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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, 2017
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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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Emerging growth company
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¨
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INDEX
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Page
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Item 1.
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||
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Consolidated Statements of Operations for the
Three and Nine Months Ended September 30, 2017 and 2016
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Consolidated Statements of Comprehensive Income for the
Three and Nine Months Ended September 30, 2017 and 2016
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Consolidated Balance Sheets as of
September 30, 2017 and December 31, 2016
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Consolidated Statements of Cash Flows for the
Nine Months Ended September 30, 2017 and 2016
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Consolidated Statements of Stockholders’ Equity for the
Nine Months Ended September 30, 2017 and 2016
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Item 2.
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Item 3.
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Item 4.
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||
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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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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.
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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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2017
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2016
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2017
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2016
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||||||||
REVENUE
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$
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1,902.6
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$
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1,922.2
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$
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5,541.4
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$
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5,582.1
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||||||||
OPERATING EXPENSES:
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|
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||||||||
Salaries and related expenses
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1,227.6
|
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1,228.0
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3,742.3
|
|
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3,726.3
|
|
||||
Office and general expenses
|
455.9
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|
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486.2
|
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1,343.8
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1,400.5
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||||
Total operating expenses
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1,683.5
|
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1,714.2
|
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5,086.1
|
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5,126.8
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||||||||
OPERATING INCOME
|
219.1
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|
|
208.0
|
|
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455.3
|
|
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455.3
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EXPENSES AND OTHER INCOME:
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Interest expense
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(21.0
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)
|
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(21.7
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)
|
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(67.6
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)
|
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(68.8
|
)
|
||||
Interest income
|
4.1
|
|
|
4.7
|
|
|
14.0
|
|
|
16.1
|
|
||||
Other (expense) income, net
|
(9.9
|
)
|
|
5.3
|
|
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(24.5
|
)
|
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(13.5
|
)
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||||
Total (expenses) and other income
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(26.8
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)
|
|
(11.7
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)
|
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(78.1
|
)
|
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(66.2
|
)
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||||
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|
|
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||||||||
Income before income taxes
|
192.3
|
|
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196.3
|
|
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377.2
|
|
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389.1
|
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||||
Provision for income taxes
|
42.5
|
|
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63.8
