x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the quarterly period ended March 31, 2016 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 13-1024020 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
Large accelerated filer | ý | Accelerated filer | ¨ | |||
Non-accelerated filer | ¨ | Smaller reporting company | ¨ | |||
(Do not check if a smaller reporting company) |
INDEX | ||
Page | ||
Item 1. | ||
Consolidated Statements of Operations for the Three Months Ended March 31, 2016 and 2015 | ||
Consolidated Statements of Comprehensive Income for the Three Months Ended March 31, 2016 and 2015 | ||
Consolidated Balance Sheets as of March 31, 2016 and December 31, 2015 | ||
Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2016 and 2015 | ||
Consolidated Statements of Stockholders’ Equity for the Three Months Ended March 31, 2016 and 2015 | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
Item 1. | ||
Item 1A. | ||
Item 2. | ||
Item 6. | ||
• | potential effects of a challenging economy, for example, on the demand for our advertising and marketing services, on our clients’ financial condition and on our business or financial condition; |
• | our ability to attract new clients and retain existing clients; |
• | our ability to retain and attract key employees; |
• | risks associated with assumptions we make in connection with our critical accounting estimates, including changes in assumptions associated with any effects of a weakened economy; |
• | potential adverse effects if we are required to recognize impairment charges or other adverse accounting-related developments; |
• | risks associated with the effects of global, national and regional economic and political conditions, including counterparty risks and fluctuations in economic growth rates, interest rates and currency exchange rates; and |
• | developments from changes in the regulatory and legal environment for advertising and marketing and communications services companies around the world. |
Item 1. | Financial Statements (Unaudited) |
Three months ended March 31, | |||||||
2016 | 2015 | ||||||
REVENUE | $ | 1,742.0 | $ | 1,676.0 | |||
OPERATING EXPENSES: | |||||||
Salaries and related expenses | 1,270.9 | 1,215.2 | |||||
Office and general expenses | 450.2 | 453.0 | |||||
Total operating expenses | 1,721.1 | 1,668.2 | |||||
OPERATING INCOME | 20.9 | 7.8 | |||||
EXPENSES AND OTHER INCOME: | |||||||
Interest expense | (22.6 | ) | (20.9 | ) | |||
Interest income | 5.8 | 7.2 | |||||
Other (expense) income, net | (17.1 | ) | 0.3 | ||||
Total (expenses) and other income | (33.9 | ) | (13.4 | ) | |||
Loss before income taxes | (13.0 | ) | (5.6 | ) | |||
Benefit of income taxes | (15.6 | ) | (1.4 | ) | |||
Income (loss) of consolidated companies | 2.6 | (4.2 | ) | ||||
Equity in net income of unconsolidated affiliates | 0.1 | 0.0 | |||||
NET INCOME (LOSS) | 2.7 | (4.2 | ) | ||||
Net loss attributable to noncontrolling interests | 2.7 | 2.4 | |||||
NET INCOME (LOSS) AVAILABLE TO IPG COMMON STOCKHOLDERS | $ | 5.4 | $ | (1.8 | ) | ||
Earnings (loss) per share available to IPG common stockholders: | |||||||
Basic | $ | 0.01 | $ | 0.00 | |||
Diluted | $ | 0.01 | $ | 0.00 | |||
Weighted-average number of common shares outstanding: | |||||||
Basic | 400.6 | 411.1 | |||||
Diluted | 409.3 | 411.1 | |||||
Dividends declared per common share | $ | 0.15 | $ | 0.12 |
Three months ended March 31, | |||||||
2016 | 2015 | ||||||
NET INCOME (LOSS) | $ | 2.7 | $ | (4.2 | ) | ||
OTHER COMPREHENSIVE INCOME (LOSS) | |||||||
Foreign currency translation: | |||||||
Foreign currency translation adjustments | 50.0 | (135.1 | ) | ||||
Less: reclassification adjustments recognized in net income (loss) | 5.9 | (0.5 | ) | ||||
55.9 | (135.6 | ) | |||||
Available-for-sale securities: | |||||||
Changes in fair value of available-for-sale securities | 0.1 | 0.2 | |||||
Income tax effect | 0.0 | (0.3 | ) | ||||
0.1 | (0.1 | ) | |||||
Derivative instruments: | |||||||
Recognition of previously unrealized losses included in net income (loss) | 0.5 | 0.5 | |||||
Income tax effect | (0.2 | ) | (0.2 | ) | |||
0.3 | 0.3 | ||||||
Defined benefit pension and other postretirement plans: | |||||||
Net actuarial gains for the period | 0.2 | 4.4 | |||||
Less: amortization of unrecognized losses, transition obligation and prior service cost included in net income (loss) | 2.7 | 3.0 | |||||
Other | 0.1 | 0.1 | |||||
Income tax effect | (0.7 | ) | (0.9 | ) | |||
2.3 | 6.6 | ||||||
Other comprehensive income (loss), net of tax | 58.6 | (128.8 | ) | ||||
TOTAL COMPREHENSIVE INCOME (LOSS) | 61.3 | (133.0 | ) | ||||
Less: comprehensive loss attributable to noncontrolling interests | (2.2 | ) | (3.2 | ) | |||
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO IPG | $ | 63.5 | $ | (129.8 | ) |
March 31, 2016 | December 31, 2015 | ||||||
ASSETS: | |||||||
Cash and cash equivalents | $ | 673.4 | $ | 1,502.9 | |||
Marketable securities | 6.9 | 6.8 | |||||
Accounts receivable, net of allowance of $52.7 and $54.2, respectively | 3,718.9 | 4,361.0 | |||||
Expenditures billable to clients | 1,774.2 | 1,594.4 | |||||
Other current assets | 312.6 | 228.0 | |||||
Total current assets | 6,486.0 | 7,693.1 | |||||
Property and equipment, net of accumulated depreciation of $969.7 and $961.9, respectively | 565.1 | 567.2 | |||||
Deferred income taxes | 277.0 | 228.4 | |||||
Goodwill | 3,681.8 | 3,608.5 | |||||
Other non-current assets | 506.9 | 487.9 | |||||
TOTAL ASSETS | $ | 11,516.8 | $ | 12,585.1 | |||
LIABILITIES: | |||||||
Accounts payable | $ | 5,785.1 | $ | 6,672.0 | |||
Accrued liabilities | 620.6 | 760.3 | |||||
Short-term borrowings | 131.7 | 150.1 | |||||
Current portion of long-term debt | 2.0 | 1.9 | |||||
Total current liabilities | 6,539.4 | 7,584.3 | |||||
Long-term debt | 1,609.9 | 1,610.3 | |||||
Deferred compensation | 414.1 | 464.2 | |||||
Other non-current liabilities | 733.2 | 672.6 | |||||
TOTAL LIABILITIES | 9,296.6 | 10,331.4 | |||||
Redeemable noncontrolling interests (see Note 4) | 246.3 | 251.9 | |||||
STOCKHOLDERS’ EQUITY: | |||||||
Common stock | 40.7 | 40.4 | |||||
Additional paid-in capital | 1,434.0 | 1,404.1 | |||||
Retained earnings | 1,379.0 | 1,437.6 | |||||
Accumulated other comprehensive loss, net of tax | (787.5 | ) | (845.6 | ) | |||
2,066.2 | 2,036.5 | ||||||
Less: Treasury stock | (124.7 | ) | (71.0 | ) | |||
Total IPG stockholders’ equity | 1,941.5 | 1,965.5 | |||||
Noncontrolling interests | 32.4 | 36.3 | |||||
TOTAL STOCKHOLDERS’ EQUITY | 1,973.9 | 2,001.8 | |||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 11,516.8 | $ | 12,585.1 |
Three months ended March 31, | |||||||
2016 | 2015 | ||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||
Net income (loss) | $ | 2.7 | $ | (4.2 | ) | ||
Adjustments to reconcile net income (loss) to net cash used in operating activities: | |||||||
Depreciation and amortization of fixed assets and intangible assets | 38.0 | 38.7 | |||||
Provision for uncollectible receivables | 3.2 | 2.7 | |||||
Amortization of restricted stock and other non-cash compensation | 23.1 | 16.8 | |||||
Net amortization of bond discounts and deferred financing costs | 1.4 | 1.4 | |||||
Deferred income tax benefit | (28.1 | ) | (31.8 | ) | |||
Losses on sales of businesses | 16.3 | 0.1 | |||||
Other | 25.2 | 10.8 | |||||
Changes in assets and liabilities, net of acquisitions and dispositions, providing (using) cash: | |||||||
Accounts receivable | 686.5 | 460.5 | |||||
Expenditures billable to clients | (137.3 | ) | (111.1 | ) | |||
Other current assets | (59.2 | ) | (31.0 | ) | |||
Accounts payable | (981.1 | ) | (929.9 | ) | |||
Accrued liabilities | (198.8 | ) | (173.3 | ) | |||
Other non-current assets and liabilities | (41.0 | ) | (30.4 | ) | |||
Net cash used in operating activities | (649.1 | ) | (780.7 | ) | |||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||
Capital expenditures | (27.0 | ) | (20.2 | ) | |||
Acquisitions, net of cash acquired | (27.0 | ) | 0.0 | ||||
