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x
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the quarterly period ended September 30, 2013
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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13-1024020
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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Large accelerated filer
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ý
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Accelerated filer
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¨
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Non-accelerated filer
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¨
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Smaller reporting company
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¨
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(Do not check if a smaller reporting company)
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INDEX
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Page No.
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Item 1.
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Item 2.
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Item 3.
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Item 4.
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Item 1.
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Item 1A.
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Item 2.
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Item 5.
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Other Information
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Item 6.
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||
•
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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;
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•
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our ability to attract new clients and retain existing clients;
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•
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our ability to retain and attract key employees;
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•
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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;
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•
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potential adverse effects if we are required to recognize impairment charges or other adverse accounting-related developments;
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•
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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
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•
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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.
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Item 1.
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Financial Statements (Unaudited)
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Three months ended
September 30, |
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Nine months ended
September 30, |
||||||||||||
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2013
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2012
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2013
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2012
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||||||||
REVENUE
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$
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1,700.4
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$
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1,670.4
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$
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4,999.6
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$
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4,892.9
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||||||||
OPERATING EXPENSES:
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Salaries and related expenses
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1,093.6
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1,064.3
|
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3,345.9
|
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3,258.1
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||||
Office and general expenses
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465.3
|
|
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474.7
|
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1,379.8
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1,366.4
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||||
Total operating expenses
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1,558.9
|
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1,539.0
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4,725.7
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4,624.5
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OPERATING INCOME
|
141.5
|
|
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131.4
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|
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273.9
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|
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268.4
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EXPENSES AND OTHER INCOME:
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Interest expense
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(23.7
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)
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(31.6
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)
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(98.0
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)
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(96.9
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)
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||||
Interest income
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5.8
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6.7
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|
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18.0
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|
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21.4
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||||
Other (expense) income, net
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(46.6
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)
|
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1.7
|
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(40.0
|
)
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5.1
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||||
Total (expenses) and other income
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(64.5
|
)
|
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(23.2
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)
|
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(120.0
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)
|
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(70.4
|
)
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||||
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Income before income taxes
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77.0
|
|
|
108.2
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|
153.9
|
|
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198.0
|
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Provision for income taxes
|
28.4
|
|
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41.9
|
|
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78.0
|
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72.8
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Income of consolidated companies
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48.6
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66.3
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75.9
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125.2
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Equity in net income of unconsolidated affiliates
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0.6
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1.4
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0.9
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2.3
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NET INCOME
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49.2
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|
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67.7
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|
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76.8
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127.5
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||||
Net (income) loss attributable to noncontrolling interests
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(0.9
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)
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3.9
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(2.0
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)
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3.0
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NET INCOME ATTRIBUTABLE TO IPG
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48.3
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71.6
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74.8
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130.5
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Dividends on preferred stock
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(2.9
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)
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(2.9
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)
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(8.7
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)
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(8.7
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)
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NET INCOME AVAILABLE TO IPG COMMON STOCKHOLDERS
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$
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45.4
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$
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68.7
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$
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66.1
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$
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121.8
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Earnings per share available to IPG common stockholders:
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Basic
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$
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0.11
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$
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0.16
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$
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0.16
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$
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0.28
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Diluted
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$
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0.11
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$
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0.15
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$
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0.16
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$
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0.27
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Weighted-average number of common shares outstanding:
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Basic
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419.7
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431.3
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419.7
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435.5
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Diluted
|
426.1
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456.1
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424.8
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469.7
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Dividends declared per common share
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$
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0.075
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$
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0.060
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$
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0.225
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$
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0.180
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Three months ended
September 30, |
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Nine months ended
September 30, |
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2013
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2012
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2013
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2012
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||||||||
NET INCOME
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$
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49.2
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$
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67.7
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$
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76.8
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$
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127.5
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OTHER COMPREHENSIVE INCOME (LOSS)
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Foreign currency translation adjustments
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24.0
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37.3
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(89.3
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)
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16.1
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Available-for-sale securities:
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Changes in market value of available-for-sale securities
