to be paid in shares; 
| |   |                                                                    
| |  | approving our annual financial statements; and                     
| |   |                                                                    
| |  | issuing specific types of debt securities.                         

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|Extraordinary general meetings of shareholders
are required for approval of matters such as amendments to our bylaws, including any amendment required
for an extraordinary corporate action. Extraordinary corporate actions include:
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                      

| |  | changing our companys name or corporate purpose;                                             
| | - | ----------------------------------------------------------------------------------------------
| |   |                                                                                               
| |  | increasing or decreasing our share capital;                                                   
| |   |                                                                                               
| |  | creating a new class of equity securities;                                                    
| |   |                                                                                               
| |  | authorizing the issuance of investment certificates or convertible or exchangeable securities;
| |   |                                                                                               
| |  | establishing any other rights to equity securities;                                           
| |   |                                                                                               
| |  | selling or transferring substantially all of our assets; and                                  
| |   |                                                                                               
| |  | voluntarily liquidating our company.                                                          

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Calling shareholders meetings
The French Commercial Code requires our
board to convene an annual ordinary general meeting of shareholders for approval of our annual financial
statements. This meeting must be held within six months of the end of each fiscal year. This period
may be extended by an order of the Presiding Judge of the Commercial Court. Our board may also convene
an ordinary or extraordinary meeting of shareholders upon proper notice at any time during the year.
If our board fails to convene an annual shareholders meeting, our independent statutory auditors
or a court-appointed agent may call the meeting. Any of the following persons may request the court
to appoint an agent:
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          

| |  | one or several shareholders holding at least 5% of our share capital;                                                                                                                                                                            
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                  
| |  | in cases of urgency, any interested party, including any member of a special management committee consisting of one manager appointed by us and a series of representatives elected by our employees, which we refer to as the Works Council; or
| |   |                                                                                                                                                                                                                                                  
| |  | duly qualified associations of our shareholders who have held their shares in registered form for at least two years and who together hold at least 1% of the voting rights of our company.                                                      

|                                                                             
|-----------------------------------------------------------------------------
|An ordinary or extraordinary meeting of shareholders may also be convened by:
|                                                                             

| |  | in a bankruptcy, our liquidator or court-appointed agent may also call a shareholders meeting in some instances; or                                                                
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                     
| |  | any shareholder that holds a majority of our outstanding shares or voting rights following a public tender or exchange offer for our shares or the sale of a majority of our shares.

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Notice of shareholders meetings
We must announce general meetings at least
30 days in advance by means of a preliminary notice published in the Bulletin des Annonces Legales
Obligatoires, or the BALO. The preliminary notice must first be sent to the Autorité
des Marchés Financiers, or the AMF. The AMF also recommends that a summary
of such preliminary notice be published in a newspaper of national circulation in France. The preliminary
notice must disclose, among other things, the time, date and place of the meeting, whether the meeting
will be ordinary or extraordinary, the agenda, a draft of the resolutions to be submitted to the
shareholders, a description of the procedures which holders of bearer shares must follow to attend
the meeting, the procedure for voting by mail, the address of the web site permitting the vote by
electronic means and a statement informing our shareholders that they may propose additional resolutions
to our board within 10 days of the publication of the notice.

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|We must send a final notice containing
the agenda and other information about the meeting at least 15 days prior to the meeting or at least
six days prior to the resumption of any meeting adjourned for lack of a quorum. The final notice
must be sent by mail or, to shareholders who have agreed thereto in writing, by electronic means,
to all registered shareholders who have held shares for more than one month before the date of the
preliminary notice. The final notice must also be published in the BALO and in a newspaper authorized
to publish legal announcements in the local administrative department in which our company is registered,
with prior notice having been given to the AMF.
In general, our shareholders can take action
at shareholders meetings only on matters listed in the agenda for the meeting. As an exception
to this rule, our shareholders may take action with respect to the dismissal of members of our board
regardless of whether this action is on the agenda. Additional resolutions to be submitted for approval
by our shareholders at the meeting may be proposed to our board, within ten days of the publication
of the preliminary notice in the BALO by:
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

| |  | a member of the Works Council designated by the Works Council;                                                                                                                        
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                         
| |  | one or several shareholders holding a specified percentage of shares; or                                                                                                                
| |   |                                                                                                                                                                                         
| |  | a duly qualified association of shareholders who have held their shares in registered form for at least two years and who together hold at least 1% of the voting rights in our company.

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Our board must submit these resolutions
to a vote of our shareholders.
During the two weeks preceding a meeting
of shareholders, any shareholder may submit written questions to our board relating to the agenda
for the meeting. Our board must respond to these questions during the meeting.
Attendance and voting at shareholders
meetings
Each of our shares confers on the shareholder
the right to cast one vote on all matters submitted to a vote of shareholders, except that we are
not entitled to vote our treasury shares. Our shareholders may attend ordinary meetings and extraordinary
shareholders meetings and exercise their voting rights subject to the conditions specified
in the French Commercial Code and our bylaws. There is no requirement that our shareholders have
a minimum number of shares in order to attend, or to be represented at, an ordinary or extraordinary
general meeting.
In addition, two members of the Works
Council are entitled to attend any shareholders meeting. They are also permitted to address
our shareholders before the vote of any resolution requiring the unanimous consent of the shareholders.
To participate in any general shareholders
meeting, a holder of our registered shares must have its shares registered in its name in a shareholder
account maintained by us, or on our behalf by an agent appointed by us, at least five days before
the date set for the meeting. A holder of our bearer shares must obtain a certificate from the accredited
intermediary with whom the holder has deposited its shares. This certificate must indicate the number
of bearer shares the holder owns. The holder must deposit this certificate at the place specified
in the notice of the meeting at least five days before the meeting. However, our board of directors
has the right to accept deposits after this deadline or to shorten the deadline.
Once a shareholder has registered its shares
or duly presented a certificate from its accredited financial intermediary, any transfer of the shares
prior to the relevant shareholders meeting must be notified to our agent or the accredited
financial intermediary. The notice must be delivered no later than 3 p.m. Paris time on the day before
such meeting.

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|Proxies and voting by mail or electronic
means
In general, all of our shareholders that
have properly registered their shares or duly presented a certificate from their accredited financial
intermediary may participate and vote in general shareholders meetings in person, by proxy,
by videoconference or by any electronic telecommunication device enabling their identification.
Proxies will be sent via mail or electronic
means to any shareholder on request. To be counted, the proxies must be received at our registered
office, or at any other address indicated on the notice convening the meeting, before the date of
the meeting. Voting instructions must be received by us in the form provided by law no later than
3:00 p.m. Paris time on the day before the shareholders meeting. A shareholder may grant proxies
to his or her spouse or to another shareholder. A shareholder that is a corporation may grant proxies
to a legal representative. Alternatively, the shareholder may send to us a blank proxy without nominating
any representative. In that case, the chair of the meeting will vote blank proxies in favor of all
resolutions proposed by our board and against all other resolutions.
With respect to votes by mail or other
electronic means, we are required to send shareholders a voting form. The completed form must be
returned to us, if by mail, at least three days before the date of the shareholders meeting.
However, forms may be sent electronically to us until 3:00 p.m. Paris time on the day before the
shareholders meeting.
Quorum
The French Commercial Code requires that
shareholders having at least 25% of the shares entitled to voting rights must be present in person
or be voting by mail, by electronic means or by proxy to fulfill the quorum requirement for:
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

| |  | an ordinary general meeting; or                                                                                                                 
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                 
| |  | an extraordinary general meeting where an increase in our share capital is proposed through incorporation of reserves, profits or share premium.

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|The quorum requirement is one-third of
the shares entitled to voting rights, determined on the same basis, for any other extraordinary general
meeting.
If a quorum is not present at a meeting,
the meeting is adjourned. When an adjourned meeting is resumed, there is no quorum requirement for
an ordinary meeting or for an extraordinary general meeting where an increase in our share capital
is proposed through incorporation of reserves, profits or share premium. However, only questions
that were on the agenda of the adjourned meeting may be discussed and voted upon. In the case of
any other reconvened extraordinary general meeting, shareholders having at least 25% of the shares
entitled to voting rights must be present in person or be voting by mail, by electronic means or
by proxy for a quorum. If a quorum is not present, the reconvened meeting may be adjourned for a
maximum of two months. Any deliberation by the shareholders taking place without a quorum is void.
Majority
Holders of a simple majority of our voting
power present in person, voting by mail, by electronic means or by proxy may pass any resolution
on matters required to be considered at an ordinary general meeting, or concerning a capital increase
by incorporation of reserves, profits or share premium at an extraordinary general meeting. At any
other extraordinary general meeting, a two-thirds vote of our voting power present in person, voting
by mail, by electronic means or by proxy is required.
A unanimous shareholder vote is required
to increase liabilities of shareholders.
Abstention from voting by shareholders
present in person, voting by mail, by electronic means or by proxy is counted as a vote against the
resolution submitted to the shareholder vote.

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|In general, our shareholders are entitled
to one vote per share on matters submitted to a vote at any general meeting. Under the French
Commercial Code, shares of a company held by entities controlled directly or indirectly by that company
are not entitled to voting rights and are not considered for quorum purposes.
Limitations on right to own our securities
The French Commercial Code currently does
not limit the right of non-residents of France or non-French persons to own and vote our shares or
ADSs. However, non-residents of France must file an administrative notice with French authorities
for any acquisition of a controlling interest in our company. Under existing administrative rulings,
ownership of 33.33% or more of our share capital or voting rights would be regarded as a controlling
interest, but a lower percentage might be held to be a controlling interest in specified circumstances
depending upon factors such as:
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        

| |  | the acquiring partys intentions;                   
| | - | ----------------------------------------------------
| |   |                                                     
| |  | the acquiring partys ability to elect directors; or
| |   |                                                     
| |  | our financial reliance on the acquiring party.      

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Anti-takeover effects of applicable law
and regulations
The French Commercial Code provides that
any person, acting alone or in concert with others, that becomes the owner, directly or indirectly,
of more than 5%, 10%, 20%, one-third, 50% or two-thirds of the outstanding shares or voting rights
of a listed company in France, such as our company, or that increases or decreases its shareholding
or voting rights above or below any of those percentages, must notify our company within five trading
days of the date it crosses any of these thresholds of the number of shares it holds and the voting
rights of the shares. The individual or entity must also notify the AMF, within five trading days
of the date it crosses any of these thresholds.
In addition, article 11 of our bylaws provides
that any person who becomes the direct or indirect owner of at least 2%, or any multiple of 2%, of
our outstanding shares or voting rights, or who decreases its shareholdings below 2% or any multiple
of 2% of our outstanding shares or voting rights, must provide written notice to us within fifteen
trading days after such threshold is crossed.
French law and AMF regulations impose additional
reporting requirements on any person who becomes the owner of more than 10% or 20% of our outstanding
shares or voting rights. Any such person must file a report with us, the AMF within five trading
days of the date it crosses either of these thresholds. In the report, the acquiror must specify
its intentions for the following 12-month period, including whether or not it intends to continue
its purchases, to acquire control of our company or to nominate candidates for our board. The AMF
makes the notice public. The acquiror must also publish a press release stating its intentions in
a financial newspaper of national circulation in France. The acquiror may amend its stated intentions,
so long as it does so on the basis of significant changes in its own situation or that of its shareholders.
Upon any change of intention, it must file a new report.
To permit holders to give the required
notice, we are required to publish in the BALO no later than 15 days after the annual ordinary general
shareholders meeting information with respect to the total number of voting rights outstanding
as of the date of the meeting. In addition, if the number of outstanding voting rights changes by
5% or more between two annual ordinary general meetings, we are required to publish in the BALO,
within 15 days of such change, the number of voting rights outstanding and provide the AMF with written
notice of this information. The AMF publishes the total number of voting rights so notified by all
listed companies in a weekly notice, noting the date each number was last updated.
If any person fails to comply with the
legal notification requirement with respect to the acquisition of 5%, 10%, 20%, one-third, 50% or
two-thirds of our shares or voting rights, the shares or voting rights in excess of the relevant
threshold will be deprived of voting rights for all shareholders meetings until the end of
a two-year period following the date on which their owner complies with the notification requirements.
Upon the request of any of our

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|shareholders holding at least 5% of our share capital, any shareholder who fails to comply with these
requirements may have all or part of his, her or its voting rights suspended for up to five years
by the French Commercial Court at the request of our chairman, any shareholder or the AMF, and may
be subject to a fine.
Pursuant to the French Commercial Code,
we are authorized to require persons holding voting shares in bearer form to disclose the beneficial
owner(s) of those shares, the number of shares held by each of the shareholders and any restrictions
to which these shares may be subject. We may suspend the voting and dividend rights associated with
these shares until the required disclosures are made.
Pursuant to the French Commercial Code,
we are authorized to require any entity holding more than 2.5% of our shares or voting rights to
disclose the identity of the persons who directly or indirectly holds more than one-third of the
outstanding shares or voting rights of that entity.
Under AMF regulations, and subject to limited
exemptions granted by the AMF, any person or persons acting in concert that own in excess of one-third
of the share capital or voting rights of a French listed company must initiate a public tender offer
for the balance of the share capital of that company.
In addition, a number of provisions of
the French Commercial Code allow us to adopt bylaws that have certain anti-takeover effects, including
provisions that allow us to:
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

| |  | limit the voting power of our shareholders; and                                                                  
| | - | -----------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                  
| |  | execute shareholders agreements that provide for preemptive rights in case of a sale of shares by a shareholder.

|                                                                                                                                                        
|--------------------------------------------------------------------------------------------------------------------------------------------------------
|The French Commercial Code also permits
us to take other corporate actions that may discourage or prevent a change of control of our company,
including:
|                                                                                                                                                        

| |  | authorizing our board to reserve for issuance to a limited number of holders securities that contain rights to receive an additional number of our shares, contingent upon the agreement of our existing shareholders to waive any preemptive rights with respect to such issuance; and
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                        
| |  | authorizing our board, upon receipt of the approval of our shareholders, to acquire our shares in open market purchases for purposes of canceling such shares.                                                                                                                         

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|On June 9, 2005, our shareholders authorized
our board of directors to purchase up to 10% of our capital stock. Our board of directors has agreed not to use this
authorization during a public tender offer.
On May 26, 2004, our shareholders delegated to the board the powers
necessary to proceed, any number of times and in the proportions and time frames that it so determines,
in France and in any other country, to issue Havas shares as well as any securities that entitle
their holder(s), immediately and/or in the future, to Havas shares, including securities that may
be issued pursuant to Article L 228-93 of the French Commercial Code. Havas realized a capital
increase as of October 19, 2004 for a par value of 49,005,361.60. The amount of the capital
increase which may be realized immediately and/or in the future under this delegation may not exceed
a par value of 10,994,638.40 which limit applies for capital increases without preemptive subscription
rights, to which will be added, if applicable, any additional shares to preserve the rights of the
holder(s) of securities entitling such holder(s) to Havas shares.
10.C Material contracts
The following summarizes each of our material
contracts, other than contracts that we entered into in the ordinary course of our business, for
the two years before the date of filing of this annual report.
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                

| |  | On October 11, 1991, Media Planning, S.A., the predecessor to Media Planning Group, entered into an agreement with Gestora de Viviendas under which Gestora de Viviendas provides client development services to Media Planning Group and its subsidiaries in exchange for new clients developed by
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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| |   | it. Fernando Rodés Vilá and Leopold Rodés Castañe, together with other members of their families, are controlling shareholders, and Leopold Rodés Castañe was a director, of Gestora de Viviendas.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |  | On January 1, 2000, Havas North America, Inc., formerly EWDB North America Inc., one of our U.S. subsidiaries, entered into a Fourth Amendment of Lease with The Rector, Church-Wardens and Vestrymen of Trinity Church in the City of New York. Under this lease, Havas North America occupies approximately 138,000 square feet for its headquarters for a fixed annual rent which escalated to $4,512,746 starting on January 1, 2003. The amended lease terminates on December 31, 2007.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |  | On January 20, 2001, we entered into an Agreement to Contribute with Advertising Antwerpen B.V., Banco Santander Central Hispano, S.A., Compañía de Cartera e Inversiones S.A., Deya S.A., Mr. Jose Martínez-Rovira Vidal, Mrs. Maris Luisa Munoz Alvarez, Mrs. Cristina Martínez-Rovira Munoz and Mrs. Sandra Martínez-Rovira Munoz, who are former shareholders of Media Planning Group, and Havas, S.A., under which the former shareholders of Media Planning Group agreed to sell the shares they held in Media Planning Group to us for a total of 28,800,000 Havas shares and 51.2 million in cash.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |  | On April 2, 2001, we entered into a Protocol Agreement and Commercial Lease with Suresnes Immobilier for the lease of our new corporate headquarters in Suresnes, France. The lease is for approximately 228,000 square feet of leasable area, for a period of nine years, commencing on the date we took possession of the leased building. The net annual rent is approximately 8.3 million, which may be adjusted annually based on the national construction cost index.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |  | On May 14, 2001, in connection with our acquisition of the remaining 55% interest in Media Planning Group, we entered into a registration rights agreement with Acacia ISP, S.L., Banco Santander Central Hispano, S.A., Compañía de Cartera e Inversiones S.A., Deya S.A., Jose Martínez-Rovira Vidal, Maria Luisa Munoz Alvarez, Cristina Martínez-Rovira Munoz and Sandra Martínez-Rovira Munoz, under which we granted to the sellers certain registration rights with respect to Havas shares they received as consideration for the acquisition.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |  | Gestora de Viviendas is a major shareholder of Vigilancia y Sistemas de Seguridad, S.A., a company that provides security services. Vigilancia y Sistemas de Seguridad provides security systems and personnel to Media Planning Group, for which Media Planning Group paid it 422,503, excluding taxes, in 2004. Media Planning Group expects to pay Vigilancia approximately the same amount in 2005 for these services.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |  | Gestora de Viviendas also controls In-Store Media, a company that provides point of sale advertising services and space, such as in-store backlight posters, floor media advertising, in-store radio and shopping trolley advertising. Media Planning Group purchases media space and services from In-Store Media on behalf of its clients as part of their advertising campaigns. Media Planning Group paid In-Store Media 1,703,265, excluding taxes, on behalf of its clients in 2004. Media Planning Group expects to pay In-Store Media approximately the same amount on behalf of its clients in 2005 for these services.                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |  | Media Planning Group receives legal services from the Spanish law firm of Rodés & Sala Abogados, S.L. Media Planning Group paid an annual retainer fee of 120,000 to Rodés & Sala for general legal services in 2004 and expects to pay an annual retainer fee of approximately 180,000 to Rodés & Sala for general legal services in 2005. In addition, Rodés & Sala was paid a total of 113,295, excluding taxes, for legal services provided to Media Planning Group and other subsidiaries of our company in Spain in 2004 and has billed Media Planning Group and other subsidiaries of our company in Spain a total of  27,680 excluding taxes, in legal fees for 2005 through May 31. Gonzalo Rodés Vilà, the brother of Fernando Rodés Vilà and the son of Leopoldo Rodés Castañe, is a partner in Rodés & Sala. In addition,
Gonzalo Rodés Vilà serves as secretary of the board of directors of Media Planning Group. Gonzalo Rodés Vilà was paid 48,000 for his services as secretary of the board in 2004 and has been paid 20,000 for such services in 2005 though May 31.
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              

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| |  | In 2003, we paid $60,000
to Colker, Gelardin & Co. for investment banking advisory services performed
during 2003 related to our specialized agencies. Richard Colker, one of our
directors and our interim Chairman and Chief Executive Officer appointed at a meeting
of our board of directors on June 21, 2005, is the Managing Partner of Colker,
Gelardin & Co.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                                                      
| |  | Thierry Meyer, who was one of our directors until June 9, 2005, also served as a director of one of our subsidiaries in the U.K. until 2003. We paid Mr. Meyer £60,000 for his services as a director of the subsidiary in 2002.                                                                                                                                     
| |   |                                                                                                                                                                                                                                                                                                                                                                      
| |  | As of October 1, 2003,
Arnold Worldwide LLC, one of our U.S. subsidiaries, entered into a lease with BP
Prucenter Acquisitions LLC, which was amended in September 2004 and January 2005. Under this lease, Arnold
leases approximately 200,727 square feet for its headquarters for a fixed annual
rent of $5,586,902. The lease terminates on August 31, 2014.     

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
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|10.D Exchange controls
French exchange control regulations currently
do not limit the amount of payments that we may remit to non-residents of France, with the exception
of certain persons connected with terrorist activities. Laws and regulations concerning foreign exchange
controls do require, however, that all payments or transfers of funds made by a French resident to
a non-resident be handled by an accredited intermediary. In France, all registered banks and most
credit establishments are accredited intermediaries.
10.E Taxation
French taxation
The following is a description of the French
tax consequences of owning and disposing of Havas shares. This description may only be relevant to
holders of Havas shares who are not residents of France and do not hold their shares in connection
with a permanent establishment or a fixed base in France through which the holders carry on a business
or perform personal services.
This description may not address all aspects
of French tax laws that may be relevant in light of the particular circumstances of individual holders
of Havas shares. It is based on the laws, conventions and treaties in force as of the date of this
Annual Report, all of which are subject to change, possibly with retroactive effect, or different
interpretations.
Holders of Havas shares should consult
their own tax advisors about the potential tax effects of owning or disposing of shares in any particular
situation.
Taxation on sale or disposal of Havas shares
Generally, a holder of Havas shares will
not be subject to any French income tax or capital gains tax when the holder sells or disposes of
Havas shares if both of the following apply:
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| |  | the holder is not a French resident for French tax purposes; and                                                                                                                    
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| |   |                                                                                                                                                                                     
| |  | the holder has held not more than 25% of Havass dividend rights, known as droits aux bénéfices sociaux, at any time during the preceding five years, either directly or indirectly.

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|If a double tax treaty between France and
the country of residence of a holder of Havas shares contains more favorable provisions, a holder
may not be subject to any French income tax or capital gains tax when the holder sells or disposes
of any Havas shares, even if one or both of the above statements does not apply to the holder.
Subject to various conditions, foreign
states, international organizations and a number of foreign public bodies are not considered French
residents for these purposes.

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|If a holder of Havas shares transfers shares
using a written agreement, that agreement must generally be registered. The holder will be required
to pay a registration duty of 1% of either the purchase price or the market value of the shares transferred,

whichever is higher. The maximum duty is 3,049 per transfer. However, if the agreement is executed
outside France, the holder of Havas shares will not be required to pay this duty.
Taxation of Dividends on Shares
In France, dividends are paid out of after-tax
income. Dividends paid to non-residents normally are subject to a 25% French withholding tax. However,
non-resident holders that are entitled to and comply with the procedures for claiming benefits under
an applicable tax treaty may be subject to a reduced rate (generally 15%) of French withholding tax.
If a non-resident holder establishes its entitlement to treaty benefits prior to the payment of a
dividend, then French tax generally will be withheld at the reduced rate provided under the treaty.
The French Finance Law of 2004 includes
a reform of the French tax treatment of distributions implementing a new mechanism to avoid double
taxation of dividends and the elimination of the former avoir fiscal and précompte mechanisms as explained below.
Avoir Fiscal  Tax Credit
Prior to enactment of the reform, French
resident shareholders were entitled to a tax credit, known as the avoir fiscal, on dividends received from French companies. The avoir fiscal was equal to 50% of the dividend received for individuals and, generally, equal to 10% of the dividend
received for other investors, although the 10% rate was generally increased by 80% of any précompte actually paid in cash by the distributing corporation.
As a result of the reform:
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|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

| |  | French resident individuals will still benefit from the avoir fiscal with respect to dividend distributions made during 2004 but will not be entitled to the avoir fiscal with respect to dividend distributions made from 2005 on. Instead, from 2005 on, French resident individuals
will only be taxed on half of dividends received and, in addition to the annual allowance which is
already applicable, will be entitled to a tax credit equal to 50% of the dividend, which we refer
to as the Tax Credit. The Tax Credit will have a cap of 230 for married couples and members
of a union agreement subject to joint taxation and 115 for single persons, widows or widowers,
divorcees or married persons subject to separate taxation.                                         
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
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| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |  | French resident shareholders other than individuals will lose the benefit of the avoir fiscal for tax credits that they would otherwise have been able to use from 2005 on; thus French corporate
shareholders with a fiscal year corresponding to the calendar year will not be entitled to the avoir fiscal with respect to dividends received in 2004. However French corporate shareholders that benefit from
the participation exemption regime defined in Articles 145 and 216 of the French Tax Code will still
be allowed to use their 50% avoir fiscal to finance the 25% Equalization Tax (see below) they should pay if they distribute in 2005 dividends
received from their affiliates according to such participation exemption regime during the preceding
five fiscal years.

