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Form 8-K INTERPUBLIC GROUP OF For: Apr 24

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April 24, 2015 1:26 PM EDT


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 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 24, 2015
 
The Interpublic Group of Companies, Inc.
(Exact Name of Registrant as Specified in Charter)
 Delaware
1-6686
13-1024020
(State or Other Jurisdiction
of Incorporation)
(Commission File
Number)
(IRS Employer
Identification No.)
 
 
 
1114 Avenue of the Americas, New York, New York
10036
(Address of Principal Executive Offices)
(Zip Code)
 
 
Registrant’s telephone number, including area code: 212-704-1200
 
(Former Name or Former Address, if Changed Since Last Report)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
  
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))


















Item 2.02. Results of Operations and Financial Condition.

On April 24, 2015, The Interpublic Group of Companies, Inc. (i) issued a press release, a copy of which is attached hereto as Exhibit 99.1 and incorporated by reference herein, announcing its results for the first quarter of 2015, (ii) held a conference call to discuss the foregoing results and (iii) posted an investor presentation, a copy of which is attached hereto as Exhibit 99.2 and incorporated by reference herein, on its website in connection with the conference call.

Item 9.01. Financial Statements and Exhibits.

Exhibit 99.1: Press release dated April 24, 2015 (furnished pursuant to Item 2.02)

Exhibit 99.2: Investor presentation dated April 24, 2015 (furnished pursuant to Item 2.02)



















































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.
 
 
THE INTERPUBLIC GROUP OF COMPANIES, INC.
Date: April 24, 2015
By:  
        /s/ Andrew Bonzani                           
 
 
Name:   Andrew Bonzani
Title:     Senior Vice President, General Counsel and
              Secretary














FOR IMMEDIATE RELEASE                     New York, NY (April 24, 2015)


INTERPUBLIC ANNOUNCES FIRST QUARTER 2015 RESULTS

•
Strong organic revenue increase of 5.7% and reported revenue increase of 2.4%
•
First quarter operating income of $7.8 million, compared to an operating loss of $11.7 million a year ago, in seasonally small first quarter
•
Break-even first quarter earnings per share, compared to a loss per share of $0.05 in the prior-year period
•
Company remains well-positioned to achieve 2015 financial targets

Summary

Revenue
•
First quarter 2015 revenue was $1.68 billion, compared to $1.64 billion in the first quarter of 2014, with an organic revenue increase of 5.7% compared to the prior-year period. This was comprised of an organic increase of 6.1% in the U.S. and 5.1% internationally.

Operating Results
•
Operating income in the first quarter of 2015 was $7.8 million, compared to an operating loss of $11.7 million in 2014.
•
Operating margin was 0.5% for the first quarter of 2015, compared to (0.7)% in 2014.

Net Results
•
First quarter 2015 net loss available to IPG common stockholders was $1.8 million, resulting in break-even earnings per basic and diluted share. This compares to net loss available to IPG common stockholders a year ago of $20.9 million, resulting in a loss of $0.05 per basic and diluted share.

“We are pleased to report first quarter results that feature strong organic growth, as well as progress in terms of operating profit. We continue to see the benefits of our long-term investments in talent and our commitment to embedding digital capabilities and expertise

Interpublic Group 1114 Avenue of the Americas New York, NY 10036 212-704-1200 tel 212-704-1201 fax



throughout our portfolio,” said Michael I. Roth, Interpublic’s Chairman and CEO. “We believe this approach is consistent with the changing dynamics of media usage and consumer behavior. This strategy places our integrated marketing solutions, led by our outstanding strategic and creative capabilities, at the center of a connected world. During the quarter, we saw solid contributions to our performance from across our agency portfolio, with particular strength in the US, as well as significant growth in Asia and the UK. Our capital structure will continue to be a source of value creation. Looking forward, we believe that we remain well positioned to achieve our 2015 targets of 3-4% organic revenue growth and 80-100 basis points of improvement in operating margin, thereby further enhancing shareholder value.”