|
|
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115.8
|
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91.9
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Income of consolidated companies
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149.8
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132.5
|
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261.4
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297.2
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||||
Equity in net (loss) income of unconsolidated affiliates
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(1.0
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)
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0.2
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0.1
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(1.6
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)
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||||
NET INCOME
|
148.8
|
|
|
132.7
|
|
|
261.5
|
|
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295.6
|
|
||||
Net (income) loss attributable to noncontrolling interests
|
(2.6
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)
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(4.1
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)
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0.9
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(4.7
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)
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NET INCOME AVAILABLE TO IPG COMMON STOCKHOLDERS
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$
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146.2
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$
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128.6
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$
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262.4
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$
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290.9
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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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0.38
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$
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0.32
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$
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0.67
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$
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0.73
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Diluted
|
$
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0.37
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$
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0.32
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$
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0.66
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$
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0.71
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||||||||
Weighted-average number of common shares outstanding:
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|
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Basic
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389.5
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397.7
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391.2
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399.5
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Diluted
|
397.2
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407.9
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398.6
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408.8
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Dividends declared per common share
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$
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0.18
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$
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0.15
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$
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0.54
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$
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0.45
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Three months ended
September 30, |
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Nine months ended
September 30, |
||||||||||||
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2017
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2016
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2017
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2016
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||||||||
NET INCOME
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$
|
148.8
|
|
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$
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132.7
|
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$
|
261.5
|
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$
|
295.6
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|
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OTHER COMPREHENSIVE INCOME (LOSS)
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|
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||||||||
Foreign currency translation:
|
|
|
|
|
|
|
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||||||||
Foreign currency translation adjustments
|
29.2
|
|
|
4.4
|
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|
114.0
|
|
|
43.5
|
|
||||
Reclassification adjustments recognized in net income
|
1.5
|
|
|
(4.2
|
)
|
|
1.8
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|
|
2.3
|
|
||||
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30.7
|
|
|
0.2
|
|
|