Other investing activities | (5.2 | ) | 0.2 | ||||
Net cash used in investing activities | (59.2 | ) | (20.0 | ) | |||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||
Common stock dividends | (59.9 | ) | (49.3 | ) | |||
Repurchase of common stock | (53.7 | ) | (51.2 | ) | |||
Net (decrease) increase in short term bank borrowings | (24.6 | ) | 34.3 | ||||
Tax payments for employee shares withheld | (19.5 | ) | (16.2 | ) | |||
Distributions to noncontrolling interests | (4.0 | ) | (1.2 | ) | |||
Exercise of stock options | 3.9 | 9.1 | |||||
Excess tax benefit on share-based compensation | 0.0 | 8.5 | |||||
Acquisition-related payments | 0.0 | (2.4 | ) | ||||
Other financing activities | (0.1 | ) | 1.1 | ||||
Net cash used in financing activities | (157.9 | ) | (67.3 | ) | |||
Effect of foreign exchange rate changes on cash and cash equivalents | 36.7 | (58.3 | ) | ||||
Net decrease in cash and cash equivalents | (829.5 | ) | (926.3 | ) | |||
Cash and cash equivalents at beginning of period | 1,502.9 | 1,660.6 | |||||
Cash and cash equivalents at end of period | $ | 673.4 | $ | 734.3 |
Common Stock | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Loss, Net of Tax | Treasury Stock | Total IPG Stockholders’ Equity | Noncontrolling Interests | Total Stockholders’ Equity | |||||||||||||||||||||||||||
Shares | Amount | |||||||||||||||||||||||||||||||||
Balance at December 31, 2015 | 406.3 | $ | 40.4 | $ | 1,404.1 | $ | 1,437.6 | $ | (845.6 | ) | $ | (71.0 | ) | $ | 1,965.5 | $ | 36.3 | $ | 2,001.8 | |||||||||||||||
Net income | 5.4 | 5.4 | (2.7 | ) | 2.7 | |||||||||||||||||||||||||||||
Other comprehensive income | 58.1 | 58.1 | 0.5 | 58.6 | ||||||||||||||||||||||||||||||
Reclassifications related to redeemable noncontrolling interests | 2.9 | 2.9 | ||||||||||||||||||||||||||||||||
Distributions to noncontrolling interests | (4.0 | ) | (4.0 | ) | ||||||||||||||||||||||||||||||
Change in redemption value of redeemable noncontrolling interests | (3.8 | ) | (3.8 | ) | (3.8 | ) | ||||||||||||||||||||||||||||
Repurchase of common stock | (53.7 | ) | (53.7 | ) | (53.7 | ) | ||||||||||||||||||||||||||||
Common stock dividends | (59.9 | ) | (59.9 | ) | (59.9 | ) | ||||||||||||||||||||||||||||
Stock-based compensation | 3.4 | 0.3 | 47.7 | 48.0 | 48.0 | |||||||||||||||||||||||||||||
Exercise of stock options | 0.5 | 0.1 | 3.9 | 4.0 | 4.0 | |||||||||||||||||||||||||||||
Shares withheld for taxes | (1.0 | ) | (0.1 | ) | (22.2 | ) | (22.3 | ) | (22.3 | ) | ||||||||||||||||||||||||
Other | 0.5 | (0.3 | ) | 0.2 | (0.6 | ) | (0.4 | ) | ||||||||||||||||||||||||||
Balance at March 31, 2016 | 409.2 | $ | 40.7 | $ | 1,434.0 | $ | 1,379.0 | $ | (787.5 | ) | $ | (124.7 | ) | $ | 1,941.5 | $ | 32.4 | $ | 1,973.9 |
Common Stock | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Loss, Net of Tax | Treasury Stock | Total IPG Stockholders’ Equity | Noncontrolling Interests | Total Stockholders’ Equity | |||||||||||||||||||||||||||
Shares | Amount | |||||||||||||||||||||||||||||||||
Balance at December 31, 2014 | 414.6 | $ | 41.2 | $ | 1,547.5 | $ | 1,183.3 | $ | (636.7 | ) | $ | (19.0 | ) | $ | 2,116.3 | $ | 34.9 | $ | 2,151.2 | |||||||||||||||
Net loss | (1.8 | ) | (1.8 | ) | (2.4 | ) | (4.2 | ) | ||||||||||||||||||||||||||
Other comprehensive loss | (128.0 | ) | (128.0 | ) | (0.8 | ) | (128.8 | ) | ||||||||||||||||||||||||||
Reclassifications related to redeemable noncontrolling interests | 1.5 | 1.5 | ||||||||||||||||||||||||||||||||
Distributions to noncontrolling interests | (1.2 | ) | (1.2 | ) | ||||||||||||||||||||||||||||||
Change in redemption value of redeemable noncontrolling interests | (5.8 | ) | (5.8 | ) | (5.8 | ) | ||||||||||||||||||||||||||||
Repurchase of common stock | (51.2 | ) | (51.2 | ) | (51.2 | ) | ||||||||||||||||||||||||||||
Common stock dividends | (49.3 | ) | (49.3 | ) | (49.3 | ) | ||||||||||||||||||||||||||||
Stock-based compensation | 2.2 | 0.2 | 31.8 | 32.0 | 32.0 | |||||||||||||||||||||||||||||
Exercise of stock options | 0.9 | 0.1 | 9.1 | 9.2 | 9.2 | |||||||||||||||||||||||||||||
Shares withheld for taxes | (0.8 | ) | (0.1 | ) | (17.0 | ) | (17.1 | ) | (17.1 | ) | ||||||||||||||||||||||||
Excess tax benefit from stock-based compensation | 8.5 | 8.5 | 8.5 | |||||||||||||||||||||||||||||||
Other | 0.1 | (0.2 | ) | (0.1 | ) | (0.1 | ) | |||||||||||||||||||||||||||
Balance at March 31, 2015 | 416.9 | $ | 41.4 | $ | 1,580.0 | $ | 1,126.2 | $ | (764.7 | ) | $ | (70.2 | ) | $ | 1,912.7 | $ | 32.0 | $ | 1,944.7 |
Effective Interest Rate | March 31, 2016 | December 31, 2015 | |||||||||||||||
Book Value | Fair Value 1 | Book Value | Fair Value 1 | ||||||||||||||
2.25% Senior Notes due 2017 (less unamortized discount and issuance costs of $0.2 and $0.8) | 2.30% | $ | 299.0 | $ | 299.7 | $ | 298.8 | $ | 299.3 | ||||||||
4.00% Senior Notes due 2022 (less unamortized discount and issuance costs of $1.9 and $1.5) | 4.13% | 246.6 | 257.5 | 246.4 | 250.9 | ||||||||||||
3.75% Senior Notes due 2023 (less unamortized discount and issuance costs of $1.1 and $2.8) | 4.32% | 496.1 | 497.1 | 496.0 | 484.8 | ||||||||||||
4.20% Senior Notes due 2024 (less unamortized discount and issuance costs of $0.8 and $3.3) | 4.24% | 495.9 | 517.2 | 495.8 | 496.4 | ||||||||||||
Other notes payable and capitalized leases | 74.3 | 74.3 | 75.2 | 75.2 | |||||||||||||
Total long-term debt | 1,611.9 | 1,612.2 | |||||||||||||||
Less: current portion | 2.0 | 1.9 | |||||||||||||||
Long-term debt, excluding current portion | $ | 1,609.9 | $ | 1,610.3 |
1 | See Note 11 for information on the fair value measurement of our long-term debt. |
Three months ended March 31, | |||||||
2016 | 2015 | ||||||
Net income (loss) available to IPG common stockholders | $ | 5.4 | $ | (1.8 | ) | ||
Weighted-average number of common shares outstanding - basic | 400.6 | 411.1 | |||||
Add: Effect of dilutive securities | |||||||
Restricted stock, stock options and other equity awards | 8.7 | N/A | |||||
Weighted-average number of common shares outstanding - diluted | 409.3 | 411.1 | |||||
Earnings (loss) per share available to IPG common stockholders: | |||||||
Basic | $ | 0.01 | $ | 0.00 | |||
Diluted | $ | 0.01 | $ | 0.00 |
Three months ended March 31, | |||||||
2016 | 2015 | ||||||
Cost of investment: current-year acquisitions | $ | 29.8 | $ | 0.0 | |||
Cost of investment: prior-year acquisitions | 0.5 | 2.4 | |||||
Less: net cash acquired | (3.3 | ) | 0.0 | ||||
Total cost of investment | 27.0 | 2.4 | |||||
Operating expense 1 | 0.0 | 0.4 | |||||
Total cash paid for acquisitions 2 | $ | 27.0 | $ | 2.8 |
1 | Represents cash payments made that were either in excess of the initial value of contingent payments or contingent upon the future employment of the former owners of the acquired companies and are recorded in the operating section of the Consolidated Statements of Cash Flows. |
2 | $27.0 for the three months ended March 31, 2016 is classified under the investing section of the unaudited Consolidated Statements of Cash Flows, as acquisitions, net of cash acquired. This amount relates to initial payments for new transactions. $2.4 of cash paid for three months ended March 31, 2015 is classified under the financing section of the unaudited Consolidated Statements of Cash Flows as acquisition-related payments. This amount relates to deferred payments and increases in our ownership interest for prior acquisitions. |
Three months ended March 31, | |||||||
2016 | 2015 | ||||||
Balance at beginning of period | $ | 251.9 | $ | 257.4 | |||
Change in related noncontrolling interests balance | (2.9 | ) | (2.1 | ) | |||
Changes in redemption value of redeemable noncontrolling interests: | |||||||
Redemptions and other | (9.0 | ) | (15.7 | ) | |||
Redemption value adjustments | 6.3 | 3.2 | |||||
Balance at end of period | $ | 246.3 | $ | 242.8 |
March 31, 2016 | December 31, 2015 | ||||||
Salaries, benefits and related expenses | $ | 333.2 | $ | 502.4 | |||