Operating Results

Revenue
Revenue of $1.68 billion in the first quarter of 2015 increased 2.4% compared with the same period in 2014. During the quarter, the effect of foreign currency translation was negative 4.4%, the impact of net acquisitions was positive 1.1%, and the resulting organic revenue increase was 5.7%.

Operating Expenses
During the first quarter of 2015, salaries and related expenses were $1.22 billion, an increase of 2.2% compared to the same period in 2014. After adjusting for currency effects and the impact of net acquisitions, salaries and related expenses increased 5.7% organically.

Staff cost ratio, which is total salaries and related expenses as a percentage of total revenue, was 72.5% in the first quarter of 2015 compared to 72.6% in the same period in 2014.

During the first quarter of 2015, office and general expenses were $453.0 million, a decrease of 1.7% compared to the same period in 2014. After adjusting for currency effects and the impact of net acquisitions, office and general expenses increased 2.1% organically.

Non-Operating Results and Tax
Net interest expense of $13.7 million decreased by $0.3 million, or 2.1%, in the first quarter of 2015 compared to the same period in 2014.

The income tax benefit in the first quarter of 2015 was $1.4 million on loss before income taxes of $5.6 million, compared to a benefit of $1.7 million on loss before income taxes of $24.0 million in the same period in 2014. The effective income tax rate for the first quarter of 2015 was 25.0%, compared to 7.1% for the same period in 2014.


Interpublic Group 1114 Avenue of the Americas New York, NY 10036 212-704-1200 tel 212-704-1201 fax



Balance Sheet
At March 31, 2015, cash, cash equivalents and marketable securities totaled $741.2 million, compared to $1.67 billion at December 31, 2014. Total debt was $1.76 billion at March 31, 2015, compared to $1.73 billion at December 31, 2014.

Share Repurchase Program and Common Stock Dividend
During the first quarter of 2015, the company repurchased 2.5 million shares of its common stock at an aggregate cost of $51.2 million and an average price of $20.84 per share, including fees. During the first quarter of 2015, the company declared and paid a common stock cash dividend of $0.12 per share, for a total of $49.3 million.

For more information concerning the company's financial results, please refer to the accompanying slide presentation available on our website, www.interpublic.com.

# # #
About Interpublic
Interpublic is one of the world's leading organizations of advertising agencies and marketing services companies. Major global brands include BPN, Craft, FCB (Foote, Cone & Belding), FutureBrand, Golin, Huge, Initiative, Jack Morton Worldwide, Lowe and Partners, MAGNA GLOBAL, McCann, Momentum, MRM//McCann, Octagon, R/GA, UM and Weber Shandwick. Leading domestic brands include Avrett Free Ginsberg, Carmichael Lynch, Deutsch, Hill Holliday, ID Media, Mithun, Mullen and The Martin Agency. For more information, please visit www.interpublic.com.

# # #

Contact Information
Tom Cunningham
(Press)
(212) 704-1326

Jerry Leshne
(Analysts, Investors)
(212) 704-1439

Interpublic Group 1114 Avenue of the Americas New York, NY 10036 212-704-1200 tel 212-704-1201 fax



Cautionary Statement
This release contains forward-looking statements. Statements in this release that are not historical facts, including statements about management's beliefs and expectations, constitute forward-looking statements. These statements are based on current plans, estimates and projections, and are subject to change based on a number of factors, including those outlined under Item 1A, Risk Factors, in our most recent Annual Report on Form 10-K. 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.
Forward-looking statements involve inherent risks and uncertainties. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. Such factors include, but are not limited to, the following:
•
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.
Investors should carefully consider these factors and the additional risk factors outlined in more detail under Item 1A, Risk Factors, in our most recent Annual Report on Form 10-K.