115.8
|
|
|
45.8
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Available-for-sale securities:
|
|
|
|
|
|
|
|
||||||||
Changes in fair value of available-for-sale securities
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(0.1
|
)
|
|
0.2
|
|
|
0.0
|
|
|
0.4
|
|
||||
Recognition of previously unrealized gains in net income
|
(0.7
|
)
|
|
(0.1
|
)
|
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(0.7
|
)
|
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(1.3
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)
|
||||
Income tax effect
|
0.1
|
|
|
0.1
|
|
|
0.1
|
|
|
0.1
|
|
||||
|
(0.7
|
)
|
|
0.2
|
|
|
(0.6
|
)
|
|
(0.8
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Derivative instruments:
|
|
|
|
|
|
|
|
||||||||
Recognition of previously unrealized losses in net income
|
0.5
|
|
|
0.5
|
|
|
1.6
|
|
|
1.5
|
|
||||
Income tax effect
|
(0.2
|
)
|
|
(0.2
|
)
|
|
(0.6
|
)
|
|
(0.6
|
)
|
||||
|
0.3
|
|
|
0.3
|
|
|
1.0
|
|
|
0.9
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Defined benefit pension and other postretirement plans:
|
|
|
|
|
|
|
|
||||||||
Net actuarial gains (losses) for the period
|
8.2
|
|
|
(79.2
|
)
|
|
9.0
|
|
|
(78.4
|
)
|
||||
Amortization of unrecognized losses, transition obligation and prior service cost included in net income
|
1.7
|
|
|
1.2
|
|
|
5.2
|
|
|
3.7
|
|
||||
Settlement and curtailment losses included in net income
|
4.0
|
|
|
0.1
|
|
|
4.0
|
|
|
0.3
|
|
||||
Other
|
0.0
|
|
|
0.0
|
|
|
(0.6
|
)
|
|
0.0
|
|
||||
Income tax effect
|
(2.8
|
)
|
|
13.0
|
|
|
(3.4
|
)
|
|
12.5
|
|
||||
|
11.1
|
|
|
(64.9
|
)
|
|
14.2
|
|
|
(61.9
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Other comprehensive income (loss), net of tax
|
41.4
|
|
|
(64.2
|
)
|
|
130.4
|
|
|
(16.0
|
)
|
||||
TOTAL COMPREHENSIVE INCOME
|
190.2
|
|
|
68.5
|
|
|
391.9
|
|
|
279.6
|
|
||||
Less: comprehensive income (loss) attributable to noncontrolling interests
|
2.5
|
|
|
5.4
|
|
|
(0.3
|
)
|
|
5.9
|
|
||||
COMPREHENSIVE INCOME ATTRIBUTABLE TO IPG
|
$
|
187.7
|
|
|
$
|
63.1
|
|
|
$
|
392.2
|
|
|
$
|
273.7
|
|
|
September 30,
2017 |
|
December 31,
2016 |
||||
ASSETS:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
704.9
|
|
|
$
|
1,097.6
|
|
Accounts receivable, net of allowance of $45.8 and $55.7, respectively
|
3,696.1
|
|
|
4,389.7
|
|
||
Expenditures billable to clients
|
1,742.3
|
|
|
1,518.1
|
|
||
Assets held for sale
|
8.3
|
|
|
203.2
|
|
||
Other current assets
|
312.2
|
|
|
229.4
|
|
||
Total current assets
|
6,463.8
|
|
|
7,438.0
|
|
||
Property and equipment, net of accumulated depreciation of $1,045.5
and $961.6, respectively |
637.5
|
|
|
622.0
|
|
||
Deferred income taxes
|
270.9
|
|
|
220.3
|
|
||
Goodwill
|
3,799.9
|
|
|
3,674.4
|
|
||
Other non-current assets
|
544.0
|
|
|
530.5
|
|
||
TOTAL ASSETS
|
$
|
11,716.1
|
|
|
$
|
12,485.2
|
|
|
|
|
|
||||
LIABILITIES:
|
|
|
|
||||
Accounts payable
|
$
|
5,561.1
|
|
|
$
|
6,303.6
|
|
Accrued liabilities
|
550.7
|
|
|
794.0
|
|
||
Short-term borrowings
|
511.8
|
|
|
85.7
|
|
||
Current portion of long-term debt
|
301.9
|
|
|
323.9
|
|
||
Liabilities held for sale
|
20.8
|
|
|
198.8
|
|
||
Total current liabilities
|
6,946.3
|
|
|
7,706.0
|
|
||
Long-term debt
|
1,285.0
|
|
|
1,280.7
|
|
||
Deferred compensation
|
457.2
|
|
|
480.7
|
|
||
Other non-current liabilities
|
749.4
|
|
|
708.3
|
|
||
TOTAL LIABILITIES
|
9,437.9
|
|
|
10,175.7
|
|
||
|
|
|
|
||||
Redeemable noncontrolling interests (see Note 4)
|
238.0
|
|
|
252.8
|
|
||
|
|
|
|
||||
STOCKHOLDERS’ EQUITY:
|
|
|
|
||||
Common stock
|
39.9
|
|
|
39.4
|
|
||
Additional paid-in capital
|
1,235.7
|
|
|
1,199.2
|
|
||
Retained earnings
|
1,849.8
|
|
|
1,804.3
|
|
||
Accumulated other comprehensive loss, net of tax
|
(832.7
|
)
|
|
(962.5
|
)
|
||
|
2,292.7
|
|
|
2,080.4
|
|
||
Less: Treasury stock
|
(279.3
|
)
|
|
(63.3
|
)
|
||
Total IPG stockholders’ equity
|
2,013.4
|
|
|
2,017.1
|
|
||
Noncontrolling interests
|
26.8
|
|
|
39.6
|
|
||
TOTAL STOCKHOLDERS’ EQUITY
|
2,040.2
|
|
|
2,056.7
|
|
||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
|
$
|
11,716.1
|
|
|
$
|
12,485.2
|
|
|
Nine months ended
September 30, |
||||||
|
2017
|
|
2016
|
||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
||||
Net income
|
$
|
261.5
|
|
|
$
|
295.6
|
|
Adjustments to reconcile net income to net cash used in operating activities:
|
|
|
|
||||
Depreciation and amortization of fixed assets and intangible assets
|
124.5
|
|
|
117.5
|
|
||
Provision for uncollectible receivables
|
9.5
|
|
|
13.6
|
|
||
Amortization of restricted stock and other non-cash compensation
|
59.8
|
|
|
59.0
|
|
||
Net amortization of bond discounts and deferred financing costs
|
4.2
|
|
|
4.2
|
|
||
Deferred income tax (benefit) provision
|
(1.6
|
)
|
|
2.6
|
|
||
Net losses on sales of businesses
|
20.9
|
|
|
16.1
|
|
||
Other
|
16.1
|
|
|
29.8
|
|
||
Changes in assets and liabilities, net of acquisitions and divestitures, providing (using) cash:
|
|
|
|
||||
Accounts receivable
|
875.8
|
|
|
666.3
|
|
||
Expenditures billable to clients
|
(165.9
|
)
|
|
(241.2
|
)
|
||
Other current assets
|
(48.2
|
)
|
|
(20.6
|
)
|
||
Accounts payable
|
(986.4
|
)
|
|
(688.4
|
)
|
||
Accrued liabilities
|
(287.8
|
)
|
|
(207.9
|
)
|
||
Other non-current assets and liabilities
|
(21.4
|
)
|
|
(73.5
|
)
|
||
Net cash used in operating activities
|
(139.0
|
)
|
|
(26.9
|
)
|
||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
||||
Capital expenditures
|
(108.7
|
)
|
|
(114.5
|
)
|
||
Acquisitions, net of cash acquired
|
(22.6
|
)
|
|
(47.9
|
)
|
||
Other investing activities
|
(9.2
|
)
|
|
(5.1
|
)
|
||
Net cash used in investing activities
|
(140.5
|
)
|
|
(167.5
|
)
|
||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
||||
Repurchases of common stock
|
(216.0
|
)
|
|
(193.3
|