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Dividends paid to non-residents are not
normally eligible for the benefit of the avoir fiscal and, from 2005 on, will not be eligible for the Tax Credit described above. However, France has entered
into tax treaties with certain countries under which qualifying residents complying with the procedures
for claiming benefits under an applicable tax treaty may be entitled to benefit from a refund of
the avoir fiscal (net of applicable withholding tax), in addition to a reduced rate of withholding tax. Certain of
these treaties impose additional conditions for the entitlement of corporate entities to the avoir fiscal and under certain treaties only individual residents are entitled to the avoir fiscal.

|                                                     
|-----------------------------------------------------
|As a result of the French Finance Law of 2004 reform:
|                                                     

| |  | qualifying non-resident individuals who hold shares directly will be entitled to a refund of the avoir fiscal
| | - | -------------------------------------------------------------------------------------------------------------

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| |   | with respect to dividends received in 2004 but will not be entitled to avoir fiscal refunds with
respect to distributions made from 2005. Instead, qualifying non-resident individuals who were previously entitled to a refund of the avoir fiscal may benefit, under the same conditions as for the avoir fiscal, from a refund of the Tax Credit (net of applicable withholding tax); the French tax authorities have not yet issued any guidance with regard to the refund of the Tax Credit to non-resident individuals, but claiming such refund may likely entail compliance with cumbersome
 formalities.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | non-resident shareholders other than individuals are no longer entitled to a refund of the avoir fiscal with respect to dividend distributions made from 2004.                                                                                                                                                                                                                                                                                                                                                                                                                                                   

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|Précompte  25% Equalization Tax
Dividends paid out of profits that have
not been taxed at the ordinary corporate rate, or were earned and taxed more than five years before
the distribution, are subject to an equalization tax called the précompte, which is payable by the distributing corporation to the French tax authorities. The précompte generally is equal to one-half of the amount of the dividend paid to shareholders prior to deduction
of withholding tax. When a tax treaty does not provide for a refund of the avoir fiscal, or when a non-resident shareholder is not entitled to such a refund but is otherwise entitled to
the benefits of the tax treaty, then a qualifying shareholder may generally obtain from the French
tax authorities a payment equal to 100% of the précompte actually paid in cash by the distributing corporation, net of applicable withholding tax. These rules
will be applicable to distributions made through December 31, 2004.
Distributions made by French companies
from 2005 on will no longer be subject to précompte. However, an equalization tax will apply to distributions made in 2005 out of profits that have not
been taxed at the ordinary corporate tax rate, or which were earned and taxed more than five years
before the distribution. This equalization tax will be equal to 25% of the amount of the dividends
paid to the shareholder. Unlike précompte, this equalization tax will not be refundable to non-resident shareholders, as it will be refunded
to the distributing corporation in three installments of one-third each with respect to the three
fiscal years closed after the distribution, either as a credit against its corporate tax liability
or in cash, if the corporate tax liability is insufficient to offset the entire tax credit.
Distributions made as from 2006 will not
give rise to précompte or equalization tax liability.
Estate and gift tax
France imposes estate and gift tax where
an individual or entity acquires real and personal property from a non-resident of France by way
of inheritance or gift. France has entered into estate and gift tax treaties with a number of countries.
Under these treaties, residents of those countries may be exempted from this tax or obtain a tax
credit, assuming specified conditions are met. Holders of Havas shares should consult their own tax
advisors about whether French estate and gift tax will apply and whether they may claim an exemption
or tax credit.
Wealth tax
French individual residents are taxable
on their worldwide assets. Non-resident individuals are taxable only on their assets which are located
in France. However, financial investments made by non-resident individuals, other than in real property
companies, are exempt from wealth tax under certain conditions.
If a double tax treaty between France and
a holders country of residence contains more favorable provisions, the holder may not be subject
to French wealth tax.
Taxation of U.S. investors
On August 31, 1994, the United States and
France signed a tax treaty, which entered into force on December 30, 1995. The following is a general
summary of the principal tax effects on holders of Havas shares or Havas ADSs for purposes of U.S.
federal income tax and French tax, if all of the following five points apply:

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| |  | the holder owns, directly or indirectly, less than 10% of Havass share capital;                                                
| | - | --------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                 
| |  | the holder is any one of (a), (b) or (c) below:                                                                                 
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| |   |                                                                                                                                 
| |   |                                                                                                                                 
| |   |                                                                                                                                 
| |   |                                                                                                                                 
| |   |                                                                                                                                 
| |  | the holder is entitled to the benefits of the U.S.-France tax treaty under the limitations on benefits article of that treaty;
| |   |                                                                                                                                 
| |  | the holder holds Havas shares or Havas ADSs as capital assets; and                                                              
| |   |                                                                                                                                 
| |  | the holders functional currency is the U.S. dollar.                                                                            

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|For purposes of the U.S.-France tax treaty
and U.S. federal income tax, holders of Havas ADSs will be treated as holders of the shares which
their Havas ADSs represent.
Special rules may apply to United States
expatriates, insurance companies, pass-through entities and investors in such entities, tax-exempt
organizations, financial institutions, persons subject to the alternative minimum tax, securities
broker-dealers and persons holding their Havas shares or Havas ADSs as part of a conversion transaction,
among others. Those special rules are not discussed in this registration statement.
Holders of Havas shares or Havas ADSs should
consult their own tax advisers as to the particular tax consequences to them of owning Havas shares
or Havas ADSs, including their eligibility for the benefits of the U.S.-France tax treaty, the applicability
and effect of state, local, foreign and other tax laws and possible changes in tax law.
Taxation of dividends
As discussed in more detail above, the
French Finance Law of 2004 includes a reform of the French tax treatment of distributions and dividends
paid by French companies to non-residents of France. Generally, non-residents of France are subject
to French withholding tax at a 25% rate and are not eligible for the benefit of the avoir fiscal. In addition, as of 2005, non-residents generally will not be eligible for the benefit of the Tax
Credit available to French resident individuals, as described above.
However, under the Treaty, you can claim
the benefit of a reduced dividend withholding tax rate of 15%.
If you are an individual U.S. holder, you
will also be entitled to a payment from the French tax authorities equal to the avoir fiscal with respect to dividends distributed in 2004 at a 50% rate, less a 15% withholding tax. Because of
the 2004 French tax reform you will no longer be entitled to the avoir fiscal refund with respect to dividend distributions made from 2005 on. Instead, under the same conditions
as for the avoir fiscal, you may be entitled to a refund of the Tax Credit less a 15% withholding tax. You generally will
be entitled to receive a refund of the avoir fiscal or the Tax Credit only if you are subject to U.S. federal income tax on the avoir fiscal payment (or the Tax Credit) and the dividend to which it relates. The refund of the avoir fiscal (or the Tax Credit) will not be made available before January 15 following the end of the calendar
year in which the dividend is paid. The French tax authorities have not yet issued any guidance with
regard to the refund of the Tax Credit to non-resident individuals, which may entail compliance with
cumbersome formalities.
As a result of the 2004 French tax reform,
U.S. holders that are legal entities, pension funds or other tax-exempt holders are no longer entitled
to tax credit payments from the French Treasury in respect of dividends paid from 2004.

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|French withholding tax will be withheld
at the 15% Treaty rate if you have established before the date of payment that you are a resident
of the United States under the Treaty and, if you are not an individual, that you are the owner of
all the rights relating to the full ownership of the shares or ADSs (including, but not limited to,
dividend rights).
With respect to distributions of dividends
made during 2004, U.S. holders that are not entitled to a refund of the avoir fiscal (e.g., corporations, pension funds and other tax-exempt U.S. holders) may generally obtain from the French
tax authorities a refund of the entire précompte equalization tax (discussed under  French Taxation above) we actually pay in cash
in respect of a dividend, less a 15% French withholding tax.
Thus, for example, if we pay a dividend
of 100 to an individual U.S. holder in 2004, the holder initially will receive 85, but will be entitled
to an additional payment of 42.50, consisting of the avoir fiscal of 50 less a 15% withholding tax. If we pay a dividend of 100 to a corporate U.S. holder, such U.S.
holder will receive 85, and will not be entitled to any avoir fiscal; in the event that the dividend distribution triggers payment by us of the précompte, such U.S. holder generally may also obtain from the French tax authorities a refund of the précompte that we pay in cash, less a 15% withholding tax.
The gross amount of dividend, avoir fiscal (or Tax Credit) and précompte payments that you receive (prior to deduction of French withholding tax) generally will be subject
to U.S. federal income taxation as foreign source dividend income. Subject to certain exceptions
for positions that are hedged or held for less than 60 days during a 121-day period, an individual
U.S. holder generally will be subject to U.S. taxation at a maximum rate of 15% in respect of dividends
received after 2002 and before 2009. Such dividends will not be eligible for the dividends received
deduction generally allowed to U.S. corporations. French withholding tax at the 15% Treaty rate will
be treated as a foreign income tax that, subject to applicable limitations under U.S. law, is eligible
for credit against your U.S. federal income tax liability or, at your election, may be deducted in
computing taxable income. Foreign tax credits will not be allowed for withholding taxes imposed in
respect of certain short-term or hedged positions in securities. You should consult your own tax
advisers concerning the implications of these rules in the light of your particular circumstances.
Dividends paid in euro will be included
in your income in a U.S. dollar amount calculated by reference to the exchange rate in effect on
the date you receive the dividend (or the date the depositary receives the dividend, in the case
of the ADSs), regardless of whether the payment is in fact converted into U.S. dollars. If such a
dividend is converted into U.S. dollars on the date of receipt, you generally should not be required
to recognize foreign currency gain or loss in respect of the dividend income.
Procedures for Claiming Treaty Benefits
In order to claim Treaty benefits with
respect to distributions made in 2004, if you are an individual U.S. holder, you must complete and
deliver to the French tax authorities either:
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| |  | the simplified certificate described below; or                      
| | - | --------------------------------------------------------------------
| |   |                                                                     
| |  | an application for refund on French Treasury Form RF 1A EU-No. 5052.

|                                         
|-----------------------------------------
|A simplified certificate must state that:
|                                         

| |  | you are a U.S. resident within the meaning of the Treaty;                                                                                         
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                   
| |  | you do not maintain a permanent establishment or fixed base in France with which the holding giving rise to the dividend is effectively connected;
| |   |                                                                                                                                                   
| |  | you own all the rights attached to the full ownership of the shares (including dividend rights); and                                              
| |   |                                                                                                                                                   
| |  | you meet all the requirements of the Treaty for obtaining the benefit of the reduced rate of withholding tax and the refund of the avoir fiscal.  

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|Copies of the simplified certificate and
the application for refund are available from the U.S. Internal Revenue Service and from the Centre des Impôts des Non-Résidents (9, rue dUzès, 75094 Paris Cedex 2).
If the certificate or application is not
filed prior to a dividend payment, then holders may claim withholding tax and avoir fiscal refunds by filing an application for refund at the latest by December 31 of the second year following
the year in which the withholding tax is paid.
The avoir fiscal and any French withholding tax refund will not be paid before January 15 following the end of
the calendar year in which the dividend is paid.
As noted above, the French tax authorities
have not yet issued any guidance with regard to the refund of the Tax Credit to non-resident individuals,
which may entail compliance with cumbersome formalities.
If you are a U.S. holder not entitled to
a refund of the avoir fiscal, in order to claim Treaty benefits (reduced withholding tax rate and, as the case may be, refund of
the précompte) with respect to distributions made in 2004, you must file with the French tax authorities either
the simplified certificate described above or French Treasury Form RF 1B EU-No. 5053 before the end
of the second year following the year in which the dividend was paid. Copies of the simplified certificate
and of the form, together with instructions, are available from the U.S. Internal Revenue Service
or at the Centre des Impôts des Non-Résidents (9, rue dUzès, 75094 Paris Cedex 2). If the simplified certificate or the form are filed
prior to the dividend payment, then the French withholding tax generally will be withheld at the
reduced rate.
The French tax authorities are expected
to issue new guidelines setting out formalities to be complied with by U.S. holders in order to obtain
the reduced withholding tax rate on distributions made from 2005. You should nevertheless be entitled
to benefit from the application of the reduced rate of withholding tax of 15% provided that you complete
and file with the French tax authorities Form RF 1B EU-No. 5053 before the payment of the dividend.
If the form is not filed prior to the dividend payment, withholding tax should be levied at the 25%
rate and you would have to claim for a refund of the excess by filing an application in this respect.
Taxation of capital gains
If a holder is a resident of the United
States for purposes of the U.S.-France tax treaty, the holder will not be subject to French tax on
any capital gain if the holder sells or exchanges its Havas shares or Havas ADSs, unless the holder
has a permanent establishment or fixed base in France and the Havas shares or Havas ADSs the holder
sold or exchanged were part of the business property of that permanent establishment or fixed base.
Special rules apply to individuals who are residents of more than one country.
In general, for U.S. federal income tax
purposes, a holder will recognize capital gain or loss if the holder sells or exchanges its shares
or Havas ADSs in the same manner as the holder would if it were to sell or exchange any other shares
held as capital assets. Any gain or loss will generally be U.S. source gain or loss. If a holder
is an individual, any capital gain will generally be subject to U.S. federal income tax at preferential
rates if the holder meets the minimum holding periods. The deductibility of capital losses is subject
to significant limitations.
We believe that we will not be treated
as a passive foreign investment company, or PFIC, for U.S. federal income tax purposes for the current
taxable year or for future taxable years. However, an actual determination of PFIC status is fundamentally
factual in nature and cannot be made until the close of the applicable taxable year. We will be a
PFIC for any taxable year in which either:
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| |  | 75% or more of our gross income is passive income; or                                                                                                             
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                   
| |  | our assets which produce passive income or which are held for the production of passive income amount to at least 50% of the value of our total assets on average.

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|If we were to become a PFIC, the tax applicable
to distributions on Havas shares or Havas ADSs and any gains a holder realizes when the holder disposes
of Havas shares or Havas ADSs may be less favorable to the holder. Each holder should consult its
own tax advisors regarding the PFIC rules and their effect on the holder if they purchase Havas shares
or Havas ADSs.
French estate and gift taxes
Under The Convention Between the
United States of America and the French Republic for the Avoidance of Double Taxation and the Prevention
of Fiscal Evasion with Respect to Taxes on Estates, Inheritance and Gifts of November 24, 1978,
if a holder transfers their Havas shares or Havas ADSs by gift, or if they are transferred by reason
of the holders death, that transfer will only be subject to French gift or inheritance tax
if one of the following applies:
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|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          

| |  | the holder is domiciled in France at the time of making the gift, or at the time of the holders death; or                                                                                        
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                   
| |  | the holder used the Havas shares or Havas ADSs in conducting a business through a permanent establishment or fixed base in France, or the holder held the Havas shares or Havas ADSs for that use.

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
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|French wealth tax
The French wealth tax does not generally
apply to Havas shares or Havas ADSs if the holder is a resident of the United States
for purposes of the U.S.-France tax treaty.
United States information reporting and backup withholding
A holder may be required to report dividend
payments and proceeds from the sale or disposal of such holders Havas shares or Havas ADSs
to the Internal Revenue Service. U.S. federal backup withholding generally is a withholding tax imposed
at the current rate of 28% on some payments to persons that fail to furnish required information.
Backup withholding will not apply to a holder who furnishes a correct taxpayer identification number
or certificate of foreign statutes and makes any other required certification, or who is otherwise
exempt from backup withholding. Any U.S. persons required to establish their exempt statutes generally
must file Internal Revenue Service Form W-9, entitled Request for Taxpayer Identification Number
and Certification.
Amounts withheld as backup withholding
may be credited against a holders U.S. federal income tax liability. A holder may obtain a
refund of any excess amounts withheld under the backup withholding rules by filing the appropriate
claim for refund with the Internal Revenue Service and furnishing any required information.
10.F Dividends and paying agents
Not applicable.
10.G Statement by experts
Not applicable.
10.H Documents on display
We are subject to the reporting requirements
of the Exchange Act and accordingly are required to file reports and other information with the SEC
relating to our business, financial condition and other matters. It is possible to read and copy
documents referred to in this annual report on Form 20-F that have been filed with the SEC at the
SECs public reference room located at 450 Fifth Street, NW, Washington, D.C. 20549. Please
call the SEC at 1-800-SEC-0330 for further information on the public reference rooms and their copy
charges. You may also view our

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|annual reports and other documents filed with the SEC on the internet at http://www.sec.gov. In addition,
you may obtain a copy of any foreign language document for which we have filed an English translation
as an exhibit to this annual report on Form 20-F by sending a written request to our corporate headquarters
at 2 allée de Longchamp, 92281 Suresnes Cedex, France, attention: Corporate Communications.
10.I Subsidiary information
Not applicable.
ITEM 11.   QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
Impact of changes in foreign currency exchange rates and interest rates
Foreign currency exchange rates.As of December 31, 2004, we had operations in 77 countries through agencies in 44 countries throughout
Europe, North America, Latin America and the Asia-Pacific region, as well as contractual affiliations
with agencies in 33 additional countries. The geographic diversity of our operations is reflected
in the diversity of the currencies that make up our results of operations. In 2004, 63.5% of our
revenues were realized in currencies other than the euro, including 38.2% realized in U.S. dollars
and 13.0% realized in British pounds. In 2003, 68.2% of our revenues were realized in currencies
other than the euro, including 40.1% realized in U.S. dollars and 15.5% realized in British pounds.
The majority of our subsidiaries carry
out businesses that are essentially local, with almost all of their revenues received in local currency
and almost all of their expenses incurred in local currency. For those subsidiaries that are involved
in more international businesses, non-local currency expenses are generally billed to the clients
for whom those expenses are incurred on a basis which protects the subsidiary from currency exchange
rate fluctuations between the time that it incurs the expenses and the time that it receives payment
from the client. In addition, most of our acquisitions for cash in the United States and the United
Kingdom have been funded through local borrowings, resulting in financial expenses and repayment
obligations in the same local currency. For these reasons, our exposure to currency exchange risks
arising from mismatches between the currencies in which we receive revenues and the currencies in
which we incur expenses tends to be limited. There can be no assurance, however, that currency exchange
risks from such mismatches will not increase in the future, which could materially affect our
results of operations.
Because our foreign currency mismatches
tend to be limited, we generally do not hedge our exposure to foreign currencies except in connection with some intercompany loans including those described below. As at December
31, 2004 and December 31, 2003, we had not entered into any foreign currency hedges, with the exception
of the following:
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

| |  | We are a party to a currency and interest rate swap arrangement, which we refer to as CIRCUS, that we entered into in June 1999 in connection with a collateral deposit in the initial amount of $30.0 million we made to secure a borrowing made by one of our U.S. subsidiaries in the same amount from Banque Nationale de Paris, New York Branch. This arrangement is repayable in six equal annual installments from June 4, 2001 to June 5, 2006 and the borrowing and collateral deposit have therefore been reduced to $10.0 million at December 31, 2004. The CIRCUS has the effect of transforming our U.S. dollar deposit of $10.0 million, which earns interest at a rate of LIBOR less a margin, into a euro deposit of 9.5 million, which earns interest at EURIBOR less a margin. As at December 31, 2004, the fair value of the CIRCUS amounted to 2.2 million, compared with 0.01
million as at December 31, 2003.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |  | We are a party to a forward sale contract of Canadian $10.7 million against British pounds that we entered into in 2000 in connection with a Canadian $10.7 million intercompany loan made by one of our U.K. subsidiaries to a newly acquired Canadian subsidiary. This forward sale contract matured in 2004 and was extended to 2005 for an amount of Canadian $20.5 million. As at December 31, 2004 and 2003, the fair value of this forward sale contract was 0.078 and (0.2) million, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                             
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |  | We were a party to a forward sale contract of $50 million against euro that we entered into in 2004. As at December 31, 2004, the fair value of this forward sale contract was (1.0) million.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

|86
|--



|For a discussion of the terms
of our financial instruments as at December 31, 2004, see Notes 2.19, 10 and 19 to our 2004 consolidated
financial statements included elsewhere in this annual report.
Because of the geographic diversity of
our operations, our subsidiaries record their revenues, expenses, assets and liabilities in a number
of different currencies. When we prepare our consolidated financial statements, the value of these
different revenues, expenses, assets and liabilities is translated into euro. Fluctuations in the
value of the euro will have an impact on the value of the amounts at which these revenues, expenses,
assets and liabilities are recorded in our financial statements. For this reason, changes in foreign
currency exchange rates can have a significant impact on our results of operations and financial
position as reported in euro. This is particularly true with respect to changes in U.S. dollar/euro
exchange rate and the British pound/euro exchange rate.
Interest rates.In the course of our operations, we are exposed to interest rate changes, primarily as a result of
our credit facilities used to finance our investment activity and to maintain financial liquidity.
We borrow at both fixed and variable rates.
As at December 31, 2004, we had 34.2
million of outstanding long-term borrowings, including current maturities, comprised principally
of:
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

| |  | 25.7 million in U.S. dollar denominated bank loans, at variable rates ranging from 2.81% to 3.19%, due 2005 to 2006;
| | - | ---------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                      
| |  | 7.7 million in a British pound denominated convertible bond at a fixed rate of 7.6%, due 2007; and                  
| |   |                                                                                                                      
| |  | 0.8 million in other borrowings, including 0.1 million at fixed rates and 0.7 million at variable rates.          

|                                                                                          
|------------------------------------------------------------------------------------------
|We generally do not hedge our interest
rate exposure, with the exception of the following:
|                                                                                          

| |  | the currency and interest rate swap arrangement, which we refer to as CIRCUS, described above;                                                                                                                                                                                                                                                                       
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                                                        
| |  | interest rate caps entered into by Media Planning Group in a total amount of 6.758 million in connection with a lease agreement; 0.493 million of these caps mature in 2005 and the remaining 6.265 million matures in 2008; as at December 31, 2004, the fair value of these caps amounted to 0.001 million, compared with 0.005 million as at December 31, 2003.