Interpublic Group 1114 Avenue of the Americas New York, NY 10036 212-704-1200 tel 212-704-1201 fax



THE INTERPUBLIC GROUP OF COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED SUMMARY OF EARNINGS
FIRST QUARTER REPORT 2015 AND 2014
(Amounts in Millions except Per Share Data)
(UNAUDITED)
 
 
 
 
 
Three months ended March 31,
 
 
2015
 
2014
 
Fav. (Unfav.)
% Variance
Revenue:
 
 
 
 
 
 
United States
$
1,003.8

 
$
939.0

 
6.9
 %
 
International
672.2

 
698.5

 
(3.8
)%
Total Revenue
1,676.0

 
1,637.5

 
2.4
 %
 
 
 
 
 
 
 
Operating Expenses:
 
 
 
 
 
 
Salaries and Related Expenses
1,215.2

 
1,188.6

 
(2.2
)%
 
Office and General Expenses
453.0

 
460.6

 
1.7
 %
Total Operating Expenses
1,668.2

 
1,649.2

 
(1.2
)%
Operating Income (Loss)
7.8

 
(11.7
)
 
N/M

Operating Margin %
0.5
%
 
(0.7
)%
 
 
 
 
 
 
 
 
 
Expenses and Other Income:
 
 
 
 
 
 
Interest Expense
(20.9
)
 
(20.2
)
 
 
 
Interest Income
7.2

 
6.2

 
 
 
Other Income, Net
0.3

 
1.7

 
 
Total (Expenses) and Other Income
(13.4
)
 
(12.3
)
 
 
 
 
 
 
 
 
 
Loss before Income Taxes
(5.6
)
 
(24.0
)
 
 
Benefit of Income Taxes
(1.4
)
 
(1.7
)
 
 
Loss of Consolidated Companies
(4.2
)
 
(22.3
)
 
 
 
Equity in Net Loss of Unconsolidated Affiliates
0.0

 
(0.1
)
 
 
Net Loss
(4.2
)
 
(22.4
)
 
 
 
Net Loss Attributable to Noncontrolling Interests
2.4

 
1.5

 
 
Net Loss Available to IPG Common Stockholders
$
(1.8
)
 
$
(20.9
)
 
 
 
 
 
 
 
 
Loss Per Share Available to IPG Common Stockholders - Basic and Diluted
$
0.00

 
$
(0.05
)
 
 
 
 
 
 
 
 
Weighted-Average Number of Common Shares Outstanding - Basic and Diluted
411.1

 
422.8

 
 
 
 
 
 
 
 
Dividends Declared Per Common Share
$
0.120

 
$
0.095

 
 
 
 
 
 
 
 
N/M - Not meaningful
 
 
 
 
 






Interpublic Group 1114 Avenue of the Americas New York, NY 10036 212-704-1200 tel 212-704-1201 fax

FIRST QUARTER 2015 EARNINGS CONFERENCE CALL April 24, 2015

 
• Organic revenue growth was 5.7% from Q1-14, 2.4% as reported  U.S. organic growth was 6.1%  International organic growth was 5.1%  Currency impact was -4.4% • Operating income was $8 million, improved from loss of $12 million a year ago, in seasonally small Q1 • Operating margin improved 120 basis points • EPS was break-even, compared with a loss of $0.05 a year ago Overview – First Quarter 2015 Page 2 See reconciliation of organic revenue change on page 15.

 
Operating Performance (Amounts in Millions, except per share amounts) Page 3 2015 2014 Revenue 1,676.0$ 1,637.5$ Salaries and Related Expenses 1,215.2 1,188.6 Office and General Expenses 453.0 460.6 Operating Income (Loss) 7.8 (11.7) Interest Expense (20.9) (20.2) Interest Income 7.2 6.2 Other Income, net 0.3 1.7 Loss Before Income Taxes (5.6) (24.0) Benefit of Income Taxes (1.4) (1.7) Equity in Net Loss of Unconsolidated Affiliates - (0.1) Net Loss (4.2) (22.4) Net Loss Attributable to Noncontrolling Interests 2.4 1.5 (1.8)$ (20.9)$ Loss per Share Available to IPG Common Stockholders - Basic and Diluted 0.00$ (0.05)$ Weighted-Average Number of Common Shares Outstanding - Basic and Diluted 411.1 422.8 Dividends Declared per Common Share 0.120$ 0.095$ Three Months Ended March 31, Net L ss Available to IPG Common Stockholders