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(0.1
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)
|
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(40.8
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)
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0.7
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|
94.7
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||||
Less: recognition of previously unrealized (gains) losses included in net income
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0.0
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0.0
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(1.4
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)
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0.6
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Income tax effect
|
0.0
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15.8
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|
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0.2
|
|
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(34.8
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)
|
||||
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(0.1
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)
|
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(25.0
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)
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(0.5
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)
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60.5
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||||
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Derivative instruments:
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Changes in fair value of derivative instruments
|
0.0
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(3.6
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)
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0.0
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(22.2
|
)
|
||||
Less: recognition of previously unrealized losses in net income
|
0.4
|
|
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0.0
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1.3
|
|
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0.0
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||||
Income tax effect
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(0.1
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)
|
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1.5
|
|
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(0.5
|
)
|
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9.2
|
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||||
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0.3
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|
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(2.1
|
)
|
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0.8
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|
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(13.0
|
)
|
||||
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||||||||
Defined benefit pension and other postretirement plans:
|
|
|
|
|
|
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||||||||
Net actuarial gains for the period
|
0.0
|
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|
0.0
|
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0.0
|
|
|
1.0
|
|
||||
Less: amortization of unrecognized losses, transition obligation and prior service cost included in net income
|
2.7
|
|
|
2.0
|
|
|
8.2
|
|
|
5.7
|
|
||||
Other
|
(0.2
|
)
|
|
(0.3
|
)
|
|
(0.9
|
)
|
|
(0.4
|
)
|
||||
Income tax effect
|
(0.8
|
)
|
|
(0.6
|
)
|
|
(2.8
|
)
|
|
(2.3
|
)
|
||||
|
1.7
|
|
|
1.1
|
|
|
4.5
|
|
|
4.0
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Other comprehensive income (loss), net of tax
|
25.9
|
|
|
11.3
|
|
|
(84.5
|
)
|
|
67.6
|
|
||||
TOTAL COMPREHENSIVE INCOME (LOSS)
|
75.1
|
|
|
79.0
|
|
|
(7.7
|
)
|
|
195.1
|
|
||||
Less: comprehensive income (loss) attributable to noncontrolling interests
|
0.7
|
|
|
(3.3
|
)
|
|
(1.2
|
)
|
|
(3.5
|
)
|
||||
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO IPG
|
$
|
74.4
|
|
|
$
|
82.3
|
|
|
$
|
(6.5
|
)
|
|
$
|
198.6
|
|
|
September 30,
2013 |
|
December 31,
2012 |
||||
ASSETS:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
999.3
|
|
|
$
|
2,574.8
|
|
Marketable securities
|
5.2
|
|
|
16.0
|
|
||
Accounts receivable, net of allowance of $65.7 and $59.0, respectively
|
3,830.2
|
|
|
4,496.6
|
|
||
Expenditures billable to clients
|
1,551.0
|
|
|
1,318.8
|
|
||
Other current assets
|
377.1
|
|
|
332.1
|
|
||
Total current assets
|
6,762.8
|
|
|
8,738.3
|
|
||
Furniture, equipment and leasehold improvements, net of accumulated
depreciation of $1,160.2 and $1,134.9, respectively |
490.5
|
|
|
504.8
|
|
||
Deferred income taxes
|
171.3
|
|
|
160.5
|
|
||
Goodwill
|
3,609.3
|
|
|
3,580.6
|
|
||
Other non-current assets
|
498.1
|
|
|
509.7
|
|
||
TOTAL ASSETS
|
$
|
11,532.0
|
|
|
$
|
13,493.9
|
|
|
|
|
|
||||
LIABILITIES:
|
|
|
|
||||
Accounts payable
|
$
|
5,705.6
|
|
|
$
|
6,584.8
|
|
Accrued liabilities
|
553.3
|
|
|
728.2
|
|
||
Short-term borrowings
|
186.3
|
|
|
172.1
|
|
||
Current portion of long-term debt
|
2.2
|
|
|
216.6
|
|
||
Total current liabilities
|
6,447.4
|
|
|
7,701.7
|
|
||
Long-term debt
|
1,481.0
|
|
|
2,060.8
|
|
||
Deferred compensation
|
483.3
|
|
|
489.0
|
|
||
Other non-current liabilities
|
557.2
|
|
|
558.6
|
|
||
TOTAL LIABILITIES
|
8,968.9
|
|
|
10,810.1
|
|
||
|
|
|
|
||||
Redeemable noncontrolling interests (see Note 5)
|
229.6
|
|
|
227.2
|
|||
|
|
|
|
||||
STOCKHOLDERS’ EQUITY:
|
|
|
|
||||
Preferred stock
|
221.5
|
|
|
221.5
|
|
||
Common stock
|
51.2
|
|
|
48.8
|
|
||
Additional paid-in capital
|
2,754.1
|
|
|
2,465.4
|
|
||
Retained earnings
|
710.4
|
|
|
738.3
|
|
||
Accumulated other comprehensive loss, net of tax
|
(369.3
|
)
|
|
(288.0
|
)
|
||
|
3,367.9
|
|
|
3,186.0
|
|
||
Less: Treasury stock
|
(1,065.3
|
)
|
|
(765.4
|
)
|
||
Total IPG stockholders’ equity
|
2,302.6
|
|
|
2,420.6
|
|
||
Noncontrolling interests
|
30.9
|
|
|
36.0
|
|
||
TOTAL STOCKHOLDERS’ EQUITY
|
2,333.5
|
|
|
2,456.6
|
|
||
TOTAL LIABILITIES AND EQUITY
|
$
|
11,532.0
|
|
|
$
|
13,493.9
|
|
|
Nine months ended
September 30, |
||||||
|
2013
|
|
2012
|
||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
||||
Net income
|
$
|
76.8
|
|
|
$
|
127.5
|
|
Adjustments to reconcile net income to net cash used in operating activities:
|
|
|
|
||||
Depreciation and amortization of fixed assets and intangible assets
|
117.9
|
|
|
108.8
|
|
||
Provision for uncollectible receivables
|
11.4
|
|
|
11.8
|
|
||
Amortization of restricted stock and other non-cash compensation
|
32.9
|
|
|
37.7
|
|
||
Net amortization of bond discounts and deferred financing costs
|
5.4
|
|
|
0.3
|
|
||
Non-cash loss related to early extinguishment of debt
|
15.2
|
|
Loss on early extinguishment of debt
|
0.0
|
|
||
Deferred income tax provision (benefit)
|
28.5
|
|
|
(31.5
|
)
|
||
Other
|
(7.4
|
)
|
|
10.0
|
|
||
Changes in assets and liabilities, net of acquisitions and dispositions, providing (using) cash:
|
|
|
|
||||
Accounts receivable
|
586.9
|
|
|
610.2
|
|
||
Expenditures billable to clients
|
(250.9
|
)
|
|
(268.4
|
)
|
||
Other current assets
|
(38.8
|
)
|
|
(17.8
|
)
|
||
Accounts payable
|
(811.5
|
)
|
|
(852.7
|
)
|
||
Accrued liabilities
|
(152.9
|
)
|
|
(172.0
|
)
|
||
Other non-current assets and liabilities
|
(43.9
|
)
|
|
(9.2
|
)
|
||
Net cash used in operating activities
|
(430.4
|
)
|
|
(445.3
|
)
|
||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
||||
Capital expenditures
|
(91.6
|
)
|
|
(99.3
|
)
|
||
Acquisitions, including deferred payments, net of cash acquired
|
(48.2
|
)
|
|
(140.6
|
)
|
||
Net sales (purchases) and maturities of short-term marketable securities
|
10.8
|
|
|
(0.8
|
)
|
||
Proceeds from sales of businesses and investments, net of cash sold
|
3.3
|
|
|
12.1
|
|
||
Other investing activities
|
(2.4
|
)
|
|
(0.7
|
)
|
||
Net cash used in investing activities
|
(128.1
|
)
|
|
(229.3
|
)
|
||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
||||
Purchase of long-term debt
|
(601.2
|
)
|
|
(401.0
|
)
|
||
Proceeds from issuance of long-term debt
|
0.0
|
|
|
246.8
|
|
||
Repurchase of common stock
|
(280.8
|
)
|
|
(201.4
|
)
|
||
Common stock dividends
|
(94.1
|
)
|
|
(78.1
|
)
|
||
Exercise of stock options
|
43.6
|
|
|
8.5
|
|
||
Acquisition-related payments
|
(27.5
|
)
|
|
(36.1
|
)
|
||
Net increase in short-term bank borrowings
|
13.3
|
|
|
45.5
|
|
||
Distributions to noncontrolling interests
|
(10.4
|
)
|
|
(12.2
|
)
|
||
Preferred stock dividends
|
(8.7
|
)
|
|
(8.7
|
)
|
||
Excess tax benefit on share-based compensation
|
9.2
|
|
|
0.0
|
|
||
Other financing activities
|
1.0
|
|
|
(3.0
|
)
|
||
Net cash used in financing activities
|
(955.6
|
)
|
|
(439.7
|
)
|
||
Effect of foreign exchange rate changes on cash and cash equivalents
|
(61.4
|
)
|
|
(1.1
|
)
|
||
Net decrease in cash and cash equivalents
|
(1,575.5
|
)
|
|
(1,115.4
|
)
|
||
Cash and cash equivalents at beginning of period
|
2,574.8
|
|
|
2,302.7
|
|
||
Cash and cash equivalents at end of period
|
$
|
999.3
|
|
|
$
|
1,187.3
|
|
|
Preferred
Stock
|
|
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, 2012
|
$
|
221.5
|
|
|
492.0
|
|
|
$
|
48.8
|
|
|
$
|
2,465.4
|
|
|
$
|
738.3
|
|
|
$
|
(288.0
|
)
|
|
$
|
(765.4
|
)
|
|
$
|
2,420.6
|
|
|
$
|
36.0
|
|
|
$
|
2,456.6
|
|
Net income
|
|
|
|
|
|
|
|
|
74.8
|
|
|
|
|
|
|
74.8
|
|
|
2.0
|
|
|
76.8
|
|
|||||||||||||||
Other comprehensive loss
|
|
|
|
|
|
|
|
|
|
|
(81.3
|
)
|
|
|
|
(81.3
|
)
|
|
(3.2
|
)
|
|
(84.5
|
)
|
|||||||||||||||
Reclassifications related to redeemable
noncontrolling interests
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4.9
|
|
|
4.9
|
|
|||||||||||||||||
Distributions to noncontrolling interests
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(10.4
|
)
|
|
(10.4
|
)
|
|||||||||||||||||
Change in redemption value of redeemable
noncontrolling interests
|
|
|
|
|
|
|
|
|
0.6
|
|
|
|
|
|
|
0.6
|
|
|
|
|
0.6
|
|
||||||||||||||||
Repurchase of common stock
|
|
|
|
|
|
|
|
|
|
|
|
|
(280.8
|
)
|
|
(280.8
|
)
|
|
|
|
(280.8
|
)
|
||||||||||||||||
Common stock dividends
|
|
|
|
|
|
|
|
|
(94.1
|
)
|
|
|
|
|
|
(94.1
|
)
|
|
|
|
(94.1
|
)
|
||||||||||||||||
Preferred stock dividends
|
|
|
|
|
|
|
|
|
(8.7
|
)
|
|
|
|
|
|
(8.7
|
)
|
|
|
|
(8.7
|
)
|
||||||||||||||||
Conversion of convertible notes to common stock
|
|
|
16.9
|
|
|
1.7
|
|
|
198.3
|
|
|
|
|
|
|
|
|
200.0
|
|
|
|
|
200.0
|
|
||||||||||||||
Capped call transaction
|
|
|
|
|
|
|
19.1
|
|
|
|
|
|
|
(19.1
|
)
|
|
0.0
|
|
|
|
|
0.0
|
|
|||||||||||||||
Stock-based compensation
|
|
|
2.4
|
|
|
0.4
|
|
|
37.2
|
|
|
|
|
|
|
|
|
37.6
|
|
|
|
|
37.6
|
|
||||||||||||||
Exercise of stock options
|
|
|
4.7
|
|
|
0.5
|
|
|
43.6
|
|
|
|
|
|
|
|
|
44.1
|
|
|
|
|
44.1
|
|
||||||||||||||
Shares withheld for taxes
|
|
|
(1.5
|
)
|
|
(0.2
|
)
|
|
(19.8
|
)
|
|
|
|
|
|
|
|
(20.0
|
)
|
|
|
|
(20.0
|
)
|
||||||||||||||
Excess tax benefit from stock-based compensation
|
|
|
|
|
|
|
8.5
|
|
|
|
|
|
|
|
|
8.5
|
|
|
|
|
8.5
|
|
||||||||||||||||
Other
|
|
|
|
|
|
|
1.8
|
|
|
(0.5
|
)
|
|
|
|
|
|
1.3
|
|
|
1.6
|
|
|
2.9
|
|
||||||||||||||
Balance at September 30, 2013
|
$
|
221.5
|
|
|
514.5
|
|
|
$
|
51.2
|
|
|
$
|
2,754.1
|
|
|
$
|
710.4
|
|
|
$
|
(369.3
|
)
|
|
$
|
(1,065.3
|
)
|
|
$
|
2,302.6
|
|
|
$
|
30.9
|
|
|
$
|
2,333.5
|
|
|
Preferred
Stock
|
|
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, 2011
|
$
|
221.5
|
|
|
491.4
|
|
|
$
|
48.2
|
|
|
$
|
2,427.5
|
|
|
$
|
405.1
|
|
|
$
|
(225.7
|
)
|
|
$
|
(414.9
|
)
|
|
$
|
2,461.7
|
|
|
$
|
35.6
|
|
|
$
|
2,497.3
|
|
Net income
|
|
|
|
|
|
|
|
|
130.5
|
|
|
|
|
|
|
130.5
|
|
|
(3.0
|
)
|
|
127.5
|
|
|||||||||||||||
Other comprehensive income
|
|
|
|
|
|
|
|
|
|
|
68.1
|
|
|
|
|
68.1
|
|
|
(0.5
|
)
|
|
67.6
|
|
|||||||||||||||
Reclassifications related to redeemable
noncontrolling interests
|
|
|
|
|
|
|
12.0
|
|
|
|
|
|
|
|
|
12.0
|
|
|
8.3
|
|
|
20.3
|
|
|||||||||||||||
Noncontrolling interest transactions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1.3
|
)
|
|
(1.3
|
)
|
|||||||||||||||||
Distributions to noncontrolling interests
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(12.2
|
)
|
|
(12.2
|
)
|
|||||||||||||||||
Change in redemption value of redeemable
noncontrolling interests
|
|
|
|
|
|
|
|
|
3.1
|
|
|
|
|
|
|
3.1
|
|
|
|
|
3.1
|
|
||||||||||||||||
Repurchase of common stock
|
|
|
|
|
|
|
|
|
|
|
|
|
(201.4
|
)
|
|
(201.4
|
)
|
|
|
|
(201.4
|
)
|
||||||||||||||||
Common stock dividends
|
|
|
|
|
|
|
|
|
(78.1
|
)
|
|
|
|
|
|
(78.1
|
)
|
|
|
|
(78.1
|
)
|
||||||||||||||||
Preferred stock dividends
|
|
|
|
|
|
|
|
|
(8.7
|
)
|
|
|
|
|
|
(8.7
|
)
|
|
|
|
(8.7
|
)
|
||||||||||||||||
Stock-based compensation
|
|
|
1.8
|
|
|
0.7
|
|
|
25.8
|
|
|
|
|
|
|
|
|
26.5
|
|
|
|
|
26.5
|
|
||||||||||||||
Exercise of stock options
|
|
|
0.9
|
|
|
0.1
|
|
|
8.5
|
|
|
|
|
|
|
|
|
8.6
|
|
|
|
|
8.6
|
|
||||||||||||||
Shares withheld for taxes
|
|
|
(2.1
|
)
|
|
(0.2
|
)
|
|
(23.3
|
)
|
|
|
|
|
|
|
|
(23.5
|
)
|
|
|
|
(23.5
|
)
|
||||||||||||||
Other
|
|
|
|
|
|
|
(2.0
|
)
|
|
(1.0
|
)
|
|
|
|
|
|
(3.0
|
)
|
|
3.8
|
|
|
0.8
|
|
||||||||||||||
Balance at September 30, 2012
|
$
|
221.5
|
|
|
492.0
|
|
|
$
|
48.8
|
|
|
$
|
2,448.5
|
|
|
$
|
450.9
|
|
|
$
|
(157.6
|
)
|
|
$
|
(616.3
|
)
|
|
$
|
2,395.8
|
|
|
$
|
30.7
|
|
|
$
|
2,426.5
|
|
|
Effective
Interest Rate
|
|
September 30,
2013 |
|
December 31,
2012 |
||||||||||||
Book
Value
|
|
Fair
Value
1
|
|
Book
Value
|
|
Fair
Value
1
|
|||||||||||
6.25% Senior Unsecured Notes due 2014 (less unamortized
discount of $0.1) |
6.29%
|
|
$
|
351.6
|
|
|
$
|
369.4
|
|
|
$
|
352.8
|
|
|
$
|
372.6
|
|
2.25% Senior Notes due 2017 (less unamortized
discount of $0.6) |
2.30%
|
|
299.4
|
|
|
296.7
|
|
|
299.3
|
|
|
297.8
|
|
||||
4.00% Senior Notes due 2022 (less unamortized
discount of $2.7) |
4.13%
|
|
247.3
|
|
|
242.0
|
|
|
247.1
|
|
|
258.7
|
|
||||
3.75% Senior Notes due 2023 (less unamortized
discount of $1.4) |
4.32%
|
|
498.6
|
|
|
469.3
|
|
|
498.5
|
|
|
499.7
|
|
||||
10.00% Senior Unsecured Notes due 2017
|
|
|
0.0
|
|
|
0.0
|
|
|
591.9
|
|
|
660.8
|
|
||||
4.75% Convertible Senior Notes due 2023
|
|
|
0.0
|
|
|
0.0
|
|
|
200.5
|
|
|
202.8
|
|
||||
Other notes payable and capitalized leases
|
|
|
86.3
|
|
|
85.8
|
|
|
87.3
|
|
|
90.8
|
|
||||
Total long-term debt
|
|
|
1,483.2
|
|
|
|
|
2,277.4
|
|
|
|
||||||
Less: current portion
2
|
|
|
2.2
|
|
|
|
|
216.6
|
|
|
|
||||||
Long-term debt, excluding current portion
|
|
|
$
|
1,481.0
|
|
|
|
|
$
|
2,060.8
|
|
|
|
|
1
|
See Note 11 for information on the fair value measurement of our long-term debt.