)
|
||
Common stock dividends
|
(211.2
|
)
|
|
(179.6
|
)
|
||
Acquisition-related payments
|
(49.1
|
)
|
|
(36.7
|
)
|
||
Tax payments for employee shares withheld
|
(38.4
|
)
|
|
(22.7
|
)
|
||
Repayments of long-term debt
|
(23.6
|
)
|
|
(1.1
|
)
|
||
Distributions to noncontrolling interests
|
(16.9
|
)
|
|
(10.8
|
)
|
||
Net increase (decrease) in short-term borrowings
|
429.9
|
|
|
(33.9
|
)
|
||
Exercise of stock options
|
12.1
|
|
|
10.2
|
|
||
Other financing activities
|
0.1
|
|
|
1.0
|
|
||
Net cash used in financing activities
|
(113.1
|
)
|
|
(466.9
|
)
|
||
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash
|
0.4
|
|
|
50.7
|
|
||
Net decrease in cash, cash equivalents and restricted cash
|
(392.2
|
)
|
|
(610.6
|
)
|
||
Cash, cash equivalents and restricted cash at beginning of period
|
1,100.2
|
|
|
1,506.1
|
|
||
Cash, cash equivalents and restricted cash at end of period
|
$
|
708.0
|
|
|
$
|
895.5
|
|
|
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, 2016
|
394.3
|
|
|
$
|
39.4
|
|
|
$
|
1,199.2
|
|
|
$
|
1,804.3
|
|
|
$
|
(962.5
|
)
|
|
$
|
(63.3
|
)
|
|
$
|
2,017.1
|
|
|
$
|
39.6
|
|
|
$
|
2,056.7
|
|
Net income
|
|
|
|
|
|
|
262.4
|
|
|
|
|
|
|
262.4
|
|
|
(0.9
|
)
|
|
261.5
|
|
|||||||||||||
Other comprehensive income
|
|
|
|
|
|
|
|
|
129.8
|
|
|
|
|
129.8
|
|
|
0.6
|
|
|
130.4
|
|
|||||||||||||
Reclassifications related to redeemable
noncontrolling interests
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7.3
|
|
|
7.3
|
|
||||||||||||||
Distributions to noncontrolling interests
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(17.5
|
)
|
|
(17.5
|
)
|
|||||||||||||||
Change in redemption value of redeemable
noncontrolling interests
|
|
|
|
|
|
|
(4.6
|
)
|
|
|
|
|
|
(4.6
|
)
|
|
|
|
(4.6
|
)
|
||||||||||||||
Repurchases of common stock
|
|
|
|
|
|
|
|
|
|
|
(216.0
|
)
|
|
(216.0
|
)
|
|
|
|
(216.0
|
)
|
||||||||||||||
Common stock dividends
|
|
|
|
|
|
|
(211.2
|
)
|
|
|
|
|
|
(211.2
|
)
|
|
|
|
(211.2
|
)
|
||||||||||||||
Stock-based compensation
|
5.6
|
|
|
0.6
|
|
|
62.9
|
|
|
|
|
|
|
|
|
63.5
|
|
|
|
|
63.5
|
|
||||||||||||
Exercise of stock options
|
1.1
|
|
|
0.1
|
|
|
12.1
|
|
|
|
|
|
|
|
|
12.2
|
|
|
|
|
12.2
|
|
||||||||||||
Shares withheld for taxes
|
(1.6
|
)
|
|
(0.2
|
)
|
|
(38.5
|
)
|
|
|
|
|
|
|
|
(38.7
|
)
|
|
|
|
(38.7
|
)
|
||||||||||||
Other
|
|
|
|
|
|
|
(1.1
|
)
|
|
|
|
|
|
(1.1
|
)
|
|
(2.3
|
)
|
|
(3.4
|
)
|
|||||||||||||
Balance at September 30, 2017
|
399.4
|
|
|
$
|
39.9
|
|
|
$
|
1,235.7
|
|
|
$
|
1,849.8
|
|
|
$
|
(832.7
|
)
|
|
$
|
(279.3
|
)
|
|
$
|
2,013.4
|
|
|
$
|
26.8
|
|
|
$
|
2,040.2
|
|
|
Common Stock
|
|
Additional
Paid-In
Capital
|
|
Retained
Earnings
|
|
Accumulated
Other
Comprehensive
Loss, Net of Tax
|
|
Treasury
Stock
|
|
Total IPG
Stockholders’
Equity
|
|
Noncontrolling
Interests
|
|
Total
Stockholders’
Equity
|
|||||||||||||||||||
|
Shares
|
|
Amount
|
|
||||||||||||||||||||||||||||||
Balance at December 31, 2015
|
404.4
|
|
|
$
|
40.4
|
|
|
$
|
1,404.1
|
|
|
$
|
1,437.6
|
|
|
$
|
(845.6
|
)
|
|
$
|
(71.0
|
)
|
|
$
|
1,965.5
|
|
|
$
|
36.3
|
|
|
$
|
2,001.8
|
|
Net income
|
|
|
|
|
|
|
290.9
|
|
|
|
|
|
|
290.9
|
|
|
4.7
|
|
|
295.6
|
|
|||||||||||||
Other comprehensive (loss) income
|
|
|
|
|
|
|
|
|
(17.2
|
)
|
|
|
|
(17.2
|
)
|
|
1.2
|
|
|
(16.0
|
)
|
|||||||||||||
Reclassifications related to redeemable
noncontrolling interests
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.5
|
|
|
0.5
|
|
|||||||||||||||
Distributions to noncontrolling interests
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(10.8
|
)
|
|
(10.8
|
)
|
|||||||||||||||
Change in redemption value of redeemable
noncontrolling interests
|
|
|
|
|
|
|
(1.3
|
)
|
|
|
|
|
|
(1.3
|
)
|
|
|
|
(1.3
|
)
|
||||||||||||||
Repurchases of common stock
|
|
|
|
|
|
|
|
|
|
|
(193.3
|
)
|
|
(193.3
|
)
|
|
|
|
(193.3
|
)
|
||||||||||||||
Common stock dividends
|
|
|
|
|
|
|
(179.6
|
)
|
|
|
|
|
|
(179.6
|
)
|
|
|
|
(179.6
|
)
|
||||||||||||||
Stock-based compensation
|
3.5
|
|
|
0.3
|
|
|
88.2
|
|
|
|
|
|
|
|
|
88.5
|
|
|
|
|
88.5
|
|
||||||||||||
Exercise of stock options
|
1.2
|
|
|
0.1
|
|
|
10.2
|
|
|
|
|
|
|
|
|
10.3
|
|
|
|
|
10.3
|
|
||||||||||||
Shares withheld for taxes
|
(1.1
|
)
|
|
(0.1
|
)
|
|
(22.9
|
)
|
|
|
|
|
|
|
|
(23.0
|
)
|
|
|
|
(23.0
|
)
|
||||||||||||
Other
|
|
|
|
|
1.6
|
|
|
(1.0
|
)
|
|
|
|
|
|
0.6
|
|
|
2.2
|
|
|
2.8
|
|
||||||||||||
Balance at September 30, 2016
|
408.0
|
|
|
$
|
40.7
|
|
|
$
|
1,481.2
|
|
|
$
|
1,546.6
|
|
|
$
|
(862.8
|
)
|
|
$
|
(264.3
|
)
|
|
$
|
1,941.4
|
|
|
$
|
34.1
|
|
|
$
|
1,975.5
|
|
|
Effective
Interest Rate
|
|
September 30,
2017 |
|
December 31,
2016 |
||||||||||||
Book
Value
|
|
Fair
Value
1
|
|
Book
Value
|
|
Fair
Value
1
|
|||||||||||
2.25% Senior Notes due 2017 (less unamortized issuance costs of $0.1)
|
2.30%
|
|
$
|
299.9
|
|
|
$
|
300.2
|
|
|
$
|
299.4
|
|
|
$
|
301.4
|
|
4.00% Senior Notes due 2022 (less unamortized discount and issuance costs of $1.4 and $1.1, respectively)
|
4.13%
|
|
247.5
|
|
|
258.5
|
|
|
247.0
|
|
|
258.4
|
|
||||
3.75% Senior Notes due 2023 (less unamortized discount and issuance costs of $0.8 and $2.2, respectively)
|
4.32%
|
|
497.0
|
|
|
520.5
|
|
|
496.6
|
|
|
503.3
|
|
||||
4.20% Senior Notes due 2024 (less unamortized discount and issuance costs of $0.7 and $2.7, respectively)
|
4.24%
|
|
496.6
|
|
|
527.0
|
|
|
496.2
|
|
|
511.6
|
|
||||
Other notes payable and capitalized leases
|
|
|
45.9
|
|
|
45.9
|
|
|
65.4
|
|
|
65.4
|
|
||||
Total long-term debt
|
|
|
1,586.9
|
|
|
|
|
1,604.6
|
|
|
|
||||||
Less: current portion
|
|
|
301.9
|
|
|
|
|
323.9
|
|
|
|
||||||
Long-term debt, excluding current portion
|
|
|
$
|
1,285.0
|
|
|
|
|
$
|
1,280.7
|
|
|
|
|
1
|
See Note
11
for information on the fair value measurement of our long-term debt.