 
Revenue ($ in Millions) Page 4 See reconciliation of segment organic revenue change on page 15. Integrated Agency Networks (“IAN”): McCann Worldgroup, FCB (Foote, Cone & Belding), Lowe & Partners, IPG Mediabrands, our digital specialist agencies and our domestic integrated agencies Constituency Management Group (“CMG”): Weber Shandwick, Golin, Jack Morton, FutureBrand, Octagon and our other marketing service specialists 2015 2014 Total Organic IAN 1,349.9$ 1,315.7$ 2.6% 6.7% CMG 326.1$ 321.8$ 1.3 1.6 Change Three Months Ended March 31, $ % Change March 31, 2014 1,637.5$ Total change 38.5 2.4% Foreign currency (71.9) (4.4%) Net acquisitions/(divestitures) 17.3 1.1% Organic 93.1 5.7% March 31, 2015 1,676.0$ Three Months Ended

 
Total Organic United States 6.9% 6.1% International (3.8%) 5.1% United Kingdom (1.6%) 6.4% Continental Europe (7.5%) 3.5% Asia Pacific (0.4%) 6.0% Latin America (14.5%) (0.7%) All Other Markets 3.5% 10.4% Worldwide 2.4% 5.7% Three Months Ended March 31, 2015 Geographic Revenue Change Page 5 “All Other Markets” includes Canada, Africa and the Middle East. See reconciliation of organic revenue change on page 15.

 
(0.9%) 0.9% 3.8% 3.7% (10.8%) 7.0% 6.1% 0.7% 2.8% 5.5% (12.0%) (10.0%) (8.0%) (6.0%) (4.0%) (2.0%) 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% Q4-05 Q4-06 Q4-07 Q4-08 Q4-09 Q4-10 Q4-11 Q4-12 Q4-13 Q4-14 Organic Revenue Growth Page 6 See reconciliation on page 16. Trailing Twelve Months Q1-15 5.4%

 
Expenses ($ in Millions) Page 7 See reconciliation of organic measures on page 15. Salaries & Related 2015 2014 $ Total Organic Three Months Ended March 31, 1,215.2$ 1,188.6$ 26.6$ 2.2% 5.7% % of Revenue 72.5% 72.6% Three months severance 17.3$ 20.4$ (3.1)$ (15.2%) % of Revenue 1.0% 1.2% Office & General 2015 2014 $ Total Organic Three Months Ended March 31, 453.0$ 460.6$ (7.6)$ (1.7%) 2.1% % of Revenue 27.0% 28.1% Three months occupancy expense (ex-D&A) 121.7$ 127.2$ (5.5)$ (4.3%) % of Revenue 7.3% 7.8% Change Change

 
(1.7%) 1.7% 5.3% 8.5% 5.7% 8.4% 9.8% 9.8% 8.4% 10.5% 10.7% 9.3% (4.0%) (2.0%) 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% Q4-05 Q4-06 Q4-07 Q4-08 Q4-09 Q4-10 Q4-11 Q4-12 Q4-13 Q4-14 Operating Margin Page 8 Trailing Twelve Months Q1-15 For the twelve months ended December 31, 2013, reported operating income of $598.3 includes our Q4 2013 restructuring charge of $60.6. Excluding this charge, adjusted operating income was $658.9, and adjusted operating margin is represented in green. ($ in Millions)

 
Balance Sheet – Current Portion ($ in Millions) Page 9 March 31, December 31, March 31, 2015 2014 2014 CURRENT ASSETS: Cash and cash equivalents 734.3$ 1,660.6$ 771.0$ Marketable securities 6.9 6.6 5.6 Accounts receivable, net 3,781.4 4,376.6 4,013.4 Expenditures billable to clients 1,497.8 1,424.2 1,692.7 Other current assets 367.1 342.2 399.2 Total current assets 6,387.5$ 7,810.2$ 6,881.9$ CURRENT LIABILITIES: Accounts payable 5,468.5$ 6,558.0$ 6,048.5$ Accrued liabilities 618.7 796.0 587.4 Short-term borrowings 135.7 107.2 171.1 Current portion of long-term debt 2.0 2.1 353.2 Total current liabilities 6,224.9$ 7,463.3$ 7,160.2$