Acquisition obligations | 72.5 | 50.1 | |||||
Office and related expenses | 43.0 | 51.0 | |||||
Interest | 16.7 | 17.3 | |||||
Restructuring and other reorganization-related | 2.8 | 3.3 | |||||
Other | 152.4 | 136.2 | |||||
Total accrued liabilities | $ | 620.6 | $ | 760.3 |
Three months ended March 31, | |||||||
2016 | 2015 | ||||||
Losses on sales of businesses and investments | $ | (16.3 | ) | $ | (0.1 | ) | |
Other (expense) income, net | (0.8 | ) | 0.4 | ||||
Total other (expense) income, net | $ | (17.1 | ) | $ | 0.3 |
Three months ended March 31, | |||||||
2016 | 2015 | ||||||
Number of shares repurchased | 2.5 | 2.5 | |||||
Aggregate cost, including fees | $ | 53.7 | $ | 51.2 | |||
Average price per share, including fees | $ | 21.67 | $ | 20.84 |
Awards | Weighted-average grant-date fair value (per award) | |||||
Stock-settled awards | 0.9 | $ | 21.59 | |||
Performance-based awards | 3.2 | $ | 19.54 | |||
Total stock-based compensation awards | 4.1 |
Foreign Currency Translation Adjustments | Available-for-Sale Securities | Derivative Instruments | Defined Benefit Pension and Other Postretirement Plans | Total | |||||||||||||||
Balance as of December 31, 2015 | $ | (665.6 | ) | $ | 1.3 | $ | (9.6 | ) | $ | (171.7 | ) | $ | (845.6 | ) | |||||
Other comprehensive income before reclassifications | 49.5 | 0.1 | 0.0 | 0.3 | 49.9 | ||||||||||||||
Amount reclassified from accumulated other comprehensive loss, net of tax | 5.9 | 0.0 | 0.3 | 2.0 | 8.2 | ||||||||||||||
Balance as of March 31, 2016 | $ | (610.2 | ) | $ | 1.4 | $ | (9.3 | ) | $ | (169.4 | ) | $ | (787.5 | ) |
Foreign Currency Translation Adjustments | Available-for-Sale Securities | Derivative Instruments | Defined Benefit Pension and Other Postretirement Plans | Total | |||||||||||||||
Balance as of December 31, 2014 | $ | (436.3 | ) | $ | 0.8 | $ | (10.9 | ) | $ | (190.3 | ) | $ | (636.7 | ) | |||||
Other comprehensive (loss) income before reclassifications | (134.3 | ) | 0.2 | 0.0 | 4.5 | (129.6 | ) | ||||||||||||
Amount reclassified from accumulated other comprehensive loss, net of tax | (0.5 | ) | (0.3 | ) | 0.3 | 2.1 | 1.6 | ||||||||||||
Balance as of March 31, 2015 | $ | (571.1 | ) | $ | 0.7 | $ | (10.6 | ) | $ | (183.7 | ) | $ | (764.7 | ) |
Three months ended March 31, | Affected Line Item in the Consolidated Statements of Operations | ||||||||
2016 | 2015 | ||||||||
Foreign currency translation adjustments | $ | 5.9 | $ | (0.5 | ) | Other (expense) income, net | |||
Losses on derivative instruments | 0.5 | 0.5 | Interest expense | ||||||
Amortization of defined benefit pension and postretirement plans items 1 | 2.7 | 3.0 | |||||||
Tax effect | (0.9 | ) | (1.4 | ) | Benefit of income taxes | ||||
Total amount reclassified from accumulated other comprehensive loss, net of tax | $ | 8.2 | $ | 1.6 |
1 | These accumulated other comprehensive loss components are included in the computation of net periodic cost. See Note 9 for further information. |
Domestic Pension Plan | Foreign Pension Plans | Domestic Postretirement Benefit Plan | |||||||||||||||||||||
Three months ended March 31, | 2016 | 2015 | 2016 | 2015 | 2016 | 2015 | |||||||||||||||||
Service cost | $ | 0.0 | $ | 0.0 | $ | 2.7 | $ | 2.5 | $ | 0.0 | $ | 0.0 | |||||||||||
Interest cost | 1.5 | 1.5 | 4.5 | 4.7 | 0.4 | 0.4 | |||||||||||||||||
Expected return on plan assets | (1.7 | ) | (1.9 | ) | (5.3 | ) | (5.1 | ) | 0.0 | 0.0 | |||||||||||||
Amortization of: | |||||||||||||||||||||||
Prior service credit | 0.0 | 0.0 | 0.0 | 0.0 | (0.1 | ) | 0.0 | ||||||||||||||||
Unrecognized actuarial losses | 1.9 | 2.0 | 0.9 | 1.0 | 0.0 | 0.0 | |||||||||||||||||
Net periodic cost | $ | 1.7 | $ | 1.6 | $ | 2.8 | $ | 3.1 | $ | 0.3 | $ | 0.4 |
Three months ended March 31, | |||||||
2016 | 2015 | ||||||
Revenue: | |||||||
IAN | $ | 1,401.6 | $ | 1,345.1 | |||
CMG | 340.4 | 330.9 | |||||
Total | $ | 1,742.0 | $ | 1,676.0 | |||
Segment operating income (loss): | |||||||
IAN | $ | 39.7 | $ | 31.4 | |||
CMG | 20.4 | 19.9 | |||||
Corporate and other | (39.2 | ) | (43.5 | ) | |||
Total | 20.9 | 7.8 | |||||
Interest expense | (22.6 | ) | (20.9 | ) | |||
Interest income | 5.8 | 7.2 | |||||
Other (expense) income, net | (17.1 | ) | 0.3 | ||||
Loss before income taxes | $ | (13.0 | ) | $ | (5.6 | ) | |
Depreciation and amortization of property and equipment and intangible assets: | |||||||
IAN | $ | 27.6 | $ | 29.4 | |||
CMG | 4.8 | 4.6 | |||||
Corporate and other | 5.6 | 4.7 | |||||
Total | $ | 38.0 | $ | 38.7 | |||
Capital expenditures: | |||||||
IAN | $ | 20.3 | $ | 12.1 | |||
CMG | 1.5 | 1.1 | |||||
Corporate and other | 5.2 | 7.0 | |||||
Total | $ | 27.0 | $ | 20.2 | |||
March 31, 2016 | December 31, 2015 | ||||||
Total assets: | |||||||
IAN | $ | 10,314.6 | $ | 10,738.2 | |||
CMG | 1,359.1 | 1,338.6 | |||||
Corporate and other | (156.9 | ) | 508.3 | ||||
Total | $ | 11,516.8 | $ | 12,585.1 |
Level 1 | Unadjusted quoted prices in active markets for identical assets or liabilities. An active market for the asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis. | |
Level 2 | Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. | |
Level 3 | Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. |
March 31, 2016 | Balance Sheet Classification | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||
Assets | |||||||||||||||||
Cash equivalents | $ | 154.5 | $ | 0.0 | $ | 0.0 | $ | 154.5 | Cash and cash equivalents | ||||||||
Short-term marketable securities | 6.9 | 0.0 | 0.0 | 6.9 | Marketable securities | ||||||||||||
Long-term investments | 0.5 | 0.0 | 0.0 | 0.5 | Other non-current assets | ||||||||||||
Total | $ | 161.9 | $ | 0.0 | $ | 0.0 | $ | 161.9 | |||||||||
As a percentage of total assets | 1.4 | % | 0.0 | % | 0.0 | % | 1.4 | % | |||||||||
Liabilities | |||||||||||||||||
Mandatorily redeemable noncontrolling interests 1 | $ | 0.0 | $ | 0.0 | $ | 56.9 | $ | 56.9 | |||||||||
December 31, 2015 | Balance Sheet Classification | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||
Assets | |||||||||||||||||
Cash equivalents | $ | 875.7 | $ | 0.0 | $ | 0.0 | $ | 875.7 | Cash and cash equivalents | ||||||||
Short-term marketable securities | 6.8 | 0.0 | 0.0 | 6.8 | Marketable securities | ||||||||||||
Long-term investments | 0.4 | 0.0 | 0.0 | 0.4 | Other non-current assets | ||||||||||||
Total | $ | 882.9 | $ | 0.0 | $ | 0.0 | $ | 882.9 | |||||||||
As a percentage of total assets | 7.0 | % | 0.0 | % | 0.0 | % | 7.0 | % | |||||||||
Liabilities | |||||||||||||||||
Mandatorily redeemable noncontrolling interests 1 | $ | 0.0 | $ | 0.0 | $ | 45.0 | $ | 45.0 |
1 | Relates to unconditional obligations to purchase additional noncontrolling equity shares of consolidated subsidiaries. Fair value measurement of the obligation was based upon the amount payable as if the forward contracts were settled. The amount redeemable within the next twelve months is classified in accrued liabilities; any interests redeemable thereafter are classified in other non-current liabilities. |
Three months ended March 31, | |||||||
Liabilities | 2016 | 2015 | |||||
Mandatorily redeemable noncontrolling interests - Balance at beginning of period | $ | 45.0 | $ | 32.8 | |||
Level 3 additions | 10.4 | 15.0 | |||||
Level 3 reductions | (0.1 | ) | (1.4 | ) | |||
Realized losses included in net income | 1.8 | 0.4 | |||||
Foreign currency translation | (0.2 | ) | 0.0 | ||||
Mandatorily redeemable noncontrolling interests - Balance at end of period | $ | 56.9 | $ | 46.8 |
March 31, 2016 | December 31, 2015 | ||||||||||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||||||
Total long-term debt | $ | 0.0 | $ | 1,571.5 | $ | 74.3 | $ | 1,645.8 | $ | 0.0 | $ | 1,531.4 | $ | 75.2 | $ | 1,606.6 |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
Three months ended March 31, 2016 | |||||
% Increase/(Decrease) | Total | Organic | |||
Revenue | 3.9 | % | 6.7 | % | |
Salaries and related expenses | 4.6 | % | 7.6 | % | |
Office and general expenses | (0.6 | )% | 2.7 | % |