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Based on approximately 26.4 million
of outstanding long-term borrowings at variable rates as at December 31, 2004, the impact on pre-tax
earnings resulting from a one-percentage point increase or decrease in interest rates would be approximately
0.3 million, holding other variables constant.
ITEM 12.   DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
Not applicable.
PART II
ITEM 13.   DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
None.

|         |                                                                             
|-------- | ----------------------------------------------------------------------------
|ITEM 14. | MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS

|87
|--



|None.
ITEM 15.   CONTROLS AND PROCEDURES
Our
Chief Executive Officer and our Chief Financial Officer have evaluated the effectiveness of the design
and operation of our disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e)
and 15d-15(e)) as of the end of the period covered by this annual report on Form 20-F. Based on that
evaluation, our Chief Executive Officer and our Chief Financial Officer have concluded that, as of
the evaluation date, our disclosure controls and procedures were effective to ensure that material
information relating to us and our consolidated subsidiaries would be made known to them by others
within these entities, particularly during the period in which this annual report was being prepared,
in order to allow timely decisions regarding required disclosure.
There
have been no significant changes in our internal controls or, to our knowledge, other factors that
could significantly affect our internal controls subsequent to the evaluation date. Therefore, no
corrective actions were taken.
ITEM 16.   [RESERVED]
ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT
Our
audit committee members are currently Messrs. Boutinard Rouelle and Vaturi.
Mr. Colker resigned from the audit committee on June 21, 2005 upon his
appointment by our board of directors as interim Chairman and
Chief Executive Officer. See Item 6. Directors,
Senior Management and Employees. The Board has determined that neither of these individuals
meet all of the criteria required to be named an audit committee financial expert, as defined in applicable
rules of the Securities and Exchange Commission.
At a meeting in April 2005 our board of directors determined to
review the membership of the audit committee so as to include an audit committee financial expert on the committee.
Our board of directors has indicated that it believes that Pierre Bouchut, one
of the newly elected directors, meets the requirements to be considered an audit
committee financial expert, and that it intends to appoint him to our audit
committee.
ITEM 16B. CODE OF ETHICS
In
March 2004, our board adopted a Code of Ethics, a code that applies to, among others, our chief executive
officer and chief financial officer. This code is publicly available on our website at www.havas.com.
ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Ernst
& Young served as our independent auditors for the 2004 fiscal year. A description of the fees
billed to us by Ernst & Young for professional services in each of the last two fiscal years
is set forth below:
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

|
|

|                   | Year Ended December 31, | 
|------------------ | ----------------------- | 
|                   |                         | 
|                   | 2004                    | 
|                   | (in  millions)         | 
|Audit Fees         | 5                       | 
|Audit-Related Fees | 1                       | 
|Tax Fees           | 1                       | 
|                   |                         | 
|Total              | 7                       | 

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Audit Fees are the aggregate
fees billed by Ernst & Young for the audit of our consolidated and annual financial statements,
reviews of interim financial statements and attestation services that are provided in connection
with statutory and regulatory filings or engagements. Audit-Related Fees are fees charged
by Ernst & Young for assurance and related services that are reasonably related to the performance
of the audit or review of our financial

|88
|--



|statements and are not reported under Audit Fees. This category comprises fees billed
for the audit of employee benefit plans and pension schemes, agreed-upon procedure engagements and
other attestation services subject to regulatory requirements, certifications of accounting-related
internal controls, as well as advisory services associated with our financial reporting. Tax
Fees are fees for professional services rendered by Ernst & Young for tax compliance, tax
planning and tax advice on actual or contemplated transactions.
In May 2003, our audit committee established
policies and procedures which require all audit and non-audit services performed by our principal
accountants to be approved by the audit committee.
All audit services have been approved by
the audit committee. All non-audit services since May 2003 have been approved under the pre-approval
policies of the audit committee.
ITEM 16D.  EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
Not applicable.
ITEM 16E.  PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED 
                       PURCHASERS
Issuer purchases of  convertible and/or exchangable 1% bonds due January 1, 2006
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

|Period                               | (a) Total Number of Convertible Bonds Purchased |  | (b) Average Price Paid per Convertible Bond (in Euros) |  | (c) Total Number of Convertible Bonds Purchased as Part of Publicly Announced Plans or Programs |  | (d) Maximum Number of Convertible Bonds that May Yet Be Purchased Under the Plans or Programs | 
|------------------------------------ | ----------------------------------------------- |  | ------------------------------------------------------ |  | ----------------------------------------------------------------------------------------------- |  | --------------------------------------------------------------------------------------------- | 
|December 3, 2004  December 10, 2004 | 17,570,404                                      |  | 25.17 (2)                                              |  | 14,133,696 (3)                                                                                  |  | 8,613,863 (4)                                                                                 | 
|Total                                | 17,570,404                                      |  | 25.17                                                  |  | 14,133,696                                                                                      |  | 8,613,863                                                                                     | 

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The convertible bonds were purchased through over the counter transactions outside the United States. All repurchased convertible bonds have been cancelled in accordance with the agreement under which they were issued.                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|(2) | This average price is inclusive of accrued interest payments up to the purchase date.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|(3) | On December 6, 2004, we announced that on December 3, 2004, we had repurchased a portion of our outstanding convertible and/or exchangeable 1% bonds due January 1, 2006 and that we would extend our offer to repurchase any additional outstanding convertible and/or exchangeable 1% bonds in the French market at an equivalent price. On December 13, 2004, we announced that since December 3, 2004, we had repurchased a total of 17,570,404 at an average price of  25.17 representing a total purchase price of approximately 442.3 million, inclusive of accrued interest up to the purchase date, and that we reserved the right to make further purchases of our bonds in the market.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|(4) | Originally, we had issued 32,817,012 of these bonds out of which: 6,632,046 had been repurchased in prior years, 699 have been converted into  shares, and 17,570,404 were purchased in December  2004. 8,613,863 reflects the total number of these bonds outstanding after these repurchases and conversions.                                                                                                                                                                                                                                                                                                                                                                                    

|89
|--



|Issuer purchases of equity securities
|-------------------------------------

|Period       |  | (a) Total Number of Shares Purchased |  | (b) Average Price Paid per Share (in Euros) |  | (c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs |  | (d) Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs
|------------ |  | ------------------------------------ |  | ------------------------------------------- |  | ------------------------------------------------------------------------------------ |  | ----------------------------------------------------------------------------------------------------------------
|             |  |                                      |  |                                             |  |                                                                                      |  |                                                                                                                 
|January 2004 |  | 27,600                               |  | 5.01                                        |  | 27,600                                                                               |  | 22,400,443                                                                                                      
|June 2004    |  | 0                                    |  |                                             |  | 0                                                                                    |  | 23,186,824                                                                                                      
|Total        |  | 27,600                               |  | 5.01                                        |  | 27,600                                                                               |  |                                                                                                                 

|                                                                                                                                                                                                                                    
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|PART III
      ITEM 17.   FINANCIAL STATEMENTS
      Not applicable.
      ITEM 18.   FINANCIAL STATEMENTS
      The following financial statements are filed as part of this annual report on Form 20-F:
    Havas and Subsidiaries
|

|Report of Independent Public Accountants                                            | F-2 | 
|----------------------------------------------------------------------------------- | --- | 
|                                                                                    |     | 
|Consolidated Statements of Operations                                               | F-3 | 
|                                                                                    |     | 
|Consolidated Balance Sheets                                                         | F-4 | 
|                                                                                    |     | 
|Consolidated Statements of Changes in Shareholders Equity and Comprehensive Income | F-5 | 
|                                                                                    |     | 
|Consolidated Statements of Cash Flows                                               | F-6 | 
|                                                                                    |     | 
|Notes to Consolidated Financial Statements                                          | F-7 | 

|                   
|-------------------
|ITEM 19.   EXHIBITS
|                   

|Exhibit No. |  | Description
|----------- |  | -----------
|            |  |            
|            |  |            
|1.1         |  |            
|            |  |            
|2.1         |  |            
|            |  |            
|2.2         |  |            
|            |  |            
|2.3         |  |            

|90
|--



|    |  |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|--- |  |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2.4 |  |  | Final Prospectus dated May 15, 2002 for the issuance of convertible and/or exchangeable bonds by Havas (English translation) (incorporated by reference to Exhibit 4.19 to Havass annual report on Form 20-F for the year ended December 31, 2001 (SEC File No. 001-16081)).                                                                                                                                                                                    
|    |  |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|4.1 |  |  | Fourth Amendment to Lease dated January 1, 2000 between Havas North America, Inc., formerly EWDB North America Inc. and The Rector, Church-Wardens and Vestrymen of Trinity Church in the City of New York (incorporated by reference to Exhibit 4.1 to Havass annual report on Form 20-F for the year ended December 31, 2000 (SEC File No. 001-16081)).                                                                                                       
|    |  |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|4.2 |  |  | Protocol Agreement and Commercial Lease dated as of April 2, 2001 between Havas Advertising and Suresnes Immobilier (English summary) (incorporated by reference to Exhibit 4.2 to Havass annual report on Form 20-F for the year ended December 31, 2000 (SEC File No. 001-16081)).                                                                                                                                                                            
|    |  |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|4.3 |  |  | Supplemental Agreement No. 1 to the Memorandum of Understanding of April 2, 2001 dated May 3, 2002 between Suresnes Immobilier and Havas (English translation) (incorporated by reference to Exhibit 4.18 to Havass annual report on Form 20-F for the year ended December 31, 2001 (SEC File No. 001-16081)).                                                                                                                                                  
|    |  |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|4.4 |  |  | Agreement to Contribute dated as of January 20, 2001 between Havas and Advertising Antwerpen B.V., Banco Santander Central Hispano, S.A., Compañía de Cartera e Inversiones S.A., Deya S.A., Mr. Jose Martínez-Rovira Vidal, Mrs. Maria Luisa Munoz Alvarez, Mrs. Cristina Martínez-Rovira Munoz, Mrs. Sandra Martínez-Rovira Munoz and Havas S.A. (incorporated by reference to Exhibit 2.7 to Havass registration statement on Form F-4 (Reg. No. 333-59880)).
|    |  |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|4.5 |  |  | Registration Rights Agreement dated as of May 14, 2001 among Acacia ISP, S.L., Banco Santander Central Hispano, S.A., Compañía de Cartera e Inversiones S.A., Deya S.A., Jose Martínez-Rovira Vidal, Maria Luisa Munoz Alvarez, Cristina Martínez-Rovira Munoz and Sandra Martínez-Rovira Munoz (incorporated by reference to Exhibit 4.14 to Havass annual report on Form 20-F for the year ended December 31, 2000 (SEC File No. 001-16081)).                 

|     |  |   |                                                                                                                                                                                                                                                                                                 
|---- |  | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|4.6  |  |   | Amended
      and Restated Employment Agreement dated January 1, 2002 between Euro RSCG
      Worldwide, Inc. and Alain de Pouzilhac (incorporated by reference to Exhibit
      4.9 to Havass annual report on Form 20-F for the year ended December
      31, 2002 (SEC File No. 001-16081)).
|     |  |   |                                                                                                                                                                                                                                                                                                 
|4.7  |  | * | Memorandum of Understanding executed on June 28, 2005 by Havas and Alain de Pouzilhac.                                                                                                                                                                                                          
|     |  |   |                                                                                                                                                                                                                                                                                                 
|4.8  |  | * | Letter Agreement dated as of June 28, 2005 between EURO RSCG New York, Inc. and Alain de Pouzilhac.                                                                                                                                                                                             
|     |  |   |                                                                                                                                                                                                                                                                                                 
|4.9  |  | * | Non-Competition
      Agreement executed on June 28, 2005 by Alain de Pouzilhac.                                                                                                                                                                                                                
|     |  |   |                                                                                                                                                                                                                                                                                                 
|4.10 |  | * | Amended
      Employment Agreement executed on January 19 , 2005 between Havas and Jacques
      Hérail.                                                                                                                                                                                        
|     |  |   |                                                                                                                                                                                                                                                                                                 
|4.11 |  |   | Agreement
      dated February 1, 2003 between Arnold Worldwide Partners and Edward Eskandarian
      (incorporated by reference to Exhibit 4.10 to Havass annual report
      on Form 20-F for the year ended December 31, 2002 (SEC File No. 001-16081)).                                    
|     |  |   |                                                                                                                                                                                                                                                                                                 
|4.12 |  | * | Amended
      Employment Agreement dated as of April 13, 2005 between Arnold Worldwide
      Partners, LLC. and Edward Eskandarian.                                                                                                                                                             
|     |  |   |                                                                                                                                                                                                                                                                                                 
|4.13 |  | * | Employment
      Agreement made as of October 1, 2004 between James Heekin and EURO RSCG
      Worldwide.                                                                                                                                                                                       
|     |  |   |                                                                                                                                                                                                                                                                                                 
|4.14 |  | * | Deferred
      Compensation Plan Trust Agreement made October 31, 2004 between Euro RSCG
      Worldwide, Inc. and Circle Advisors, Inc. for the benefit of James Heekin.                                                                                                                       
|     |  |   |                                                                                                                                                                                                                                                                                                 
|4.15 |  | * | Amendment
      to Employment Agreement executed on January 19, 2005 between Havas and Jacques
      Séguéla.                                                                                                                                                                                   
|     |  |   |                                                                                                                                                                                                                                                                                                 
|4.16 |  | * | Amendment
      to Employment Agreement executed on January 19, 2005 between Havas and Alain
      Cayzac.                                                                                                                                                                                      
|     |  |   |                                                                                                                                                                                                                                                                                                 
|4.17 |  | * | Lease Agreement
      dated October 1, 2003 between Arnold Worldwide LLC and BP Prucenter Acquisition
      LLC.                                                                                                                                                                                
|     |  |   |                                                                                                                                                                                                                                                                                                 
|4.18 |  | * | First Amendment
      to Lease Agreement dated September 2004 between Arnold Worldwide LLC and
      BP Prucenter Acquisition LLC.                                                                                                                                                              

|91
|--



|                      |  |   |                                                                                                                                                   
|--------------------- |  | - | --------------------------------------------------------------------------------------------------------------------------------------------------
|4.19                  |  | * | Second Amendment to Lease Agreement dated January 2005 between Arnold Worldwide LLC and BP Prucenter Acquisition LLC.                             
|                      |  |   |                                                                                                                                                   
|8.1                   |  | * | List of subsidiaries.                                                                                                                             
|                      |  |   |                                                                                                                                                   
|12.1                  |  | * | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                               
|                      |  |   |                                                                                                                                                   
|12.2                  |  | * | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                               
|                      |  |   |                                                                                                                                                   
|13.1                  |  | * | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|                      |  |   |                                                                                                                                                   
|13.2                  |  | * | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|                      |  |   |                                                                                                                                                   
|15                    |  | * | Nasdaq Corporate Governance Exemptions.                                                                                                           
|                      |  |   |                                                                                                                                                   
|                     
|                     
|*     Filed herewith.

|92
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|SIGNATURES
        The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                     

|                     | HAVAS
|-------------------- | -----
|                     |      
|                     | By:  
|                     |      
|                     |      
|                     |      
|                     |      
|                     |      
|Dated: June 28, 2005 |      

|93
|--



|INDEX TO FINANCIAL STATEMENTS
|-----------------------------
|                             
|Havas and Subsidiaries       
|                             

|Report of Independent Public Accountants                                            | F-2
|----------------------------------------------------------------------------------- | ---
|Consolidated Statements of Operations                                               | F-3
|Consolidated Balance Sheets                                                         | F-4
|Consolidated Statements of Changes in Shareholders Equity and Comprehensive Income | F-5
|Consolidated Statements of Cash Flows                                               | F-6
|Notes to Consolidated Financial Statements                                          | F-7

|F - 1
|-----



|REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors ofHavas
We have audited the accompanying consolidated
balance sheets of Havas and subsidiaries (the Company) as of December 31, 2004 and 2003,
and the related consolidated statements of operations, changes in shareholders equity and comprehensive
income and cash flows for each of the three years in the period ended December 31, 2004. These consolidated
financial statements are the responsibility of the Companys management. Our responsibility
is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the
standards of the Public Company Accounting Oversight Board (United States). Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. We were not engaged to perform an audit of the Companys
internal control over financial reporting. Our audits included consideration of internal control
over financial reporting as a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Companys
internal control over financial reporting. Accordingly, we express no such opinion. An audit also
includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements
referred to above present fairly, in all material respects, the consolidated financial position of
Havas and subsidiaries at December 31, 2004 and 2003, and the consolidated results of their
operations and their cash flows for each of the three years in the period ended December 31, 2004
in conformity with U.S. generally accepted accounting principles.
As described in Note 2.25
to the consolidated financial statements, in 2004 the Company changed its accounting policy relating to the definition of cash and cash equivalents.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |                     |                           
| | ------------------- | --------------------------
| |                     |                           
| | ERNST & YOUNG AUDIT
| |                     |                           
| | By:                 | /s/   CHRISTIAN CHIARASINI
| |                     |                           
| |                     | Name:Christian Chiarasini 

|                                      
|--------------------------------------
|Neuilly-sur-Seine, FranceJune 17, 2005

|F - 2
|-----



|HAVAS AND SUBSIDIARIES
    CONSOLIDATED STATEMENTS OF OPERATIONS
|----------------------------------------------------------------
|                                                                

|                                                                                     | Year ended
      December 31,
      (In millions of euros except per share data) | 
|------------------------------------------------------------------------------------ | -------------------------------------------------------------------------------- | 
|
|                                                                                     |                                                                                  | 
|                                                                                     |                                                                                  | 
|**Net
      revenues**                                                               |                                                                                  | 
|**Operating
      expenses**                                                        
|Compensation
      and related costs                                                 |                                                                                  | 
|Stock-based
      compensation                                                       | 12                                                                               | 
|General
      and administrative non-payroll costs                                   |                                                                                  | 
|Compensation
      to former shareholders of 
               acquired businesses     | 11                                                                               | 
|Amortization
      of intangible assets                                              | 6                                                                                | 
|Goodwill
      and other intangible impairment                                       | 5, 6                                                                             | 
|Restructuring
      and other charges                                                | 7                                                                                | 
|                                                                                     |                                                                                  | 
|Total
      operating expenses                                                       |                                                                                  | 
|                                                                                     |                                                                                  | 
|**Operating
      income (loss)**                                                    |                                                                                  | 
|                                                                                     |                                                                                  | 
|Interest
      expense                                                               |                                                                                  | 
|Interest
      income                                                                |                                                                                  | 
|Exchange
      rate gain (loss)                                                      |                                                                                  | 
|Net
      gain on trading securities                                                 |                                                                                  | 
|Other                                                                                | 10                                                                               | 
|                                                                                     |                                                                                  | 
|**Financial
      expense-net**                                                      |                                                                                  | 
|                                                                                     |                                                                                  | 
|**Net
      income(loss) from operations before income tax**                         |                                                                                  | 
|Provision
      for income tax                                                       | 14                                                                               | 
|Minority
      interests                                                             |                                                                                  | 
|Equity
      in earnings of investees                                                | 9                                                                                | 
|                                                                                     |                                                                                  | 
|**Income
      (Loss) from continuing operations**                                   |                                                                                  | 
|                                                                                     |                                                                                  | 
|Loss from
      discontinued operations (net of tax)                                 | 8                                                                                | 
|                                                                                     |                                                                                  | 
|**Net
      income(loss)** **before
      effect of change in accounting principle** |                                                                                  | 
|                                                                                     |                                                                                  | 
|Cumulative
      effect of accounting change                                         | 5                                                                                | 
|                                                                                     |                                                                                  | 
|**Net
      income (loss)**                                                          |                                                                                  | 
|                                                                                     |                                                                                  | 
|                                                                                     |                                                                                  | 
|Per common
      share basic and diluted :                                           |                                                                                  | 
|                                                                                     |                                                                                  | 
|Income
      (loss) from continuing operations (2)                                   |                                                                                  | 
|Loss
      from discontinued operations (2)                                          |                                                                                  | 
|Loss
      from cumulative effect of an accounting change                            |                                                                                  | 
|                                                                                     |                                                                                  | 
|Net
      income (loss)                                                              | 16                                                                               | 
|                                                                                     |                                                                                  | 
|Weighted
      average common shares outstanding                                     |                                                                                  | 
|Basic                                                                                |                                                                                  | 
|Diluted                                                                              |                                                                                  | 

|    |                                                                                                                                                        
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | 2003 figures have been adjusted due to the decision by the Company not to sell a subsidiary previously reported as discontinued.                       
|    |                                                                                                                                                        
|(2) | 2002 and 2003 earnings per share have been adjusted by a factor of 0.93254 following the preferential subscription rights  issue on October 19th, 2004.

|                                                                                       
|---------------------------------------------------------------------------------------
|The accompanying notes are an integral part of these consolidated financial statements.

|F - 3
|-----



|HAVAS AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
|--------------------------------------------------
|                                                  

|                                                                                                                                                                                                                                       | As of December
      31,
      (In millions of euros) | 
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------- | 
|
|
|                                                                                                                                                                                                                                       |                                                       | 
|**ASSETS**                                                                                                                                                                                                                             |                                                       | 
|**Current
      assets:**                                                                                                                                                                                                              |                                                       | 
|Cash                                                                                                                                                                                                                                   |                                                       | 
|Highly
      liquid investments                                                                                                                                                                                                        |                                                       | 
|Accounts
      receivable, net of allowance for doubtful accounts 
         of 33.9 and 36.7 as of December 31, 2004 and 2003, respectively                                                                                            | 23                                                    | 
|Costs
      billable to clients                                                                                                                                                                                                        |                                                       | 
|Prepaid
      expenses and advances to suppliers                                                                                                                                                                                       |                                                       | 
|Other
      receivables                                                                                                                                                                                                                |                                                       | 
|Deferred
      tax assets                                                                                                                                                                                                              | 14                                                    | 
|Assets
      held for sale                                                                                                                                                                                                             | 8                                                     | 
|Other
      current assets                                                                                                                                                                                                             |                                                       | 
|                                                                                                                                                                                                                                       |                                                       | 
|Total
        current assets                                                                                                                                                                                                           |                                                       | 
|                                                                                                                                                                                                                                       |                                                       | 
|**Noncurrent
      assets:**                                                                                                                                                                                                          
|Property
      and equipment, net                                                                                                                                                                                                      | 4                                                     | 
|Goodwill                                                                                                                                                                                                                               | 5                                                     | 
|Other
      intangible assets, net                                                                                                                                                                                                     | 6                                                     | 
|Equity
      investments                                                                                                                                                                                                               | 9                                                     | 
|Noncurrent
      deferred tax assets                                                                                                                                                                                                   | 14                                                    | 
|Other
      assets                                                                                                                                                                                                                     |                                                       | 
|                                                                                                                                                                                                                                       |                                                       | 
|Total
        noncurrent assets                                                                                                                                                                                                        |                                                       | 
|                                                                                                                                                                                                                                       |                                                       | 
|**Total
      assets**                                                                                                                                                                                                                 |                                                       | 
|                                                                                                                                                                                                                                       |                                                       | 
|**LIABILITIES
        AND SHAREHOLDERS EQUITY**                                                                                                                                                                                       |                                                       | 
|**Current
      liabilities**                                                                                                                                                                                                         
|Short-term
      borrowings                                                                                                                                                                                                            | 10                                                    | 
|Current
      maturities of convertible bonds                                                                                                                                                                                          | 10                                                    | 
|Current
      maturities of long-term borrowings                                                                                                                                                                                       | 10                                                    | 
|Short-term
      obligations under capital leases                                                                                                                                                                                      | 17                                                    | 
|Accounts
      payable                                                                                                                                                                                                                 |                                                       | 
|Liabilities
      held for sale                                                                                                                                                                                                        | 8                                                     | 
|Other
      payables                                                                                                                                                                                                                   |                                                       | 
|Advances
      from clients                                                                                                                                                                                                            |                                                       | 
|Accrued
      compensation                                                                                                                                                                                                             | 11,
      12                                          | 
|Deferred
      tax liabilities                                                                                                                                                                                                         | 14                                                    | 
|Deferred
      income                                                                                                                                                                                                                  |                                                       | 
|                                                                                                                                                                                                                                       |                                                       | 
|Total
        current liabilities                                                                                                                                                                                                      |                                                       | 
|                                                                                                                                                                                                                                       |                                                       | 
|**Noncurrent
      liabilities**                                                                                                                                                                                                      
|Long-term
      borrowings                                                                                                                                                                                                             | 10                                                    | 
|Convertible
      bonds                                                                                                                                                                                                                | 10                                                    | 
|Long-term
      obligations under capital leases                                                                                                                                                                                       | 17                                                    | 
|Accrued
      compensation                                                                                                                                                                                                             | 11, 12                                                | 
|Deferred
      tax liabilities                                                                                                                                                                                                         | 14                                                    | 
|Accrued
      pensions and other benefits costs                                                                                                                                                                                        | 13                                                    | 
|Other
      liabilities                                                                                                                                                                                                                |                                                       | 
|                                                                                                                                                                                                                                       |                                                       | 
|Total
        noncurrent liabilities                                                                                                                                                                                                   |                                                       | 
|                                                                                                                                                                                                                                       |                                                       | 
|**Minority
      interests**                                                                                                                                                                                                           |                                                       | 
|                                                                                                                                                                                                                                       |                                                       | 
|**Shareholders
      equity**                                                                                                                                                                                                        
|Common
      stock: 0.40 par value, 428,832,440 and 306,196,659 shares issued at
         December 31, 2004 and 2003, respectively and 421,398,323 and 298,581,996 
   shares ourstanding at December 31, 2004 and 2003, respectively |                                                       | 
|Additional
      paid-in capital                                                                                                                                                                                                       |                                                       | 
|Retained
      earnings                                                                                                                                                                                                                |                                                       | 
|Deferred
      compensation                                                                                                                                                                                                            |                                                       | 
|Accumulated
      other comprehensive income                                                                                                                                                                                           |                                                       | 
|Less:
      Treasury stock, at cost, 7,434,117 and 7,614,663 shares at December
         31, 2004 and  2003, respectively                                                                                                              |                                                       | 
|Total
      Shareholders equity                                                                                                                                                                                                       |                                                       | 
|                                                                                                                                                                                                                                       |                                                       | 
|**Total
      liabilities and Shareholders equity**                                                                                                                                                                                   |                                                       | 
|                                                                                                                                                                                                                                       |                                                       | 

| | 
| | 
| | 

|                                                                                       
|---------------------------------------------------------------------------------------
|The accompanying notes are an integral part of these consolidated financial statements.