|
|
Three months ended
September 30, |
|
Nine months ended
September 30, |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Net income available to IPG common stockholders
|
$
|
146.2
|
|
|
$
|
128.6
|
|
|
$
|
262.4
|
|
|
$
|
290.9
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted-average number of common shares outstanding - basic
|
389.5
|
|
|
397.7
|
|
|
391.2
|
|
|
399.5
|
|
||||
Dilutive effect of stock options and restricted shares
|
7.7
|
|
|
10.2
|
|
|
7.4
|
|
|
9.3
|
|
||||
Weighted-average number of common shares outstanding - diluted
|
397.2
|
|
|
407.9
|
|
|
398.6
|
|
|
408.8
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Earnings per share available to IPG common stockholders:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.38
|
|
|
$
|
0.32
|
|
|
$
|
0.67
|
|
|
$
|
0.73
|
|
Diluted
|
$
|
0.37
|
|
|
$
|
0.32
|
|
|
$
|
0.66
|
|
|
$
|
0.71
|
|
|
Nine months ended
September 30, |
||||||
|
2017
|
|
2016
|
||||
Cost of investment: current-year acquisitions
|
$
|
28.1
|
|
|
$
|
61.0
|
|
Cost of investment: prior-year acquisitions
|
50.0
|
|
|
37.2
|
|
||
Less: net cash acquired
|
(6.4
|
)
|
|
(13.6
|
)
|
||
Total cost of investment
|
71.7
|
|
|
84.6
|
|
||
Operating payments
1
|
37.5
|
|
|
18.7
|
|
||
Total cash paid for acquisitions
2
|
$
|
109.2
|
|
|
$
|
103.3
|
|
|
1
|
Represents cash payments for amounts that have been recognized in operating expenses since the date of acquisition either relating to adjustments to estimates in excess of the initial value of contingent payments recorded or were contingent upon the future employment of the former owners of the acquired companies. Amounts are reflected in the operating section of the unaudited Consolidated Statements of Cash Flows.
|
2
|
Of the total cash paid for acquisitions,
$22.6
and
$47.9
for the
nine months ended
September 30, 2017
and
2016
, respectively, are classified under the investing section of the unaudited Consolidated Statements of Cash Flows, as acquisitions, net of cash acquired. These amounts relate to initial payments for new transactions. Of the total cash paid for acquisitions,
$49.1
and
$36.7
for the
nine months ended
September 30, 2017
and
2016
, respectively, are classified under the financing section of the unaudited Consolidated Statements of Cash Flows as acquisition-related payments. These amounts relate to deferred payments and increases in our ownership interest for prior acquisitions.
|
|
Nine months ended
September 30, |
||||||
|
2017
|
|
2016
|
||||
Balance at beginning of period
|
$
|
252.8
|
|
|
$
|
251.9
|
|
Change in related noncontrolling interests balance
|
(9.5
|
)
|
|
(1.5
|
)
|
||
Changes in redemption value of redeemable noncontrolling interests:
|
|
|
|
||||
Additions
|
3.4
|
|
|
6.8
|
|
||
Redemptions and other
|
(18.5
|
)
|
|
(14.8
|
)
|
||
Redemption value adjustments
|
9.8
|
|
|
4.5
|
|
||
Balance at end of period
|
$
|
238.0
|
|
|
$
|
246.9
|
|
|
September 30,
2017 |
|
December 31,
2016 |
||||
Salaries, benefits and related expenses
|
$
|
341.3
|
|
|
$
|
499.0
|
|
Acquisition obligations
|
53.2
|
|
|
77.5
|
|
||
Office and related expenses
|
48.8
|
|
|
46.7
|
|
||
Interest
|
17.0
|
|
|
17.3
|
|
||
Other
|
90.4
|
|
|
153.5
|
|
||
Total accrued liabilities
|
$
|
550.7
|
|
|
$
|
794.0
|
|
|
Three months ended