Three months ended March 31, | |||||||
2016 | 2015 | ||||||
Operating margin | 1.2 | % | 0.5 | % | |||
Expenses as % of revenue: | |||||||
Salaries and related expenses | 73.0 | % | 72.5 | % | |||
Office and general expenses | 25.8 | % | 27.0 | % | |||
Net income (loss) available to IPG common stockholders | $ | 5.4 | $ | (1.8 | ) | ||
Earnings (loss) per share available to IPG common stockholders: | |||||||
Basic | $ | 0.01 | $ | 0.00 | |||
Diluted | $ | 0.01 | $ | 0.00 |
Components of Change | Change | ||||||||||||||||||||||||
Three months ended March 31, 2015 | Foreign Currency | Net Acquisitions/ (Divestitures) | Organic | Three months ended March 31, 2016 | Organic | Total | |||||||||||||||||||
Consolidated | $ | 1,676.0 | $ | (51.9 | ) | $ | 5.5 | $ | 112.4 | $ | 1,742.0 | 6.7 | % | 3.9 | % | ||||||||||
Domestic | 1,003.8 | 0.0 | 3.7 | 83.7 | 1,091.2 | 8.3 | % | 8.7 | % | ||||||||||||||||
International | 672.2 | (51.9 | ) | 1.8 | 28.7 | 650.8 | 4.3 | % | (3.2 | )% | |||||||||||||||
United Kingdom | 164.9 | (9.3 | ) | 4.3 | 5.7 | 165.6 | 3.5 | % | 0.4 | % | |||||||||||||||
Continental Europe | 155.1 | (6.2 | ) | (3.9 | ) | 2.6 | 147.6 | 1.7 | % | (4.8 | )% | ||||||||||||||
Asia Pacific | 187.8 | (10.9 | ) | 0.2 | 5.0 | 182.1 | 2.7 | % | (3.0 | )% | |||||||||||||||
Latin America | 77.5 | (18.7 | ) | (2.5 | ) | 9.0 | 65.3 | 11.6 | % | (15.7 | )% | ||||||||||||||
Other | 86.9 | (6.8 | ) | 3.7 | 6.4 | 90.2 | 7.4 | % | 3.8 | % |
Three months ended March 31, | |||||||
2016 | 2015 | ||||||
Salaries and related expenses | $ | 1,270.9 | $ | 1,215.2 | |||
Office and general expenses | 450.2 | 453.0 | |||||
Total operating expenses | $ | 1,721.1 | $ | 1,668.2 | |||
Operating income | $ | 20.9 | $ | 7.8 |
Components of Change | Change | ||||||||||||||||||||||||
2015 | Foreign Currency | Net Acquisitions/ (Divestitures) | Organic | 2016 | Organic | Total | |||||||||||||||||||
Three months ended March 31, | $ | 1,215.2 | $ | (38.1 | ) | $ | 1.5 | $ | 92.3 | $ | 1,270.9 | 7.6 | % | 4.6 | % |
Three months ended March 31, | |||||
2016 | 2015 | ||||
Salaries and related expenses | 73.0 | % | 72.5 | % | |
Base salaries, benefits and tax | 59.6 | % | 60.5 | % | |
Incentive expense | 4.6 | % | 3.9 | % | |
Severance expense | 1.4 | % | 1.0 | % | |
Temporary help | 4.0 | % | 3.9 | % | |
All other salaries and related expenses | 3.4 | % | 3.2 | % |
Components of Change | Change | ||||||||||||||||||||||||
2015 | Foreign Currency | Net Acquisitions/ (Divestitures) | Organic | 2016 | Organic | Total | |||||||||||||||||||
Three months ended March 31, | $ | 453.0 | $ | (15.6 | ) | $ | 0.4 | $ | 12.4 | $ | 450.2 | 2.7 | % | (0.6 | )% |
Three months ended March 31, | |||||
2016 | 2015 | ||||
Office and general expenses | 25.8 | % | 27.0 | % | |
Professional fees | 1.8 | % | 1.7 | % | |
Occupancy expense (excluding depreciation and amortization) | 7.2 | % | 7.3 | % | |
Travel & entertainment, office supplies and telecommunications | 3.4 | % | 3.6 | % | |
All other office and general expenses | 13.4 | % | 14.4 | % |
Three months ended March 31, | |||||||
2016 | 2015 | ||||||
Cash interest on debt obligations | $ | (19.3 | ) | $ | (19.1 | ) | |
Non-cash interest | (3.3 | ) | (1.8 | ) | |||
Interest expense | (22.6 | ) | (20.9 | ) | |||
Interest income | 5.8 | 7.2 | |||||
Net interest expense | (16.8 | ) | (13.7 | ) | |||
Other (expense) income, net | (17.1 | ) | 0.3 | ||||
Total (expenses) and other income | $ | (33.9 | ) | $ | (13.4 | ) |
Three months ended March 31, | |||||||
2016 | 2015 | ||||||
Losses on sales of businesses and investments | $ | (16.3 | ) | $ | (0.1 | ) | |
Other (expense) income, net | (0.8 | ) | 0.4 | ||||
Total other (expense) income, net | $ | (17.1 | ) | $ | 0.3 |
Three months ended March 31, | |||||||
2016 | 2015 | ||||||
Loss before income taxes | $ | (13.0 | ) | $ | (5.6 | ) | |
Benefit of income taxes | $ | (15.6 | ) | $ | (1.4 | ) |
Components of Change | Change | ||||||||||||||||||||||||
Three months ended March 31, 2015 | Foreign Currency | Net Acquisitions/ (Divestitures) | Organic | Three months ended March 31, 2016 | Organic | Total | |||||||||||||||||||
Consolidated | $ | 1,345.1 | $ | (44.2 | ) | $ | (1.2 | ) | $ | 101.9 | $ | 1,401.6 | 7.6 | % | 4.2 | % | |||||||||
Domestic | 790.9 | 0.0 | 0.0 | 74.5 | 865.4 | 9.4 | % | 9.4 | % | ||||||||||||||||
International | 554.2 | (44.2 | ) | (1.2 | ) | 27.4 | 536.2 | 4.9 | % | (3.2 | )% |
Three months ended March 31, | ||||||||||
2016 | 2015 | Change | ||||||||
Segment operating income | $ | 39.7 | $ | 31.4 | 26.4 | % | ||||
Operating margin | 2.8 | % | 2.3 | % |
Components of Change | Change | ||||||||||||||||||||||||
Three months ended March 31, 2015 | Foreign Currency | Net Acquisitions/ (Divestitures) | Organic | Three months ended March 31, 2016 | Organic | Total | |||||||||||||||||||
Consolidated | $ | 330.9 | $ | (7.7 | ) | $ | 6.7 | $ | 10.5 | $ | 340.4 | 3.2 | % | 2.9 | % | ||||||||||
Domestic | 212.9 | 0.0 | 3.7 | 9.2 | 225.8 | 4.3 | % | 6.1 | % | ||||||||||||||||
International | 118.0 | (7.7 | ) | 3.0 | 1.3 | 114.6 | 1.1 | % | (2.9 | )% |
Three months ended March 31, | ||||||||||
2016 | 2015 | Change | ||||||||
Segment operating income | $ | 20.4 | $ | 19.9 | 2.5 | % | ||||
Operating margin | 6.0 | % | 6.0 | % |
Three months ended March 31, | |||||||
Cash Flow Data | 2016 | 2015 | |||||
Net income (loss), adjusted to reconcile net income (loss) to net cash used in operating activities 1 | $ | 81.8 | $ | 34.5 | |||
Net cash used in working capital 2 | (689.9 | ) | (784.8 | ) | |||
Changes in other non-current assets and liabilities using cash | (41.0 | ) | (30.4 | ) | |||
Net cash used in operating activities | $ | (649.1 | ) | $ | (780.7 | ) | |
Net cash used in investing activities | (59.2 | ) | (20.0 | ) | |||
Net cash used in financing activities | (157.9 | ) | (67.3 | ) |
1 | Reflects net income (loss) adjusted primarily for depreciation and amortization of fixed assets and intangible assets, amortization of restricted stock and other non-cash compensation, losses on sales of businesses and deferred income taxes. |
2 | Reflects changes in accounts receivable, expenditures billable to clients, other current assets, accounts payable and accrued liabilities. |
Balance Sheet Data | March 31, 2016 | December 31, 2015 | March 31, 2015 | ||||||||
Cash, cash equivalents and marketable securities | $ | 680.3 | $ | 1,509.7 | $ | 741.2 | |||||
Short-term borrowings | $ | 131.7 | $ | 150.1 | $ | 135.7 | |||||
Current portion of long-term debt | 2.0 | 1.9 | 2.0 | ||||||||
Long-term debt | 1,609.9 | 1,610.3 | 1,610.4 | ||||||||
Total debt | $ | 1,743.6 | $ | 1,762.3 | $ | 1,748.1 |
• | Acquisitions – We paid cash of $26.5, which was net of cash acquired of $3.3, for acquisitions completed in the first quarter of 2016. We also paid cash of $0.5 in up-front payments related to prior-year acquisitions. In addition to potential cash expenditures for new acquisitions, we expect to pay approximately $66.0 over the remainder of 2016 related to prior-year acquisitions. We may also be required to pay approximately $35.0 in 2016 related to put options held by minority shareholders if exercised. We will continue to evaluate strategic opportunities to grow and continue to strengthen our market position, particularly in our digital and marketing services offerings, and to expand our presence in high-growth and key strategic world markets. |
• | Dividends – In the first quarter of 2016, we paid a cash dividend of $0.15 per share on our common stock, which corresponded to an aggregate dividend payment of $59.9. Assuming we continue to pay a quarterly dividend of $0.15 per share, and there is no significant change in the number of outstanding shares as of March 31, 2016, we would expect to pay an additional approximately $182.0 in 2016. |