|
2
|
We included our
4.75%
Convertible Senior Notes due
2023
(the “
4.75%
Notes”) in the current portion of long-term debt on our
December 31, 2012
Consolidated Balance Sheet because holders of the
4.75%
Notes had an option to require us to repurchase their Notes for cash, stock or a combination, at our election, at par on March 15, 2013. The
4.75%
Notes were retired in the first quarter of 2013.
|
|
Three months ended
September 30, |
|
Nine months ended
September 30, |
||||||||||||
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
Net income available to IPG common stockholders - basic
|
$
|
45.4
|
|
|
$
|
68.7
|
|
|
$
|
66.1
|
|
|
$
|
121.8
|
|
Adjustments: Effect of dilutive securities
|
|
|
|
|
|
|
|
||||||||
Interest on 4.75% Notes
1
|
0.0
|
|
|
1.0
|
|
|
0.0
|
|
|
3.1
|
|
||||
Interest on 4.25% Notes
1
|
0.0
|
|
|
0.0
|
|
|
0.0
|
|
|
0.3
|
|
||||
Net income available to IPG common stockholders - diluted
|
$
|
45.4
|
|
|
$
|
69.7
|
|
|
$
|
66.1
|
|
|
$
|
125.2
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Weighted-average number of common shares outstanding - basic
|
419.7
|
|
|
431.3
|
|
|
419.7
|
|
|
435.5
|
|
||||
Add: Effect of dilutive securities
|
|
|
|
|
|
|
|
||||||||
Restricted stock, stock options and other equity awards
|
6.4
|
|
|
8.1
|
|
|
5.1
|
|
|
7.1
|
|
||||
4.75% Notes
1
|
0.0
|
|
|
16.7
|
|
|
0.0
|
|
|
16.7
|
|
||||
4.25% Notes
1
|
0.0
|
|
|
0.0
|
|
|
0.0
|
|
|
10.4
|
|
||||
Weighted-average number of common shares outstanding - diluted
|
426.1
|
|
|
456.1
|
|
|
424.8
|
|
|
469.7
|
|
||||
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Earnings per share available to IPG common stockholders - basic
|
$
|
0.11
|
|
|
$
|
0.16
|
|
|
$
|
0.16
|
|
|
$
|
0.28
|
|
Earnings per share available to IPG common stockholders - diluted
|
$
|
0.11
|
|
|
$
|
0.15
|
|
|
$
|
0.16
|
|
|
$
|
0.27
|
|
|
1
|
We
retired
all of our outstanding
4.75%
Notes and 4.25% Convertible Senior Notes due 2023 (the “4.25% Notes”) in March 2013 and March 2012, respectively. See Note 2 for further information on our
4.75%
Notes. For purposes of calculating diluted earnings per share, the potentially dilutive shares are pro-rated based on the period they were outstanding.
|
|
Three months ended
September 30, |
|
Nine months ended
September 30, |
||||||||
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||
4.75% Notes
1
|
0.0
|
|
|
0.0
|
|
|
4.4
|
|
|
0.0
|
|
Preferred stock outstanding
|
17.3
|
|
|
16.9
|
|
|
17.3
|
|
|
16.9
|
|
Total
|
17.3
|
|
|
16.9
|
|
|
21.7
|
|
|
16.9
|
|
|
|
|
|
|
|
|
|
||||
Securities excluded from the diluted earnings per share calculation
because the exercise price was greater than the average market price: |
|
|
|
|
|
|
|
||||
Stock options
2
|
0.0
|
|
|
7.1
|
|
|
0.2
|
|
|
7.1
|
|
|
1
|
We retired all of our outstanding
4.75%
Notes in March 2013. See Note 2 for further information on our
4.75%
Notes. For purposes of calculating diluted earnings per share, the potentially dilutive shares are pro-rated based on the period they were outstanding.
|
2
|
These options are outstanding at the end of the respective periods. In any period in which the exercise price is less than the average market price, these options have the potential to be dilutive, and application of the treasury stock method would reduce this amount.
|
|
Nine months ended
September 30, |
||||||
|
2013
|
|
2012
|
||||
Cost of investment: current-year acquisitions
|
$
|
51.9
|
|
|
$
|
154.3
|
|
Cost of investment: prior-year acquisitions
|
28.5
|
|
|
37.0
|
|
||
Less: net cash acquired
|
(4.7
|
)
|
|
(14.6
|
)
|
||
Total cost of investment
|
75.7
|
|
|
176.7
|
|
||
|
|
|
|
||||
Operating expense
1
|
1.6
|
|
|
3.2
|
|
||
Total cash paid for acquisitions
2
|
$
|
77.3
|
|
|
$
|
179.9
|
|
|
1
|
Represents cash payments made that were either in excess of the contractual value or contingent upon the future employment of the former owners of acquired companies.
|
2
|
Of the total cash paid,
$27.5
and
$36.1
for the
nine months ended
September 30, 2013
, and
2012
, respectively, are classified under the financing section of the unaudited Consolidated Statements of Cash Flows within acquisition-related payments. These amounts relate to increases in our ownership interests in our consolidated subsidiaries, as well as deferred payments for acquisitions that closed on or after January 1, 2009. Of the total cash paid,
$48.2
and
$140.6
for the
nine months ended
September 30, 2013
, and
2012
, respectively, are classified under the investing section of the unaudited Consolidated Statements of Cash Flows within acquisitions, including deferred payments, net of cash acquired. These amounts relate to initial payments for new transactions and deferred payments for acquisitions that closed prior to January 1, 2009.
|
|
Nine months ended
September 30, |
||||||
|
2013
|
|
2012
|
||||
Balance at beginning of period
|
$
|
227.2
|
|
|
$
|
243.4
|
|
Change in related noncontrolling interests balance
|
(4.9
|
)
|
|
(8.3
|
)
|
||
Changes in redemption value of redeemable noncontrolling interests:
|
|
|
|
||||
Additions
|
12.5
|
|
|
3.0
|
|
||
Redemptions and other
|
(2.1
|
)
|
|
(14.2
|
)
|
||
Redemption value adjustments
1
|
(3.1
|
)
|
|
(3.6
|
)
|
||
Balance at end of period
|
$
|
229.6
|
|
|
$
|
220.3
|
|
|
1
|
Redeemable noncontrolling interests are reported at their estimated redemption value in each reporting period, but not less than their initial fair value. Any adjustment to the redemption value impacts retained earnings or additional paid-in capital, except adjustments as a result of currency translation.