September 30, |
|
Nine months ended
September 30, |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Net (losses) gains on sales of businesses and investments
|
$
|
(6.2
|
)
|
|
$
|
3.9
|
|
|
$
|
(18.3
|
)
|
|
$
|
(14.6
|
)
|
Other (expense) income, net
|
(3.7
|
)
|
|
1.4
|
|
|
(6.2
|
)
|
|
1.1
|
|
||||
Total other (expense) income, net
|
$
|
(9.9
|
)
|
|
$
|
5.3
|
|
|
$
|
(24.5
|
)
|
|
$
|
(13.5
|
)
|
|
Nine months ended
September 30, |
||||||
|
2017
|
|
2016
|
||||
Number of shares repurchased
|
9.4
|
|
|
8.5
|
|
||
Aggregate cost, including fees
|
$
|
216.0
|
|
|
$
|
193.3
|
|
Average price per share, including fees
|
$
|
22.92
|
|
|
$
|
22.69
|
|
|
Awards
|
|
Weighted-average
grant-date fair value
(per award)
|
|||
Stock-settled awards
|
0.8
|
|
|
$
|
24.20
|
|
Performance-based awards
|
4.8
|
|
|
$
|
20.06
|
|
Total stock-based compensation awards
|
5.6
|
|
|
|
|
Foreign Currency
Translation Adjustments
|
|
Available-for-Sale
Securities
|
|
Derivative
Instruments
|
|
Defined Benefit Pension and Other Postretirement Plans
|
|
Total
|
||||||||||
Balance as of December 31, 2016
|
$
|
(716.7
|
)
|
|
$
|
0.6
|
|
|
$
|
(8.4
|
)
|
|
$
|
(238.0
|
)
|
|
$
|
(962.5
|
)
|
Other comprehensive income before reclassifications
|
113.4
|
|
|
0.0
|
|
|
0.0
|
|
|
6.3
|
|
|
119.7
|
|
|||||
Amount reclassified from accumulated other comprehensive loss, net of tax
|
1.8
|
|
|
(0.6
|
)
|
|
1.0
|
|
|
7.9
|
|
|
10.1
|
|
|||||
Balance as of September 30, 2017
|
$
|
(601.5
|
)
|
|
$
|
0.0
|
|
|
$
|
(7.4
|
)
|
|
$
|
(223.8
|
)
|
|
$
|
(832.7
|
)
|
|
Foreign Currency
Translation Adjustments
|
|
Available-for-Sale
Securities
|
|
Derivative
Instruments
|
|
Defined Benefit Pension and Other Postretirement Plans
|
|
Total
|
||||||||||
Balance as of December 31, 2015
|
$
|
(665.6
|
)
|
|
$
|
1.3
|
|
|
$
|
(9.6
|
)
|
|
$
|
(171.7
|
)
|
|
$
|
(845.6
|
)
|
Other comprehensive income before reclassifications
|
42.3
|
|
|
0.4
|
|
|
0.0
|
|
|
(65.0
|
)
|
|
(22.3
|
)
|
|||||
Amount reclassified from accumulated other comprehensive loss, net of tax
|
2.3
|
|
|
(1.2
|
)
|
|
0.9
|
|
|
3.1
|
|
|
5.1
|
|
|||||
Balance as of September 30, 2016
|
$
|
(621.0
|
)
|
|
$
|
0.5
|
|
|
$
|
(8.7
|
)
|
|
$
|
(233.6
|
)
|
|
$
|
(862.8
|
)
|
|
Three months ended
September 30, |
|
Nine months ended
September 30, |
|
Affected Line Item in the Consolidated Statements of Operations
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|||||||||
Foreign currency translation adjustments
1
|
$
|
1.5
|
|
|
$
|
(4.2
|
)
|
|
$
|
1.8
|
|
|
$
|
2.3
|
|
|
Other (expense) income, net
|
Gains on available-for-sale securities
|
(0.7
|
)
|
|
(0.1
|
)
|
|
(0.7
|
)
|
|
(1.3
|
)
|
|
Other (expense) income, net
|
||||
Losses on derivative instruments
|
0.5
|
|
|
0.5
|
|
|
1.6
|
|
|
1.5
|
|
|
Interest expense
|
||||
Amortization of defined benefit pension and postretirement plan items
|
5.7
|
|
|
1.3
|
|
|
9.2
|
|
|
4.0
|
|
|
Other (expense) income, net
|
||||
Tax effect
|
(0.6
|
)
|
|
(0.4
|
)
|
|
(1.8
|
)
|
|
(1.4
|
)
|
|
Provision for income taxes
|
||||
Total amount reclassified from accumulated other comprehensive loss, net of tax
|
$
|
6.4
|
|
|
$
|
(2.9
|
)
|
|
$
|
10.1
|
|
|
$
|
5.1
|
|
|
|
|
1
|
These foreign currency translation adjustments are primarily a result of the sales of businesses.