 
2015 2014 NET LOSS (4)$ (22)$ OPERATING ACTIVITIES Depreciation & amortization 57 57 Deferred taxes (32) (23) Other non-cash items 13 7 Change in working capital, net (801) (723) Other non-current assets & liabilities (30) (22) Net cash used in Operating Activities (797) (726) INVESTING ACTIVITIES Capital expenditures (20) (27) Acquisitions & deferred payments, net - (22) Business, investment & fixed asset purchases/sales, net - 2 Net cash used in Investing Activities (20) (47) FINANCING ACTIVITIES Repurchase of common stock (51) (45) Common stock dividends (49) (40) Acquisition-related payments (2) (3) Distributions to noncontrolling interests (1) (6) Net increase (decrease) in short-term bank borrowings 34 (7) Exercise of stock options 9 6 Excess tax benefit from share-based payment arrangements 9 3 Other financing activities - 1 Net cash used in Financing Activities (51) (91) Currency Effect (58) (2) Decrease in Cash & S/T Marketable Securities (926)$ (866)$ Three Months Ended March 31, Cash Flow ($ in Millions) Page 10

 
$2,349 $2,120 $1,947 $1,737 $1,769 $1,652 $1,663 $1,733 $1,758 $1,000 $1,500 $2,000 $2,500 $3,000 12/31/2007 12/31/2008 12/31/2009 12/31/2010 12/31/2011 12/31/2012 12/31/2013 12/31/2014 3/31/2015 $2,450 Total Debt (1) ($ in Millions) Page 11 (2) (1) Includes current portion of long-term debt, short-term borrowings and long-term debt. (2) Includes our November 2012 debt issuances of $800 aggregate principal amount of Senior Notes, which pre-funded our plan to redeem a similar amount of debt in 2013.

 
• Q1 a solid start on FY-15 performance objectives • Traction from key strategic initiatives  Quality of our agency offerings, creative talent and “open architecture” solutions  Digital strength across disciplines  Effective expense management • Focus is on continued margin improvement • Financial strength continues to be a source of value creation  Investment grade ratings at all three credit rating agencies  Raised dividend and authorized new share repurchase program (in February) Summary Page 12

 
Appendix

 
Depreciation and Amortization ($ in Millions) Page 14 Q1 Q2 Q3 Q4 YTD 2015 Depreciation and amortization of fixed assets and intangible assets 38.7$ 38.7$ Amortization of restricted stock and other non-cash compensation 16.8 16.8 Net amortization of bond discounts and deferred financing costs 1.4 1.4 Q1 Q2 Q3 Q4 FY 2014 Depreciati n and amortization of fixed assets and intangible assets 40.5$ 40.2$ 41.0$ 41.3$ 163.0$ Amortization of restricted stock and other non-cash compensation 15.1 11.1 11.7 16.4 54.3 Net amortization of bond discounts and deferred financing costs 1.0 1.3 1.4 1.4 5.1 2015 2014

 
Three Months Ended March 31, 2014 Foreign Currency Net Acquisitions / (Divestitures) Three Months Ended March 31, 2015 Organic Total Segment Revenue IAN 1,315.7$ (60.4)$ 6.8$ 87.8$ 1,349.9$ 6.7% 2.6% CMG 321.8 (11.5) 10.5 5.3 326.1 1.6% 1.3% Total 1,637.5$ (71.9)$ 17.3$ 93.1$ 1,676.0$ 5.7% 2.4% Geographic United States 939.0$ -$ 7.6$ 57.2$ 1,003.8$ 6.1% 6.9% International 698.5 (71.9) 9.7 35.9 672.2 5.1% (3.8%) United Kingdom 167.6 (13.4) - 10.7 164.9 6.4% (1.6%) Continental Europe 167.7 (28.3) 9.9 5.8 155.1 3.5% (7.5%) Asia Pacific 188.6 (12.0) (0.1) 11.3 187.8 6.0% (0.4%) Latin America 90.6 (12.4) (0.1) (0.6) 77.5 (0.7%) (14.5%) All Other Markets 84.0 (5.8) - 8.7 86.9 10.4% 3.5% Worldwide 1,637.5$ (71.9)$ 17.3$ 93.1$ 1,676.0$ 5.7% 2.4% Expenses Salaries & Related 1,188.6$ (53.5)$ 12.3$ 67.8$ 1,215.2$ 5.7% 2.2% Office & General 460.6 (20.9) 3.5 9.8 453.0 2.1% (1.7%) Total 1,649.2$ (74.4)$ 15.8$ 77.6$ 1,668.2$ 4.7% 1.2% Components of Change Change Organic Reconciliation of Organic Measures ($ in Millions) Page 15