|
|
September 30,
2013 |
|
December 31,
2012 |
||||
Salaries, benefits and related expenses
|
$
|
370.9
|
|
|
$
|
478.2
|
|
Office and related expenses
|
52.9
|
|
|
51.6
|
|
||
Acquisition obligations
|
9.2
|
|
|
29.5
|
|
||
Interest
|
15.9
|
|
|
42.4
|
|
||
Professional fees
|
17.6
|
|
|
21.7
|
|
||
Other
|
86.8
|
|
|
104.8
|
|
||
Total accrued liabilities
|
$
|
553.3
|
|
|
$
|
728.2
|
|
|
Three months ended
September 30, |
|
Nine months ended
September 30, |
||||||||||||
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
Loss on early extinguishment of debt
|
$
|
(45.2
|
)
|
|
$
|
0.0
|
|
|
$
|
(45.2
|
)
|
|
$
|
0.0
|
|
(Losses) gains on sales of businesses and investments
|
(0.8
|
)
|
|
(3.4
|
)
|
|
1.9
|
|
|
(5.2
|
)
|
||||
Vendor discounts and credit adjustments
|
0.1
|
|
|
5.0
|
|
|
0.6
|
|
|
9.9
|
|
||||
Other (expense) income, net
|
(0.7
|
)
|
|
0.1
|
|
|
2.7
|
|
|
0.4
|
|
||||
Total other (expense) income, net
|
$
|
(46.6
|
)
|
|
$
|
1.7
|
|
|
$
|
(40.0
|
)
|
|
$
|
5.1
|
|
|
Foreign Currency Translation Adjustments
|
|
Available-for-Sale Securities
|
|
Derivative Instruments
|
|
Defined Benefit Pension and Other Postretirement Plans
|
|
Total
|
||||||||||
Balance as of December 31, 2012
|
$
|
(130.1
|
)
|
|
$
|
0.8
|
|
|
$
|
(12.7
|
)
|
|
$
|
(146.0
|
)
|
|
$
|
(288.0
|
)
|
Other comprehensive (loss) income before reclassifications
|
(86.1
|
)
|
|
0.7
|
|
|
0.0
|
|
|
(0.9
|
)
|
|
(86.3
|
)
|
|||||
Amount reclassified from accumulated other comprehensive loss, net of tax
|
0.0
|
|
|
(1.2
|
)
|
|
0.8
|
|
|
5.4
|
|
|
5.0
|
|
|||||
Total change for the period
|
(86.1
|
)
|
|
(0.5
|
)
|
|
0.8
|
|
|
4.5
|
|
|
(81.3
|
)
|
|||||
Balance as of September 30, 2013
|
$
|
(216.2
|
)
|
|
$
|
0.3
|
|
|
$
|
(11.9
|
)
|
|
$
|
(141.5
|
)
|
|
$
|
(369.3
|
)
|
|
Three months ended
September 30, 2013 |
|
Nine months ended
September 30, 2013 |
|
Affected Line Item in the Consolidated Statement of Operations
|
||||
Foreign currency translation adjustments
|
$
|
0.0
|
|
|
$
|
0.0
|
|
|
|
Gains on available-for-sale securities
|
0.0
|
|
|
(1.4
|
)
|
|
Other (expense) income, net
|
||
Losses on derivative instruments
|
0.4
|
|
|
1.3
|
|
|
Interest expense
|
||
Amortization of defined benefit pension and postretirement plans items
1
|
2.7
|
|
|
8.2
|
|
|
|
||
Tax effect
|
(0.9
|
)
|
|
(3.1
|
)
|
|
Provision for income taxes
|
||
Total amount reclassified from accumulated other comprehensive loss, net of tax
|
$
|
2.2
|
|
|
$
|
5.0
|
|
|
|
|
1
|
These accumulated other comprehensive loss components are included in the computation of net periodic cost. See Note 9 for further information.
|
|
Nine months ended
September 30, |
||||||
|
2013
|
|
2012
|
||||
Number of shares repurchased
|
19.9
|
|
|
18.6
|
|
||
Aggregate cost, including fees
|
$
|
280.8
|
|
|
$
|
201.4
|
|
Average price per share, including fees
|
$
|
14.12
|
|
|
$
|
10.85
|
|
|
Awards
|
|
Weighted-average
grant-date fair value
(per award)
|
|||
Stock options
|
0.7
|
|
|
$
|
4.14
|
|
Stock-settled awards
|
1.0
|
|
|
$
|
13.17
|
|
Performance-based awards
|
1.5
|
|
|
$
|
11.97
|
|
Total stock-based compensation awards
|
3.2
|
|
|
|
|
Domestic Pension Plan
|
|
Foreign Pension Plans
|
|
Domestic
Postretirement Benefit Plan
|
||||||||||||||||||
Three months ended September 30,
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||||||
Service cost
|
$
|
0.0
|
|
|
$
|
0.0
|
|
|
$
|
2.6
|
|
|
$
|
3.0
|
|
|
$
|
0.1
|
|
|
$
|
0.1
|
|
Interest cost
|
1.4
|
|
|
1.6
|
|
|
5.3
|
|
|
5.3
|
|
|
0.4
|
|
|
0.5
|
|
||||||
Expected return on plan assets
|
(1.9
|
)
|
|
(2.0
|
)
|
|
(4.7
|
)
|
|
(4.5
|
)
|
|
0.0
|
|
|
0.0
|
|
||||||
Settlement and curtailment losses
|
0.0
|
|
|
0.0
|
|
|
0.0
|
|
|
0.1
|
|
|
0.0
|
|
|
0.0
|
|
||||||
Amortization of:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Transition obligation
|
0.0
|
|
|
0.0
|
|
|
0.0
|
|
|
0.0
|
|
|
0.0
|
|
|
0.0
|
|
||||||
Prior service cost (credit)
|
0.0
|
|
|
0.0
|
|
|
0.1
|
|
|
0.1
|
|
|
(0.1
|
)
|
|
0.0
|
|
||||||
Unrecognized actuarial losses
|
2.0
|
|
|
1.6
|
|
|
0.7
|
|
|
0.3
|
|
|
0.0
|
|
|
0.0
|
|
||||||
Net periodic cost
|
$
|
1.5
|
|
|
$
|
1.2
|
|
|
$
|
4.0
|
|
|
$
|
4.3
|
|
|
$
|
0.4
|
|
|
$
|
0.6
|
|
|
Domestic Pension Plan
|
|
Foreign Pension Plans
|
|
Domestic
Postretirement Benefit Plan |
||||||||||||||||||
Nine months ended September 30,
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||||||
Service cost
|
$
|
0.0
|
|
|
$
|
0.0
|
|
|
$
|
7.7
|
|
|
$
|
8.3
|
|
|
$
|
0.1
|
|
|
$
|
0.2
|
|
Interest cost
|
4.1
|
|
|
4.7
|
|
|
15.9
|
|
|
16.3
|
|
|
1.2
|
|
|
1.7
|
|
||||||
Expected return on plan assets
|
(5.8
|
)
|
|
(5.8
|
)
|
|
(14.3
|
)
|
|
(13.6
|
)
|
|
0.0
|
|
|
0.0
|
|
||||||
Settlement and curtailment losses
|
0.0
|
|
|
0.0
|
|
|
0.0
|
|
|
0.1
|
|
|
0.0
|
|
|
0.0
|
|
||||||
Amortization of:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Transition obligation
|
0.0
|
|
|
0.0
|
|
|
0.0
|
|
|
0.0
|
|
|
0.0
|
|
|
0.1
|
|
||||||
Prior service cost (credit)
|
0.0
|
|
|
0.0
|
|
|
0.2
|
|
|
0.1
|
|
|
(0.1
|
)
|
|
(0.1
|
)
|
||||||
Unrecognized actuarial losses
|
6.0
|
|
|
4.8
|
|
|
2.1
|
|
|
0.8
|
|
|
0.0
|
|
|
0.0
|
|
||||||
Net periodic cost
|
$
|
4.3
|
|
|
$
|
3.7
|
|
|
$
|
11.6
|
|
|
$
|
12.0
|
|
|
$
|
1.2
|
|
|
$
|
1.9
|
|
|
Three months ended
September 30, |
|
Nine months ended
September 30, |
||||||||||||
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
Revenue:
|
|
|
|
|
|
|
|
||||||||
IAN
|
$
|
1,370.9
|
|
|
$
|
1,332.5
|
|
|
$
|
4,047.7
|
|
|
$
|
3,999.7
|
|
CMG
|
329.5
|
|
|
337.9
|
|
|
951.9
|
|
|
893.2
|
|
||||
Total
|
$
|
1,700.4
|
|
|
$
|
1,670.4
|
|
|
$
|
4,999.6
|
|
|
$
|
4,892.9
|
|
|
|
|
|
|
|
|
|
||||||||
Segment operating income:
|
|
|
|
|
|
|
|
||||||||
IAN
|
$
|
119.9
|
|
|
$
|
116.6
|
|
|
$
|
266.5
|
|
|
$
|
278.6
|
|
CMG
|
39.7
|
|
|
34.4
|
|
|
88.3
|
|
|
73.1
|
|
||||
Corporate and other
|
(18.1
|
)
|
|
(19.6
|
)
|
|
(80.9
|
)
|
|
(83.3
|
)
|
||||
Total
|
141.5
|
|
|
131.4
|
|
|
273.9
|
|
|
268.4
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Interest expense
|
(23.7
|
)
|
|
(31.6
|
)
|
|
(98.0
|
)
|
|
(96.9
|
)
|
||||
Interest income
|
5.8
|
|
|
6.7
|
|
|
18.0
|
|
|
21.4
|
|
||||
Other (expense) income, net
|
(46.6
|
)
|
|
1.7
|
|
|
(40.0
|
)
|
|
5.1
|
|
||||
Income before income taxes
|
$
|
77.0
|
|
|
$
|
108.2
|
|
|
$
|
153.9
|
|
|
$
|
198.0
|
|
|
|
|
|
|
|
|
|
||||||||
Depreciation and amortization of fixed assets and intangible assets:
|
|
|
|
|
|
|
|
||||||||
IAN
|
$
|
32.9
|
|
|
$
|
30.1
|
|
|
$
|
95.4
|
|
|
$
|
88.4
|
|
CMG
|
3.9
|
|
|
3.9
|
|
|
11.6
|
|
|
10.6
|
|
||||
Corporate and other
|
3.7
|
|
|
3.4
|
|
|
10.9
|
|
|
9.8
|
|
||||
Total
|
$
|
40.5
|
|
|
$
|
37.4
|
|
|
$
|
117.9
|
|
|
$
|
108.8
|
|
|
|
|
|
|
|
|
|
||||||||
Capital expenditures:
|
|
|
|
|
|
|
|
||||||||
IAN
|
$
|
24.5
|
|
|
$
|
19.9
|
|
|
$
|
48.0
|
|
|
$
|
52.6
|
|
CMG
|
2.4
|
|
|
11.9
|
|
|
6.5
|
|
|
17.5
|
|
||||
Corporate and other
|
17.9
|
|
|
9.3
|
|
|
37.1
|
|
|
29.2
|
|
||||
Total
|
$
|
44.8
|
|
|
$
|
41.1
|
|
|
$
|
91.6
|
|
|
$
|
99.3
|
|
|
|
|
|
|
|
|
|
||||||||
|
September 30,
2013 |
|
December 31,
2012 |
|
|
|
|
||||||||
Total assets:
|
|
|
|
|
|
|
|
||||||||
IAN
|
$
|
10,368.3
|
|
|
$
|
11,035.3
|
|
|
|
|
|
||||
CMG
|
1,182.8
|
|
|
1,073.1
|
|
|
|
|
|
||||||
Corporate and other
|
(19.1
|
)
|
|
1,385.5
|
|
|
|
|
|
||||||
Total
|
$
|
11,532.0
|
|
|
$
|
13,493.9
|
|
|
|
|
|
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.