|F - 4
|-----



|HAVAS AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITYAND COMPREHENSIVE INCOME(In millions of euro except number of shares)
|-----------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                     

|                                                                                | Number of shares
      (000s) |  | Common stock |  | Additionnal
      paid-in capital |  | Retained
      earnings |   | Treasury
      stock |   | Deferred
      compensation |   | Other 
      comprehensive
      income |   | Total
      shareholders
      equity |  
|------------------------------------------------------------------------------- | ------------------------------ |  | ------------ |  | --------------------------------- |  | ----------------------- | - | -------------------- | - | --------------------------- | - | --------------------------------------- | - | -------------------------------------- | -
|                                                                                |                                | 
|**Balance
      at December 31, 2001**                                          | 294,019                        |  | 122          |  | 3,221                             |  | (255                    | ) | (78                  | ) | (11                         | ) | 50                                      |   | 3,049                                  |  
|                                                                                |                                | 
|Comprehensive
      income:                                                     |                                |  |              | 
|                                                                                |                                | 
|Net
      loss                                                                  |                                |  |              |  |                                   |  | (1,433                  | ) |                      |   |                             |   |                                         |   | (1,433                                 | )
|                                                                                |                                | 
|Currency
      translation adjustment                                           |                                |  |              |  |                                   |  |                         |   |                      |   |                             |   | (213                                    | ) | (213                                   | )
|                                                                                |                                | 
|Minimum
      Liability Adjustment, gross                                       |                                |  |              |  |                                   |  |                         |   |                      |   |                             |   | (9                                      | ) | (9                                     | )
|                                                                                |                                |  |              | 
|Minimum
      Liability Adjustment, tax                                         |                                |  |              |  |                                   |  |                         |   |                      |   |                             |   | 3                                       |   | 3                                      |  
|                                                                                |                                |  |              | 
|Total
      comprehensive income (loss)                                         |                                |  |              |  |                                   |  | (1,433                  | ) |                      |   |                             |   | (219                                    | ) | (1,652                                 | )
|                                                                                |                                |  |              | 
|Dividends
      (per share amount: 0.16) 
         and  equalization tax       |                                |  |              |  |                                   |  | (70                     | ) |                      |   |                             |   |                                         |   | (70                                    | )
|                                                                                |                                | 
|Treasury
      stock transactions                                               | 672                            |  |              |  |                                   |  | (8                      | ) | 15                   |   |                             |   |                                         |   | 7                                      |  
|                                                                                |                                | 
|Exercise
      of stock options and warrants                                    | 899                            |  |              |  | 3                                 |  |                         |   |                      |   |                             |   |                                         |   | 3                                      |  
|                                                                                |                                | 
|Unearned
      compensation on unvested options                                 |                                |  |              |  |                                   |  |                         |   |                      |   | 10                          |   |                                         |   | 10                                     |  
|                                                                                |                                | 
|**Balance
      at December 31, 2002**                                          | 295,590                        |  | 122          |  | 3,224                             |  | (1,766                  | ) | (63                  | ) | (1                          | ) | (169                                    | ) | 1,347                                  |  
|                                                                                |                                | 
|                                                                                |                                |  |              |  |                                   |  |                         |   |                     
|Comprehensive
      income:                                                    
|                                                                                |                                | 
|Net
      loss                                                                  |                                |  |              |  |                                   |  | (423                    | ) |                      |   |                             |   |                                         |   | (423                                   | )
|                                                                                |                                | 
|Currency
      translation adjustment                                           |                                |  |              |  |                                   |  |                         |   |                      |   |                             |   | (134                                    | ) | (134                                   | )
|                                                                                |                                | 
|Minimum
      Liability Adjustment, gross                                       |                                |  |              |  |                                   |  |                         |   |                      |   |                             |   | (4                                      | ) | (4                                     | )
|                                                                                |                                |  |              | 
|Minimum
      Liability Adjustment, tax                                         |                                |  |              |  |                                   |  |                         |   |                      |   |                             |   | 1                                       |   | 1                                      |  
|                                                                                |                                |  |              | 
|Total
      comprehensive income (loss)                                         |                                |  |              |  |                                   |  | (423                    | ) |                      |   |                             |   | (137                                    | ) | (560                                   | )
|                                                                                |                                |  |              | 
|Dividends
      (per share amount: 0.08) and                                   |                                |  |              |  |                                   |  | (30                     | ) |                      |   |                             |   |                                         |   | (30                                    | )
|equalization
      tax                                                         
|                                                                                |                                | 
|Treasury
      stock transactions                                               | 2,015                          |  |              |  |                                   |  | (14                     | ) | 31                   |   |                             |   |                                         |   | 17                                     |  
|                                                                                |                                | 
|Exercise
      of stock options                                                 | 975                            |  |              |  | 4                                 |  |                         |   |                      |   |                             |   |                                         |   | 4                                      |  
|                                                                                |                                | 
|Share issuanceconvertible
      bonds                                          | 2                              | 
|                                                                                |                                | 
|Balance at
      December 31, 2003                                              | 298,582                        |  | 122          |  | 3,228                             |  | (2,233                  | ) | (32                  | ) | (1                          | ) | (306                                    | ) | 778                                    |  
|                                                                                |                                | 
|Comprehensive
      income:                                                    
|                                                                                |                                | 
|Net
      income                                                                |                                |  |              |  |                                   |  | 33                      |   |                      |   |                             |   |                                         |   | 33                                     |  
|                                                                                |                                | 
|Currency
      translation adjustment                                           |                                |  |              |  |                                   |  |                         |   |                      |   |                             |   | (38                                     | ) | (38                                    | )
|                                                                                |                                | 
|Minimum
      Liability Adjustment, gross                                       |                                |  |              |  |                                   |  |                         |   |                      |   |                             |   | (4                                      | ) | (4                                     | )
|                                                                                |                                |  |              | 
|Minimum
      Liability Adjustment, tax                                         |                                |  |              |  |                                   |  |                         |   |                      |   |                             |   | 1                                       |   | 1                                      |  
|                                                                                |                                |  |              | 
|Total
      comprehensive income (loss)                                         |                                |  |              |  |                                   |  | 33                      |   |                      |   |                             |   | (41                                     | ) | (8                                     | )
|                                                                                |                                |  |              | 
|Dividends
      (per share amount: 0.05) and 
          equalization tax       |                                |  |              |  |                                   |  | (11                     | ) |                      |   |                             |   |                                         |   | (11                                    | )
|                                                                                |                                | 
|Treasury
      stock transactions                                               | 181                            |  |              |  |                                   |  | (3                      | ) | 5                    |   | 1                           |   |                                         |   | 3                                      |  
|                                                                                |                                | 
|Exercise
      of stock options                                                 | 121                            | 
|                                                                                |                                | 
|Impact of
      variable accounting related to stock
         options repricing |                                |  |              |  | 6                                 |  |                         |   |                      |   | (2                          | ) |                                         |   | 4                                      |  
|                                                                                |                                |  |              |  |                                   |  |                         |   |                     
|Share issuanceconvertible
      bonds                                          | 1                              | 
|                                                                                |                                |  |              |  |                                   |  |                         |   |                     
|other                                                                          | 122,513                        |  | 49           |  | 339                               |  |                         |   |                      |   |                             |   |                                         |   | 388                                    |  
|                                                                                |                                | 
|**Balance
      at December 31, 2004**                                          | 421,398                        |  | 171          |  | 3,573                             |  | (2,214                  | ) | (27                  | ) | (2                          | ) | (347                                    | ) | 1,154                                  |  
|                                                                                |                                | 
|                                                                                |                                |  |              |  |                                   |  |                         |  

|                                                                                       
|---------------------------------------------------------------------------------------
|The accompanying notes are an integral part of these consolidated financial statements.

|F - 5
|-----



|HAVAS AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
|------------------------------------------------------------
|                                                            

|                                                                                                     | Year ended
      December 31,
      (in milllions of euros) |  
|---------------------------------------------------------------------------------------------------- | ----------------------------------------------------------- | -
|
|
|                                                                                                     |                                                             |  
|                                                                                                     |                                                             |  
|Cash
      flows from operating activities                                                           |                                                             |  
|                                                                                                    
|Net income
      (loss) from continuing operations and after changes in
      accounting principles  | 50                                                          |  
|Adjustments
      to reconcile net income (loss) to net cash provided by
      operating activities:
|Minority
      interests                                                                             | 8                                                           |  
|Amortization,
      depreciation and impairment                                                      | 74                                                          |  
|(Gain
      ) loss on repurchase of convertible bonds                                                | (30                                                         | )
|Restructuring                                                                                        | (26                                                         | )
|Stock-based
      compensation-Parent company plan                                                   | 3                                                           |  
|(Gain)
      loss on disposal of highly liquid investments                                           | (7                                                          | )
|(Gain)
      loss on disposal of fixed assets                                                        | (2                                                          | )
|Deferred
      tax                                                                                   | (32                                                         | )
|Change
      in assets and liabilities:                                                             
|Accounts
      receivable                                                                            | 76                                                          |  
|Accounts
      payable                                                                               | 11                                                          |  
|Advances
      from clients                                                                          | (6                                                          | )
|Other                                                                                                | 4                                                           |  
|
|Net
      cash provided by operating activities                                                      | 123                                                         |  
|**Cash
      flows from investing activities**                                                       |                                                             |  
|Purchase
      of tangible and intangible assets                                                     | (37                                                         | )
|Purchase
      of subsidiaries net of cash acquired                                                  | (79                                                         | )
|Proceeds
      from sale of tangible and intangible assets                                           | 6                                                           |  
|Proceeds
      from sale of subsidiaries                                                             | 36                                                          |  
|Net (increase)/decrease
      in highly liquid investments                                           | 204                                                         |  
|
|Net
      cash (used in)/provided by investing activities                                            | 130                                                         |  
|**Cash
      flows from financing activities**                                                      
|Dividends
      paid in cash                                                                         | (20                                                         | )
|Acquisition
      of treasury stock                                                                  |                                                            |  
|Proceeds
      from issuance of stock and disposal of treasury stock                                 | 391                                                         |  
|Net payments
      under line-of-credit agreements                                                   | (16                                                         | )
|Principal
      payments under capital lease obligations                                             | (2                                                          | )
|Proceeds
      from convertible bonds                                                                |                                                            |  
|Purchase
      of convertible bonds                                                                  | (472                                                        | )
|Proceeds
      from long-term borrowings                                                             | 31                                                          |  
|Repayment
      of long-term borrowings                                                              | (89                                                         | )
|
|Net
      cash (used in)/provided by financing activities                                            | (177                                                        | )
|                                                                                                     |                                                             |  
|**Effect
      of exchange rate changes on cash**                                                    | (7                                                          | )
|**Net
      cash used in discontinued operations**                                                   |                                                            |  
|**Net
      increase (decrease) in cash**                                                            | 69                                                          |  
|**Cash
      at beginning of the year**                                                              | 242                                                         |  
|**Cash
      at end of the year**                                                                    | 311                                                         |  

|    |                                                                                                        
|--- | -------------------------------------------------------------------------------------------------------
|(1) | 2003 and 2002 figures
      have been restated following a change in accounting policy (See Note 2.25).
|    |                                                                                                        

|F - 6
|-----



|HAVAS AND SUBSIDIARIES
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (In millions of euro except per share amounts and as otherwise indicated)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|1.   NATURE OF OPERATIONS
  Havas, a French corporation listed on the Compartiment A of the Eurolist ofEuronext and on the Nasdaq National Market system, and its subsidiaries (the Company
or Havas) operate as a global advertising and communications group with worldwide
networks that offer a broad range of advertising and communications services, including integrated
communications, traditional advertising, direct marketing, media planning and buying, corporate communications,
internal communications, sales promotion, design, television sponsorship, human resources, multimedia
interactive communications and public relations.
2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The consolidated financial statements of the
Company have been prepared in accordance with accounting principles generally accepted in the United
States of America.
All figures are presented in millions of euro,
unless otherwise indicated.
2.1.   Principles of Consolidation
The consolidated financial statements include
the accounts of the Company and its majority owned subsidiaries. Investments, in which the Company
owns 20-50% and has the ability to exercise significant influence over the operating and financial
policies, are accounted for using the equity method of accounting. All significant intercompany balances
and transactions are eliminated upon consolidation.
2.2.   Foreign Currency Translation
The balance sheets of foreign subsidiaries are
converted into euro at year-end exchange rates and their income and cash-flows statements are converted
at average rates for the year. Differences arising on translation are recorded as a separate component
of shareholders equity.
2.3.   Estimates and Judgments
The preparation of financial statements in conformity with accounting principles generally accepted
in the United States of America requires management to make estimates and judgments that affect the
reported amounts of assets, liabilities, revenue and expenses as well as the disclosure of contingent
assets and liabilities. Actual results could differ from those estimates. The following may involve
a higher degree of judgment or complexity: revenue recognition, allowances for doubtful accounts,
restructuring charges, contingent acquisition obligations, impairment of intangible assets and goodwill
and income taxes.
2.4.   Revenue Recognition
Substantially all revenue is derived from fees
and commissions for advertising and communication services and for the planning and purchase of media.
Revenue is recognized on the date that the service is performed, in accordance with the terms of
the contractual arrangement, and upon completion of the earnings process. The earnings process is
complete when services are rendered, on the date the media is presented, when costs are incurred
for production and when collection is reasonably assured. Some contractual arrangements with clients
include performance incentives which allow the Company to earn additional revenues as a result of
its performance relative to both qualitative and quantitative objectives. The

|F - 7
|-----



|HAVAS AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(In millions of euro except per share amounts and as otherwise indicated)
Company recognizes the incentive portion of revenue under these arrangements when the clients achieve
these qualitative and quantitative goals.
2.5.   Accounts Receivable
Accounts receivable include both amounts due from customers for services provided in the normal course
of business operations as well as actual media and production costs which are paid by the Company
and rebilled to clients.
2.6.   Allowance for Doubtful Accounts
The Company maintains allowances for doubtful
accounts for estimated losses that result from the inability of its customers to make required payments.
The Company bases its allowances on the likelihood of recoverability of accounts receivable based
upon past experience and reviews of aging and analysis of specific accounts. If economic or specific
industry trends worsen beyond its estimates, the Company will increase its allowances for doubtful
accounts by recording additional expense.
2.7.   Highly liquid investments

Highly liquid investments
include variable interest notes and investments in money market mutual funds which include monetary Societe
dInvestissement à Capital Variable (SICAVs) and Fonds Communs de
Placement (FCP) that qualify as Euro monetary mutual funds under
the French Autorité des Marché Financiers regulations, under which:- the sensitivity, defined as duration divided by
(1 + effective rate), of the
investment portfolio should be within the range of 0 to 0.5,- the investment strategy
disclosed should refer to one or several indicators for the monetary market of the euro
zone,- the portfolio should not be
subject to foreign-exchange risk exposure and should not include equity securities.2.8.   Costs Billable to Clients
Revenue resulting from expenditures billable
to clients is recognized when the services are performed and billed.
2.9.   Property and Equipment, net
Property and equipment are carried at historical
cost. Depreciation is calculated either on a straight-line basis or using the declining-balance method
over the estimated useful life of the related asset. Assets acquired under capital lease agreements
are capitalized.
The Company estimates the useful lives of its
property and equipment in order to determine the amount of depreciation and amortization expense
to be recorded during any reporting period.
2.10.   Goodwill and Other Intangible Assets
Goodwill corresponds to the excess of the
acquisition cost of subsidiaries over the fair value of the related assets acquired and liabilities
assumed. Beginning on January 1, 2002, in accordance with the provisions of Statement of Financial
Accounting Standards (SFAS) No. 142, Goodwill and Other Intangible Assets,
the Company no longer amortizes goodwill, but rather tests these assets at least annually for impairment
by comparing the fair value of the reporting units over their carrying values. The fair value of
the reporting units has been computed using the discounted cash flow method. Such projections require
the use of estimates and assumptions as to matters such as future revenue growth, product margins,
capital expenditures, working capital requirements, tax rates and discount rates. Actual earnings
may differ from the Companys estimates. If the fair value of the reporting unit is determined
to be less than its carrying value, a second step is performed to compute the amount of goodwill
impairment, if any. In 2002, the Company completed the transitional impairment tests of goodwill,
net of tax, and intangible assets with indefinite lives. The Company determined that upon adoption,
1,120.8 of goodwill was required to be written off at January 1, 2002. This charge was reflected
as the Cumulative effect of accounting change in the accompanying consolidated statements
of operations. As a result of the annual impairment testing, the Company determined that there was
no goodwill impairment charge in 2004 whereas an additional goodwill impairment charge of 69.5 and 362.5
was recorded in 2003 and 2002 respectively (See Note 5).
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|F - 8
|-----



|HAVAS AND SUBSIDIARIES
      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (In millions of euro except per share amounts and as otherwise indicated)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|Other intangibles consist mainly of trademarks and customer lists and customer relationships, which are amortized over their estimated useful lives using the straight-line method.
      2.11.   Impairment of Long Lived Assets and Accounting for Discontinued Operations
The long lived assets are reviewed
for impairment whenever events or circumstances indicate their carrying values
may not be recoverable. Whenever such events or circumstances arise, an estimate
of the future undiscounted cash flows is compared to the assets carrying
value to determine if impairment exists pursuant the requirements of SFAS
144, Accounting for the Impairment or Disposal of Long-Lived-Assets.
      In accordance with SFAS 144, the Company includes in assets and liabilities held for sale and in discontinued operations the assets and liabilities that meet certain criteria with respect to the Companys plans for their sale or abandonment. Depreciation and amortization cease when the asset meets the criteria to be classified as held for sale. If (1) a planned or completed disposal involves a component of the Company whose operations and cash flows can be distinguished operationally and for financial reporting purposes; (2) such operations and cash flows will be (or have been) eliminated from the Companys ongoing operations; and (3) the Company will not have any significant continuing involvement in the component,
then the components results of operations are presented as discontinued operations for all periods. Operating losses from discontinued operations are recognized in the period in which they occur. Long-lived assets (or groups of assets and related liabilities) classified as held for sale, are measured at the lower of carrying amount or fair value less cost to sell.
      2.12.   Pension, Retirement and Post Employment Obligations
      In accordance with the laws and practices of each country, the Company participates in various employee benefit plans offering pensions, retirement, termination and death and disability benefits.
      Pension plans include flat benefits, final pay plans and multi-employer plans. For defined contribution plans and multi-employer plans, pension expenses correspond to the contributions payable. For defined benefit pension plans, pension costs are determined using the projected unit credit method.
      Individual employment contracts, collective bargaining agreements and statutes in certain countries where the Company operates generally provide for severance indemnities in the event of involuntary employee terminations. Indemnities may range generally from several months to, for certain key employees, several years of the related employees annual salary. Those severance indemnities that are provided for by collective bargaining agreement or statutes generally accumulate and when they are probable and can be reasonably estimated, they are accrued ratably over the service period. Those severance indemnities that are allowed through individual contracts generally do not vest or accumulate and are therefore accrued when the decision to sever the individual is made. Key employees are also generally subject to non-competition agreements.
      2.13.   Income Taxes
    In accordance with the SFAS No. 109, Accounting for Income Taxes, the Company records deferred tax assets and liabilities using enacted tax rates that account for the effect of temporary differences between the book and tax bases of assets and liabilities. If enacted tax rates change, the Company would adjust its deferred tax assets and liabilities through the provision for income taxes in the period of the change to reflect the enacted tax rate expected to be in effect when the deferred tax items are reversed. The Company records a valuation allowance on deferred tax assets when it is more likely than not that some portion or all of the deferred tax assets will not be realized.
Forming a conclusion that a valuation allowance is not needed is difficult when there is negative evidence such as cumulative losses in  recent years. Cumulative losses weigh heavily in the overall assessment.

|F - 9
|-----



|HAVAS AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(In millions of euro except per share amounts and as otherwise indicated)
2.14.   Foreign Currency Transactions
Foreign currency transactions are converted at
the exchange rates prevailing at the dates of the transactions. Monetary assets and liabilities denominated
in foreign currencies are converted at the respective exchange rates prevailing at the balance sheet
date.
2.15.   Earnings per share
Basic earnings per share is computed by dividing net income by the weighted-average number of Havas
shares outstanding during the year after deducting the weighted average number of treasury shares.
Diluted earnings per share is calculated by adjusting weighted average outstanding shares, assuming
conversion of all potentially dilutive instruments, which include: convertible bonds (Note 10),
stock options granted to employees (Note 12), converted stock options granted by Snyder Communications
for SNC and Circle.com shares (Note 12).
2.16.   Treasury Stock
Treasury share purchases are accounted for at cost. The sale of treasury shares is accounted for at
first in first out cost method. Gains on the sale of treasury shares are accounted for as additional
paid-in capital whereas losses on the sale of treasury shares are accounted for as retained earnings
and do not affect reported results of operations.
2.17.   Stock Options
At December 31, 2004, the Company had stock-based
employee compensation plans, which are more fully described in Note 12. The Company accounts for
those plans under the recognition and measurement principles of Accounting Practices Board (APB)
Opinion No. 25, Accounting for Stock Issued to Employees.
The following table illustrates the effect on
net income and earnings per share if the Company had applied the fair value recognition provisions
of SFAS No 123, Accounting for Stock-Based Compensation, to stock-based compensation.
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

|                                                                                                                    | 2004 |   | 2003  |   | 2002   |  
|------------------------------------------------------------------------------------------------------------------- | ---- | - | ----- | - | ------ | -
|                                                                                                                    |      |   |       |   |        |  
|Net income (loss), as reported                                                                                      | 33   |   | (423  | ) | (1,433 | )
|Deduct: Stock-based compensation expense under fair value
       method, net of related  tax effects                | (18  | ) | (12   | ) | (35    | )
|Add: Stock-based compensation expense included in Net 
       income (loss) reported,  net of related tax effects | 8    |   | 5     |   | 13     |  
|Net income (loss), pro forma                                                                                        | 23   |   | (430  | ) | (1,455 | )
|Net income (loss) per share basic and diluted, as reported (1)                                                      | 0.10 |   | (1.33 | ) | (4.53  | )
|Net income (loss) per share basic and diluted, pro forma (1)                                                        | 0.07 |   | (1.35 | ) | (4.6   | )

