8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported): April 25, 2006

OMNICOM GROUP INC.
(Exact Name of Registrant as Specified in Charter)

New York
(State or Other Jurisdiction
of Incorporation)  1-10551
(Commission
File Number)  13-1514814
(IRS Employer
Identification No.)

437 Madison Avenue, New York, NY
(Address of Principal Executive Offices)  10022
(Zip Code)

Registrants’ telephone number, including area code: (212) 415-3600

Not Applicable
(Former Name or Former Address, if Changed Since Last Report)

        Check the appropriate box if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2.):

|_| Written communications pursuant to Rule 425 under Securities Act (17 CFR 230.425)

|_| Soliciting material pursuant to Rule 14a-12 under Securities Act (17 CFR 240.14a-12)

|_| Pre-commencement communications pursuant to Rule 14(d)-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

|_| Pre-commencement communications pursuant to Rule 13(c) under the Exchange Act

 

Item 2.02 Results of Operations and Financial Condition.

        On April 25, 2006, Omnicom Group Inc. (“Omnicom”) issued an earnings release reporting its financial results for the three months ended March 31, 2006. A copy of this earnings release is attached as Exhibit 99.1 hereto. Following the issuance of this earnings release, Omnicom hosted an earnings call in which its financial results for the three months ended March 31, 2006 were discussed. The investor presentation materials used for the call are attached as Exhibit 99.2 hereto.

        On April 25, 2006, Omnicom posted the materials attached as Exhibits 99.1 and 99.2 on its web site (www.omnicomgroup.com).

        As discussed on page 1 of Exhibit 99.2, the investor presentation contains forward-looking statements within the meaning of the federal securities laws. These statements are present expectations, and are subject to the limitations listed therein and in Omnicom’s other SEC reports, including that actual events or results may differ materially from those in the forward-looking statements.

        The foregoing information (including the exhibits hereto) is being furnished under “Item 2.02 Results of Operations and Financial Condition” and “Item 7.01 Regulation FD Disclosure.” Such information (including the exhibits hereto) shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.

        The filing of this Report and the furnishing of this information pursuant to Items 2.02 and 7.01 (including the investor presentation) do not mean that such information is material or that disclosure of such information is required.

Item 7.01 Regulation FD Disclosure.

        See “Item 2.02 Results of Operations and Financial Condition” above.

Item 9.01. Financial Statements and Exhibits.

        (c) Exhibits.

Exhibit Number	Description
99.1	Earnings release dated April 25, 2006.
99.2	Investor presentation materials dated April 25, 2006.

 

SIGNATURES

        Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

OMNICOM GROUP INC.

By: /s/ Philip J. Angelastro Name: Philip J. Angelastro
Title: Senior Vice President Finance and Controller

Date: April 25, 2006

 

2

EXHIBIT INDEX

Exhibit Number	Description
99.1	Earnings release dated April 25, 2006.
99.2	Investor presentation materials dated April 25, 2006.

 

3

EX-99.1

Exhibit 99.1

FOR IMMEDIATE RELEASE

 Contact: Randall Weisenburger
212-415-3393

Omnicom Reports First Quarter 2006 Results

NEW YORK, APRIL 25, 2006 – Omnicom Group Inc. (NYSE-OMC) today announced that net income for the first quarter of 2006 increased 10% to $165.7 million from $150.5 million in the first quarter of 2005. Diluted earnings per share in the first quarter of 2006 increased 13% to $0.93 per share from $0.82 per share in the first quarter of 2005.

Worldwide revenue increased 7% to $2,562.9 million from $2,403.0 million in the first quarter of 2005. Domestic revenue for the first quarter of 2006 increased 9% to $1,433.0 million compared to $1,312.1 million in the first quarter of 2005. International revenue increased 4% to $1,129.9 million compared to $1,090.9 million in the first quarter of 2005.

Omnicom Group Inc. (NYSE-OMC) (www.omnicomgroup.com) is a leading global marketing and corporate communications company. Omnicom's branded networks and numerous specialty firms provide advertising, strategic media planning and buying, direct and promotional marketing, public relations and other specialty communications services to over 5,000 clients in more than 100 countries.

For a live webcast and/or a replay of our first quarter earnings conference call, go to www.omnicomgroup.com/InvestorRelations.

Omnicom Group Inc.