|
|
September 30, 2013
|
|
Balance Sheet Classification
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
|||||||||
Assets
|
|
|
|
|
|
|
|
|
|
||||||||
Cash equivalents
|
$
|
511.0
|
|
|
$
|
0.0
|
|
|
$
|
0.0
|
|
|
$
|
511.0
|
|
|
Cash and cash equivalents
|
Short-term marketable securities
|
5.2
|
|
|
0.0
|
|
|
0.0
|
|
|
5.2
|
|
|
Marketable securities
|
||||
Long-term investments
|
1.5
|
|
|
0.0
|
|
|
0.0
|
|
|
1.5
|
|
|
Other assets
|
||||
Total
|
$
|
517.7
|
|
|
$
|
0.0
|
|
|
$
|
0.0
|
|
|
$
|
517.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
As a percentage of total assets
|
4.5
|
%
|
|
0.0
|
%
|
|
0.0
|
%
|
|
4.5
|
%
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
||||||||
Liabilities
|
|
|
|
|
|
|
|
|
|
||||||||
Mandatorily redeemable noncontrolling interests
1
|
$
|
0.0
|
|
|
$
|
0.0
|
|
|
$
|
26.0
|
|
|
$
|
26.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
December 31, 2012
|
|
Balance Sheet Classification
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
|||||||||
Assets
|
|
|
|
|
|
|
|
|
|
||||||||
Cash equivalents
|
$
|
1,806.6
|
|
|
$
|
0.0
|
|
|
$
|
0.0
|
|
|
$
|
1,806.6
|
|
|
Cash and cash equivalents
|
Short-term marketable securities
|
16.0
|
|
|
0.0
|
|
|
0.0
|
|
|
16.0
|
|
|
Marketable securities
|
||||
Long-term investments
|
1.5
|
|
|
0.0
|
|
|
0.0
|
|
|
1.5
|
|
|
Other assets
|
||||
Total
|
$
|
1,824.1
|
|
|
$
|
0.0
|
|
|
$
|
0.0
|
|
|
$
|
1,824.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
As a percentage of total assets
|
13.5
|
%
|
|
0.0
|
%
|
|
0.0
|
%
|
|
13.5
|
%
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
||||||||
Liabilities
|
|
|
|
|
|
|
|
|
|
||||||||
Mandatorily redeemable noncontrolling interests
1
|
$
|
0.0
|
|
|
$
|
0.0
|
|
|
$
|
25.3
|
|
|
$
|
25.3
|
|
|
|
|
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.
|
Liabilities
|
Mandatorily Redeemable Noncontrolling Interests
|
||
Balance at December 31, 2012
|
$
|
25.3
|
|
Level 3 additions
|
1.0
|
|
|
Level 3 reductions
|
(0.9
|
)
|
|
Realized losses included in net income
|
0.6
|
|
|
Balance at September 30, 2013
|
$
|
26.0
|
|
|
September 30, 2013
|
|
December 31, 2012
|
||||||||||||||||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||||||||||
Total long-term debt
|
$
|
0.0
|
|
|
$
|
1,377.4
|
|
|
$
|
85.8
|
|
|
$
|
1,463.2
|
|
|
$
|
0.0
|
|
|
$
|
2,292.4
|
|
|
$
|
90.8
|
|
|
$
|
2,383.2
|
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
|
Three months ended
September 30, 2013 |
|
Nine months ended
September 30, 2013 |
||||||||||||
% Increase/(Decrease)
|
Total
|
|
Organic
|
|
Total
|
|
Organic
|
||||||||
Revenue
|
1.8
|
%
|
|
2.8
|
%
|
|
2.2
|
%
|
|
2.4
|
%
|
||||
Salaries and related expenses
|
2.8
|
%
|
|
3.5
|
%
|
|
2.7
|
%
|
|
2.8
|
%
|
||||
Office and general expenses
|
(2.0
|
)%
|
|
(0.7
|
)%
|
|
1.0
|
%
|
|
1.8
|
%
|
||||
|
|
|
|
|
|
|
|
||||||||
|
Three months ended
September 30, |
|
Nine months ended
September 30, |
||||||||||||
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
Operating margin
|
8.3
|
%
|
|
7.9
|
%
|
|
5.5
|
%
|
|
5.5
|
%
|
||||
Expenses as % of revenue:
|
|
|
|
|
|
|
|
||||||||
Salaries and related expenses
|
64.3
|
%
|
|
63.7
|
%
|
|
66.9
|
%
|
|
66.6
|
%
|
||||
Office and general expenses
|
27.4
|
%
|
|
28.4
|
%
|
|
27.6
|
%
|
|
27.9
|
%
|
||||
|
|
|
|
|
|
|
|
||||||||
Net income available to IPG common stockholders
1
|
$
|
45.4
|
|
|
$
|
68.7
|
|
|
$
|
66.1
|
|
|
$
|
121.8
|
|
|
|
|
|
|
|
|
|
||||||||
Earnings per share available to IPG common stockholders:
|
|
|
|
|
|
|
|
||||||||
Basic
1
|
$
|
0.11
|
|
|
$
|
0.16
|
|
|
$
|
0.16
|
|
|
$
|
0.28
|
|
Diluted
1
|
$
|
0.11
|
|
|
$
|
0.15
|
|
|
$
|
0.16
|
|
|
$
|
0.27
|
|
|
1
|
For the three and nine months ended September 30, 2013, net income available to IPG common stockholders includes a loss on early extinguishment of debt of $28.3, net of tax. As a result, for the three months ended September 30, 2013, basic and diluted earnings per share were impacted by $0.07 and $0.06 per share, respectively. For the nine months ended September 30, 2013, basic and diluted earnings per share were both impacted by $0.06 per share.
|
|
|
|
Components of Change
|
|
|
|
Change
|
||||||||||||||||||
|
Three months
ended September 30, 2012 |
Foreign
Currency
|
|
Net
Acquisitions/
(Divestitures)
|
|
Organic
|
|
Three months
ended September 30, 2013 |
Organic
|
|
Total
|
||||||||||||||
Consolidated
|
$
|
1,670.4
|
|
|
$
|
(23.5
|
)
|
|
$
|
6.9
|
|
|
$
|
46.6
|
|
|
$
|
1,700.4
|
|
|
2.8
|
%
|
|
1.8
|
%
|
Domestic
|
940.5
|
|
|
0.0
|
|
|
0.9
|
|
|
35.2
|
|
|
976.6
|
|
|
3.7
|
%
|
|
3.8
|
%
|
|||||
International
|
729.9
|
|
|
(23.5
|
)
|
|
6.0
|
|
|
11.4
|
|
|
723.8
|
|
|
1.6
|
%
|
|
(0.8
|
)%
|
|||||
United Kingdom
|
148.8
|
|
|
(2.6
|
)
|
|
0.0
|
|
|
(13.8
|
)
|
|
132.4
|
|
|
(9.3
|
)%
|
|
(11.0
|
)%
|
|||||
Continental Europe
|
165.3
|
|
|
8.8
|
|
|
0.2
|
|
|
(9.7
|
)
|
|
164.6
|
|
|
(5.9
|
)%
|
|
(0.4
|
)%
|
|||||
Asia Pacific
|
202.9
|
|
|
(14.3
|
)
|
|
5.6
|
|
|
23.0
|
|
|
217.2
|
|
|
11.3
|
%
|
|
7.0
|
%
|
|||||
Latin America
|
107.5
|
|
|
(9.6
|
)
|
|
0.2
|
|
|
8.6
|
|
|
106.7
|
|
|
8.0
|
%
|
|
(0.7
|
)%
|
|||||
Other
|
105.4
|
|
|
(5.8
|
)
|
|
0.0
|
|
|
3.3
|
|
|
102.9
|
|
|
3.1
|
%
|
|
(2.4
|
)%
|
|
|
|
Components of Change
|
|
|
|
Change
|
||||||||||||||||||
|
Nine months
ended September 30, 2012 |
Foreign
Currency |
|
Net
Acquisitions/ (Divestitures) |
|
Organic
|
|
Nine months
ended September 30, 2013 |
Organic
|
|
Total
|
||||||||||||||
Consolidated
|
$
|
4,892.9
|
|
|
$
|
(53.1
|
)
|
|
$
|
40.1
|
|
|
$
|
119.7
|
|
|
$
|
4,999.6
|
|
|
2.4
|
%
|
|
2.2
|
%
|
Domestic
|
2,771.1
|
|
|
0.0
|
|
|
25.5
|
|
|
71.0
|
|
|
2,867.6
|
|
|
2.6
|
%
|
|
3.5
|
%
|
|||||
International
|
2,121.8
|
|
|
(53.1
|
)
|
|
14.6
|
|
|
48.7
|
|
|
2,132.0
|
|
|
2.3
|
%
|
|
0.5
|
%
|
|||||
United Kingdom
|
400.7
|
|
|
(7.5
|
)
|
|
(0.2
|
)
|
|
(2.8
|
)
|
|
390.2
|
|
|
(0.7
|
)%
|
|
(2.6
|
)%
|
|||||
Continental Europe
|
543.3
|
|
|
13.6
|
|
|
(0.3
|
)
|
|
(36.2
|
)
|
|
520.4
|
|
|
(6.7
|
)%
|
|
(4.2
|
)%
|
|||||
Asia Pacific
|
584.8
|
|
|
(25.3
|
)
|
|
14.6
|
|
|
40.0
|
|
|
614.1
|
|
|
6.8
|
%
|
|
5.0
|
%
|
|||||
Latin America
|
294.3
|
|
|
(20.7
|
)
|
|
0.5
|
|
|
38.7
|
|
|
312.8
|
|
|
13.1
|
%
|
|
6.3
|
%
|
|||||
Other
|
298.7
|
|
|
(13.2
|
)
|
|
0.0
|
|
|
9.0
|
|
|
294.5
|
|
|
3.0
|
%
|
|
(1.4
|
)%
|
|
Three months ended
September 30, |
|
Nine months ended
September 30, |
||||||||||||
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
Salaries and related expenses
|
$
|
1,093.6
|
|
|
$
|
1,064.3
|
|
|
$
|
3,345.9
|
|
|
$
|
3,258.1
|
|
Office and general expenses
|
465.3
|
|
|
474.7
|
|
|
1,379.8
|
|
|
1,366.4
|
|
||||
Total operating expenses
|
$
|
1,558.9
|
|
|
$
|
1,539.0