|
|
Domestic Pension Plan
|
|
Foreign Pension Plans
|
|
Domestic Postretirement Benefit Plan
|
||||||||||||||||||
Three months ended September 30,
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||||||
Service cost
|
$
|
0.0
|
|
|
$
|
0.0
|
|
|
$
|
1.0
|
|
|
$
|
2.4
|
|
|
$
|
0.0
|
|
|
$
|
0.0
|
|
Interest cost
|
1.3
|
|
|
1.4
|
|
|
3.4
|
|
|
4.1
|
|
|
0.3
|
|
|
0.4
|
|
||||||
Expected return on plan assets
|
(1.5
|
)
|
|
(1.5
|
)
|
|
(4.5
|
)
|
|
(4.9
|
)
|
|
0.0
|
|
|
0.0
|
|
||||||
Settlements and curtailments
|
0.0
|
|
|
0.0
|
|
|
4.0
|
|
|
0.1
|
|
|
0.0
|
|
|
0.0
|
|
||||||
Amortization of:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Prior service cost (credit)
|
0.0
|
|
|
0.0
|
|
|
0.1
|
|
|
0.1
|
|
|
(0.1
|
)
|
|
(0.1
|
)
|
||||||
Unrecognized actuarial losses
|
0.3
|
|
|
0.3
|
|
|
1.4
|
|
|
0.9
|
|
|
0.0
|
|
|
0.0
|
|
||||||
Net periodic cost
|
$
|
0.1
|
|
|
$
|
0.2
|
|
|
$
|
5.4
|
|
|
$
|
2.7
|
|
|
$
|
0.2
|
|
|
$
|
0.3
|
|
|
Domestic Pension Plan
|
|
Foreign Pension Plans
|
|
Domestic Postretirement Benefit Plan
|
||||||||||||||||||
Nine months ended September 30,
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||||||
Service cost
|
$
|
0.0
|
|
|
$
|
0.0
|
|
|
$
|
2.9
|
|
|
$
|
7.3
|
|
|
$
|
0.0
|
|
|
$
|
0.0
|
|
Interest cost
|
3.8
|
|
|
4.4
|
|
|
10.0
|
|
|
13.3
|
|
|
0.9
|
|
|
1.1
|
|
||||||
Expected return on plan assets
|
(4.6
|
)
|
|
(4.9
|
)
|
|
(13.2
|
)
|
|
(15.5
|
)
|
|
0.0
|
|
|
0.0
|
|
||||||
Settlements and curtailments
|
0.0
|
|
|
0.0
|
|
|
4.0
|
|
|
0.3
|
|
|
0.0
|
|
|
0.0
|
|
||||||
Amortization of:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Prior service cost (credit)
|
0.0
|
|
|
0.0
|
|
|
0.1
|
|
|
0.1
|
|
|
(0.1
|
)
|
|
(0.1
|
)
|
||||||
Unrecognized actuarial losses
|
1.1
|
|
|
1.0
|
|
|
4.1
|
|
|
2.7
|
|
|
0.0
|
|
|
0.0
|
|
||||||
Net periodic cost
|
$
|
0.3
|
|
|
$
|
0.5
|
|
|
$
|
7.9
|
|
|
$
|
8.2
|
|
|
$
|
0.8
|
|
|
$
|
1.0
|
|
|
Three months ended
September 30, |
|
Nine months ended
September 30, |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Revenue:
|
|
|
|
|
|
|
|
||||||||
IAN
|
$
|
1,520.2
|
|
|
$
|
1,503.2
|
|
|
$
|
4,465.6
|
|
|
$
|
4,453.3
|
|
CMG
|
382.4
|
|
|
419.0
|
|
|
1,075.8
|
|
|
1,128.8
|
|
||||
Total
|
$
|
1,902.6
|
|
|
$
|
1,922.2
|
|
|
$
|
5,541.4
|
|
|
$
|
5,582.1
|
|
|
|
|
|
|
|
|
|
||||||||
Segment operating income (loss):
|
|
|
|
|
|
|
|
||||||||
IAN
|
$
|
183.9
|
|
|
$
|
184.1
|
|
|
$
|
402.1
|
|
|
$
|
424.1
|
|
CMG
|
50.1
|
|
|
54.8
|
|
|
127.4
|
|
|
125.2
|
|
||||
Corporate and other
|
(14.9
|
)
|
|
(30.9
|
)
|
|
(74.2
|
)
|
|
(94.0
|
)
|
||||
Total
|
219.1
|
|
|
208.0
|
|
|
455.3
|
|
|
455.3
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Interest expense
|
(21.0
|
)
|
|
(21.7
|
)
|
|
(67.6
|
)
|
|
(68.8
|
)
|
||||
Interest income
|
4.1
|
|
|
4.7
|
|
|
14.0
|
|
|
16.1
|
|
||||
Other (expense) income, net
|
(9.9
|
)
|
|
5.3
|
|
|
(24.5
|
)
|
|
(13.5
|
)
|
||||
Income before income taxes
|
$
|
192.3
|
|
|
$
|
196.3
|
|
|
$
|
377.2
|
|
|
$
|
389.1
|
|
|
|
|
|
|
|
|
|
||||||||
Depreciation and amortization of property and equipment and intangible assets:
|
|
|
|
|
|
|
|
||||||||
IAN
|
$
|
30.7
|
|
|
$
|
29.1
|
|
|
$
|
90.8
|
|
|
$
|
85.9
|
|
CMG
|
4.6
|
|
|
4.9
|
|
|
15.2
|
|
|
14.6
|
|
||||
Corporate and other
|
6.9
|
|
|
5.7
|
|
|
18.5
|
|
|
17.0
|
|
||||
Total
|
$
|
42.2
|
|
|
$
|
39.7
|
|
|
$
|
124.5
|
|
|
$
|
117.5
|
|
|
|
|
|
|
|
|
|
||||||||
Capital expenditures:
|
|
|
|
|
|
|
|
||||||||
IAN
|
$
|
29.3
|
|
|
$
|
39.7
|
|
|
$
|
77.9
|
|
|
$
|
86.9
|
|
CMG
|
6.2
|
|
|
4.7
|
|
|
12.9
|
|
|
8.4
|
|
||||
Corporate and other
|
4.3
|
|
|
7.1
|
|
|
17.9
|
|
|
19.2
|
|
||||
Total
|
$
|
39.8
|
|
|
$
|
51.5
|
|
|
$
|
108.7
|
|
|
$
|
114.5
|
|
|
|
|
|
|
|
|
|
||||||||
|
September 30,
2017 |
|
December 31,
2016 |
|
|
|
|
||||||||
Total assets:
|
|
|
|
|
|
|
|
||||||||
IAN
|
$
|
10,257.7
|
|
|
$
|
10,660.0
|
|
|
|
|
|
||||
CMG
|
1,433.4
|
|
|
1,428.3
|
|
|
|
|
|
||||||
Corporate and other
|
25.0
|
|
|
396.9
|
|
|
|
|
|
||||||
Total
|