(Unaudited)
(In Millions of Dollars, Except Per Share Data)

Three Months Ended March 31,	2006(1)		2005
Revenue	$    2,562.9		$    2,403.0
Operating expenses	2,278.5		2,145.7
Operating profit	284.4		257.3
Net interest expense	15.1		12.1
Income before income taxes	269.3		245.2
Income taxes	90.9		86.1
Income after income taxes	178.4		159.1
Equity in earnings of affiliates	4.9		5.2
Minority interests	(17.6	)	(13.8	)
Net income	$        165.7		$        150.5
Net income per common share
Basic	$          0.94		$          0.82
Diluted	$          0.93		$          0.82
Weighted average shares (in millions)
Basic	176.7		182.6
Diluted	177.8		183.8
Dividend declared per share	$        0.250		$        0.225

⁽¹⁾ Included in operating profit and net income for the quarter ended March 31, 2006 is a benefit of $3.6 million and $2.0 million, respectively, resulting from the cumulative effect of the adoption of SFAS 123(R) and the requirement to provide an estimate for forfeitures on all unvested stock-based compensation awards, as of January 1, 2006.

EX-99.2

OmnicomGroup

FIRST QUARTER 2006 RESULTS

Investor Presentation

April 25, 2006

Exhibit 99.2

The following materials have been prepared for use in the April 25, 2006 conference call on Omnicom’s results of
operations for the quarter ended March 31, 2006. The call will be archived on the Internet at
http://www.omnicomgroup.com/financialwebcasts.

Forward-Looking Statements
Certain of the statements in this document constitute forward-looking statements within the meaning of the Private
Securities Litigation Act of 1995. These statements relate to future events or future financial performance and involve
known and unknown risks and other factors that may cause our actual or our industry’s results, levels of activity or
achievement to be materially different from those expressed or implied by any forward-looking statements. These risks
and uncertainties include, but are not limited to, our future financial condition and results of operations, changes in general
economic conditions, competitive factors, changes in client communication requirements, the hiring and retention of
human resources and our international operations, which are subject to the risks of currency fluctuations and exchange
controls. In some cases, forward-looking statements can be identified by terminology such as “may,” “will,” “could,”
“would,” “should,” “expect,” “plan,” “anticipate,” “intend,” “believe,” “estimate,” “predict,” “potential” or “continue” or the
negative of those terms or other comparable terminology. These statements are present expectations. Actual events or
results may differ materially. We undertake no obligation to update or revise any forward-looking statement.

Other Information
All dollar amounts are in millions except for EPS. The following financial information contained in this document has not
been audited, although some of it has been derived from Omnicom’s historical financial statements, including its audited
financial statements. In addition, industry, operational and other non-financial data contained in this document have been
derived from sources we believe to be reliable, but we have not independently verified such information, and we do not,
nor does any other person, assume responsibility for the accuracy or completeness of that information.

The inclusion of information in this presentation does not mean that such information is material or that disclosure of such
information is required.

1

2006 vs. 2005 P&L Summary

2

(1)  Included in operating income and net income for the quarter ended March 31, 2006 is a benefit of $3.6 million and $2.0
million, respectively, resulting from the cumulative effect of adoption of SFAS 123(R) and the requirement to provide an
estimate for forfeitures on all unvested stock-based compensation awards, as of January 1, 2006.

2006(1)

2005

% Change

Revenue

2,562.9

$

2,403.0

$

6.7%

Operating Income

284.4

257.3

10.5%

% Margin

11.1%

10.7%

Net Interest Expense

15.1

12.1

Profit Before Tax

269.3

245.2

9.8%

% Margin

10.5%

10.2%

Taxes

90.9

86.1

% Tax Rate

33.8%

35.1%

Profit After Tax

178.4

159.1

12.1%

Equity in Affiliates

4.9

5.2

Minority Interest

(17.6)

(13.8)

Net Income

165.7

$     

150.5

$     

10.1%

First Quarter

2006 vs. 2005 Earnings Per Share

Earnings per Share:

Basic

Diluted

Weighted Average Shares (millions):

Basic

Diluted

Dividend Declared Per Share

$  0.94

  0.93

176.7

177.8

$0.250

2005

2006

First Quarter

$  0.82

  0.82

182.6

183.8

$0.225

3

2006 Total Revenue Growth

(a)

To calculate the FX impact, we first convert the current period’s local currency revenue using the average
exchange rates from the equivalent prior period to arrive at constant currency revenue.  The FX impact equals
the difference between the current period revenue in U.S. dollars and the current period revenue in constant
currency.