|
|
|
$
|
4,725.7
|
|
|
$
|
4,624.5
|
|
Operating income
|
$
|
141.5
|
|
|
$
|
131.4
|
|
|
$
|
273.9
|
|
|
$
|
268.4
|
|
|
|
|
Components of Change
|
|
|
|
Change
|
||||||||||||||||||
|
2012
|
Foreign
Currency
|
|
Net
Acquisitions/
(Divestitures)
|
|
Organic
|
|
2013
|
Organic
|
|
Total
|
||||||||||||||
Three months ended September 30,
|
$
|
1,064.3
|
|
|
$
|
(11.5
|
)
|
|
$
|
3.8
|
|
|
$
|
37.0
|
|
|
$
|
1,093.6
|
|
|
3.5
|
%
|
|
2.8
|
%
|
Nine months ended September 30,
|
3,258.1
|
|
|
(28.1
|
)
|
|
23.9
|
|
|
92.0
|
|
|
3,345.9
|
|
|
2.8
|
%
|
|
2.7
|
%
|
|
Three months ended
September 30, |
|
Nine months ended
September 30, |
||||||||
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||
Salaries and related expenses
|
64.3
|
%
|
|
63.7
|
%
|
|
66.9
|
%
|
|
66.6
|
%
|
Base salaries, benefits and tax
|
54.6
|
%
|
|
53.8
|
%
|
|
56.3
|
%
|
|
55.5
|
%
|
Incentive expense
|
2.2
|
%
|
|
2.3
|
%
|
|
3.0
|
%
|
|
3.3
|
%
|
Severance expense
|
1.2
|
%
|
|
1.0
|
%
|
|
1.4
|
%
|
|
1.2
|
%
|
Temporary help
|
3.8
|
%
|
|
3.8
|
%
|
|
3.7
|
%
|
|
3.8
|
%
|
All other salaries and related expenses
|
2.5
|
%
|
|
2.8
|
%
|
|
2.5
|
%
|
|
2.8
|
%
|
|
|
|
Components of Change
|
|
|
|
Change
|
||||||||||||||||||
|
2012
|
Foreign
Currency
|
|
Net
Acquisitions/
(Divestitures)
|
|
Organic
|
|
2013
|
Organic
|
|
Total
|
||||||||||||||
Three months ended September 30,
|
$
|
474.7
|
|
|
$
|
(8.5
|
)
|
|
$
|
2.2
|
|
|
$
|
(3.1
|
)
|
|
$
|
465.3
|
|
|
(0.7
|
)%
|
|
(2.0
|
)%
|
Nine months ended September 30,
|
1,366.4
|
|
|
(18.6
|
)
|
|
7.6
|
|
|
24.4
|
|
|
1,379.8
|
|
|
1.8
|
%
|
|
1.0
|
%
|
|
Three months ended
September 30, |
|
Nine months ended
September 30, |
||||||||
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||
Office and general expenses
|
27.4
|
%
|
|
28.4
|
%
|
|
27.6
|
%
|
|
27.9
|
%
|
Professional fees
|
1.5
|
%
|
|
1.5
|
%
|
|
1.7
|
%
|
|
1.7
|
%
|
Occupancy expense (excluding depreciation and amortization)
|
7.3
|
%
|
|
7.2
|
%
|
|
7.4
|
%
|
|
7.4
|
%
|
Travel & entertainment, office supplies and telecommunications
|
3.5
|
%
|
|
3.6
|
%
|
|
3.7
|
%
|
|
3.9
|
%
|
All other office and general expenses
|
15.1
|
%
|
|
16.1
|
%
|
|
14.8
|
%
|
|
14.9
|
%
|
|
Three months ended
September 30, |
|
Nine months ended
September 30, |
||||||||||||
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
Cash interest on debt obligations
|
$
|
(21.7
|
)
|
|
$
|
(30.7
|
)
|
|
$
|
(91.4
|
)
|
|
$
|
(96.0
|
)
|
Non-cash interest
|
(2.0
|
)
|
|
(0.9
|
)
|
|
(6.6
|
)
|
|
(0.9
|
)
|
||||
Interest expense
|
(23.7
|
)
|
|
(31.6
|
)
|
|
(98.0
|
)
|
|
(96.9
|
)
|
||||
Interest income
|
5.8
|
|
|
6.7
|
|
|
18.0
|
|
|
21.4
|
|
||||
Net interest expense
|
(17.9
|
)
|
|
(24.9
|
)
|
|
(80.0
|
)
|
|
(75.5
|
)
|
||||
Other (expense) income, net
|
(46.6
|
)
|
|
1.7
|
|
|
(40.0
|
)
|
|
5.1
|
|
||||
Total (expenses) and other income
|
$
|
(64.5
|
)
|
|
$
|
(23.2
|
)
|
|
$
|
(120.0
|
)
|
|
$
|
(70.4
|
)
|
|
Three months ended
September 30, |
|
Nine months ended
September 30, |
||||||||||||
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
Loss on early extinguishment of debt
|
$
|
(45.2
|
)
|
|
$
|
0.0
|
|
|
$
|
(45.2
|
)
|
|
$
|
0.0
|
|
(Losses) gains on sales of businesses and investments
|
(0.8
|
)
|
|
(3.4
|
)
|
|
1.9
|
|
|
(5.2
|
)
|
||||
Vendor discounts and credit adjustments
|
0.1
|
|
|
5.0
|
|
|
0.6
|
|
|
9.9
|
|
||||
Other (expense) income, net
|
(0.7
|
)
|
|
0.1
|
|
|
2.7
|
|
|
0.4
|
|
||||
Total other (expense) income, net
|
$
|
(46.6
|
)
|
|
$
|
1.7
|
|
|
$
|
(40.0
|
)
|
|
$
|
5.1
|
|
|
Three months ended
September 30, |
|
Nine months ended
September 30, |
||||||||||||
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
Income before income taxes
|
$
|
77.0
|
|
|
$
|
108.2
|
|
|
$
|
153.9
|
|
|
$
|
198.0
|
|
Provision for income taxes
|
$
|
28.4
|
|
|
$
|
41.9
|
|
|
$
|
78.0
|
|
|
$
|
72.8
|
|
Effective income tax rate
|
36.9
|
%
|
|
38.7
|
%
|
|
50.7
|
%
|
|
36.8
|
%
|
|
|
|
Components of Change
|
|
|
|
Change
|
||||||||||||||||||
|
Three months
ended September 30, 2012 |
Foreign
Currency
|
|
Net
Acquisitions/
(Divestitures)
|
|
Organic
|
|
Three months
ended September 30, 2013 |
Organic
|
|
Total
|
||||||||||||||
Consolidated
|
$
|
1,332.5
|
|
|
$
|
(20.9
|
)
|
|
$
|
5.8
|
|
|
$
|
53.5
|
|
|
$
|
1,370.9
|
|
|
4.0
|
%
|
|
2.9
|
%
|
Domestic
|
721.0
|
|
|
0.0
|
|
|
0.9
|
|
|
28.6
|
|
|
750.5
|
|
|
4.0
|
%
|
|
4.1
|
%
|
|||||
International
|
611.5
|
|
|
(20.9
|
)
|
|
4.9
|
|
|
24.9
|
|
|
620.4
|
|
|
4.1
|
%
|
|
1.5
|
%
|
|
|
|
Components of change
|
|
|
|
Change
|
||||||||||||||||||
|
Nine months
ended September 30, 2012 |
Foreign
Currency |
|
Net
Acquisitions/ (Divestitures) |
|
Organic
|
|
Nine months
ended September 30, 2013 |
|
Organic
|
|
Total
|
|||||||||||||
Consolidated
|
$
|
3,999.7
|
|
|
$
|
(47.9
|
)
|
|
$
|
33.3
|
|
|
$
|
62.6
|
|
|
$
|
4,047.7
|
|
|
1.6
|
%
|
|
1.2
|
%
|
Domestic
|
2,188.6
|
|
|
0.0
|
|
|
25.5
|
|
|
15.2
|
|
|
2,229.3
|
|
|
0.7
|
%
|
|
1.9
|
%
|
|||||
International
|
1,811.1
|
|
|
(47.9
|
)
|
|
7.8
|
|
|
47.4
|
|
|
1,818.4
|
|
|
2.6
|
%
|
|
0.4
|
%
|
|
Three months ended
September 30, |
|
|
|
Nine months ended
September 30,
|
|
|
||||||||||||||
|
2013
|
|
2012
|
|
Change
|
|
2013
|
|
2012
|
|
Change
|
||||||||||
Segment operating income
|
$
|
119.9
|
|
|
$
|
116.6
|
|
|
2.8
|
%
|
|
$
|
266.5
|
|
|
$
|
278.6
|
|
|
(4.3
|
)%
|
Operating margin
|
8.7
|
%
|
|
8.8
|
%
|
|
|
|
6.6
|
%
|
|
7.0
|
%
|
|
|
|
Three months
ended September 30, 2012 |
|
Components of Change
|
|
Three months
ended September 30, 2013 |
|
Change
|
||||||||||||||||||
|
Foreign
Currency
|
|
Net
Acquisitions/
(Divestitures)
|
|
Organic
|
|
Organic
|
|
Total
|
||||||||||||||||
Consolidated
|
$
|
337.9
|
|
|
$
|
(2.6
|
)
|
|
$
|
1.1
|
|
|
$
|
(6.9
|
)
|
|
$
|
329.5
|
|
|
(2.0
|
)%
|
|
(2.5
|
)%
|
Domestic
|
219.5
|
|
|
0.0
|
|
|
0.0
|
|
|
6.7
|
|
|
226.2
|
|
|
3.1
|
%
|
|
3.1
|
%
|
|||||
International
|
118.4
|
|
|
(2.6
|
)
|
|
1.1
|
|
|
(13.6
|
)
|
|
103.3
|
|
|
(11.5
|
)%
|
|
(12.8
|
)%
|
|
Nine months
ended September 30, 2012 |
|
Components of change
|
|
Nine months
ended September 30, 2013 |
|
Change
|
||||||||||||||||||
|
Foreign
Currency |
|
Net
Acquisitions/ (Divestitures) |
|
Organic
|
|
Organic
|
|
Total
|
||||||||||||||||
Consolidated
|
$
|
893.2
|
|
|
$
|
(5.2
|
)
|
|
$
|
6.8
|
|
|
$
|
57.1
|
|
|
$
|
951.9
|
|
|
6.4
|
%
|
|
6.6
|
%
|
Domestic
|
582.5
|
|
|
0.0
|
|
|
0.0
|
|
|
55.9
|
|
|
638.4
|
|
|
9.6
|
%
|
|
9.6
|
%
|
|||||
International
|
310.7
|
|
|
(5.2
|
)
|
|
6.8
|
|
|
1.2
|
|
|
313.5
|
|
|
0.4
|
%
|
|
0.9
|
%
|
|
Three months ended
September 30, |
|
|
|
Nine months ended
September 30,
|
|
|
||||||||||||||
|
2013
|
|
2012
|
|
Change
|
|
2013
|
|
2012
|
|
Change
|
||||||||||