• | Contributions to pension plans – Our funding policy regarding our pension plans is to make contributions necessary to satisfy minimum pension funding requirements, plus such additional contributions as we consider appropriate to improve the plans’ funded status. During the first quarter of 2016, we contributed $8.5 of cash to our foreign pension plans. For the remainder of 2016, we expect to contribute approximately $15.0 of cash to our foreign pension plans. We do not expect to make any contributions to our domestic pension plan in 2016. |
March 31, 2016 | |||||||||||||||
Total Facility | Amount Outstanding | Letters of Credit 1 | Total Available | ||||||||||||
Cash, cash equivalents and marketable securities | $ | 680.3 | |||||||||||||
Committed credit agreement | $ | 1,000.0 | $ | 0.0 | $ | 4.5 | $ | 995.5 | |||||||
Uncommitted credit arrangements | $ | 764.1 | $ | 131.7 | $ | 2.8 | $ | 629.6 |
1 | We are required from time to time to post letters of credit, primarily to support obligations of our subsidiaries. These letters of credit have historically not been drawn upon. |
Four Quarters Ended | Four Quarters Ended | |||||||
Financial Covenants | March 31, 2016 | EBITDA Reconciliation | March 31, 2016 | |||||
Interest coverage ratio (not less than) 1 | 5.00x | Operating income | $ | 885.0 | ||||
Actual interest coverage ratio | 18.83x | Add: | ||||||
Leverage ratio (not greater than) 1 | 3.50x | Depreciation and amortization | 232.9 | |||||
Actual leverage ratio | 1.56x | Other non-cash amounts | 0.5 | |||||
EBITDA 1 | $ | 1,118.4 |
1 | The interest coverage ratio is defined as EBITDA, as defined in the Credit Agreement, to net interest expense for the four quarters then ended. The leverage ratio is defined as debt as of the last day of such fiscal quarter to EBITDA for the four quarters then ended. |
Moody’s Investor Service | Standard and Poor’s | Fitch Ratings | |||
Rating | Baa3 | BBB- | BBB | ||
Outlook | On Review for Upgrade | Positive | Stable |
Item 3. | Quantitative and Qualitative Disclosures about Market Risk |
Item 4. | Controls and Procedures |
Item 1. | Legal Proceedings |
Item 1A. | Risk Factors |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds |
(c) | The following table provides information regarding our purchases of our equity securities during the period from January 1, 2016 to March 31, 2016: |
Total Number of Shares (or Units) Purchased 1 | Average Price Paid per Share (or Unit) 2 | Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs 3 | Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs 3 | ||||||||||
January 1 - 31 | 1,213,913 | $ | 21.82 | 1,208,932 | $ | 132,172,400 | |||||||
February 1 - 29 | 1,434,110 | $ | 21.62 | 422,803 | $ | 422,962,355 | |||||||
March 1 - 31 | 863,087 | $ | 21.39 | 845,000 | $ | 404,911,328 | |||||||
Total | 3,511,110 | $ | 21.63 | 2,476,735 |
1 | Included shares of our common stock, par value $0.10 per share, withheld under the terms of grants under employee stock-based compensation plans to offset tax withholding obligations that arose upon vesting and release of restricted shares (the “Withheld Shares”). We repurchased 4,981 Withheld Shares in January 2016, 1,011,307 Withheld Shares in February 2016 and 18,087 Withheld Shares in March 2016, for a total of 1,034,375 Withheld Shares during the three month period. |
2 | The average price per share for each of the months in the fiscal quarter and for the three month period was calculated by dividing (a) the sum for the applicable period of the aggregate value of the tax withholding obligations and the aggregate amount we paid for shares acquired under our stock repurchase program, described in Note 5 to the unaudited Consolidated Financial Statements, by (b) the sum of the number of Withheld Shares and the number of shares acquired in our stock repurchase program. |
3 | On February 12, 2016, we announced that our Board of Directors had approved a new share repurchase program to repurchase from time to time up to $300.0 million of our common stock, in addition to amounts available on existing authorizations. There is no expiration date associated with the share repurchase programs. |
Item 6. | Exhibits |
THE INTERPUBLIC GROUP OF COMPANIES, INC. | ||
By | /s/ Michael I. Roth | |
Michael I. Roth Chairman and Chief Executive Officer |
By | /s/ Christopher F. Carroll | |
Christopher F. Carroll Senior Vice President, Controller and Chief Accounting Officer (Principal Accounting Officer) |
EXHIBIT NO. | DESCRIPTION | |
10(iii)(A)(1) | Description of Changes to the Compensation for Non-Management Directors is incorporated by reference to Exhibit 10(iii)(A)(69) to the Annual Report on Form 10-K of The Interpublic Group of Companies, Inc. for the year ended December 31, 2015, which was filed with the Securities and Exchange Commission on February 22, 2016. | |
12.1 | Computation of Ratios of Earnings to Fixed Charges. | |
31.1 | Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended. | |
31.2 | Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended. | |
32 | Certification of the Chief Executive Officer and the Chief Financial Officer furnished pursuant to 18 U.S.C. Section 1350 and Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended. | |
101 | Interactive Data File, for the period ended March 31, 2016. |
COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES | ||||||||||||||||||||||||
(Amounts in Millions, Except Ratios) | ||||||||||||||||||||||||
Three months ended March 31, | Years ended December 31, | |||||||||||||||||||||||
2016 | 2015 | 2014 | 2013 | 2012 | 2011 | |||||||||||||||||||
Earnings (loss) 1 | ||||||||||||||||||||||||
(Loss) income from continuing operations before income taxes | $ | (13.0 | ) | $ | 762.2 | $ | 720.7 | $ | 468.0 | $ | 674.8 | $ | 738.4 | |||||||||||
Fixed charges 2 | ||||||||||||||||||||||||
Interest expense | 22.6 | 85.8 | 84.9 | 122.7 | 133.5 | 136.8 | ||||||||||||||||||
Interest factor of net operating rents 3 | 42.5 | 162.4 | 170.0 | 173.3 | 169.0 | 175.6 | ||||||||||||||||||
Total fixed charges | 65.1 | 248.2 | 254.9 | 296.0 | 302.5 | 312.4 | ||||||||||||||||||
Earnings, as adjusted | $ | 52.1 | $ | 1,010.4 | $ | 975.6 | $ | 764.0 | $ | 977.3 | $ | 1,050.8 | ||||||||||||
Ratio of earnings to fixed charges 4 | N/A | 4.1 | 3.8 | 2.6 | 3.2 | 3.4 |
1 | Earnings (loss) consist of (loss) income from continuing operations before income taxes, equity in net (loss) income of unconsolidated affiliates and adjustments for net (loss) income attributable to noncontrolling interests. |
2 | Fixed charges consist of interest on indebtedness, amortization of debt discount, waiver and other amendment fees, debt issuance costs (all of which are included in interest expense) and the portion of net rental expense deemed representative of the interest component (one-third). |
3 | We have calculated the interest factor of net operating rent as one third of our operating rent, as this represents a reasonable approximation of the interest factor. |
4 | We had less than a 1:1 ratio of earnings to fixed charges due to our losses in the three months ended March 31, 2016. To provide a 1:1 coverage ratio for the deficient period results as reported would have required additional earnings of $13.0 in the three months ended March 31, 2016. |
1. | I have reviewed this quarterly report on Form 10-Q of The Interpublic Group of Companies, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
/s/ Michael I. Roth | |
Michael I. Roth | |
Chairman and Chief Executive Officer |
1. | I have reviewed this quarterly report on Form 10-Q of The Interpublic Group of Companies, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
/s/ Frank Mergenthaler | |
Frank Mergenthaler | |
Executive Vice President and Chief Financial Officer |
/s/ Michael I. Roth | |
Michael I. Roth | |
Chairman and Chief Executive Officer |
/s/ Frank Mergenthaler | |
Frank Mergenthaler | |
Executive Vice President and Chief Financial Officer |
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3 Months Ended
Document and Entity Information
Amendment Flag
false
Entity Registrant Name
INTERPUBLIC GROUP OF COMPANIES, INC.