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) 2002 and 2003 earnings per share have been adjusted by a factor of 0.93254 following the preferential
subscription rights issue on October 19, 2004.
Based on recent trading prices of the Companys
shares, most of the outstanding options to purchase the Companys shares have become out of
the money. As of December 31, 2004, of the 37,057,658 options outstanding, 27,893,868 options had
an exercise price above the 20-day average trading price of the Companys shares on Euronext
Paris as of that date.
The fair value of each option granted is estimated
on the date of grant. Until December 31, 2003 the Company used the Black-Scholes option-pricing model
to compute the fair value of its options. In 2004, the Company decided to use the

|F - 10
|------



|HAVAS AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(In millions of euro except per share amounts and as otherwise indicated)
binomial method which is more relevant to compute the fair value of stock options. This method allows
the Company to make assumptions during all the window periods instead of estimating an expected life
of the options. In 2004, the Company computed for all its plans not vested at January 1, 2004, a
fair market value of the options using the binomial method whereas 2003 and 2002 proforma figures
have not been restated, the impact of this change of method being not significant.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

| |                          | 2004          |  | 2003          |  | 2002          |  | 
| | ------------------------ | ------------- |  | ------------- |  | ------------- |  | 
| |                          |               |  |               |  |               |  | 
| | Expected life (in years) | N/A           |  | 4             |  | 4             |  | 
| | Risk-free interest rates | 3.22 to 4.60% |  | 2.81 to 3.35% |  | 3.35 to 4.46% |  | 
| | Expected dividend yield  | 1.50%         |  | 2.00 to 3.35% |  | 2.00 to 3.65% |  | 
| | Expected volatility      | 30%           |  | 30%           |  | 30%           |  | 

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2.18.   Concentration of Credit Risk
The Company provides advertising and communications
services to a wide range of clients that operate in many different industry sectors around the world.
The Company grants credit to all qualified clients and does not believe it is exposed to any undue
concentration of credit risk related to either a specific country or customer. Consequently, concentrations
of credit risk with accounts receivable are limited. The Company used derivative financial instruments
to manage its exposure to interest rate and foreign exchange rate risks, which are negotiated with
leading banks, thus limiting the counterpart risks. The Company invests its excess cash in short-term
securities with financial institutions and limits the amount of credit exposure to any one counterpart.
2.19.   Derivative Financial Instruments
The Company adopted SFAS No. 133, Accounting
for Derivative Instruments and Hedging Activities, on January 1, 2001. SFAS 133 establishes
accounting and reporting standards requiring that every derivative financial instrument (including
certain derivative financial instruments embedded in other contracts) be recorded on the balance
sheet as either an asset or liability measured at its fair value.
Derivatives that are not hedges must be adjusted
to fair value through the consolidated statement of income. If the derivative is a hedge, depending
on the nature of the hedge, changes in the fair value of the derivative will either be offset against
the change in fair value of the hedged assets, liabilities or firm commitments through earnings or
recognized in other comprehensive income until the hedged item is recognized in earnings. The ineffective
portion of the change in fair value of a derivative used as a hedge is required to be recognized
immediately in the statement of income.
For derivative financial instruments to qualify
for hedge accounting, the following criteria must be met: (1) the hedging instrument must be designated
as a hedge; (2) the hedged exposure must be specifically identifiable and expose the Company to risk;
and (3) it must be highly probable that a change in fair value of the derivative financial instrument
and an opposite change in the fair value of the hedged exposure will have a high degree of correlation.
Currently, the Company does not have any derivative
financial instruments outstanding that are designated as hedges. Therefore, the Companys derivative
financial instruments are recorded on the balance sheet as either assets or liabilities and are revalued
to the current market rate, with any resulting gains or losses recorded in the statement of income
in the current period.

|F - 11
|------



|HAVAS AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(In millions of euro except per share amounts and as otherwise indicated)
2.20.   Restructuring Charges
Restructuring charges were recorded in 2001 and
in 2003, associated with the Companys formal restructuring plan. The related reserves reflect
many estimates, including those pertaining to separation costs and obligations under real estate
leases, net of estimated sublease income. The Company reassesses the reserve requirements to complete
its restructuring plan at the end of each reporting period. The 2001 restructuring plan has been
recorded in accordance with Emerging Issues Task Force (EITF) Issue No. 94-3, Liability
Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including
Certain Costs Incurred in a Restructuring.) The 2003 restructuring plan has been recorded in
accordance with SFAS No.146 Accounting for Costs Associated with Exit or Disposal Activities.
As real estate market conditions change, the Company may have further refinements in the future,
either upward or downward, to the original charge recorded.
2.21.   Contingent Acquisition Obligations
Certain of the Companys acquisition contracts
provide for contingent consideration based on earnings (an earn-out). The Company utilizes
earn-out structures in an effort to minimize the risk to the Company associated with potential future
negative changes in the performance of the acquired entity. The ultimate amounts payable are dependent
upon future results of the acquired entity. The Company does not record the contingent consideration
as additional purchase price for these items on its balance sheet until the applicable contingency
is resolved and additional consideration is determinable. However, if the contingent consideration
is conditioned on the employment of any selling shareholder, the Company applies EITF consensus on
issue No. 95-8, Accounting for Contingent Consideration Paid to Shareholders of an Acquired
Enterprise in a Purchase Business Combination, which requires that compensation expense be
accrued as more fully described in Note 11.
Actual results can differ from these estimates and,
as a result, the actual amount that the Company pays may be different from these estimates. These
obligations change from period to period as a result of earn-out payments made during the current
period, changes in the previous estimates of the acquired entities performances, changes in
foreign exchange rates and the addition of new contingent obligations resulting from acquisitions
with earn-out structures that were completed in the current period. These differences could be material
(See Note 21).
In addition, owners of interests in certain subsidiaries
or affiliates of the Company have the right in certain circumstances to require the Company to purchase
their interests (a buy-out). The purchase price for a buy-out is generally based upon
a multiple of future earnings and in some cases is conditioned on the continued employment of the
related shareholders. The Company accounts for these arrangements as restricted stock plans. The
ultimate amount payable in the future relating to these transactions will vary because it is generally
dependent on the future results of operations of the subject businesses and the timing the buy-out
is exercised. The actual amounts that the Company pays may be different from these estimates. These
differences could be material (See Note 21).
2.22.   Advertising Costs
Advertising costs are expensed as incurred. Advertising
expense amounted to 10.7, 13.5 and 14.2 for the years ended December 31, 2004, 2003 and 2002, respectively.
2.23.   Recently Issued Accounting Pronouncements
In December 2004, Financial Accounting Standards
Board (FASB) issued SFAS No. 123R Share-based payment. This statement is
a revision of SFAS No. 123 Accounting for stock-based compensation and establishes standards
for the accounting for transactions in which an entity exchanges its equity instruments for goods
or services. This Statement focuses primarily on accounting for transactions in which an entity obtains
employee services in share-based payment
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|F - 12
|------



|HAVAS AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(In millions of euro except per share amounts and as otherwise indicated)
transactions. The application of this statement is required as of the beginning of the first annual
reporting period that begins after December 15, 2005. The Company is assessing the impact that this
statement will have on the Companys financial position and results of operations.  No material
impact is expected on the cash flows.
2.24. Reclassifications
Certain amounts applicable to prior periods have been reclassified to conform to the classifications
followed in 2004.

2.25. Change in accounting policy
In 2004, the Company changed its policy relating to the definition
of cash and cash equivalents for the purpose of cash flow preparation and now
excludes highly liquid investments (See Note 2.7) from cash and cash
equivalents. This change has been effected by restating financial statements for
earlier years presented for comparative purposes.

Consequently, highly liquid investments
have been presented in a separate line item below cash in the consolidated balance sheets at December 31, 2004 and 2003.

3. ACQUISITIONS
The Company did not acquire any significant subsidiaries
in 2004. The Company acquired 7 small entities in 2004 for an aggregate amount of 9.6, including
acquisition costs, resulting in a preliminary aggregate goodwill of 5.4. Revenues from such acquisitions
reflected in the 2004 Consolidated Statements of Operations amount to 3.9. The Company is in the
process of finalizing the purchase price allocation of the net assets acquired and liabilities assumed
in connection with the above acquisitions.
The Company did not acquire any significant subsidiaries
in 2003. The Company acquired 9 small entities in 2003 for an aggregate amount of 11.5, including
acquisition costs, resulting in a goodwill of 9.6. Revenues from such acquisitions reflected in the
2003 Consolidated Statements of Operations amounted to 5.9.
4.   PROPERTY AND EQUIPMENT, NET
Property and equipment, net are comprised of
the following:
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        

| |                                   | Useful lives |  | As of December 31, |   |     
| | --------------------------------- | ------------ |  | ------------------ | - | ----
|
|
| |                                   |              |  |                    |   |     
| | Land                              |             |  |                   |   | 1   
| | Buildings                         | 25-33 years  |  | 38                 |   | 58  
| | Furniture, fixtures and equipment | 3-10 years   |  | 300                |   | 340 
| |                                   |              |  |                    |   |     
| |                                   |              |  | 338                |   | 399 
| | Less: Accumulated depreciation    |              |  | (214               | ) | (246
| |                                   |              |  |                    |   |     
| |                                   |              |  | 124                |   | 153 
| |                                   |              |  |                    |   |     

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Included in property and equipment are buildings
recorded under capital leases with costs of approximately 5.1 and 11 as of December 31, 2004 and
2003, respectively. The accumulated depreciation of these assets amounted to 2 and 3.3 as of December
31, 2004 and 2003, respectively.
Depreciation expense amounted to 44.6, 53.1 and
72.4 for the years ended December 31, 2004, 2003 and 2002, respectively.
5.   GOODWILL
As required, the Company adopted SFAS 142 as of January 1, 2002. Upon adoption, the Company recognized
an impairment charge of 1,120.8, net of tax, in one reporting unit, which is the result of adopting
a fair value approach under SFAS 142. The fair value approach calculates impairment using the discounted
future cash flows method at the reporting unit level. Prior to adoption of SFAS 142, the Company
assessed the recoverability of goodwill by comparing for each entity the undiscounted projected future
earnings before interest and after taxes over its economic life to its carrying amount.

|F - 13
|------



|HAVAS AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(In millions of euro except per share amounts and as otherwise indicated)
During 2003, the Company performed its annual impairment review for goodwill and
recorded a charge of 69.5, which is recorded as a component of operating income
in the accompanying consolidated statements of operations. The 2003 impairment
was the result of the elimination of one of the Companys reporting units
in connection with its strategic reorganization. One of the Companys
subsidiaries, previously included in the 2003 Strategic reorganization, was not
sold in 2004 as final negotiations failed. As a result, the Company decided to
reorganize the subsidiary and has classified it as held and used in 2004.
Consequently, the result of operations of this subsidiary previously reported as
discontinued in 2003 has been reported as continuing
operations in the 2003 Consolidated Statement of Operations, this
resulting in a 9.6 reclassification between Loss from discontinued
operations and Goodwill and other intangible impairment. No impairment charge was
recorded during 2004.

The changes in the carrying amount of goodwill for each of the two-year period ended December
31, 2004 are as follows:
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

|Balance as of January 1, 2003                              | 1,892 |  
|---------------------------------------------------------- | ----- | -
|Currency translation adjustment                            | (123  | )
|Goodwill acquired during the year                          | 10    |  
|Goodwill arising from earn-out, buy-out payments           | 15    |  
|Goodwill written off related to business sold or abandoned | (54   | )
|Goodwill reclassified as Assets Held for Sale              | (16   | )
|Impairment loss during the year                            | (79   | )
|Balance as of December 31, 2003                            | 1,645 |  
|Currency translation adjustment                            | (33   | )
|Goodwill acquired during the year                          | 6     |  
|Goodwill arising from earn-out, buy-out payments           | 76    |  
|Goodwill written off related to business sold or abandoned | (52   | )
|Goodwill adjustment (1)                                    | (17   | )
|Balance as of December 31, 2004                            | 1,625 |  

|                                                                                                                                                                                                                                                                 
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) During 2004, the Company reversed a 17.4 tax
reserve that was previously recorded against goodwill since the Company acquired
Snyder SNC in 2000.
6.   OTHER INTANGIBLE ASSETS, NET
Other intangible assets subject to amortization consist of the following:
|                                                                                                                                                                                                                                                                 

|                                        | As of December 31, |   |     
|--------------------------------------- | ------------------ | - | ----
|
|
|                                        |                    |   |     
|Customer base                           | 205                |   | 209 
|Database                                | 27                 |   | 29  
|Trademarks                              | 75                 |   | 81  
|Patents, licenses and other intangibles | 43                 |   | 31  
|Less: Accumulated amortization          | (148               | ) | (114
|                                        |                    |   |     
|                                        | 202                |   | 236 
|                                        |                    |   |     

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Amortization expense for the year ended December
31, 2004, 2003 and 2002 is 28.9, 31.1 and 33.4 respectively. The estimated aggregate amortization
expense for each of the five succeeding years is as follows: 26 for 2005; 24 for 2006; 17 for 2007;
17 for 2008 and 17 for 2009.
Due to the Companys 2003 reorganization,
an impairment test was conducted in 2003 on certain intangible assets resulting in a 20.7 charge
on trademarks which is reflected as Goodwill and other intangible impairment in the 2003
Consolidated Statements of Operations.

|F - 14
|------



|HAVAS AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(In millions of euro except per share amounts and as otherwise indicated)
7.   RESTRUCTURING AND OTHER CHARGES
In the fourth quarter of 2003, the Company completed the strategic reorganization of its business
operations that was announced in September 2003. The Company initiated the strategic reorganization
to strengthen its integrated communications capability, to simplify its organizational structure,
and to promote greater synergies among the agencies by refocusing its activities around its two global
networks, Euro RSCG Worldwide and Media Planning Group, and its creativity-focused network, Arnold
Worldwide Partners.
The Company also implemented a restructuring plan, primarily in the United States and the United
Kingdom, to reduce costs. This plan resulted in pre-tax restructuring costs and other charges in
the amount of 92.4. This charge includes pre-tax severance and other personnel-related costs of 39.3,
pre-tax occupancy and facilities-related costs of 37.8 as well as other charges of 15.3 including
8.8 asset write downs.
The severance and other personnel related charges of 39.3 reflected the elimination of 1,158 positions
worldwide, most of them in Europe and North America. The employee groups affected included all levels
and functions across the Company. All positions were identified for elimination at December 31, 2003,
and the remaining reserve balance of 3.1 at December 31, 2004 reflects costs relating to severance
and other termination benefits to be settled in 2005.
The plan resulted in the abandonment and closure of 40 offices representing about 70,000 m2
principally located in Great Britain and in North America. Such termination costs were based upon
an estimate of the amounts that the Company expected to pay over the terms of these leases, based
on its assumptions regarding offsetting sublease income. The remaining balance in occupancy and facilities-related
reserves of 33.9 and 31.8 at December 31, 2004 and December 31, 2003 respectively, relates to non-cancelable
lease commitments in excess of estimated sublease income for abandoned facilities that will be paid
out over the remaining lease periods, ranging from one to nine years. In 2004, the Company recorded
an additional expense of 15.2 corresponding to the completion of the plan (the space was identified
to be vacant but not yet vacant at December 31, 2003). Conversely, the Company recorded an income
of 4.5 due to a 2004 decision to sublease to some companies within the group, part of the UK space left vacant
at December 31, 2003.
The following table displays the activity and balances of the restructuring reserve account :
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

|                              | Severance and 
      other personnel-
      related |   | Occupancy
      and facilities-
      related |   | Other |   | Total |  
|----------------------------- | --------------------------------------------------- | - | --------------------------------------------- | - | ----- | - | ----- | -
|                              |                                                     |   |                                               |   |       |   |       |  
|2003 Charge                   | 39                                                  |   | 38                                            |   | 15    |   | 92    |  
|Foreign exchange translation  | (2                                                  | ) | (2                                            | ) | (1    | ) | (5    | )
|Non cash items                |                                                    |   |                                              |   | (9    | ) | (9    | )
|Amount used                   | (12                                                 | ) | (4                                            | ) | (3    | ) | (19   | )
|Balance at December 31, 2003  | 25                                                  |   | 32                                            |   | 2     |   | 59    |  
|Foreign exchange translation  | 1                                                   |   | (1                                            | ) |      |   |      |  
|2004 Additional expense       | 4                                                   |   | 15                                            |   |      |   | 19    |  
|Non cash items                |                                                    |   | (2                                            | ) |      |   | (2    | )
|Amount used                   | (25                                                 | ) | (13                                           | ) | (1    | ) | (39   | )
|Reversals                     | (1                                                  | ) | (4                                            | ) |      |   | (5    | )
|Change in original estimate   |                                                    |   | 2                                             |   |      |   | 2     |  
|Change in consolidation scope | (1                                                  | ) | 5                                             |   |      |   | 4     |  
|Balance at December 31, 2004  | 3                                                   |   | 34                                            |   | 1     |   | 38    |  

|                                                                                                                                                                                                                                                                                                                                                                            
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|During 2001, the Company recorded approximately 128.4 in pre-tax restructuring and other charges associated
with the Companys worldwide initiative to reduce costs. This charge included pre-tax severance
and other personnel-related costs of 61.3, pre-tax occupancy and facilities-related costs of 51.5
as well as pre-tax asset write-downs and other charges of 15.6

|F - 15
|------



|HAVAS AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(In millions of euro except per share amounts and as otherwise indicated)
(including 14.1 asset depreciation / write-downs which are not included in Reserve established
as they are non-cash items).
The severance and other personnel-related charges reflected the elimination of 2,826 positions worldwide,
approximately 80% of which occurred in Europe and North America. The employee groups affected included
executive and regional management and administrative personnel. All positions had been eliminated
at December 31, 2002. During 2002, a personnel related reserve was reversed in the amount of 1 which
primarily related to one entity, Circle.com, where the amounts actually paid were less than estimated,
although the headcount reduction was unchanged.
The pre-tax occupancy and facilities-related costs of 51.5 in 2001 associated with lease terminations
and other exit costs resulted primarily from the abandonment and closure of office space predominantly
located in North America. Lease terminations include remaining lease obligations net of estimated
sublease income. Such termination costs were based upon an estimate of the amounts that the Company
expected to pay over the terms of these leases, based on the Companys assumptions regarding
offsetting sublease income. During 2004, 2003 and 2002, as local real estate markets changed, the
Company adjusted its estimated sublease income over the related lease terms, which resulted in an
additional restructuring reserve of 1.0, 5.9 and 2.6 respectively and in a reversal of previously
recorded reserves of 1.0, 0.2 and 5.1, respectively. The remaining balance in occupancy and facilities-related
reserves at December 31, 2004 relates to non-cancelable lease commitments in excess of estimated
sublease income for abandoned facilities that will be paid out over the remaining lease periods,
ranging from one to 11 years.
The following table displays the activity and balances of the restructuring reserve account:
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

|                                        | Severance and other
      personnel-related |   | Occupancy and
      facilities-related |   | Other |   | Total |  
|--------------------------------------- | ------------------------------------------- | - | -------------------------------------- | - | ----- | - | ----- | -
|                                        |                                             |   |                                        |   |       |   |       |  
|Reserve established                     | 61                                          |   | 51                                     |   | 2     |   | 114   |  
|Amount used                             | (52                                         | ) | (7                                     | ) | (1    | ) | (60   | )
|Balance at December 31, 2001            | 9                                           |   | 44                                     |   | 1     |   | 54    |  
|                                        |                                             |   |                                        |  
|Foreign exchange translation adjustment |                                            |   | (7                                     | ) |      |   | (7    | )
|Deductions:                            
|- Amounts used                          | (7                                          | ) | (15                                    | ) |      |   | (22   | )
|- Reversals                             | (1                                          | ) | (5                                     | ) |      |   | (6    | )
|Change in original estimate             |                                            |   | 2                                      |   |      |   | 2     |  
|Balance at December 31, 2002            | 1                                           |   | 19                                     |   | 1     |   | 21    |  
|                                        |                                             |   |                                        |  
|Foreign exchange translation adjustment |                                            |   | (4                                     | ) |      |   | (4    | )
|Deductions:                            
|- Amounts used                          | (1                                          | ) | (6                                     | ) | (1    | ) | (8    | )
|- Reversals                             |                                            |   |                                        |   |      |   |       |  
|Change in original estimate             |                                            |   | 6                                      |   |      |   | 6     |  
|Balance at December 31, 2003            |                                            |   | 15                                     |   |      |   | 15    |  
|Foreign exchange translation adjustment |                                            |   | (1                                     | ) |      |   | (1    | )
|Deductions:                            
|- Amounts used                          |                                            |   | (3                                     | ) |      |   | (3    | )
|- Reversals                             |                                            |   | (1                                     | ) |      |   | (1    | )
|Change in original estimate             |                                            |   | 1                                      |   |      |   | 1     |  
|Change in consolidation scope           |                                            |   | (1                                     | ) |      |   | (1    | )
|Balance at December 31, 2004            |                                            |   | 10                                     |   |      |   | 10    |  

|F - 16
|------



|HAVAS AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(In millions of euro except per share amounts and as otherwise indicated)
8.   DISCONTINUED OPERATIONS  HELD FOR SALE
In the fourth quarter of 2003, the Company completed
the strategic reorganization of its business operations that was announced in September 2003. As
part of its strategic reorganization, the Companys management targeted for sale or cessation
of operations a number of companies that were not engaged primarily in activities within its core
areas of competence, were not strategic investments, did not meet the Companys financial performance
criteria or otherwise did not fit into its new organization. This reorganization was finalized during
2004.
One of the Companys subsidiaries, previously
included in the 2003 strategic reorganization, was not sold in 2004 as final negotiations failed.
As a result, the Company decided to reorganize the subsidiary and has classified it as held and used
in 2004. Consequently, the result of operations of this subsidiary previously reported as discontinued
in 2003 has been reported as continuing operations in the 2003 Consolidated Statement
of Operations, this resulting in a 9.6 reclassification between Loss from discontinued operations
and Goodwill and other intangible impairment. The 2004 operating income of this subsidiary
amounts to 0.2.
In accordance with SFAS 144, the results of operations of the businesses sold at December 31, 2004
have been reported as Discontinued in the current and prior periods. The table below
reports the breakdown of the discontinued operations:
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

|                                                                        | Year ended December 31, |  
|----------------------------------------------------------------------- | ----------------------- | -
|
|**DISCONTINUED OPERATIONS**                                             | **2004**                |  
|Loss on disposal, including costs to sell                               | (13                     | )
|Income (loss) from discontinued operations (excluding loss on disposal) | (3                      | )
|Benefit (provision) for income taxes                                    | (1                      | )
|Loss from discontinued operations (net of tax)                          | (17                     | )

|                                                                                                                                                                                                                                                                                                                                    
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|As the reorganization was finalized during 2004, there are no Assets or Liabilities Held for
Sale in the accompanying Consolidated Balance Sheet as of December 31, 2004. The major classes
of assets and liabilities classified as Held for sale in the Consolidated Balance Sheet
as of December 31, 2003 are disclosed below:
|                                                                                                                                                                                                                                                                                                                                    

|**As of December 31, 2003**                      |   
|------------------------------------------------ | --
|                                                 |   
|**ASSETS
      HELD FOR SALE**                   |   
|Goodwill,
      net                              | 16
|Accounts
      receivable                        | 23
|Cost
      billable to clients                   | 5 
|Prepaid
      expenses and advances to suppliers | 3 
|Other
      assets                               | 2 
|Assets
      held for sale                       | 49

|                                                                                                                                                                                                                                                                                                                                                    
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|9. EQUITY INVESTMENTS
Subsidiaries over which the Company exercises a significant influence are accounted for by the equity
method due to its minority interests or minority representative within the Board of these subsidiaries
without any commitment to buy-out minority interests. Individual and total values of associates are
not material.
|                                                                                                                                                                                                                                                                                                                                                    

|              | 2004 |  | 2003 | 
|------------- | ---- |  | ---- | 
|
|
|              |      |  |      | 
|Miscellaneous | 3    |  | 1    | 
|              |      |  |      | 

|F - 17
|------



|HAVAS AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(In millions of euro except per share amounts and as otherwise indicated)
10.   CONVERTIBLE BONDS,  LONG-TERM AND SHORT-TERM BORROWINGS
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                        