Segment operating income
|
$
|
39.7
|
|
|
$
|
34.4
|
|
|
15.4
|
%
|
|
$
|
88.3
|
|
|
$
|
73.1
|
|
|
20.8
|
%
|
Operating margin
|
12.0
|
%
|
|
10.2
|
%
|
|
|
|
9.3
|
%
|
|
8.2
|
%
|
|
|
|
Nine months ended
September 30, |
||||||
Cash Flow Data
|
2013
|
|
2012
|
||||
Net income, adjusted to reconcile net income to net cash used in operating activities
1
|
$
|
280.7
|
|
|
$
|
264.6
|
|
Net cash used in working capital
2
|
(667.2
|
)
|
|
(700.7
|
)
|
||
Changes in other non-current assets and liabilities using cash
|
(43.9
|
)
|
|
(9.2
|
)
|
||
Net cash used in operating activities
|
$
|
(430.4
|
)
|
|
$
|
(445.3
|
)
|
Net cash used in investing activities
|
(128.1
|
)
|
|
(229.3
|
)
|
||
Net cash used in financing activities
|
(955.6
|
)
|
|
(439.7
|
)
|
|
1
|
Reflects net income adjusted primarily for depreciation and amortization of fixed assets and intangible assets, amortization of restricted stock and other non-cash compensation, non-cash loss related to early extinguishment of debt, 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
|
September 30,
2013 |
|
December 31,
2012 |
|
September 30,
2012 |
||||||
Cash, cash equivalents and marketable securities
|
$
|
1,004.5
|
|
|
$
|
2,590.8
|
|
|
$
|
1,201.6
|
|
|
|
|
|
|
|
||||||
Short-term borrowings
|
$
|
186.3
|
|
|
$
|
172.1
|
|
|
$
|
200.5
|
|
Current portion of long-term debt
|
2.2
|
|
|
216.6
|
|
|
217.1
|
|
|||
Long-term debt
|
1,481.0
|
|
|
2,060.8
|
|
|
1,263.1
|
|
|||
Total debt
|
$
|
1,669.5
|
|
|
$
|
2,449.5
|
|
|
$
|
1,680.7
|
|
•
|
Debt service – We retired all of our
4.75%
Notes in March 2013 and redeemed all of our
10.00%
Notes in July 2013. Our $350.0 in aggregate principal amount of the 6.25% Senior Unsecured Notes due 2014 mature on November 15, 2014. The remainder of our debt is primarily long-term, with maturities scheduled through 2031.
|
•
|
Acquisitions – We paid cash of
$47.2
, which was net of cash acquired of
$4.7
, for acquisitions completed in the
first nine months
of
2013
. We also paid cash of $30.1 related to acquisitions made in prior years. In addition to potential cash expenditures for new acquisitions, we expect to pay approximately $1.0 for the remainder of
2013
and approximately $6.0 in 2014 related to prior acquisitions. We may also be required to pay approximately $15.0 over the next 12 months related to put options held by minority share holders if exercised. We will continue to evaluate strategic opportunities to grow and continue to strengthen our 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 nine months
of
2013
, we paid three quarterly cash dividends of
$0.075
per share on our common stock, which corresponded to an aggregate dividend payment of
$94.1
. Assuming we continue to pay a quarterly dividend of
$0.075
per share and there is no significant change in the number of outstanding shares as of
September 30, 2013
, we would pay approximately
$126.0
over the next twelve months.
On October 17, 2013, we converted all of our Series B Cumulative Convertible Perpetual Preferred Stock and we will no longer be required to pay annual preferred stock dividends of $11.6. Assuming we continue to pay common stock dividends at our current rate, we would pay an additional approximately $5.0 common stock dividends over the next twelve months related to the common shares issued as a result of the conversion.
|
•
|
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
nine months ended
September 30, 2013
, we contributed
$0.5
and
$13.5
of cash to our domestic and foreign pension plans, respectively. For the remainder of
2013
, we do not expect to make any additional cash contributions to our domestic pension plan and we expect to contribute approximately
$6.0
of cash to our foreign pension plans.
|
|
September 30, 2013
|
||||||||||||||
|
Total
Facility
|
|
Amount
Outstanding
|
|
Letters
of Credit
1
|
|
Total
Available
|
||||||||
Cash, cash equivalents and marketable securities
|
|
|
|
|
|
|
$
|
1,004.5
|
|
||||||
Committed credit agreement
|
$
|
1,000.0
|
|
|
$
|
0.0
|
|
|
$
|
14.5
|
|
|
$
|
985.5
|
|
Uncommitted credit arrangements
|
$
|
693.2
|
|
|
$
|
186.3
|
|
|
$
|
4.1
|
|
|
$
|
502.8
|
|
|
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
|
|
September 30, 2013
|
|
EBITDA Reconciliation
|
|
September 30, 2013
|
||
Interest coverage ratio (not less than)
|
|
5.00x
|
|
Operating income
|
|
$
|
683.8
|
|
Actual interest coverage ratio
|
|
8.48x
|
|
Add:
|
|
|
||
|
|
|
|
Depreciation and amortization
|
|
196.5
|
|
|
Leverage ratio (not greater than)
|
|
2.75x
|
|
Other non-cash amounts
|
|
0.5
|
|
|
Actual leverage ratio
|
|
1.90x
|
|
EBITDA
1
|
|
$
|
880.8
|
|
|
1
|
EBITDA is calculated as defined in the Credit Agreement.
|
|
Moody’s Investor
Service
|
|
Standard and
Poor’s
|
|
Fitch Ratings
|
Rating
|
Baa3
|
|
BB+
|
|
BBB
|
Outlook
|
Stable
|
|
Stable
|
|
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 July 1, 2013 to
September 30, 2013
:
|
|
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
|
||||||
July 1 - 31
|
1,499,145
|
|
|
$
|
15.30
|
|
|
1,492,349
|
|
|
$
|
396,717,259
|
|
August 1 - 31
|
2,150,819
|
|
|
$
|
15.96
|
|
|
2,148,652
|
|
|
$
|
362,430,177
|
|
September 1 - 30
|
2,599,596
|
|
|
$
|
16.67
|
|
|
2,580,200
|
|
|
$
|
319,425,085
|
|
Total
|
6,249,560
|
|
|
$
|
16.10
|
|
|
6,221,201
|
|
|
|
|
1
|
Includes 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 6,796 Withheld Shares in July 2013, 2,167 Withheld Shares in August 2013 and 19,396 Withheld Shares in September 2013, for a total of 28,359 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 6 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 22, 2013, we announced that our Board of Directors (the "Board") 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. On April 1, 2013, we announced that our Board had approved an increase in that share repurchase program from
$300.0 million
to
$500.0 million
of our common stock. There is no expiration date associated with the share repurchase program.
|
Item 5.
|
Other Information
|
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
|
3(i)(1)
|
|
Certificate of Elimination, dated as of October 24, 2013.
|
|
|
|
3(i)(2)
|
|
Restated Certificate of Incorporation of The Interpublic Group of Companies Inc. (“Interpublic”), dated as of October 24, 2013.
|
|
|
|
3(ii)
|
|
By-Laws of Interpublic as amended through October 24, 2013.
|
|
|
|
10(iii)(A)(1)
|
|
Extension of Existing Executive Change of Control Agreement between Interpublic and Michael I. Roth, dated August 29, 2013, is incorporated by reference to Exhibit 10.1 to Interpublic’s Current Report on Form 8-K, filed with the Securities and Exchange Commission (the “SEC”) on August 30, 2013.