Entity Central Index Key
0000051644
Current Fiscal Year End Date
--12-31
Entity Filer Category
Large Accelerated Filer
Document Type
10-Q
Document Period End Date
Mar. 31, 2016
Document Fiscal Year Focus
2016
Document Fiscal Period Focus
Q1
Entity Common Stock, Shares Outstanding
402,405,201
$ in Millions
ASSETS:
Cash and cash equivalents
$ 673.4
$ 1,502.9
Marketable securities
6.9
6.8
Accounts receivable, net of allowance of $52.7 and $54.2, respectively
3,718.9
4,361.0
Expenditures billable to clients
1,774.2
1,594.4
Other current assets
312.6
228.0
Total current assets
6,486.0
7,693.1
Property and equipment, net of accumulated depreciation of $969.7 and $961.9, respectively
565.1
567.2
Deferred income taxes
277.0
228.4
Goodwill
3,681.8
3,608.5
Other non-current assets
506.9
487.9
TOTAL ASSETS
11,516.8
12,585.1
LIABILITIES:
Accounts payable
5,785.1
6,672.0
Accrued liabilities
620.6
760.3
Short-term borrowings
131.7
150.1
Current portion of long-term debt
2.0
1.9
Total current liabilities
6,539.4
7,584.3
Long-term debt
1,609.9
1,610.3
Deferred compensation
414.1
464.2
Other non-current liabilities
733.2
672.6
TOTAL LIABILITIES
9,296.6
10,331.4
Redeemable noncontrolling interests (see Note 4)
246.3
251.9
STOCKHOLDERS' EQUITY:
Common stock
40.7
40.4
Additional paid-in capital
1,434.0
1,404.1
Retained earnings
1,379.0
1,437.6
Accumulated other comprehensive loss, net of tax
(787.5)
(845.6)
Stockholders Equity Subtotal Before Treasury Stock
2,066.2
2,036.5
Less: Treasury stock
(124.7)
(71.0)
Total IPG stockholders' equity
1,941.5
1,965.5
Noncontrolling interests
32.4
36.3
TOTAL STOCKHOLDERS' EQUITY
1,973.9
2,001.8
TOTAL LIABILITIES AND EQUITY
11,516.8
12,585.1
Parentheticals:
Allowance for Doubtful Accounts Receivable
52.7
54.2
Accumulated Depreciation, Property and Equipment
$ 969.7
$ 961.9
$ in Millions3 Months Ended
CASH FLOWS FROM OPERATING ACTIVITIES:
NET INCOME (LOSS)
$ 2.7
$ (4.2)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation and amortization of fixed assets and intangible assets
38.0
38.7
Provision for uncollectible receivables
3.2
2.7
Amortization of restricted stock and other non-cash compensation
23.1
16.8
Net amortization of bond discounts and deferred financing costs
1.4
1.4
Deferred income tax benefit
(28.1)
(31.8)
Losses on sales of businesses
16.3
0.1
Other
25.2
10.8
Changes in assets and liabilities, net of acquisitions and dispositions, providing (using) cash:
Accounts receivable
686.5
460.5
Expenditures billable to clients
(137.3)
(111.1)
Other current assets
(59.2)
(31.0)
Accounts payable
(981.1)
(929.9)
Accrued liabilities
(198.8)
(173.3)
Other non-current assets and liabilities
(41.0)
(30.4)
Net cash used in operating activities
(649.1)
(780.7)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures
(27.0)
(20.2)
Acquisitions, net of cash acquired
(27.0)
0.0
Other investing activities
(5.2)
0.2
Net cash used in investing activities
(59.2)
(20.0)
CASH FLOWS FROM FINANCING ACTIVITIES:
Common stock dividends
(59.9)
(49.3)
Repurchase of common stock
(53.7)
(51.2)
Net (decrease) increase in short term bank borrowings
(24.6)
34.3
Tax payments for employee shares withheld
(19.5)
(16.2)
Distributions to noncontrolling interests
(4.0)
(1.2)
Exercise of stock options
3.9
9.1
Excess tax benefit on share-based compensation
0.0
8.5
Acquisition-related payments
0.0
(2.4)
Other financing activities
(0.1)
1.1
Net cash used in financing activities
(157.9)
(67.3)
Effect of foreign exchange rate changes on cash and cash equivalents
36.7
(58.3)
Net decrease in cash and cash equivalents
(829.5)
(926.3)
Cash and cash equivalents at beginning of period
1,502.9
1,660.6
Cash and cash equivalents at end of period
$ 673.4
$ 734.3
shares in Millions, $ in Millions
Balance at Dec. 31, 2014
$ 2,151.2
$ 41.2
$ 1,547.5
$ 1,183.3
$ (636.7)
$ (19.0)
$ 2,116.3
$ 34.9
Balance, Common Stock Shares at Dec. 31, 2014
414.6
Net income (loss)
(4.2)
(1.8)
Income (Loss) Attributable to Parent
(1.8)
Net Income (Loss) Attributable to Noncontrolling Interest
(2.4)
(2.4)
Other comprehensive income (loss)
(128.8)
(128.0)
(128.0)
Other Comprehensive Income (Loss), Attributable to Noncontrolling Interest
(0.8)
Reclassifications related to redeemable noncontrolling interests
1.5
1.5
Distributions to noncontrolling interests
(1.2)
(1.2)
Change in redemption value of redeemable noncontrolling interests
(5.8)
(5.8)
(5.8)
Repurchase of common stock
(51.2)
(51.2)
(51.2)
Common stock dividends
(49.3)
(49.3)
(49.3)
Stock-based compensation, shares
2.2
Stock-based compensation, value
32.0
0.2
31.8
32.0
Exercise of stock options, shares
0.9
Exercise of stock options, value
9.2
0.1
9.1
9.2
Shares withheld for taxes, shares
(0.8)
Shares withheld for taxes, value
(17.1)
(0.1)
(17.0)
(17.1)
Excess tax benefit from stock-based compensation
8.5
8.5
8.5
Other
(0.1)
0.1
(0.2)
(0.1)
Balance at Mar. 31, 2015
1,944.7
41.4
1,580.0
1,126.2
(764.7)
(70.2)
1,912.7
32.0
Balance, Common Stock Shares at Mar. 31, 2015
416.9
Balance at Dec. 31, 2015
2,001.8
40.4
1,404.1
1,437.6
(845.6)
(71.0)
1,965.5
36.3
Balance, Common Stock Shares at Dec. 31, 2015
406.3
Net income (loss)
2.7
5.4
Income (Loss) Attributable to Parent
5.4
Net Income (Loss) Attributable to Noncontrolling Interest
(2.7)
(2.7)
Other comprehensive income (loss)
58.6
58.1
58.1
Other Comprehensive Income (Loss), Attributable to Noncontrolling Interest
0.5
Reclassifications related to redeemable noncontrolling interests
2.9
2.9
Distributions to noncontrolling interests
(4.0)
(4.0)
Change in redemption value of redeemable noncontrolling interests
(3.8)
(3.8)
(3.8)
Repurchase of common stock
(53.7)
(53.7)
(53.7)
Common stock dividends
(59.9)
(59.9)
(59.9)
Stock-based compensation, shares
3.4
Stock-based compensation, value
48.0
0.3
47.7
48.0
Exercise of stock options, shares
0.5
Exercise of stock options, value
4.0
0.1
3.9
4.0
Shares withheld for taxes, shares
(1.0)
Shares withheld for taxes, value
(22.3)
(0.1)
(22.2)
(22.3)
Other
(0.4)
0.5
(0.3)
0.2
(0.6)
Balance at Mar. 31, 2016
$ 1,973.9
$ 40.7
$ 1,434.0
$ 1,379.0
$ (787.5)
$ (124.7)
$ 1,941.5
$ 32.4
Balance, Common Stock Shares at Mar. 31, 2016
409.2
3 Months Ended
Basis of Presentation [Abstract]
Basis of Presentation
3 Months Ended
Debt Disclosure [Abstract]
Debt and Credit Arrangements
2016
2015
3 Months Ended
Earnings Per Share [Abstract]
Earnings Per Share [Text Block]
March 31,
3 Months Ended
Business Combinations [Abstract]
Business Combination Disclosure [Text Block]
March 31,
March 31,
3 Months Ended
Supplementary Data [Abstract]
Accrued Liabilities
2016
2015
2016
2015
Other Income, Net
March 31,
Share Repurchase Program
March 31,
3 Months Ended
Income Tax Disclosure [Abstract]
Income Taxes