| | Convertible Bonds
| | -----------------

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|On May 22, 2002, the Company issued 41,860,465 unsecured convertible and/or exchangeable bonds, each
with a nominal value of 10.75, for an aggregate principal amount of 450. The Company received
net proceeds of approximately 443.5 from this issuance. The coupon rate of the bonds is 4.0% per
annum, payable annually in arrears on January 1 of each year, beginning January 1, 2003, and the
gross yield to maturity also is 4.0% per annum, assuming no conversion or redemption occurs prior
to maturity. The implicit interest rate, including issue costs, is 4.26% per annum. The bonds have
a maturity date of January 1, 2009. Each bond currently is exercisable at any time at the option
of the holder for 1.13 Havas shares, subject to specified anti-dilution adjustments, which exercise
may, at the Companys option, be a conversion for newly issued shares, an exchange for treasury
shares or a combination thereof.
In accordance with French law, the conversion/exchange ratio has been adjusted from 1 to 1.13 due to
the distribution of a portion of paid-in capital in connection with the Companys payment of
its annual dividend to shareholders as well as the increase in capital on October 19, 2004. The bonds
have a redemption value at maturity equal to their nominal value. The Company has the option to redeem
all, but not less than all, of the outstanding bonds between January 1, 2005 and December 31, 2008
at their nominal value plus accrued interest if the product of (1) the conversion/exchange ratio
and (2) the arithmetic mean of the closing prices of Havas shares on Euronext Paris during 20 consecutive
trading days chosen by the Company from among the 40-trading day period preceding publication of
a notice of early redemption, exceeds 125% of the nominal value of the bonds. The Company also has
the option to redeem, all, but not less than all, of the bonds at their nominal value plus accrued
interest at any time when less than 10% of the bonds issued remain outstanding. In connection with
this issuance, the Company agreed not to give any other bonds any preference over the bonds, or reduce
its share capital or alter the way it allocates profits.
The General Meeting of holders of these Havas bonds met on December 1, 2003 and approved the payment
by the Company of 1.20 per bond, payable in cash in a single installment on January 1, 2004,
in exchange for a waiver of the option they had to cause the Company to redeem the bonds at its nominal
value plus accrued interest on January 1, 2006 (Put). This amount is reflected in Other payables
in the accompanying consolidated Balance Sheets as of December 31, 2003. As a result of this transaction,
the maturity date of the 450 series of bonds is postponed with certainty until January 1, 2009. The
total expense for the Company amounted to 51.1 including 0.9 consulting fees reflected as Other
financial expense in the Consolidated Statements of Operations as of December 31, 2003. Based
on the Emerging Issues Task Force (EITF) consensus on issue No. 96-19 Debtors
accounting for a modification or exchange of debt instruments, this operation has been accounted
for in accordance with paragraph 16 of Statement 125, resulting in a 10.7 loss which is reflected
as Other financial expense in the accompanying Consolidated Statements of Operations
as of December 31, 2003, 930 bonds had been exercised since its issuance. The aggregate
amount of the outstanding bonds at December 31, 2004 amounted to 472.6 comprised of 454.6 in aggregate
principal and 18.0 of interest.
On December 22, 2000, the Company issued 32,817,012
unsecured convertible and/or exchangeable bonds, each with a nominal value of 21.60, for an
aggregate principal amount at issuance of 708.9. The Company received net proceeds of 694.9 from
this issuance. The coupon rate of the bonds is 1.0% per annum, payable annually in arrears on January
1 of each year, beginning January 1, 2002, and the gross yield to maturity is 4.25% per annum, assuming
no conversion or redemption occurs prior to maturity. The implicit interest rate, including issue
costs, is 4.67% per annum. The bonds have a maturity date of January 1, 2006. Each bond currently
is exercisable at any time at the option of the holder for 1.13 Havas shares, subject to specified
anti-dilution adjustments, which exercise may, at the Companys option, be a conversion for
newly issued shares, an exchange for treasury shares or a combination thereof. In accordance with
French law, the conversion/exchange ratio has been adjusted from 1 to 1.13 due to the distribution
of a portion of paid-in capital in connection with the Companys payment of its annual dividend
to shareholders as well as the increase in capital on October 19, 2004. The bonds have a redemption
value at maturity of 25.44 per bond, or approximately 117.78% of their nominal value. The Company
has the option to redeem all, but not less than all, of the outstanding bonds between January 1, 2004

|F - 18
|------



|HAVAS AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(In millions of euro except per share amounts and as otherwise indicated)
and December 31, 2005, at an early redemption price that guarantees the holder of the bond a yield
to maturity equivalent to the rate the holder would have obtained upon redemption at maturity, if
the product of (1) the conversion/exchange ratio and (2) the arithmetic mean of the closing prices
of Havas shares on Euronext Paris during 20 consecutive trading days chosen by the Company from among
the 40-trading day period preceding publication of a notice of early redemption, exceeds 115% of
the early redemption price. The Company also has the option to redeem all, but not less than all,
of the bonds at their nominal value plus accrued interest at any time when less than 10% of the bonds
issued remain outstanding. In connection with this issuance, the Company agreed not to issue bonds
with any preference over these bonds, or reduce its share capital or alter the way it allocates profits.
The aggregate amount of the outstanding bonds at December 31, 2004 amounted to 214.0 comprised of
186.1 in aggregate principal, 25.9 in accrued premium through that date and 2.0 in interest. Assuming
no conversion, redemption or repurchase, an additional 7.2 of premium would accrue on those bonds through maturity.
Since 2002, the Company repurchased 24,202,450 of its convertible bonds issued in December 2000:-
1,342,046 during the last quarter of 2002 resulting in a gain of 4.8-
5,290,000 during the first quarter of 2003 resulting in a gain of 12.2-
17,570,404 during December 2004 resulting in a loss of 8.7
which are  reflected as Other financial income and expense in the accompanying
consolidated statements of operations.
On February 12, 1999, the Company issued 1,223,405 unsecured convertible and/or exchangeable bonds
due January 1, 2004, each with a nominal value of 188, for an aggregate principal amount at
issuance of 230. The Company received net proceeds of 225.3 from this issuance. The coupon rate of
the bonds was 1.0% per annum, payable annually in arrears on January 1 of each year, and the gross
yield to maturity was 1.75% per annum, assuming no conversion or redemption occured prior to maturity.
The implicit interest rate, including issue costs, was 2.18% per annum. The bonds had a maturity
date of January 1, 2004. At December 31, 2003, the aggregate amount of the outstanding bonds amounted
to 89.4, comprised of 85.3 in aggregate principal, 3.2 in accrued premium through that date and 0.9
in interest. The redemption of bonds was made on January 1, 2004.
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

| | Long-Term Borrowings
| | --------------------

|                                              
|----------------------------------------------
|Long-term borrowings consist of the following:
|                                              

|                                                                                                                                                        | As of December 31, |  
|------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------ | -
|
|
|                                                                                                                                                        |                    |  
|U.S. dollar denominated bank loans, at variable rates ranging from 2.81% to
      3.19%, due 2005 to 2006 (1.36% to 1.49%, due 2004 to 2006 as of 2003) | 26                 |  
|Convertible bond of a subsidiary (Havas UK plc) with a fixed rate of 7.6%                                                                               | 57                 |  
|Less: Forward sale agreement on Havas UK shares                                                                                                         | (49                | )
|Other (weighted average interest of 6.6% as of 2003)                                                                                                   |                   |  
|                                                                                                                                                        |                    |  
|Total                                                                                                                                                   | 34                 |  
|                                                                                                                                                        |                    |  
|Less: Current maturities of long-term borrowings                                                                                                        | (26                | )
|                                                                                                                                                        |                    |  
|Long-term borrowings                                                                                                                                    | 8                  |  
|                                                                                                                                                        |                    |  

|F - 19
|------



|HAVAS AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(In millions of euro except per share amounts and as otherwise indicated)
Future minimum payments as of December 31, 2004, on long-term borrowings and convertible bonds, excluding
capital leases, are as follows:
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                    

| | Year                     | 2004 |   | 
| | ------------------------ | ---- | - | 
| |                          |      |   | 
| | 2005                     | 47   |   | 
| | 2006                     | 221  |   | 
| | 2007                     | 1    |   | 
| | 2008                     | 1    |   | 
| | 2009                     | 451  |   | 
| | Thereafter               |     |   | 
| |                          | 721  |   | 
| |                          |      |   | 
| | Less: Current maturities | (47  | ) | 
| |                          |      |   | 
| |                          | 674  |   | 
| |                          |      |   | 

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Convertible bond of Havas UK plc
On January 19, 2000, Havas UK plc, formerly Evelink
plc, an indirect, wholly owned subsidiary of the Company, issued a 56.7 convertible bond due July
19, 2007 to Banque Nationale de Paris S.A. (BNP). This convertible bond bears interest
at the rate of 7.6% per annum and is convertible, at the option of the holder, at any time from January
19, 2000 through January 19, 2007 into 117,131 ordinary shares of Havas UK plc, subject to specified
anti-dilution adjustments. In addition, Havas UK plc issued a warrant to BNP authorizing the holder
of the warrant, upon payment of £40 million (56.7) to purchase from Havas UK plc 117,131 ordinary
shares of Havas UK plc on January 19, 2007, subject to specified anti-dilution adjustments. The right
to purchase such ordinary shares under the warrant will lapse in the event that the conversion right
of this convertible bond is exercised.
On the same date, Havas International S.A., a
wholly owned subsidiary of the Company, and BNP, as the initial holder of the bond, entered into
a forward sale agreement under which Havas International S.A. paid 49 to BNP for the future purchase
of the same number of Havas UK plc ordinary shares as issuable on conversion of this convertible
bond.
In the absence of a right of setoff, this convertible
bond and the investment of 49 resulting from the forward sale agreement are presented separately
in the table above. The interest expense related to this convertible bond is determined using the
net proceeds (7.7 and 10.8 at December 31, 2004 and 2003 respectively) as a basis for applying the
effective rate of 7.605%. Such net proceeds are presented under proceeds from borrowings in the Consolidated
Statements of Cash Flows.
CIRCUS agreement
In 1999, a U.S. subsidiary of the Company borrowed
$30 million (22) from an international bank (the Bank). In connection with
this loan, the Company agreed with the Bank to make a deposit in the same amount to allow the subsidiary
to borrow the funds. The terms of the agreement provide that the deposit and debt mature simultaneously
in six equal annual installments from June 4, 2001 to June 5, 2006, and the debt and deposit have
therefore been reduced to $10 million (7.3) at December 31, 2004. The deposit has been classified
as restricted deposits under Other assets (7.3 as converted at the spot rate
at the closing date for the loan) in the balance sheet as of December 31, 2004 (11.9 as of December
31, 2003). The debt bears interest at LIBOR plus a margin, and interest on the deposit is at LIBOR
less a margin. The Company entered into a combined interest and currency swap arrangement, referred
to as CIRCUS, with the Bank with the effect of transforming this $10 million deposit
into a euro deposit of 9.5 at EURIBOR less a margin. The maturities of the CIRCUS are identical to
those of the deposit both in terms of dates, currency and amounts. As of December 31, 2004, an exchange
gain on the CIRCUS was recorded in the Consolidated Statements of Operations under exchange
rate gain for 2.2. As of December 31, 2004, an exchange loss on the deposit was recorded in
the consolidated statements of operations under exchange rate loss for 2.2 (a loss of 2.4 in 2003).

|F - 20
|------



|HAVAS AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(In millions of euro except per share amounts and as otherwise indicated)
HSBC deposit
In 2004, a German subsidiary of the Company made
a fixed cash deposit (3.5) with an international bank in order to secure fixed term loans granted
by this bank to certain of the Companys other subsidiaries in Germany for the same amount and
maturity. The deposit has been classified as restricted deposits under Other assets.
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

| | Short-Term Borrowings
| | ---------------------

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Included in short-term borrowings in the amounts
of 29.7 and 52.9 at December 31, 2004 and 2003, respectively, are primarily borrowings by subsidiaries
under the terms of various short-term borrowing arrangements. The weighted-average interest rates
on these short-term borrowings outstanding at December 31, 2004 and 2003 were 2.7% and 2.6%, respectively.
Also included in short-term borrowings in the amounts of 50.7 and 46.2 at December 31, 2004 and 2003,
respectively, are overdraft amounts resulting from various lines of credit of subsidiaries. These
overdraft amounts bear interest at the prevailing market rates in the countries of the subsidiaries.
In the aggregate, the Company had unused lines of credit available under short term and overdraft
borrowing arrangements of 152.2 and 159.3 at December 31, 2004 and 2003, respectively, carrying interest
at prevailing market rates.
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        

| | Floating rate credit facility agreement Club deal
| | ---------------------------------------------------

|                                                                                                                                   
|-----------------------------------------------------------------------------------------------------------------------------------
|In December 2004, the Company entered into a 150  floating rate credit
agreement with a pool of banks (club deal), consisting of:
|                                                                                                                                   

| | - | a 100  amortization loan, reaching final maturity on November 30, 2007, dedicated to finance
  the repurchase and/or the redemption of the 2000 / 2006 convertible bonds ;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | - | a  50  revolving credit facility, maturing on October 31, 2008, dedicated to
  the general financing purposes of the Company.                                             
| |   |                                                                                                                                                                           

| | This agreement is subject to resctrictive covenants, commitments and restrictions that mainly relate
  to warranties to be granted by the Company and the planification of acquisitions or disposals of
  assets until credit maturity.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                                                                        

| | These credit lines were not used in 2004.
| | -----------------------------------------
| |                                          

| | Covenants
| | ---------

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|The Company and some of its subsidiaries are
subject to restrictive covenants under borrowings at the subsidiary level. Covenants on Company debt
include total borrowing levels in some countries and minimum shareholders consolidated equity,
among others. In addition, the Company guarantees significant loans of its subsidiaries.
As of December 31, 2004, the Company was in compliance
with all its financial covenants.
As of December 31, 2003, the Company was not
in compliance with financial covenants under two credit facilities, for an aggregate principal amount
of 22.6. However, the credit facility banks waived any default with respect to the noncompliance.
As of December 31, 2003, the Company and its subsidiaries were in compliance with all other financial
covenants related to the borrowings described above.
11.   COMPENSATION TO FORMER SHAREHOLDERS OF ACQUIRED BUSINESSES
In connection with the acquisition of private
companies, the Company typically enters into agreements with some or all of the selling shareholders
that provide for the payment of contingent consideration based upon a multiple of future earnings
of the acquired company. In certain cases, their right to such contingent consideration is conditioned
on the continued employment of such selling shareholders (an Earn-Out) and
are partially or totally forfeited if they leave the acquired company before certain future dates.
EITF consensus on issue No. 95-8 requires that in those circumstances the amount paid

|F - 21
|------



|HAVAS AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(In millions of euro except per share amounts and as otherwise indicated)
in excess of what the selling shareholders are entitled to if they left the acquired company at the
date of the relevant agreement be recorded as compensation expense. The amounts recorded in each
of the periods presented have been determined on the basis of the earnings formula upon which the
contingent consideration is based and allocated on a straight-line basis over the period the employees
are required to stay with the acquired company to obtain the maximum amount of the Earn-Out. Estimates
used in connection with such computations are based upon the latest available earnings data and the
related formulas and are revised every year.
In the case of partial acquisitions,
the purchase contracts generally include put and call provisions to buy the remainder of the equity
of the acquired company at some future date (the Buy-Out). The purchase price
for the Buy-Out is generally based upon a multiple of future earnings (the Formula)
and in certain cases is conditioned on the continued employment of the related shareholders (the
Minority Shareholders). The Company accounts for these arrangements as restricted
stock plans. The Formula is applied at the end of every period on the basis of latest available earnings
data and any amount in excess of what the Minority Shareholders would get if they left the acquired
company at the date of the purchase contract is treated as compensation expense, which is allocated
to every period presented under a method similar to the one used for Earn-Out provisions. The share
in the earnings of the related subsidiaries attributable to the Minority Shareholders, included in
such amounts, is presented as Minority interests.
Compensation expense related to the arrangements
described above was:
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

| |                                                                 | 2004 |  | 2003 |  | 2002 | 
| | --------------------------------------------------------------- | ---- |  | ---- |  | ---- | 
| |                                                                 |      |  |      |  |      | 
| | Earn-out                                                        |     |  | 2    |  | 6    | 
| | Buy-out                                                         | 3    |  | 1    |  |     | 
| |                                                                 |      |  |      |  |      | 
| | Recorded as compensation to shareholders of acquired businesses | 3    |  | 3    |  | 6    | 
| | Recorded as minority interests                                  | 2    |  | 1    |  | 2    | 

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|As of December 31, 2004, the contingent payments
expected to be made based upon the assumptions used for the determination of compensation expense
amounted to approximately 6.0 (7.1 as of 2003), of which 5.4 (6.0 as of 2003) were accrued as of
the same date.
For tax purposes, the above expenses are generally
included as part of the purchase price of the acquired company. The tax effect of this excess of
the tax basis over the financial reporting basis is not recognized until the disposition of such
acquired company.
12.   EMPLOYEE STOCK OPTION PLANS
Havas share options
The following table sets forth information with respect to the status of outstanding options granted under Havass stock option plans for the years ended December 31, 2004, 2003 and 2002 (except options issued in
connection with the acquisitions of the SNC common stock and the Circle.com common stock of Snyder
Communications which are disclosed separately below).
Pursuant to the Companys incentive plan, the exercise price of options awarded
may not be less than 100% of the market price of the stock at the date of grant
and the option term cannot be longer than ten years for French employees and
seven years for the other employees from the date of grant. The terms of each
option and the times at which each option will be exercisable is determined by
the Compensation and Selection Committee. The plans generally vest as follows:
one third over one year, one third over two years and the remaining third over
three years.

|F - 22
|------



|HAVAS AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(In millions of euro except per share amounts and as otherwise indicated)
|------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                          

|                                                              |  | Year ended December 31, |  
|------------------------------------------------------------- |  | ----------------------- | -
|
|
|
|
|
|
|
|Outstanding at the beginning of the year                      |  | 30,734,948              |  
|Options granted                                               |  | 10,483,000              |  
|Options exercised                                             |  | (105,228                | )
|Options forfeited                                             |  | (6,645,412              | )
|Equity restructuring adjustment (1)                           |  | 2,590,350               |  
|                                                              |  |                         |  
|Outstanding at the end of the year                            |  | 37,057,658              |  
|                                                              |  |                         |  
|Exercisable at the end of the year                            |  | 26,886,681              |  
|                                                              |  |                         |  
|Weighted-average fair value of optionsGranted during the year |  |                         |  
|                                                              |  |                         |  

|    |                                                                                                                                                                                                                                                                                                                                                                                                                     
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | In accordance with French law, the number of options and the exercise price have been adjusted due
to the distribution of a portion of paid-in capital in connection with the Companys payment
of its annual dividend to shareholders on June 17, 2004, on June 18, 2003, on June 11, 2002 and also following
the Companys share offering with preferential subscription rights that occurred on October
19, 2004.

|                                                                                                                                                
|------------------------------------------------------------------------------------------------------------------------------------------------
|The following table summarizes information with respect tostock options outstanding under the Companys stock option plans at December 31, 2004:
|                                                                                                                                                

|Exercise
      Prices |  | Number Outstanding
      at December 31, 2004 |  | Weighted-Average
      Remaining Contractual Life |     | Number Exercisable
      at December 31, 2004 |          
|--------------------- |  | --------------------------------------------- |  | ------------------------------------------------- | --- | --------------------------------------------- | ---------
|                     
|                     
|4.05                  |  | 4,406,598                                     |  | 1.5                                               |     | 4,406,598                                     |          
|6.71                  |  | 800,049                                       |  | 1.1                                               |     | 800,049                                       |          
|8.00                  |  | 318,468                                       |  | 1.5                                               |     | 318,468                                       |          
|9.56                  |  | 227,066                                       |  | 1.7                                               |     | 227,066                                       |          
|13.81                 |  | 933,345                                       |  | 1.9                                               |     | 933,345                                       |          
|24.33                 |  | 1,009,219                                     |  | 2.2                                               |     | 1,009,219                                     |          
|22.01                 |  | 454,257                                       |  | 2.4                                               |     | 454,257                                       |          
|15.62                 |  | 2,768,916                                     |  | 2.8                                               |     | 2,768,916                                     |          
|13.64                 |  | 3,666,398                                     |  | 3.2                                               |     | 3,666,398                                     |          
|13.06                 |  | 2,712,719                                     |  | 3.4                                               |     | 2,712,719                                     |          
|7.57                  |  | 4,890,984                                     |  | 4.1                                               |     | 3,266,946                                     |          
|4.36                  |  | 4,447                                         |  | 4.9                                               |     | 2,964                                         |          
|2.43                  |  | 2,403,376                                     |  | 6.2                                               |     | 769,111                                       |          
|3.67                  |  | 345,560                                       |  | 8.5                                               |     | 115,174                                       |          
|3.99                  |  | 1,596,340                                     |  | 6.7                                               |     | 532,786                                       |          
|4.06                  |  | 411,916                                       |  | 9.4                                               |     |                                              |          
|4.17                  |  | 10,108,000                                    |  |                                                   | 6.8 |                                               | 4,902,665
|                      |  |                                               |  |                                                   |     |                                               |          
|                      |  | 37,057,658                                    |  |                                                   |     | 26,886,681                                    |          
|                      |  |                                               |  |                                                   |     |                                               |          

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|As a result of the Companys acquisition of all of the outstanding shares of SNC common stock
of Snyder Communications on September 26, 2000, all SNC options outstanding on that date were converted into
options to purchase Havas shares. Each SNC option was converted into an option to acquire 1.371 Havas
shares, which was the same ratio used to exchange SNC common stock for the Companys ADSs.
As a result of the Companys acquisition of all of the outstanding shares of Circle.com common stock of Snyder

|F - 23
|------



|HAVAS AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(In millions of euro except per share amounts and as otherwise indicated)
Communications on June 26, 2001, all Circle.com options outstanding on that date
were converted into options to purchase Havas shares. Each Circle.com option was converted into an
option to acquire 0.0937 Havas shares, which was the same ratio used to exchange Circle.com common
stock for the Companys ADSs.
A summary of the Companys option activity
with respect to the converted SNC options for 2004 and 2003 is set forth below:
Converted SNC stock options
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

|                                 | Options
      Outstanding
      2004 |   | Weighted
      Average
      Exercise
      Price 2004 |  | Weighted
      Average
      Exercise
      Price 2004 |  | Options
      Outstanding
      2003 |   | Weighted
      Average
      Exercise
      Price 2003 |  | Weighted
      Average
      Exercise
      Price 2003 | 
|-------------------------------- | ------------------------------------ | - | ------------------------------------------------------ |  | ------------------------------------------------------ |  | ------------------------------------ | - | ------------------------------------------------------ |  | ------------------------------------------------------ | 
|                                 |                                      |   |                                                        |  |                                                        |  |                                      |   |                                                        |  |                                                        | 
|                                 | (In 000s)                            |   | (In USD)                                               |  | (In Euro) (1)                                          |  | (In 000s)                            |   | (In USD)                                               |  | (In Euro) (2)                                          | 
|Outstanding at beginning of year | 3,192                                |   | 11.58                                                  |  | 8.55                                                   |  | 5,629                                |   | 11.79                                                  |  | 9.36                                                   | 
|Exercised                        | (16                                  | ) | 1.45                                                   |  | 1.07                                                   |  | (5                                   | ) | 3.01                                                   |  | 2.39                                                   | 
|Forfeited or expired             | (763                                 | ) | 11.83                                                  |  | 8.74                                                   |  | (2,432                               | ) | 12.09                                                  |  | 9.60                                                   | 
|                                 |                                      |   |                                                        |  |                                                        |  |                                      |   |                                                        |  |                                                        | 
|Outstanding at end of year       | 2,413                                |   | 11.57                                                  |  | 8.55                                                   |  | 3,192                                |   | 11.58                                                  |  | 9.19                                                   | 
|                                 |                                      |   |                                                        |  |                                                        |  |                                      |   |                                                        |  |                                                        | 
|Exercisable at end of year       | 2,413                                |   | 11.57                                                  |  | 8.55                                                   |  | 3,187                                |   | 11.58                                                  |  | 9.19                                                   | 
|                                 |                                      |   |                                                        |  |                                                        |  |                                      |   |                                                        |  |                                                        | 

|    |                                                                                                                                                                
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Translation of amounts from USD into Euro has been made solely for the convenience of the reader at

the noon buying rate of 1 = $1.3538 on December 31, 2004.
|    |                                                                                                                                                                
|(2) | Translation of amounts from USD into Euro has been made solely for the convenience of the reader at

the noon buying rate of 1 = $1.2597 on December 31, 2003.