|
|
|
|
10(iii)(A)(2)
|
|
Extension of Existing Executive Change of Control Agreement between Interpublic and Frank Mergenthaler, dated August 29, 2013, is incorporated by reference to Exhibit 10.2 to Interpublic’s Current Report on Form 8-K, filed with the SEC on August 30, 2013.
|
|
|
|
10(iii)(A)(3)
|
|
Extension of Existing Executive Change of Control Agreement between Interpublic and Andrew Bonzani, dated August 29, 2013, is incorporated by reference to Exhibit 10.3 to Interpublic’s Current Report on Form 8-K, filed with the SEC on August 30, 2013.
|
|
|
|
10(iii)(A)(4)
|
|
Extension of Existing Executive Change of Control Agreement between Interpublic and Christopher Carroll, dated August 29, 2013, is incorporated by reference to Exhibit 10.4 to Interpublic’s Current Report on Form 8-K, filed with the SEC on August 30, 2013.
|
|
|
|
10(iii)(A)(5)
|
|
Extension of Existing Executive Change of Control Agreement between Interpublic and Philippe Krakowsky, dated August 29, 2013, is incorporated by reference to Exhibit 10.5 to Interpublic’s Current Report on Form 8-K, filed with the SEC on August 30, 2013.
|
|
|
|
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 September 30, 2013.
|
Table of Contents
|
||||
|
|
|
||
|
|
Page
|
|
|
|
|
|
||
ARTICLE 1
OFFICES
|
||||
Section 1.01.
|
Registered Office......................................................................................................
|
1
|
|
|
Section 1.02.
|
Other Offices.............................................................................................................
|
1
|
|
|
|
|
|
||
ARTICLE 2
STOCKHOLDERS
|
||||
Section 2.01.
|
Annual Meeting........................................................................................................
|
1
|
|
|
Section 2.02.
|
Special Meetings.......................................................................................................
|
1
|
|
|
Section 2.03.
|
Place of Meetings......................................................................................................
|
2
|
|
|
Section 2.04.
|
Notice of Meetings....................................................................................................
|
2
|
|
|
Section 2.05.
|
Organization..............................................................................................................
|
3
|
|
|
Section 2.06.
|
Record Date..............................................................................................................
|
3
|
|
|
Section 2.07.
|
List of Stockholders Entitled to Vote........................................................................
|
5
|
|
|
Section 2.08.
|
Quorum.....................................................................................................................
|
5
|
|
|
Section 2.09.
|
Adjourned Meeting...................................................................................................
|
5
|
|
|
Section 2.10.
|
Order of Business......................................................................................................
|
6
|
|
|
Section 2.11.
|
Vote of Stockholders.................................................................................................
|
6
|
|
|
Section 2.12.
|
Proxies......................................................................................................................
|
6
|
|
|
Section 2.13.
|
Notice of Stockholder Business...............................................…….........................
|
6
|
|
|
|
|
|
||
ARTICLE 3
BOARD OF DIRECTORS
|
||||
Section 3.01.
|
Number......................................................................................................................
|
10
|
|
|
Section 3.02.
|
Election and Term of Office......................................................................................
|
10
|
|
|
Section 3.03.
|
General Powers.........................................................................................................
|
10
|
|
|
Section 3.04.
|
Place of Meetings......................................................................................................
|
11
|
|
|
Section 3.05.
|
Regular Meetings......................................................................................................
|
11
|
|
|
Section 3.06.
|
Special Meetings.......................................................................................................
|
11
|
|
|
Section 3.07.
|
Business that may be Transacted..............................................................................
|
11
|
|
Section 3.08.
|
Organization..............................................................................................................
|
11
|
|
|
Section 3.09.
|
Quorum and Adjournment........................................................................................
|
12
|
|
|
Section 3.10.
|
Voting........................................................................................................................
|
12
|
|
|
Section 3.11.
|
Compensation...........................................................................................................
|
12
|
|
|
Section 3.12.
|
Action Without a Meeting.........................................................................................
|
12
|
|
|
Section 3.13.
|
Resignations..............................................................................................................
|
12
|
|
|
Section 3.14.
|
Removal of Directors................................................................................................
|
12
|
|
|
Section 3.15.
|
Filling of Vacancies..................................................................................................
|
12
|
|
|
|
|
|
|
|
ARTICLE 4
COMMITTEES
|
||||
Section 4.01.
|
Appointment and Powers..........................................................................................
|
13
|
|
|
Section 4.02.
|
Procedural Rules.......................................................................................................
|
13
|
|
|
Section 4.03.
|
Minutes.....................................................................................................................
|
13
|
|
|
Section 4.04.
|
Removal....................................................................................................................
|
13
|
|
|
Section 4.05.
|
Vacancies..................................................................................................................
|
14
|
|
|
|
|
|
||
ARTICLE 5
OFFICERS
|
||||
Section 5.01.
|
Designation...............................................................................................................
|
14
|
|
|
Section 5.02.
|
Terms of Office; Vacancies.......................................................................................
|
14
|
|
|
Section 5.03.
|
Resignations..............................................................................................................
|
14
|
|
|
Section 5.04.
|
Chief Executive Officer............................................................................................
|
15
|
|
|
Section 5.05.
|
Vice Presidents and Other Officers...........................................................................
|
15
|
|
|
Section 5.06.
|
The Secretary............................................................................................................
|
15
|
|
|
Section 5.07.
|
The Treasurer............................................................................................................
|
15
|
|
|
Section 5.08.
|
Additional Powers and Duties..................................................................................
|
16
|
|
|
Section 5.09.
|
Compensation...........................................................................................................
|
16
|
|
|
|
|
|
||
ARTICLE 6
INDEMNIFICATION
|
||||
Section 6.01.
|
Actions other than those by or in the right of the Corporation.................................
|
16
|
|
|
Section 6.02.
|
Actions by or in the right of the Corporation............................................................
|
16
|
|
|
Section 6.03.
|
Indemnification against Expenses............................................................................
|
17
|
|
Section 6.04.
|
Authorization............................................................................................................
|
17
|
|
|
Section 6.05.
|
Payment of Expenses in Advance of Final Disposition............................................
|
17
|
|
|
Section 6.06.
|
Contract Rights.........................................................................................................
|
18
|
|
|
Section 6.07.
|
Non-Exclusivity........................................................................................................
|
18
|
|
|
Section 6.08.
|
Application................................................................................................................
|
18
|
|
|
Section 6.09.
|
Amendments/Repeals...............................................................................................
|
18
|
|
|
|
|
|
||
ARTICLE 7
STOCK CERTIFICATES
|
||||
Section 7.01.
|
Issuance of Certificates.............................................................................................
|
18
|
|
|
Section 7.02.
|
Form of Certificates..................................................................................................
|
19
|
|
|
Section 7.03.
|
Lost, Stolen or Destroyed Certificates......................................................................
|
19
|
|
|
|
|
|
||
ARTICLE 8
TRANSFERS OF STOCK
|
||||
Section 8.01.
|
Registration of Transfers...........................................................................................
|
19
|
|
|
Section 8.02.
|
Transfer Agents and Registrars.................................................................................
|
20
|
|
|
|
|
|
||
ARTICLE 9
DELEGATION OF AUTHORITY
|
||||
Section 9.01.
|
Officers’ Duties.........................................................................................................
|
20
|
|
|
Section 9.02.
|
Negotiable Instruments.............................................................................................
|
20
|
|
|
Section 9.03.
|
Voting Upon Stocks..................................................................................................
|
20
|
|
|
Section 9.04.
|
Attorneys...................................................................................................................
|
20
|
|
|
|
|
|
||
ARTICLE 10
MISCELLANEOUS
|
||||
Section 10.01.
|
Seal............................................................................................................................
|
21
|
|
|
Section 10.02.
|
Fiscal Year.................................................................................................................
|
21
|
|
|
Section 10.03.
|
Inspection of Books..................................................................................................
|
21
|
|
|
Section 10.04.
|
Registered Stockholders...........................................................................................
|
21
|
|
|
Section 10.05.
|
Waiver of Notice.......................................................................................................
|
21
|
|
|
Section 10.06.
|
Amendment...............................................................................................................
|
22
|
|
(a)
|
Annual Meetings of Stockholders.
|
COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
|
|||||||||||||||||||||||||
(Amounts in Millions, Except Ratios)
|
|||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
Nine months ended
September 30, |
|
|
|
Years ended December 31,
|
|||||||||||||||||||
|
|
2013
|
|
2012
|
|
2011
|
|
2010
|
|
2009
|
|
2008
|
|
||||||||||||
Earnings
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Income from continuing operations before income taxes
|
|
153.9
|
|
|
$
|
674.8
|
|
|
$
|
738.4
|
|
|
$
|
450.6
|
|
|
$
|
232.4
|
|
|
$
|
471.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Fixed charges
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Interest expense
|
|
98.0
|
|
|
133.5
|
|
|
136.8
|
|
|
139.7
|
|
|
155.6
|
|
|
211.9
|
|
|
||||||
Interest factor of net operating rents
2
|
|
127.9
|
|
|
169.0
|
|
|
175.6
|
|
|
172.8
|
|
|
181.4
|
|
|
183.9
|
|
|
||||||
Total fixed charges
|
|
225.9
|
|
|
302.5
|
|
|
312.4
|
|
|
312.5
|
|
|
337.0
|
|
|
395.8
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Earnings, as adjusted
|
|
$
|
379.8
|
|
|
$
|
977.3
|
|
|
$
|
1,050.8
|
|
|
$
|
763.1
|
|
|
$
|
569.4
|
|
|
$
|
867.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Ratio of earnings to fixed charges
|
|
1.7
|
|
|
3.2
|
|
|
3.4
|
|
|
2.4
|
|
|
1.7
|
|
|
2.2
|
|
|
|
1
|
Earnings consist of income from continuing operations before income taxes, equity in net income of unconsolidated affiliates and adjustments for net income attributable to noncontrolling interests. 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).
|
2
|
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.
|
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
|
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
|