 
Last Twelve Months Ending Beginning of Period Revenue Foreign Currency Net Acquisitions / (Divestitures) Organic End of Period Revenue 12/31/05 6,387.0$ 40.4$ (107.4)$ (56.2)$ 6,263.8$ 3/31/06 6,323.8 (10.9) (132.6) 81.5 6,261.8 6/30/06 6,418.4 (8.8) (157.5) (68.5) 6,183.6 9/30/06 6,335.9 (13.9) (140.4) 15.6 6,197.2 12/31/06 6,263.8 20.7 (165.5) 57.8 6,176.8 3/31/07 6,261.8 78.4 (147.2) 16.0 6,209.0 6/30/07 6,183.6 102.4 (124.7) 166.6 6,327.9 9/30/07 6,197.2 137.3 (110.9) 209.2 6,432.8 12/31/07 6,176.8 197.5 (70.7) 233.1 6,536.7 3/31/08 6,209.0 217.8 (45.9) 280.6 6,661.5 6/30/08 6,327.9 244.8 (12.6) 282.4 6,842.5 9/30/08 6,432.8 237.4 32.8 317.2 7,020.2 12/31/08 6,536.7 71.5 87.6 243.0 6,938.8 3/31/09 6,661.5 (88.3) 114.7 91.9 6,779.8 6/30/09 6,842.5 (286.2) 139.2 (275.3) 6,420.2 9/30/09 7,020.2 (390.1) 115.2 (636.4) 6,108.9 12/31/09 6,938.8 (251.6) 69.1 (748.9) 6,007.4 3/31/10 6,779.8 (88.2) 36.0 (705.4) 6,022.2 6/30/10 6,420.2 59.1 2.0 (316.9) 6,164.4 9/30/10 6,108.9 117.7 9.6 60.1 6,296.3 12/31/10 6,007.4 63.3 17.0 419.6 6,507.3 3/31/11 6,022.2 21.0 18.2 583.7 6,645.1 6/30/11 6,164.4 61.5 12.4 535.8 6,774.1 9/30/11 6,296.3 119.1 (7.7) 539.5 6,947.2 12/31/11 6,507.3 122.2 (8.6) 393.7 7,014.6 3/31/12 6,645.1 92.9 (1.4) 310.0 7,046.6 6/30/12 6,774.1 (14.3) 14.5 247.3 7,021.6 9/30/12 6,947.2 (117.2) 39.7 95.8 6,965.5 12/31/12 7,014.6 (147.6) 41.8 47.4 6,956.2 3/31/13 7,046.6 (143.7) 48.2 41.3 6,992.4 6/30/13 7,021.6 (111.4) 56.9 65.8 7,032.9 9/30/13 6,965.5 (80.3) 49.5 128.2 7,062.9 12/31/13 6,956.2 (80.4) 50.3 196.2 7,122.3 3/31/14 6,992.4 (89.9) 51.2 263.1 7,216.8 6/30/14 7,032.9 (80.6) 51.6 308.1 7,312.0 9/30/14 7,062.9 (53.5) 74.3 369.0 7,452.7 12/31/14 7,122.3 (75.5) 95.3 395.0 7,537.1 3/31/15 7,216.8 (125.7) 98.4 386.1 7,575.6 Components of Change During the Period Reconciliation of Organic Revenue Growth ($ in Millions) Page 16