|                                                                                                                                                                                                                                                                                                                                                                                                   
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|The converted SNC options outstanding at December
31, 2004 had exercise prices that ranged from $2.20 to $13.94 (at December 31, 2003, the range was
from $0.96 to $13.94) with a six-year maximum remaining contractual life.
A summary of the Companys option activity
with respect to the converted Circle.com options for 2004 and 2003 is set forth below:
Converted Circle.com stock options
|                                                                                                                                                                                                                                                                                                                                                                                                   

|                                 | Options
      Outstanding
      2004 |   | Weighted
      Average
      Exercise
      Price 2004 |  | Weighted
      Average
      Exercise
      Price 2004 |  | Options
      Outstanding
      2003 |   | Weighted
      Average
      Exercise
      Price 2003 |  | Weighted
      Average
      Exercise
      Price 2003 | 
|-------------------------------- | ------------------------------------ | - | ------------------------------------------------------ |  | ------------------------------------------------------ |  | ------------------------------------ | - | ------------------------------------------------------ |  | ------------------------------------------------------ | 
|                                 |                                      |   |                                                        |  |                                                        |  |                                      |   |                                                        |  |                                                        | 
|                                 | (In 000s)                            |   | (In USD)                                               |  | (In Euro) (1)                                          |  | (In 000s)                            |   | (In USD)                                               |  | (In Euro) (2)                                          | 
|Outstanding at beginning of year | 106                                  |   | 181.92                                                 |  | 134.38                                                 |  | 172                                  |   | 195.59                                                 |  | 155.27                                                 | 
|Exercised                        |                                     |   |                                                       |  |                                                       |  |                                     |   |                                                       |  |                                                       | 
|Forfeited or expired             | (27                                  | ) | 163.50                                                 |  | 120.77                                                 |  | (66                                  | ) | 217.76                                                 |  | 172.87                                                 | 
|                                 |                                      |   |                                                        |  |                                                        |  |                                      |   |                                                        |  |                                                        | 
|Outstanding at end of year       | 79                                   |   | 188.41                                                 |  | 139.17                                                 |  | 106                                  |   | 181.92                                                 |  | 144.42                                                 | 
|                                 |                                      |   |                                                        |  |                                                        |  |                                      |   |                                                        |  |                                                        | 
|Exercisable at end of year       | 79                                   |   | 188.41                                                 |  | 139.17                                                 |  | 105                                  |   | 184.35                                                 |  | 146.34                                                 | 
|                                 |                                      |   |                                                        |  |                                                        |  |                                      |   |                                                        |  |                                                        | 

|    |                                                                                                                                                                
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Translation of amounts from USD into Euro has been made solely for the convenience of the reader at

the noon buying rate of 1 = $1.3538 on December 31, 2004.
|    |                                                                                                                                                                
|(2) | Translation of amounts from USD into Euro has been made solely for the convenience of the reader at

the noon buying rate of 1 = $1.2597 on December 31, 2003.

|                                                                                                                                                                                     
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|The converted Circle.com options outstanding
at December 31, 2004 and 2003 had exercise prices that ranged from $0.08 to $272.43  with a six-year maximum remaining contractual life.
|                                                                                                                                                                                     

|The compensation expense related to the Companys stock-based compensation is presented under
Stock-based compensation and amounted to 3.1, 0 and 11.2 in 2004, 2003 and
2002 respectively. Due to the Companys share offering with preferential subscription rights that
occurred on October 19, 2004, variable accounting was required on all
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|F - 24
|------



|HAVAS AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(In millions of euro except per share amounts and as otherwise indicated)
options that were outstanding at that date.
In addition, certain subsidiaries have granted
stock options to some of their employees with respect to their own stock. The strike price is usually
based on a multiple of current earnings of the subsidiary at the award date (the Multiple).
Such options are generally exercisable five to seven years after the award date and require continuing
employment. The parent companies of such subsidiaries have the option to buy back the shares if and
when acquired by the employees and the employees have the option to put these shares to such parent
companies. The buyback price is generally based upon the Multiple applied to the earnings level of
the subsidiary when the option is exercised. The employees are required to put the shares to such
parent companies when they leave the subsidiary. Under U.S. GAAP, such plans are performance plans
and variable plan accounting is required. Accordingly, the Company makes an interim measurement of
compensation on the basis of the formula price at the end of each period based upon the most recent
available earnings data and allocates such costs to expenses over the period from award date to exercise
date. As of December 31, 2004, 2003 and 2002, accrued compensation related to such plans amounted
to 5.2, 3.1, and 5.0, respectively. The related compensation recorded for the years ended December
31, 2004, 2003 and 2002 amounted to 5.0, 5.4, and 1.7, respectively, and is presented under Stock-based
compensation.
13.   PENSIONS AND OTHER BENEFITS
In accordance with the laws and practices of
each country, the Company participates in employee benefits pension plans offering death and disability,
retirement and special termination benefits. Those plans provide benefits of various types from flat
currency amounts per year of service to final pay plans integrated with social security and multi-employer
plans.
For defined contribution plans, expenses correspond
to the contributions paid. The contributions paid amounted to 18.0 and 17.1 in 2004 and 2003, respectively.
The Company estimates the contributions to be paid for the next five years will
approximate the contributions paid in 2004 and 2003. For defined benefit pension plans, accruals and prepaid expenses are determined using the projected
unit credit method.
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|F - 25
|------



|HAVAS AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(In millions of euro except per share amounts and as otherwise indicated)
Defined benefit pension plans in France are unfunded.
In 2004, the measurement date is as of December 31, 2004.
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                          

|                                                              | Pension Benefits |   | Other Benefits |  
|------------------------------------------------------------- | ---------------- | - | -------------- | -
|
|
|                                                              |                  |   |                |  
|**Change
      in benefit obligation**                        |                  |   |                |  
|**Benefit
      obligation at beginning of the year**         | (93              | ) | (95            | )
|Service cost                                                  | (3               | ) | (4             | )
|Interest
      cost                                           | (5               | ) | (5             | )
|Plan participants
      contributions                        |                 |   | (1             | )
|Amendments                                                    |                 |   |               |  
|                                                              |                  |   |                |  
|Acquisitions/disposals                                        |                 |   |               |  
|Curtailments
      / settlements                              | 1                |   | 1              |  
|Actuarial
      gain (loss)                                   | (4               | ) | 1              |  
|Benefits
      paid                                           | 5                |   | 4              |  
|Others (foreign
      currency translation)                   | 1                |   | 6              |  
|                                                              |                  |   |                |  
|**Benefit
      obligation at end of the year**               | (98              | ) | (93            | )
|Accumulated
      Benefit obligation ( French companies only) | (12              | ) | (14            | )
|                                                             
|**Change
      in plan assets**                              
|**Fair
      value of plan assets at beginning of the year**  | 54               |   | 52             |  
|Expected
      return on plan assets                          | 4                |   | 3              |  
|Company contributions                                         | 3                |   | 2              |  
|Plan participants
      contributions                        |                 |   |               |  
|Acquisitions/disposals                                        |                 |   |               |  
|Curtailments
      /settlements                               |                 |   |               |  
|Benefits
      paid                                           | (4               | ) | (2             | )
|Actuarial
      gain                                          | 3                |   | 3              |  
|Others (foreign
      currency translation)                   | (1               | ) | (4             | )
|                                                              |                  |   |                |  
|**Fair
      value of plan assets at end of the year**        | 59               |   | 54             |  
|                                                              |                  |   |                |  
|**Funded
      status of the plan**                           | (39              | ) | (38            | )
|Unrecognized
      actuarial loss                             | 20               |   | 20             |  
|Unrecognized
      actuarial prior service cost               |                 |   |               |  
|Unrecognized
      actuarial transition obligation            |                 |   |               |  
|                                                              |                  |   |                |  
|**Accrued
      benefit cost**                                | (19              | ) | (18            | )
|                                                              |                  |   |                |  

|F - 26
|------



|HAVAS AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(In millions of euro except per share amounts and as otherwise indicated)
Actuarial assumptions were as follows:
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                 

|                               | Pension Benefits |  | Other Benefits |  
|------------------------------ | ---------------- |  | -------------- | -
|
|
|                               |                  |  |                |  
|Discount rate                  | 4.3% - 6%        |  | 5.7            | %
|Rate of compensation increase  | 1%  3.8%        |  | 3.0            | %
|Expected return on plan assets | 5% - 6.3%        |  | 6.6            | %
|                               |                  |  |                |  

|                                                                                                                                          | 
|----------------------------------------------------------------------------------------------------------------------------------------- | 
|The expected return of plan assets rate is based on the expected return of assets of similar duration in the domestic market of the plan.
|                                                                                                                                         

|                                                    | Pension Benefits |   | Other Benefits |  
|--------------------------------------------------- | ---------------- | - | -------------- | -
|
|
|                                                    |                  |   |                |  
|**Annual cost**                                     |                  |   |                |  
|Service cost                                        | 3                |   | 4              |  
|Expected interest cost                              | 5                |   | 5              |  
|Expected return on plan assets                      | (4               | ) | (3             | )
|Amortization of unrecognized prior 
   service cost |                 |   |               |  
|Amortization of actuarial net loss                  | 1                |   | 1              |  
|Amortization of net transition obligation           |                 |   |               |  
|Curtailments/settlements                            |                 |   |               |  
|                                                    |                  |   |                |  
|**Net periodic benefit cost**                       | 5                |   | 7              |  
|                                                    |                  |   |                |  
|                                                    |                  |   |                |  

|                                                                                                                             
|-----------------------------------------------------------------------------------------------------------------------------
|Health care costs
are assumed to increase (inflation excluded) by 2.8% in 2005
and  to decrease gradually to 2.3% (ultimate).

|                                                                     
|---------------------------------------------------------------------
|Amounts recognized in the consolidated balance sheet were as follows:
|                                                                     

|                                       | Pension Benefits |   | Other Benefits |  
|-------------------------------------- | ---------------- | - | -------------- | -
|
|
|                                       |                  |   |                |  
|Accrued benefit liability              | (38              | ) | (34            | )
|Prepaid benefit cost                   | 2                |   | 2              |  
|                                       |                  |   |                |  
|**Net amount accrued for**             | (36              | ) | (32            | )
|                                       |                  |   |                |  
|Accumulated other comprehensive income | 17               |   | 14             |  
|                                       |                  |   |                |  
|**Net amount recognized**              | (19              | ) | (18            | )
|                                       |                  |   |                |  
|                                       |                  |   |                |  

|                                                                                                                                                                                          
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|The net accruals accounted for as of December
31, 2004, 2003 and 2002 in the accompanying Consolidated Balance Sheets can be compared with balances
determined under U.S. GAAP as follows:
|                                                                                                                                                                                          

|                                                                 | Pension Benefits |   | Other Benefits |  
|---------------------------------------------------------------- | ---------------- | - | -------------- | -
|
|
|                                                                 |                  |   |                |  
|                                                                 |                  |   |                |  
|Net amount accrued under U.S. GAAP                               | (36              | ) | (32            | )
|Minimum liability adjustment                                     | 17               |   | 14             |  
|                                                                 |                  |   |                |  
|**Net amount accrued for in consolidated  financial** statements | (19              | ) | (18            | )
|Accrued                                                          | (21              | ) | (20            | )
|Prepaid                                                          | 2                |   | 2              |  

|F - 27
|------



|HAVAS AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(In millions of euro except per share amounts and as otherwise indicated)
Regarding the other benefits plans, a one-percentage-point
change in assumed health care cost trend rates would have the following effects:
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                      

|                                                        | One-Percentage-Point
      Increase |   | One-Percentage-
      Point Decrease |  
|------------------------------------------------------- | ----------------------------------- | - | ------------------------------------ | -
|
|
|                                                        |                                     |   |                                      |  
|Effect on total of service and interest cost components |                                    |   | (1                                   | )
|Effect on the post-retirement benefit obligation        | (1                                  | ) | (4                                   | )

|                                                                                                                                                                                                                                                                                                                                                                                                                    
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|The benefits expected to be paid over the next five years are approximately 5 per year.
As of December 31, 2004, the fair value of total plan assets held is invested in equity securities
  for 52%, in bonds for 32% and other assets (insured annuities) for 16%, approximately.
14.   INCOME TAX
As of December 31, 2004 and 2003, the deferred
tax assets and liabilities in the balance sheet were as follows:
|                                                                                                                                                                                                                                                                                                                                                                                                                    

|                                   | As of December 31, |  
|---------------------------------- | ------------------ | -
|
|
|                                   |                    |  
|Deferred tax assetCurrent         | 53                 |  
|Deferred tax assetNoncurrent      | 15                 |  
|Deferred tax liabilityCurrent     | (2                 | )
|Deferred tax liabilityNoncurrent  | (48                | )
|                                   |                    |  
|Net deferred tax asset (liability) | 18                 |  
|                                   |                    |  

|                                                                          | 
|------------------------------------------------------------------------- | 
|The Companys provision for income tax includes the following components:
|                                                                          | 

|                         |         | As of December 31, |    
|------------------------ | ------- | ------------------ | ---
|
|
|                         |         |                    |    
|Current                  |         |                    |    
|                         | France  | 5                  |    
|                         | State   | 2                  |    
|                         | Foreign | 27                 |    
|                         |         |                    |    
|                         | Total   | 34                 |    
|                         |         |                    |    
|Deferred                
|                         | France  | 6                  |    
|                         | State   | 2                  |    
|                         | Foreign | (39                | )  
|                         |         |                    |    
|                         | Total   | (31                | )  
|                         |         |                    |    
|Provision for income tax | 3       |                    | 108
|                         |         |                    |    
|                         |         |                    |    

|F - 28
|------



|HAVAS AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (In millions of euro except per share amounts and as otherwise indicated)
The provision for income tax differs from the
amount computed by applying the French income tax rate as a result of the following:
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                  

|                                                                                                           | Year ended December 31, |  
|---------------------------------------------------------------------------------------------------------- | ----------------------- | -
|
|
|                                                                                                           |                         |  
|Net income (loss) from continuing operations                                                               | 50                      |  
|Minority interests                                                                                         | 8                       |  
|Provision for income tax                                                                                   | 3                       |  
|Equity in (earnings) losses of investees                                                                   | (1                      | )
|                                                                                                           |                         |  
|Income from operations before income tax (1)                                                               | 60                      |  
|                                                                                                           |                         |  
|Provision for income tax using rates of 34.9%, 35.43% and 35.43% in 
    2004, 2003 and 2002, respectively | 21                      |  
|Stock-based compensation                                                                                   | 3                       |  
|Compensation to former shareholders of acquired businesses                                                 | 1                       |  
|Non deductible goodwill amortization and impairment                                                        |                        |  
|Loss on intercompany sale of consolidated company / waive of 
    intercompany debt                        | (30                     | )
|Other permanent differences                                                                                | (26                     | )
|Change in tax rate                                                                                         | 6                       |  
|Tax losses used                                                                                            | (4                      | )
|Difference between French and foreign rates                                                                | 2                       |  
|Change in valuation allowance                                                                              | 30                      |  
|                                                                                                           |                         |  
|Provision for income tax                                                                                   | 3                       |  
|                                                                                                           |                         |  

|                                                                                                                                                                                                                                    
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1)   Of which (117,295), (77,809) and 15,189 originated from French companies
for 2004, 2003 and 2002,          respectively.
Temporary differences that give rise to deferred
tax assets and liabilities consist of the following:
|                                                                                                                                                                                                                                    

|                                                      | Year ended
      December 31, |  
|----------------------------------------------------- | ----------------------------- | -
|
|
|                                                      |                               |  
|Tax
      effect on tax loss carry forward            |                               |  
|Ordinary
      tax losses carry forward               | 618                           |  
|                                                      |                               |  
|Temporary
      differences                           |                               |  
|Long-term
      incentive plan                        | 5                             |  
|Accrued
      pension costs                           | 10                            |  
|Amortization                                          | 31                            |  
|Accrued
      expenses and others                     | 77                            |  
|                                                      |                               |  
|Total temporary
      differences                     | 123                           |  
|Deferred
      tax assets, gross                      | 741                           |  
|                                                      |                               |  
|Tax effect
      of temporary differences related to:
|Deductible
      goodwill amortization                | 16                            |  
|Intangibles                                           | 65                            |  
|Other                                                 | 18                            |  
|                                                      |                               |  
|Deferred
      tax liabilities                        | 99                            |  
|                                                      |                               |  
|Less:
      valuation allowances                      | (624                          | )
|Net deferred
      tax asset (liability)              | 18                            |  
|                                                      |                               |  

|The Company has 1,090.2 long term
capital losses that will be lost in 2007 due to a 2004 change in French tax law. As the
Company does not anticipate using any of these tax losses in 2005 and 2006, no deferred
tax has been recognized on this amount.


F - 29
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|HAVAS AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (In millions of euro except per share amounts and as otherwise indicated)
SFAS 109 Accounting for Income Taxes
requires that a valuation allowance be established when it is more likely than not that all or a
portion of deferred tax assets will not be realized. All available positive and negative evidence
needs to be considered, including the Companys performance, the market environment in which
the Company operates, the utilization of past tax loss carry forwards, length of carry back and carry
forward periods and existing contracts that will result in future profits. It further states that
forming a conclusion that a valuation allowance is not needed is difficult when there is negative
evidence such as cumulative losses in recent years. Therefore, cumulative losses weigh much more
heavily in the overall assessment. The Company determined that positive evidence was not sufficient
to overcome such negative evidence and concluded that it was therefore appropriate to establish a
full valuation allowance for its deferred tax assets related to the Companys US and French
tax groups. Nevertheless, management continues to believe that business will achieve profitability
in future years, and that the Company will be able to utilize these tax assets to minimize the US
and French taxes for the next years.
The Companys share of undistributed earnings
  of foreign subsidiaries that could be subject to additional income tax if remitted was approximately
  217.6 and 203.8 as of December 31, 2004 and 2003, respectively. No provision has been recorded for
  the French and foreign taxes that could result from the remittance of such undistributed earnings
  since the earnings are permanently reinvested outside of France and it is not practicable to estimate
  the amount of such taxes.
As of December 31, 2004, the expiration dates
of tax loss carry forwards are as follows:
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        

| |                   | As of
      December
      31, 2004 |  | 
| | ----------------- | ----------------------------------- |  | 
| |                   |                                     |  | 
| | December 31, 2005 | 35                                  |  | 
| | December 31, 2006 | 20                                  |  | 
| | December 31, 2007 | 6                                   |  | 
| | December 31, 2008 | 8                                   |  | 
| | December 31, 2009 | 1                                   |  | 
| | Thereafter        | 1,818                               |  | 
| |                   |                                     |  | 
| |                   | 1,888                               |  | 
| |                   |                                     |  | 

|    |                           
|--- | --------------------------
|15. | RELATED PARTY TRANSACTIONS

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Transactions involving directors, officers and shareholders of Havas
Transactions involving the Rodés Family.  Media Planning Group and its subsidiaries have entered into the following transactions with
  members of the families of Fernando Rodés Vilà, one of our directors and executive officers
  and the chief executive officer of Media Planning Group, and Leopoldo Rodés Castañe, one
  of our directors and the father of Fernando Rodés Vilà, and or entities controlled by them.
In October 1991, the predecessor
    to Media Planning Group entered into an agreement with Gestora de Viviendas S.A. under which Gestora
    de Viviendas provides client development services to Media Planning Group and its subsidiaries in
    exchange for commissions on new clients developed by it. Under this agreement, Media Planning Group
    paid Gestora de Viviendas commissions of 325,472, excluding taxes, for these services provided
    in 2004. This agreement was terminated as December 31, 2004. Fernando Rodés Vilà and Leopoldo
    Rodés Castañe, together with other members of their families, are controlling shareholders
    of Gestora de Viviendas.

Gestora de Viviendas is a major shareholder
of Vigilancia y Sistemas de Seguridad, S.A., a company that provides security services. Vigilancia
y Sistemas de Seguridad provides security systems and personnel to Media Planning Group, for which
Media Planning Group paid it 422,503, excluding taxes, in 2004.

|F - 30
|------



|HAVAS AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (In millions of euro except per share amounts and as otherwise indicated)
Gestora de Viviendas also controls In-Store
Media, a company that provides point of sale advertising services and space, such as
in-store backlight posters, floor media advertising, in-store radio and shopping trolley advertising.
Media Planning Group purchases media space and services from In-Store Media on behalf of its clients
as part of their advertising campaigns. Media Planning Group paid In-Store Media 1,703,265,
excluding taxes, on behalf of its clients in 2004.
Media Planning Group receives legal services
  from the Spanish law firm of Rodés & Sala Abogados, S.L. Media Planning Group paid an annual
  retainer fee of 120,000 to Rodés & Sala for general legal services in 2004. In addition, Rodés & Sala was paid a total of 113,295, excluding
  taxes, for legal services provided to Media Planning Group and other subsidiaries of the Company
  in Spain in 2004.
 Gonzalo Rodés Vilà, the brother of Fernando Rodés Vilà and
  the son of Leopoldo Rodés Castañe, is a partner in Rodés & Sala. In addition,
  Gonzalo Rodés Vilà serves as secretary of the board of directors of Media Planning Group.
  Gonzalo Rodés Vilà was paid 48,000 for his services as secretary of the board in 2004.
Transactions involving Richard Colker. In 2003, the Company paid $60,000 to Colker, Gelardin & Co. for investment banking advisory services
performed during 2003 related to the Companys specialized agencies ($60,000 in 2002). Richard
Colker, one of the Companys directors, is the Managing Partner of Colker, Gelardin & Co.
Transactions involving Thierry Meyer. Thierry Meyer, one of the Companys directors, also served as a director of one of the Companys
  subsidiaries in the U.K. The Company paid Mr. Meyer £40,000 for his services as a director of
  the subsidiary provided in 2002 until 2003.
16.   NET INCOME (LOSS) PER SHARE AS IN CONSOLIDATED STATEMENTS OF OPERATIONS
Basic net income (loss) per share is computed
on the basis of the weighted-average number of Havas shares issued after deducting the weighted average
number of treasury shares.
Diluted net income (loss) per share takes into
account share equivalents having a dilutive effect, including the effect of: convertible bonds (Note
10), stock options granted to employees (Note 12), converted stock options granted by Snyder Communications
for SNC and Circle.com shares (Note 12). Net income is adjusted for after tax interest expense related
to the convertible bonds. The dilutive effect of stock options is calculated using the treasury stock
method.
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|F - 31
|------



|HAVAS AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(In millions of euro except per share amounts and as otherwise indicated)
The following tables present a reconciliation
of the net income (loss), basic, per share and the net income (loss), diluted, per share for each
of the years ended December 31:
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                          

|                             | Net income |   | Number of shares |  | Per share
      Amount |  
|---------------------------- | ---------- | - | ---------------- |  | ---------------------- | -
|                             |            |   |                  |  |                        |  
|2004                         |            |   |                  |  |                        |  
|Basic net income per share   | 33         |   | 340,534,449      |  | 0.10                   |  
|Stock options Havas          |           |   | 1,483,420        |  |                       |  
|Stock options SNC            |           |   | 13,716           |  |                       |  
|Stock options Circle         |           |   | 35               |  |                       |  
|Convertible bonds (1)        |           |   |                 |  |                       |  
|                             |            |   |                  |  |                        |  
|Diluted net loss per share   | 33         |   | 342,031,620      |  | 0.10                   |  
|                             |            |   |                  |  |                        |  
|2003                         |            |  
|Basic net loss per share (2) | (423       | ) | 318,494,944      |  | (1.33                  | )
|Stock options Havas (1)      |           |   |                 |  |                       |  
|Stock options SNC (1)        |           |   |                 |  |                       |  
|Convertible bonds (1)        |           |   |                 |  |                       |  
|                             |            |   |                  |  |                        |  
|Diluted net loss per share   | (423       | ) | 318,494,944      |  | (1.33                  | )
|                             |            |   |                  |  |                        |  
|2002                         |            |  
|Basic net loss per share (2) | (1,433     | ) | 316,080,537      |  | (4.53                  | )
|Stock options Havas (1)      |           |   |                 |  |                       |  
|Stock options SNC (1)        |           |   |                 |  |                       |  
|Convertible bonds (1)        |           |   |                 |  |                       |  
|                             |            |   |                  |  |                        |  
|Diluted net loss per share   | (1,433     | ) | 316,080,537      |  | (4.53                  | )
|                             |            |   |                  |  |                        |  

|    |                                                                                                                                                     
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | As these items are anti-dilutive, they are not included in the calculation.                                                                         
|    |                                                                                                                                                     
|(2) | 2002 and 2003 earnings per share have been adjusted by a factor of 0.93254 following the preferential
subscription rights issue on October 19, 2004.