(b)

Acquisition revenue is the aggregate of the applicable prior period revenue of the acquired businesses.  Netted
against this number is the revenue of any business included in the prior period reported revenue that was
disposed of subsequent to the prior period.

(c)

Organic revenue is calculated by subtracting both the acquisition revenue and the FX impact from total revenue
growth.

4

$

%

Prior Period Revenue

2,403.0

$  

Foreign Exchange (FX) Impact (a)

(65.3)

-2.7%

Acquisition Revenue (b)

17.3

0.7%

Organic Revenue (c)

207.9

8.7%

Current Period Revenue

2,562.9

$  

6.7%

First Quarter

2006RevenueByDiscipline

(a)  “Growth” is the year-over-year growth from the prior period.

Advertising

43.1%

PR

10.1%

CRM

34.8%

Specialty

12.0%

First
Quarter

2006

5

$ Mix

% Growth (a)

Advertising

1,104.7

5.2%

####

CRM

892.1

10.0%

####

PR

259.8

1.4%

####

Specialty

306.3

7.1%

####

First
Quarter

2006

United
States

55.9%

UK

10.7%

Euro

Markets

18.9%

Other

14.5%

6

^(a)  “Growth” is the year-over-year growth from the prior period.  

2006 Revenue By Geography

$ Mix

$ Growth(a)

United States

1,433.0

$   

120.9

$      

Organic

104.0

Acquisition

16.9

International

1,129.9

$   

39.0

$        

Organic

103.9

Acquisition

0.4

FX

(65.3)

$ Mix

% Growth(a)

United States

1,433.0

$     

9.2%

Euro Currency Markets

483.8

-4.4%

United Kingdom

273.7

3.1%

Other

372.4

16.7%

Cash Flow – GAAP Presentation (condensed)

7

2006

2005

Net Income

165.7

$     

150.5

$     

  Stock-Based Compensation Expense

15.7

26.0

  Windfall Tax Benefit on Stock Compensation

-

13.6

  Depreciation and Amortization

44.2

41.7

  Other Non-Cash Items to Reconcile to Net Income

17.5

5.0

  Other Changes in Working Capital

(136.5)

(953.8)

  Book Tax Benefit on Stock Compensation

(5.6)

-

Net Cash Provided by (Used in) Operations

101.0

(717.0)

  Capital Expenditures

(33.5)

(30.1)

  Acquisitions

(35.4)

(23.1)

  Proceeds from Sale of Businesses

-

29.3

  Other Investing Activities, net

351.8

556.7

Net Cash Provided by Investing Activities

282.9

532.8

  Dividends

(45.2)

(41.6)

  Stock Repurchases

(359.2)

(377.9)

  Proceeds from Issuance of Debt

995.2

0.2

  Other Financing Activities

10.5

29.8

  Book Tax Benefit on Stock Compensation

5.6

-

Net Cash Provided by (Used in)  Financing Activities

606.9

(389.5)

Effect of exchange rate changes on cash and cash equivalents

(3.6)

(3.8)

Net Increase (Decrease) in Cash and Cash Equivalents

987.2

$     

(577.5)

$   

3 Months Ended March 31,

Current Credit Picture

(a)    “Operating Income (EBIT)” and “Net Interest Expense”  calculations shown are the latest twelve month (“LTM”)  figures for the
periods specified. Although our bank agreements reference EBITDA, we have used EBIT for this presentation because EBITDA
is a non-GAAP measure.

8

2006

2005

Operating Income (EBIT) (a)

$

1,367

$

1,243

Net Interest Expense (a)

$

62.3

$

38.2

EBIT / Net Interest

21.9

x

32.5

x

Net Debt / EBIT

1.1

x

1.6

x

Debt:

Bank Loans (Due Less Than 1 Year)

$

22

$

12

CP Issued Under $2.1B - 5 Year Revolver Due 5/23/10

-

-

5.20% Euro Notes Due 6/24/05

-

198

Convertible Notes Due 2/7/31

847

847

Convertible Notes Due 7/31/32

892

892

Convertible Notes Due 6/15/33

600

600

10 Year Notes Due 4/15/16

995

-

Other Debt

18

21

Total Debt

$

3,374

$

2,570

Cash and Short Term Investments

1,862

605

Net Debt

$

1,512

$

1,965

LTM ended March 31,

Current Liquidity Picture

9

(a)

The $400 million 364 Day Credit facility includes a one-year term out at maturity at our option.