3 Months Ended
Employee Service Share-based Compensation, Aggregate Disclosures [Abstract]
Incentive Compensation Plans
3 Months Ended
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]
Comprehensive Income (Loss) Note [Text Block]
March 31,
3 Months Ended
Defined Benefit Pension Plans and Defined Benefit Postretirement Plans Disclosure [Abstract]
Employee Benefits
3 Months Ended
Segment Reporting [Abstract]
Segment Reporting Disclosure
March 31,
2016
2015
3 Months Ended
Fair Value Disclosures [Abstract]
Fair Value Measurements
March 31,
3 Months Ended
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies
3 Months Ended
New Accounting Pronouncements and Changes in Accounting Principles [Abstract]
Recent Accounting Standards
3 Months Ended
Long-term Debt, Unclassified [Abstract]
Summary of Carrying Amounts and Fair Values of Long-term Debt
2016
2015
3 Months Ended
Earnings Per Share [Abstract]
Schedule of Earnings Per Share, Basic and Diluted
March 31,
3 Months Ended
Business Combinations [Abstract]
Cash Paid For Current And Prior Years' Acquisitions [Table Text Block]
March 31,
Redeemable Noncontrolling Interest [Table Text Block]
March 31,
3 Months Ended
Supplementary Data (Tables) [Abstract]
Accrued Liabilities
2016
2015
2016
2015
Other (Expense) Income, Net
March 31,
Share Repurchase Program [Table Text Block]
March 31,
3 Months Ended
Employee Service Share-based Compensation, Aggregate Disclosures [Abstract]
Stock-based Compensation Awards
3 Months Ended
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]
Schedule of Accumulated Other Comprehensive Income (Loss)
Disclosure of Reclassification Amount
March 31,
3 Months Ended
Defined Benefit Pension Plans and Defined Benefit Postretirement Plans Disclosure [Abstract]
Schedule of Net Periodic Costs
3 Months Ended
Segment Reporting [Abstract]
Schedule of Segment Reporting Information, by Segment
March 31,
2016
2015
3 Months Ended
Fair Value Disclosures [Abstract]
Fair Value, Assets and Liabilities Measured on Recurring Basis
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation
March 31,
Fair Value, Assets and Liabilities Measured on Nonrecurring Basis
$ in Millions3 Months Ended
Debt Instrument [Line Items]
Long-term Debt, Gross
$ 1,611.9
$ 1,612.2
Long-term Debt, Current Maturities
2.0
1.9
Long-term Debt, Excluding Current Maturities
$ 1,609.9
1,610.3
2.25% Notes
Debt Instrument [Line Items]
Debt Instrument, Maturity Date
Nov. 15, 2017
Debt Instrument, Interest Rate, Stated Percentage
2.25%
Debt Instrument, Interest Rate, Effective Percentage
2.30%
Debt Instrument, Unamortized Discount
$ 0.2
Debt Instrument, Unamortized Debt Issuance Costs
0.8
Long-term Debt, Gross
299.0
298.8
Long-term Debt, Fair Value
[1]
$ 299.7
299.3
4.00% Notes
Debt Instrument [Line Items]
Debt Instrument, Maturity Date
Mar. 15, 2022
Debt Instrument, Interest Rate, Stated Percentage
4.00%
Debt Instrument, Interest Rate, Effective Percentage
4.13%
Debt Instrument, Unamortized Discount
$ 1.9
Debt Instrument, Unamortized Debt Issuance Costs
1.5
Long-term Debt, Gross
246.6
246.4
Long-term Debt, Fair Value
[1]
$ 257.5
250.9
3.75% Notes
Debt Instrument [Line Items]
Debt Instrument, Maturity Date
Feb. 15, 2023
Debt Instrument, Interest Rate, Stated Percentage
3.75%
Debt Instrument, Interest Rate, Effective Percentage
4.32%
Debt Instrument, Unamortized Discount
$ 1.1
Debt Instrument, Unamortized Debt Issuance Costs
2.8
Long-term Debt, Gross
496.1
496.0
Long-term Debt, Fair Value
[1]
$ 497.1
484.8
4.20% Notes
Debt Instrument [Line Items]
Debt Instrument, Maturity Date
Apr. 15, 2024
Debt Instrument, Interest Rate, Stated Percentage
4.20%
Debt Instrument, Interest Rate, Effective Percentage
4.24%
Debt Instrument, Unamortized Discount
$ 0.8
Debt Instrument, Unamortized Debt Issuance Costs
3.3
Long-term Debt, Gross
495.9
495.8
Long-term Debt, Fair Value
[1]
517.2
496.4
Other notes payable and capitalized leases
Debt Instrument [Line Items]
Long-term Debt, Gross
74.3
75.2
Long-term Debt, Fair Value
[1]
$ 74.3
$ 75.2
[1]
See Note 11 for information on the fair value measurement of our long-term debt.
$ in Millions3 Months Ended
Line of Credit Facility [Abstract]
Line of Credit Facility, Expiration Date
Oct. 20, 2020
Line of Credit Facility, Maximum Borrowing Capacity
$ 1,000.0
Line of Credit Facility, Available Capacity Increase Amount
250.0
Line of Credit Facility, Limit on Letters of Credit
$ 200.0
$ / shares in Units, shares in Millions, $ in Millions3 Months Ended
Earnings Per Share [Abstract]
Net income (loss) available to IPG common stockholders
$ 5.4
$ (1.8)
Weighted-average number of common shares outstanding, Basic
400.6
Incremental Common Shares Attributable to Dilutive Effect of Share-based Payment Arrangements
8.7
Weighted-average number of common shares outstanding, Diluted
409.3
Weighted Average Number of Shares Outstanding, Basic and Diluted
411.1
Earnings per share, Basic
$ 0.01
$ 0.00
Earnings per share, Diluted
$ 0.01
$ 0.00
3 Months Ended
Earnings Per Share [Abstract]
Increase in shares in the effect of dilutive securities due to adoption of new guidance
1.4
Potential shares of restricted stock, stock options and other equity awards excluded from the diluted loss per share calculation
6.3
$ in Millions3 Months Ended
Number of Businesses Acquired
3
Business Combination, Goodwill and Intangibles Recorded | $
$ 66.7
IAN
Number of Businesses Acquired
1
CMG
Number of Businesses Acquired
2
$ in Millions3 Months Ended
Business Combinations [Abstract]
Cost of investment: current-year acquisitions
$ 29.8
$ 0.0
Cost of investment: prior-year acquisition
0.5
2.4
Less: net cash acquired
(3.3)
0.0
Total cost of investment
27.0
2.4
Operating expense
[1]
0.0
0.4
Total cash paid for acquisitions
[2]
27.0
2.8
Payments to acquire businesses, investing activity
27.0
0.0
Payments for previous acquisition, financing activity
$ 0.0
$ 2.4
[1]
Represents cash payments made that were either in excess of the initial value of contingent payments or contingent upon the future employment of the former owners of the acquired companies and are recorded in the operating section of the Consolidated Statements of Cash Flows.
[2]
$27.0 for the three months ended March 31, 2016 is classified under the investing section of the unaudited Consolidated Statements of Cash Flows, as acquisitions, net of cash acquired. This amount relates to initial payments for new transactions. $2.4 of cash paid for three months ended March 31, 2015 is classified under the financing section of the unaudited Consolidated Statements of Cash Flows as acquisition-related payments. This amount relates to deferred payments and increases in our ownership interest for prior acquisitions.