 
Metrics Update

 
Metrics Update Page 18 SALARIES & RELATED Trailing Twelve Months (% of revenue) Base, Benefits & Tax Incentive Expense Severance Expense Temporary Help OFFICE & GENERAL Trailing Twelve Months (% of revenue) Professional Fees Occupancy Expense (ex-D&A) T&E, Office Supplies & Telecom All Other O&G FINANCIAL Available Liquidity $1.0 Billion 5-Year Credit Facility Covenants Category Metric

 
Salaries & Related Expenses Page 19 63.8% 64.0% 64.0% 60.0% 62.0% 64.0% 66.0% 3/31/2014 12/31/2014 3/31/2015 % of Revenue, Trailing Twelve Months

 
1.0% 1.2% 0.0% 1.0% 2.0% 3.0% Severance Expense 3.9% 3.9% 0.0% 2.0% 4.0% 6.0% Temporary Help 3.9% 3.9% 0.0% 2.0% 4.0% 6.0% Incentive Expense 60.5% 60.3% 50.0% 55.0% 60.0% 65.0% Base, Benefits & Tax 2015 2014 Salaries & Related Expenses (% of Revenue) Page 20 Three Months Ended March 31 “All Other Salaries & Related,” not shown, was 3.2% and 3.3% for the three months ended March 31, 2015 and 2014, respectively.

 
26.7% 25.6% 25.4% 23.0% 25.0% 27.0% 29.0% 3/31/2014 12/31/2014 3/31/2015 % of Revenue, Trailing Twelve Months Office & General Expenses Page 21 (1) Office & general expenses excludes our Q4 2013 restructuring charge, which was recorded as a separate line item in our income statement. (1)

 
1.7% 1.7% 0.0% 1.0% 2.0% 3.0% Professional Fees 7.3% 7.8% 4.0% 6.0% 8.0% 10.0% Occupancy Expense (ex-D&A) 14.4% 14.7% 10.0% 12.0% 14.0% 16.0% All Other O&G 3.6% 3.9% 2.0% 3.0% 4.0% 5.0% T&E, Office Supplies & Telecom Office & General Expenses (% of Revenue) Page 22 Three Months Ended March 31 “All Other O&G” includes production expenses, depreciation and amortization, bad debt expense, adjustments for contingent acquisition obligations, foreign currency (gains) losses, restructuring and other reorganization-related charges (reversals), long-lived asset impairments and other expenses. 2015 2014

 
$777 $901 $902 $1,667 $741 $985 $985 $984 $984 $983 $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 3/31/2014 6/30/2014 9/30/2014 12/31/2014 3/31/2015 Cash, Cash Equivalents and Short-Term Marketable Securities Available Committed Credit Facility Available Liquidity ($ in Millions) Page 23 Cash, Cash Equivalents and Short-Term Marketable Securities + Available Committed Credit Facility

 
Last Twelve Months Ending March 31, 2015 I. Interest Coverage Ratio (not less than): 5.00x Actual Interest Coverage Ratio: 18.40x II. Leverage Ratio (not greater than): 3.25x Actual Leverage Ratio: 1.72x Interest Coverage Ratio - Interest Expense Reconciliation Last Twelve Months Ending March 31, 2015 Interest Expense: $85.6 - Interest income 28.4 - Other 1.5 Net interest expense : $55.7 EBITDA Reconciliation Last Twelve Months Ending March 31, 2015 Operating Income: $807.9 + Depreciation and amortization 217.2 EBITDA : $1,025.1 Covenants $1.0 Billion 5-Year Credit Facility Covenants ($ in Millions) Page 24 (1) Calculated as defined in the Credit Agreement. (1) (1)

 
Cautionary Statement Page 25 This investor presentation contains forward-looking statements. Statements in this investor presentation that are not historical facts, including statements about management’s beliefs and expectations, constitute forward-looking statements. These statements are based on current plans, estimates and projections, and are subject to change based on a number of factors, including those outlined in our most recent Annual Report on Form 10-K under Item 1A, Risk Factors. 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. Forward-looking statements involve inherent risks and uncertainties. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. Such factors include, but are not limited to, the following: ➔ 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. Investors should carefully consider these factors and the additional risk factors outlined in more detail in our most recent Annual Report on Form 10-K under Item 1A, Risk Factors.

 

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