(b)

Credit facility expires May 23, 2010.

(c)

Represents uncommitted facilities in the U.S., U.K. and Canada. These amounts are excluded from
our available liquidity for purposes of this presentation.

Total Amount

Of Facility

Outstanding

Available

Committed Facilities

364 Day Revolver Due 6/29/06 (a)

400

$            

-

$         

400

$      

5 Year Revolver (b)

2,100

-

2,100

Other Committed Credit Facilities

14

14

-

Total Committed Facilities

2,514

14

2,500

Uncommitted Facilities (c)

336

8

-

(c)

Total Credit Facilities

2,850

$         

22

$            

2,500

$   

Cash and Short Term Investments

1,862

Total Liquidity Available

4,362

$   

As of March 31, 2006

Acquisitions Summary

10

Acquisition Related Expenditures

11

Note: See appendix for subsidiary acquisition profiles.

(a)  Includes acquisitions of a majority interest in new agencies resulting in their consolidation.

(b)  Includes acquisitions of additional equity interests in existing affiliate agencies resulting in majority ownership and
consolidation.

(c)  Includes acquisitions of less than a majority interest in agencies in which Omnicom did not have a prior equity interest and
the acquisition of additional interests in existing affiliated agencies that did not result in majority ownership.

(d)  Includes the acquisition of additional equity interests in already consolidated subsidiary agencies.

(e)  Includes additional consideration paid for acquisitions completed in prior periods.  

New Subsidiary Acquisitions (a)

30

$   

Affiliates to Subsidiaries (b)

-

Affiliates (c)

1

Existing Subsidiaries (d)

14

Earn-outs (e)

13

Total Acquisition Expenditures

58

$   

First Quarter 2006

Potential Earn-out Obligations

The following is a calculation of future earn-out obligations as of
March 31, 2006, assuming that the underlying acquired agencies
continue to perform at their current levels: ^(a)

(a)

The ultimate payments will vary as they are dependent on future events and changes in FX rates.

12

2006

2007

2008

2009

Thereafter

Total

120

$  

136

$  

92

$   

49

$   

45

$         

442

$  

Potential Obligations

13

(a)The ultimate payments will vary as they are dependent on future events and changes in FX rates.

In conjunction with certain transactions Omnicom has agreed to
acquire (at the sellers’ option) additional equity interests. If these
rights are exercised, there would be an increase in our net income as
a result of our increased ownership and the reduction of minority
interest expense.  The following is a calculation of  these potential
future obligations (as of March 31, 2006), assuming these underlying
acquired agencies continue to perform at their current levels: ^(a)

Currently

Exercisable

Not Currently

Exercisable

Total

Subsidiary Agencies

114

$           

105

$           

219

$         

Affiliated Agencies

44

6

50

Total

158

$           

111

$           

269

$         

First Quarter Acquisitions

Unisono Fieldmarketing

Unisono Fieldmarketing (“Unisono”) is a diversified field marketing
and merchandising organization specializing in building and
maintaining solid market positions across China for multinational and
local clients.  Located in more than 25 cities, Unisono serves clients
in the consumer goods, retail, food processing, utilities and
automotive industries.

Unisono is headquartered in Beijing, China.

14

First Quarter Acquisitions

GPlus Europe

GPlus Europe (GPlus) is a public relations firm that provides its
clients with European Union focused communication strategies.  
GPlus’s approach is to position, brand and build a client’s reputation
with the policy-makers, stake-holders and media within the European
Union.

The agency is located in Brussels and London.

15

First Quarter Acquisitions

Kaleidoscope Marketing Group

Kaleidoscope Marketing Group (KMG) provides consulting services
targeted towards the youth market.  KMG channels brand specific
information to schools, camps, daycare centers and other youth
oriented organizations by providing product samples, educational
messages, activity books, branded school supplies and various other
materials.

KMG is a member of the Radiate Group of Companies and is located
in South Carolina.

16

First Quarter Acquisitions

Singer Direct

Singer Direct is a specialist in the insert media business providing insert
media buying and management services.  Singer Direct assists clients in
reaching consumer touch points that can accommodate an insert
advertisement, and through its insert management division develops new
revenue streams and media channels for clients seeking to leverage their
own customer contact points. Rounding out its full-service offering, Singer
Direct also provides internet cost-per-acquisition services.

Singer Direct is located in Scarsdale, New York and is a member of the
Omnicom Media Group.

17