|                                                                                                                                                                                                                                     
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|17.   LEASES
The Company leases certain premises and equipment
under both capital and operating leases. The following is a schedule of future minimum lease payments
for capital and operating leases in effect at December 31, 2004:
|                                                                                                                                                                                                                                     

| | Year Ending December 31,              | Capital
      Leases |   | Operating
      Leases |  | 
| | ------------------------------------- | -------------------- | - | ---------------------- |  | 
| |                                       |                      |   |                        |  | 
| | 2005                                  | 1                    |   | 81                     |  | 
| | 2006                                  | 1                    |   | 77                     |  | 
| | 2007                                  |                     |   | 71                     |  | 
| | 2008                                  |                     |   | 62                     |  | 
| | 2009                                  |                     |   | 55                     |  | 
| | Thereafter                            |                     |   | 185                    |  | 
| |                                       |                      |   |                        |  | 
| | Total minimum lease payments          | 2                    |   | 531                    |  | 
| |                                       |                      |   |                        |  | 
| | Less: amount representing interest    |                     |   |                        |  | 
| | Total obligation under capital leases | 2                    |  
| | Less: current portion                 | (1                   | ) |                        |  | 
| |                                       |                      |  
| | Long-term portion                     | 1                    |  
| |                                       |                      |  

|                                                                                                              
|--------------------------------------------------------------------------------------------------------------
|Net rental expenses for all operating leases were 86.1, 106.7, and 135.1 in 2004, 2003 and 2002, respectively.

|F - 32
|------



|HAVAS AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(In millions of euro except per share amounts and as otherwise indicated)
18.   SEGMENT DATA
The Companys revenues and operating results
are derived from three operating divisions utilizing independent brands plus a number of specialized
agencies until the 2003 strategic reorganization described in Note 8. This organization was mainly
designed in order that the Company could provide advertising and communications services to clients
with competing products and services and to permit the expansion of certain specialty advertising
and communications services. These three operating divisions have substantial similarities in the
nature of services provided, the delivery process for rendering their services, the customers they
serve and their economics. The Company aggregates its operating segments into one reportable segment.
Geographical information required by SFAS 131,
Disclosure about Segment of an Enterprise and Related Information, for each of the years
ended December 31, is as follows:
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

|                              | France |  | United
      States |  | United
      Kingdom |  | Rest of
      Europe |  | Other |  | Total | 
|----------------------------- | ------ |  | ------------------- |  | -------------------- |  | -------------------- |  | ----- |  | ----- | 
|                              |        |  |                     |  |                      |  |                      |  |       |  |       | 
|2004                          |        |  |                     |  |                      |  |                      |  |       |  |       | 
|Net revenues                  | 301    |  | 548                 |  | 194                  |  | 258                  |  | 148   |  | 1,449 | 
|Property and equipment, net   | 27     |  | 50                  |  | 14                   |  | 25                   |  | 8     |  | 124   | 
|Goodwill, net                 | 236    |  | 391                 |  | 333                  |  | 578                  |  | 87    |  | 1,625 | 
|Other intangible assets, net. | 36     |  | 60                  |  | 15                   |  | 75                   |  | 16    |  | 202   | 
|Equity investments            |       |  |                    |  | 3                    |  |                     |  |      |  | 3     | 
|                              |        | 
|2003                          |        |  |                     |  |                      |  |                      |  |       |  |       | 
|Net revenues                  | 260    |  | 612                 |  | 243                  |  | 254                  |  | 156   |  | 1,525 | 
|Property and equipment, net   | 30     |  | 63                  |  | 24                   |  | 26                   |  | 10    |  | 153   | 
|Goodwill, net                 | 217    |  | 406                 |  | 367                  |  | 576                  |  | 79    |  | 1,645 | 
|Other intangible assets, net  | 39     |  | 76                  |  | 20                   |  | 84                   |  | 17    |  | 236   | 
|                              |        | 
|Equity investments            |       |  |                    |  | 2                    |  |                     |  | 1     |  | 3     | 
|                              |        |  |                     |  |                      |  |                      |  |       |  |       | 
|2002                          |        |  |                     |  |                      |  |                      |  |       |  |       | 
|Net revenues                  | 287    |  | 756                 |  | 330                  |  | 262                  |  | 176   |  | 1,811 | 

|                                                                                                                                                                                                                                                                                                                                  
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Net revenues and long-lived assets are attributed
to countries based on the location of the applicable operating unit.
19. FINANCIAL INSTRUMENTS AND DERIVATIVE INSTRUMENTS
Fair value of financial instruments
The following methods and assumptions were used
to estimate the fair value of each class of financial instruments:
|                                                                                                                                                                                                                                                                                                                                  

|Highly liquid investments and short-term borrowings
|---------------------------------------------------

|                                                                                                                                                                
|----------------------------------------------------------------------------------------------------------------------------------------------------------------
|The carrying value of highly liquid investments
and short-term borrowings approximates fair value because of the relatively short maturity of these
instruments.
|                                                                                                                                                                

|Restricted deposit
|------------------

|                                                                                                        
|--------------------------------------------------------------------------------------------------------
|Restricted deposit carries a variable interest
rate and its fair value approximates its carrying amount.

|F - 33
|------



|HAVAS AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(In millions of euro except per share amounts and as otherwise indicated)
|------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                          

|Long-term borrowings
|--------------------

|                                                                                                                                                                                                                                
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|The fair value of long-term borrowings is substantially
the same as its carrying amount in the financial statements because the majority of the Companys
long-term borrowings is at variable rates and approximates fair value.
|                                                                                                                                                                                                                                

|Convertible and/or exchangeable bonds
|-------------------------------------

|                                                                                                                                                                                                    
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|The fair value of convertible and/or exchangeable
bonds was determined by reference to quotations available in markets where the bonds were traded
estimated using quoted market prices and amounts.
|                                                                                                                                                                                                    

|Combined interest and currency swap (CIRCUS)
|------------------------------------------------

|                                                                                                                                                                                                                                                                                        
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|The estimation of the CIRCUS fair value involves
splitting the swap into its borrowing and lending elements and discounting the future expected currency
cash flows relating to each element. The fair value of the CIRCUS was calculated by third party banks.
Please refer to Note 10.
|                                                                                                                                                                                                                                                                                        

|Interest rate swaps and caps
|----------------------------

|                                                                                       
|---------------------------------------------------------------------------------------
|The fair value of interest rate swaps and caps
has been estimated by third-party banks.
|                                                                                       

|Forward contracts
|-----------------

|                                                                                                                                                                                                                                                                                                                                                                                                                                   
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Due to the short maturities of forward exchange
contracts, the fair value of the contracts were determined to be the difference between the contract
rate and the market forward rate multiplied by the foreign currency amount.
The following table presents the carrying amounts
and estimated fair values of the Companys financial instruments as of December 31, 2004 and
2003. Amounts in parentheses represent liabilities.
|                                                                                                                                                                                                                                                                                                                                                                                                                                   

|                                                        | 2004 |   | 2003 |  
|------------------------------------------------------- | ---- | - | ---- | -
|
|
|                                                        |      |   |      |  
|                                                        |      |   |      |  
|Cash                                                    | 311  |   | 311  |  
|Highly
      liquid investments                         | 223  |   | 223  |  
|Restricted
      deposit                                | 7    |   | 7    |  
|Long-term
      borrowings including current maturities | (34  | ) | (34  | )
|Convertible
      bonds                                 | (687 | ) | (685 | )
|CIRCUS                                                  | 2    |   | 2    |  
|Interest
      rate swap (Media Planning Group)         |     |   |     |  
|US dollar
      denominated forward contracts           | (1   | ) | (1   | )

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Purposes for which derivative financial instruments are held or issued
The Company uses derivative instruments primarily
  to mitigate interest rate and foreign currency exposures. Currently, the Company hedges intra-group
  loans denominated in foreign currency with forward contracts. The intra-group loans are recorded
  at spot rates before being eliminated and the forward contracts are marked-to-market in earnings
  (natural hedge). As of December 31, 2004, changes in fair value of forward contracts amounted to 0.5.
The Company hedges a foreign-currency variable rate deposit with a combined interest and currency swap
(CIRCUS). This strategy is described in Note 10. The foreign-currency deposit is accounted
for at a spot rate and the swap is marked-to-market in earnings. As of December 31, 2004, the CIRCUS
impacted earnings by 2.4 (before tax) which are reflected as exchange rate gain (loss)
in the Consolidated Statement of Operations.

|F - 34
|------



|HAVAS AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (In millions of euro except per share amounts and as otherwise indicated)
The Company also hedges a variable leasing debt
with an interest rate cap for which the Company elected not to apply hedge accounting. Such cap was
therefore remeasured at market value with a direct impact in earnings. As of December 31, 2004, the
impact of the interest rate swap and cap amounted to 0.
20.   SUPPLEMENTAL CASH FLOWS INFORMATION
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

|                                             | Years ended December 31, | 
|-------------------------------------------- | ------------------------ | 
|
|
|
|
|Cash paid for interest                       | 106                      | 
|Cash paid for income taxes                   | 26                       | 
|Non cash items:                              |                          | 
|Equipment purchased under capital lease      | 1                        | 
|                                             |                          | 
|Increase in shareholders equity related to: |                          | 
|Acquisition of minority interests            | 1                        | 
|Extinguishment of convertible debt (Note 10) |                         | 
|Issuance of convertible debt (Note 10)       |                         | 

|                                                                                                                                                                                                                                                                                                                                                                                                               
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|The increase in cash paid for interest between 2003 and 2004 mainly results from the Companys
repurchase of 17,570,404 of its convertible bonds in December 2004 ( as described in Note 10).
Part of the repurchase price (55.5) has been considered as being interest payment (corresponding
to accrued premium and annual interest at repurchase date).
21. CONTRACTUAL OBLIGATIONS
Commercial commitments
|                                                                                                                                                                                                                                                                                                                                                                                                               

|(In  million)                                   | 2005 |    | 2006 |   | 2007 |     | 2008 |    | 2009 |   | Thereafter |    | Undetermined |    | Total |    
|------------------------------------------------ | ---- | -- | ---- | - | ---- | --- | ---- | -- | ---- | - | ---------- | -- | ------------ | -- | ----- | ---
|                                                 |      |    |      |   |      |     |      |    |      |   |            |    |              |    |       |    
|Given                                            |      |    |      |   |      |     |      |    |      |   |            |    |              |    |       |    
|Security for media space buying (1)              |      | 23 |      |  |      |    |      |   |      |  |            |   |              | 1  |       | 24 
|Marketing rights (2)                             |      | 2  |      |  |      |    |      |   |      |  |            |   |              |   |       | 2  
|Guarantees for businesses 
      disposed of (3) |      | 6  |      |  |      |    |      |   |      |  |            | 63 |              |   |       | 69 
|Other obligations (4)                            |      |   |      |  |      |    |      |   |      |  |            |   |              | 89 |       | 89 
|Total                                            |      | 31 |      |  |      |    |      |   |      |  |            | 63 |              | 90 |       | 184
|                                                 |      |    |      |   |      |     |      |    |      |   |            |    |              |    |       |    
|Received                                         |      |    |      |   |      |     |      |    |      |   |            |    |              |    |       |    
|Authorized unused credit lines (5)               |      |   |      |  |      | 100 |      | 50 |      |  |            |   |              |   |       | 150
|Marketing rights (2)                             |      | 1  |      |  |      |    |      |   |      |  |            |   |              |   |       | 1  
|Total                                            |      | 1  |      |  |      | 100 |      | 50 |      |  |            |   |              |   |       | 151

|F - 35
|------



|HAVAS AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (In millions of euro except per share amounts and as otherwise indicated)
(1)   In certain countries, such as the UK and Asia, media space buying operations carried
out by agencies are secured by the Company, as required by local practices.
(2)  One of the Companys subsidiaries purchases marketing rights from its clients,
  which are primarily soccer and rugby clubs, for periods from one to seven years, and then re-sells
  those rights to sponsors. At December 31, 2004, these purchases amounted to 1.7 (24.2 as of December
  31, 2003), which are due in 2005. This subsidiary has received commitments from sponsors of 0.5 as
  of December 31, 2004 (1.3 as of December 31, 2003).
(3)   In connection with the disposal of companies in 2004, guarantees were given to
the buyers. Maximum guarantees are presented in the table below. Their characteristics are the following
:
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

|- | guarantees are capped to the considerations received,                                      
|- | -------------------------------------------------------------------------------------------
|- | other guarantees are claimable over a maximum period of two years from the completion date,

|- | tax guarantees are claimable over a maximum period of seven years from the completion date for disposals
performed in the United Kingdom.
|- | -----------------------------------------------------------------------------------------------------------------------------------------

|                                                                                                                                                                                                                                                                                                                                                                                         
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(4)   In order to allow the Companys British subsidiaries to use electronix banking
payment systems, the Company was required to provide guarantees to certain banks in an aggregate
amount of 89.2.
(5)  This amount corresponds to the floating rate credit facility agreement Club deal described in Note 10.
Estimated obligations under earn-outs / buy-outs / stock option plans
|                                                                                                                                                                                                                                                                                                                                                                                         

|                                 | 2005 |    | 2006 |    | 2007 |   | 2008 |    | Total |    
|-------------------------------- | ---- | -- | ---- | -- | ---- | - | ---- | -- | ----- | ---
|                                 |      |    |      |    |      |   |      |    |       |    
|Stock option plans               |      | 4  |      | 1  |      |  |      | 2  |       | 7  
|Additional payments (Earn-out) |      | 25 |      | 3  |      |  |      |   |       | 28 
|Purchase of minority interests   |      | 38 |      | 15 |      | 6 |      | 12 |       | 71 
|Total                            |      | 67 |      | 19 |      | 6 |      | 14 |       | 106

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|In addition to the stock option plan
obligations set forth in the table, in 2004 one of the Companys subsidiaries granted stock options
with respect to its shares to some of its employees. These options are generally
exercisable four to five years after the award date and require continuing employment. The
parent company of the subsidiary is required to buy back the shares when acquired by the
employees at a price based on the estimated market value of the subsidiary at the buyback
date. The buyback price, which may be significant, will be settled in new or existing shares
of Havas, unless payment in Havas shares is not possible for legal or regulatory reasons.

As more fully described in Notes 2.21 and 11, the Company has entered into contingent consideration
arrangements in connection with certain business combinations. At December 31, 2004 and 2003, the
related total commitment is estimated at 99.0 and 155.8, respectively, of which 5.4 and 6.0 were
accrued at December 31, 2004 and 2003, respectively. Minority interest related to subsidiaries subject
to buy-out agreements amounted to 19.9 as of December 31, 2004 (21.1 as of December 31, 2003). As
these agreements do not include maximum amounts to be paid and are based on future earnings, it is
not possible to determine a maximum potential amount of future payments. Therefore, the amounts indicated
above represent the Companys best estimate and actual amounts may differ. Payments made under
these agreements were approximately 74.8, 38.8 and 71.6 in 2004, 2003 and 2002 respectively.
The payment date for the Companys buy-out obligations has been assumed to be the date the applicable
  buy-out option can first be exercised by the minority shareholder.
The other commitments are described in Note 17.

|F - 36
|------



|HAVAS AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (In millions of euro except per share amounts and as otherwise indicated)
22. CONTINGENCIES
Bankruptcy of WorldCom, Inc.
On July 21, 2002, WorldCom, one of the
  Companys  clients, now known as MCI, Inc., filed for reorganization under Chapter
  11 of the United States Bankruptcy Code. The Company provides both advertising and marketing services
  and media services to MCI.
With respect to the media, the Company
    acts as an agent for MCI and as an intermediary in the transfer of the clients payments to
    the applicable media suppliers, which is consistent with the concept of sequential liability
    adopted by the American Association of Advertising Agencies in 1991 as its standard for the industry.
    The Company had outstanding pre-bankruptcy petition media receivables of approximately $26.4 million
    as of December 31, 2003 and in parallel, the Company had outstanding pre-bankruptcy petition media
    payables for the media space reserved on behalf of MCI of approximately $26.9 million as of December
    31, 2003.
With respect to commissions and production
      work, the Company had outstanding pre-bankruptcy petition receivables of approximately $10.4 million
      in its financial statements as of December 31, 2003 and 2002, which were fully reserved as of December
      31, 2002.
On August 4, 2003, the Company entered
        into an agreement to compromise the pre-bankruptcy amounts due to the company. Under its terms, the agreement
        became effective upon MCI emerging from U.S. Chapter 11 protection. The agreement provided for the
        payment of a certain portion of the amount due to the company. As a consequence, in 2003 the Company reversed
        $6.6 million of the $10.4 million reserve that was recorded in its financial statements at December
        31, 2002.
On April 20, 2004, MCI emerged from bankruptcy
          and the agreement became effective. On May 26, 2004, MCI paid the Company $14.3 million pursuant
          to the agreement. The Company had distributed a substantial portion of the amount received from MCI
          to media and production vendors. Consequently, as of December 31, 2004, the Company offset the remaining
          receivables against the payables in its financial statements in a residual amount of $18 million.
Currently, no media vendor is pursuing,
            nor have any waived, any claim against the Company for any MCI payables, and it is not currently
            possible to determine what actions, if any, will be taken in connection with the MCI bankruptcy proceeding,
            or the possible outcome of any such actions, or the amount of any loss to the company that might result. Consequently,
            although a loss is possible, the Company cannot at this time reasonably determine the probability
            of any loss or the magnitude thereof. Therefore, no reserve has been recorded in the Companys
            financial statements.
One production vendor filed a complaint
              against the Company seeking to recover approximately $64,000. This matter has been settled by paying
              the production vendor the same percentage of its claim as the Company was paid and paid other vendors.
In May 2005, The Screen Actors Guild filed
                an action against one of the Companys subsidiaries, Euro RSCG New York, Inc., seeking to recover
                an unspecified amount payable with pension and welfare and other benefits, together with interest
                and penalties thereon, with respect to certain celebrity performers who appeared in commercials which
                were produced on behalf of MCI pre-bankruptcy. The Company intends to defend this matter vigorously.
American Student List Class Action lawsuit
On February 18, 2004, a purported class action
lawsuit was filed in the United States District Court for the Middle District of Florida against
American Student List, LLC (ASL) one of the Companys subsidiaries. The lawsuit
alleged that ASL obtained, disclosed and used information from the Florida Department of Highway
Safety and Motor Vehicles in alleged violation of the U.S. Drivers Privacy Protection Act (DPPA).
The named plaintiff sought to represent a class of 876,665 individuals whose personal information
from Florida Department of Highway Safety and Motor Vehicles records
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|HAVAS AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (In millions of euro except per share amounts and as otherwise indicated)
was obtained, disclosed and used for allegedly impermissible uses by ASL without the express consent
of the individuals. The lawsuit sought certification as a class action, liquidated damages in the
amount of $2,500 per alleged violation of the Act, as well as punitive damages, attorneys fees
and costs, and injunctive and other relief. After dismissal of the lawsuit for a procedural error,
American Student List settled the case with the named plaintiff, ending the litigation.
Snyder Communications LP class action lawsuit
Former employees of Snyder Communications LP have filed
    a purported class action lawsuit in the Texas State Court. The motion to certify the purported class
    of former employees in Texas was granted by the Texas trial court in January 2002, affirmed on appeal
    by the Texas intermediate appellate court in November 2002 and was reversed by the Texas Supreme
    Court on appeal.  The lawsuit alleges, in substance, that Snyder improperly denied commission payments to
    former employees in connection with alleged sales activities. The litigation was dismissed with prejudice
    by the Texas State Court in an Order entered March 20, 2005 and the lawsuit with the named plaintiffs
    has been settled.
Circle.com litigation
On June 4, 2001, two holders of Circle.com common stock
filed a purported class action lawsuit in Delaware Chancery Court against Snyder Communications,
the Company and each director of the Company and Snyder Communications. The lawsuit sought a preliminary
and permanent injunction or, alternatively, monetary damages. The lawsuit alleges that the Company
and the board of directors of Snyder Communications breached their fiduciary duties owed to the Circle.com
stockholders when considering and negotiating the proposed merger of Snyder Communications with one
of the subsidiaries of the Company by failing to create an independent negotiating structure, failing
to seek truly independent advice, concealing material information from the Circle.com stockholders,
and unfairly timing the proposed merger to the disadvantage of the Circle.com stockholders. On February
6, 2004, the Delaware Chancery Court dismissed the lawsuit without prejudice.
Verizon settlement
A case involving claims by Snyder Communications for
    declaratory relief as to alleged indemnification obligations set forth in their agreements with Verizon
    Select Services and counterclaims by Verizon for indemnification, declaratory relief and damages
    was filed in April 2001, as a result of two investigations by Florida agencies into the parties
    business and marketing practices. Verizon demanded that Snyder Communications indemnify it for all
    liabilities, costs and expenses incurred as a result of the two Florida Investigations. In their
    December 2001 Settlement Agreement, the Company and Snyder Communications agreed to pay an aggregate
    amount of $1,052,500 to Verizon in a series of installments. The final payment was made on February 15, 2003.
American Student List consent order
In September 2002, American Student List LLC, one of
  the Companys subsidiaries, signed a consent order issued by the U.S. Federal Trade Commission
  relating to the use of information collected from a survey conducted by the National Research Center
  for College and University Admissions (NRCCUA). For a number of years, American Student
  List provided funding for a portion of the out-of-pocket expenses incurred by NRCCUA in connection
  with its post-secondary education planning survey. The FTC argued that the disclosures made by NRCCUA
  to the high schools that distributed the surveys to students, and the disclosures in the survey completed
  by the students, were inadequate to advise the schools and students that the results of the survey
  would be used for marketing and non-educational uses. American Student List signed the consent order
  without admitting that it engaged in any deceptive practices that violate the law. The consent order
  became effective on January 31, 2003.
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|HAVAS AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  (In millions of euro except per share amounts and as otherwise indicated)                                                                                                                                                                                                                                                                                                                                                                                                    
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|Other
    In addition to the foregoing, the Company is party to various other legal and arbitration proceedings arising in the ordinary course of business, including matters relating to current and former vendors, clients and employees. None of these proceedings has had or is expected to have a significant effect on the financial position of the Company.
    23.   ALLOWANCE FOR DOUBTFUL ACCOUNTS
    Changes in the Companys allowance for doubtful accounts for the years ended December 31, 2004, 2003 and 2002 were as follows:
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

|          | Opening
      Balance |  | Charge to
      Costs and
      Expense |  | Reversal |   | Deductions |   | Other
      Movements |   | Closing
      Balance | 
|--------- | --------------------- |  | --------------------------------------- |  | -------- | - | ---------- | - | --------------------- | - | --------------------- | 
|          |                       |  |                                         |  |          |   |            |   |                       |   |                       | 
|Year 2004 | 37                    |  | 10                                      |  | 0        |   | (11        | ) | (2                    | ) | 34                    | 
|Year 2003 | 58                    |  | 11                                      |  | (6       | ) | (14        | ) | (12                   | ) | 37                    | 
|Year 2002 | 54                    |  | 22                                      |  | (3       | ) | (9         | ) | (6                    | ) | 58                    | 

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