$ in Millions3 Months Ended
Business Combinations [Abstract]
Balance at beginning of period
$ 251.9
$ 257.4
Change in related noncontrolling interest balance
(2.9)
(2.1)
Redemptions and other
(9.0)
(15.7)
Redemption value adjustments
6.3
3.2
Balance at end of period
$ 246.3
$ 242.8
$ in Millions
Accrued Liabilities [Abstract]
Salaries, benefits and related expenses
$ 333.2
$ 502.4
Acquisition obligations
72.5
50.1
Office and related expenses
43.0
51.0
Interest
16.7
17.3
Restructuring and other reorganization-related
2.8
3.3
Other
152.4
136.2
Total accrued liabilities
$ 620.6
$ 760.3
$ in Millions3 Months Ended
Disposal Group, Not Discontinued Operation, Disposal Disclosures [Abstract]
Assets held for sale
$ 20.3
Liabilities held for sale
27.8
Other Income and Expenses [Abstract]
Losses on sales of businesses and investments
(16.3)
$ (0.1)
Other (expense) income, net
(0.8)
0.4
Total other (expense) income, net
$ (17.1)
$ 0.3
$ / shares in Units, shares in Millions, $ in Millions3 Months Ended
Share Repurchase Program [Abstract]
Stock Repurchase Program, Authorized Amount
$ 300.0
$ 300.0
Number of shares repurchased
2.5
2.5
Aggregate cost, including fees
$ 53.7
$ 51.2
Average price per share, including fees
$ 21.67
$ 20.84
Stock Repurchase Program, Remaining Authorized Repurchase Amount
$ 404.9
$ in Millions3 Months Ended
Income Tax Disclosure [Abstract]
Valuation Allowance, Deferred Tax Asset, Increase (Decrease), Amount
$ 12.2
Excess Tax Benefit from Share-based Compensation
$ 7.5
$ in Millions
Maximum [Member]
Significant Change in Unrecognized Tax Benefits is Reasonably Possible [Line Items]
Decrease in Unrecognized Tax Benefits is Reasonably Possible
$ 45.0
Minimum [Member]
Significant Change in Unrecognized Tax Benefits is Reasonably Possible [Line Items]
Decrease in Unrecognized Tax Benefits is Reasonably Possible
$ 35.0
shares in Millions3 Months Ended
Stock-settled awards
Incentive Compensation Plans
Granted awards
0.9
Weighted Average Grant Date Fair Value | $ / shares
$ 21.59
Performance based awards
Incentive Compensation Plans
Granted awards
3.2
Weighted Average Grant Date Fair Value | $ / shares
$ 19.54
Total stock-based compensation awards
Incentive Compensation Plans
Granted awards
4.1
$ in Millions3 Months Ended
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Performance cash awards granted during the period target value
$ 40.4
Restricted cash awards granted during the period target value
$ 3.5
Cash awards vesting period
3 years
$ in Millions3 Months Ended
Foreign currency translation adjustment:
Balance at beginning of period
$ (665.6)
$ (436.3)
Other comprehensive income before reclassifications
49.5
(134.3)
Amount reclassified from accumulated other comprehensive loss, net of tax
5.9
(0.5)
Balance at end of period
(610.2)
(571.1)
Available-for-sale securities:
Balance at beginning of period
1.3
0.8
Other comprehensive income before reclassifications
0.1
0.2
Amount reclassified from accumulated other comprehensive loss, net of tax
0.0
(0.3)
Balance at end of period
1.4
0.7
Derivative instruments:
Balance at beginning of period
(9.6)
(10.9)
Other comprehensive income before reclassifications
0.0
0.0
Amount reclassified from accumulated other comprehensive loss, net of tax
0.3
0.3
Balance at end of period
(9.3)
(10.6)
Defined benefit pension and other postretirement plans:
Balance at beginning of period
(171.7)
(190.3)
Other comprehensive income before reclassifications
0.3
4.5
Amount reclassified from accumulated other comprehensive loss,net of tax
2.0
2.1
Balance at end of period
(169.4)
(183.7)
Total:
Balance at beginning of period
(845.6)
(636.7)
Other comprehensive income before reclassifications
49.9
(129.6)
Amount reclassified from accumulated other comprehensive loss, net of tax
8.2
1.6
Balance at end of period
$ (787.5)
$ (764.7)
$ in Millions3 Months Ended
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]
Foreign currency translation adjustments
$ 5.9
$ (0.5)
Losses on derivative instruments
0.5
0.5
Amortization of defined benefit pension and postretirement plans items
[1]
2.7
3.0
Tax effect
(0.9)
(1.4)
Total amount reclassified from accumulated other comprehensive loss, net of tax
$ (8.2)
$ (1.6)
[1]
These accumulated other comprehensive loss components are included in the computation of net periodic cost. See Note 9 for further information.
$ in Millions3 Months Ended
Domestic Pension Plan
Defined Pension and Postretirement Benefit Plans
Service cost
$ 0.0
$ 0.0
Interest cost
1.5
1.5
Expected return on plan assets
(1.7)
(1.9)
Amortization of:
Prior service credit
0.0
0.0
Unrecognized actuarial losses
1.9
2.0
Net periodic cost
1.7
1.6
Foreign Pension Plans
Defined Pension and Postretirement Benefit Plans
Service cost
2.7
2.5
Interest cost
4.5
4.7
Expected return on plan assets
(5.3)
(5.1)
Amortization of:
Prior service credit
0.0
0.0
Unrecognized actuarial losses
0.9
1.0
Net periodic cost
2.8
3.1
Pension Plan - Employer Contributions
8.5
Pension Plan - Estimated Employer Contributions Current fiscal year
15.0
Domestic Postretirement Benefit Plan
Defined Pension and Postretirement Benefit Plans
Service cost
0.0
0.0
Interest cost
0.4
0.4
Expected return on plan assets
0.0
0.0
Amortization of:
Prior service credit
(0.1)
0.0
Unrecognized actuarial losses
0.0
0.0
Net periodic cost
$ 0.3
$ 0.4
$ in Millions3 Months Ended
Segments:
Revenue
$ 1,742.0
$ 1,676.0
OPERATING INCOME
20.9
7.8
Interest expense
22.6
20.9
Interest income
5.8
7.2
Other (expense) income, net
(17.1)
0.3
Loss before income taxes
(13.0)
(5.6)
Depreciation and amortization of fixed assets and intangible assets
38.0
38.7
Capital expenditures
27.0
20.2
IAN
Segments:
Revenue
1,401.6
1,345.1
OPERATING INCOME
39.7
31.4
Depreciation and amortization of fixed assets and intangible assets
27.6
29.4
Capital expenditures
20.3
12.1
CMG
Segments:
Revenue
340.4
330.9
OPERATING INCOME
20.4
19.9
Depreciation and amortization of fixed assets and intangible assets
4.8
4.6
Capital expenditures
1.5
1.1
Corporate and Other
Segments:
OPERATING INCOME
(39.2)
(43.5)
Depreciation and amortization of fixed assets and intangible assets
5.6
4.7
Capital expenditures
$ 5.2
$ 7.0
$ in Millions
Segments:
Assets
$ 11,516.8
$ 12,585.1
IAN
Segments:
Assets
10,314.6
10,738.2
CMG
Segments:
Assets
1,359.1
1,338.6
Corporate and Other
Segments:
Assets
$ (156.9)
$ 508.3
$ in Millions
Level 1
Fair value assets and liabilities measured on recurring and nonrecurring basis
Cash equivalents
$ 154.5
$ 875.7
Short-term marketable securities
6.9
6.8
Long-term investments
0.5
0.4
Fair Value of Total Assets, Recurring
$ 161.9
$ 882.9
Fair value of assets measured on a recurring basis, percentage of total assets
1.40%
7.00%
Mandatorily redeemable noncontrolling interests
[1]
$ 0.0
$ 0.0
Level 2
Fair value assets and liabilities measured on recurring and nonrecurring basis
Cash equivalents
0.0
0.0
Short-term marketable securities
0.0
0.0
Long-term investments
0.0
0.0
Fair Value of Total Assets, Recurring
$ 0.0
$ 0.0
Fair value of assets measured on a recurring basis, percentage of total assets
0.00%
0.00%
Mandatorily redeemable noncontrolling interests
[1]
$ 0.0
$ 0.0
Level 3
Fair value assets and liabilities measured on recurring and nonrecurring basis
Cash equivalents
0.0
0.0
Short-term marketable securities
0.0
0.0
Long-term investments
0.0
0.0
Fair Value of Total Assets, Recurring
$ 0.0
$ 0.0
Fair value of assets measured on a recurring basis, percentage of total assets
0.00%
0.00%
Mandatorily redeemable noncontrolling interests
[1]
$ 56.9
$ 45.0
Fair Value, Total
Fair value assets and liabilities measured on recurring and nonrecurring basis
Cash equivalents
154.5
875.7
Short-term marketable securities
6.9
6.8
Long-term investments
0.5
0.4
Fair Value of Total Assets, Recurring
$ 161.9
$ 882.9
Fair value of assets measured on a recurring basis, percentage of total assets
1.40%
7.00%
Mandatorily redeemable noncontrolling interests
[1]
$ 56.9
$ 45.0
[1]
Relates to unconditional obligations to purchase additional noncontrolling equity shares of consolidated subsidiaries. Fair value measurement of the obligation was based upon the amount payable as if the forward contracts were settled. The amount redeemable within the next twelve months is classified in accrued liabilities; any interests redeemable thereafter are classified in other non-current liabilities.
$ in Millions3 Months Ended
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation
Balance at beginning of period
$ 45.0
$ 32.8
Level 3 additions
10.4
15.0
Level 3 reductions
(0.1)
(1.4)
Realized losses included in net income
1.8
0.4
Foreign currency translation
(0.2)
0.0
Balance at end of period
$ 56.9
$ 46.8
$ in Millions
Level 1
Fair value assets and liabilities measured on recurring and nonrecurring basis
Total long-term debt
$ 0.0
$ 0.0
Level 2
Fair value assets and liabilities measured on recurring and nonrecurring basis
Total long-term debt
1,571.5
1,531.4
Level 3
Fair value assets and liabilities measured on recurring and nonrecurring basis
Total long-term debt
74.3
75.2
Fair Value, Total
Fair value assets and liabilities measured on recurring and nonrecurring basis
Total long-term debt
$ 1,645.8
$ 1,606.6
$ in Millions
Commitments and Contingencies Disclosure [Abstract]
Lease guarantees
$ 840.3
$ 619.4
Credit facility guarantees
$ 350.8
$ 336.5
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