$
|
11,716.1
|
|
|
$
|
12,485.2
|
|
|
|
|
|
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, 2017
|
|
Balance Sheet Classification
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
|||||||||
Assets
|
|
|
|
|
|
|
|
|
|
||||||||
Cash equivalents
|
$
|
153.2
|
|
|
$
|
0.0
|
|
|
$
|
0.0
|
|
|
$
|
153.2
|
|
|
Cash and cash equivalents
|
Short-term marketable securities
|
0.1
|
|
|
0.0
|
|
|
0.0
|
|
|
0.1
|
|
|
Other current assets
|
||||
Long-term investments
|
0.4
|
|
|
0.0
|
|
|
0.0
|
|
|
0.4
|
|
|
Other non-current assets
|
||||
Total
|
$
|
153.7
|
|
|
$
|
0.0
|
|
|
$
|
0.0
|
|
|
$
|
153.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
As a percentage of total assets
|
1.3
|
%
|
|
0.0
|
%
|
|
0.0
|
%
|
|
1.3
|
%
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
||||||||
Liabilities
|
|
|
|
|
|
|
|
|
|
||||||||
Contingent acquisition obligations
1
|
$
|
0.0
|
|
|
$
|
0.0
|
|
|
$
|
164.2
|
|
|
$
|
164.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
December 31, 2016
|
|
Balance Sheet Classification
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
|||||||||
Assets
|
|
|
|
|
|
|
|
|
|
||||||||
Cash equivalents
|
$
|
440.8
|
|
|
$
|
0.0
|
|
|
$
|
0.0
|
|
|
$
|
440.8
|
|
|
Cash and cash equivalents
|
Short-term marketable securities
|
3.0
|
|
|
0.0
|
|
|
0.0
|
|
|
3.0
|
|
|
Other current assets
|
||||
Long-term investments
|
0.4
|
|
|
0.0
|
|
|
0.0
|
|
|
0.4
|
|
|
Other non-current assets
|
||||
Total
|
$
|
444.2
|
|
|
$
|
0.0
|
|
|
$
|
0.0
|
|
|
$
|
444.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
As a percentage of total assets
|
3.6
|
%
|
|
0.0
|
%
|
|
0.0
|
%
|
|
3.6
|
%
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
||||||||
Liabilities
|
|
|
|
|
|
|
|
|
|
||||||||
Contingent acquisition obligations
1
|
$
|
0.0
|
|
|
$
|
0.0
|
|
|
$
|
205.4
|
|
|
$
|
205.4
|
|
|
|
|
1
|
Contingent acquisition obligations includes deferred acquisition payments and unconditional obligations to purchase additional noncontrolling equity shares of consolidated subsidiaries. Fair value measurement of the obligations is based upon actual and projected operating performance targets as specified in the related agreements. The
decrease
in this balance of
$41.2
from
December 31, 2016
to
September 30, 2017
is primarily due to payments of
$91.4
, partially offset by acquisitions and exercised options of
$38.2
. The amounts payable within the next twelve months are classified in accrued liabilities; any amounts payable thereafter are classified in other non-current liabilities.
|
|
September 30, 2017
|
|
December 31, 2016
|
||||||||||||||||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||||||||||
Total long-term debt
|
$
|
0.0
|
|
|
$
|
1,606.2
|
|
|
$
|
45.9
|
|
|
$
|
1,652.1
|
|
|
$
|
0.0
|
|
|
$
|
1,574.7
|
|
|
$
|
65.4
|
|
|
$
|
1,640.1
|
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
|
Three months ended
September 30, |
|
Nine months ended
September 30, |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Operating margin
|
11.5
|
%
|
|
10.8
|
%
|
|
8.2
|
%
|
|
8.2
|
%
|
||||
Expenses as % of revenue:
|
|
|
|
|
|
|
|
||||||||
Salaries and related expenses
|
64.5
|
%
|
|
63.9
|
%
|
|
67.5
|
%
|
|
66.8
|
%
|
||||
Office and general expenses
|
24.0
|
%
|
|
25.3
|
%
|
|
24.3
|
%
|
|
25.1
|
%
|
||||
|
|
|
|
|
|
|
|
||||||||
Net income available to IPG common stockholders
|
$
|
146.2
|
|
|
$
|
128.6
|
|
|
$
|
262.4
|
|
|
$
|
290.9
|
|
|
|
|
|
|
|
|
|
||||||||
Earnings per share available to IPG common stockholders:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.38
|
|
|
$
|
0.32
|
|
|
$
|
0.67
|
|
|
$
|
0.73
|
|
Diluted
|
$
|
0.37
|
|
|
$
|
0.32
|
|
|
$
|
0.66
|
|
|
$
|
0.71
|
|
|
|
|
Components of Change
|
|
|
|
Change
|
||||||||||||||||||
|
Three months ended
September 30, 2016 |
Foreign
Currency
|
|
Net
Acquisitions/
(Divestitures)
|
|
Organic
|
|
Three months ended
September 30, 2017 |
Organic
|
|
Total
|
||||||||||||||
Consolidated
|
$
|
1,922.2
|
|
|
$
|
7.7
|
|
|
$
|
(37.2
|
)
|
|
$
|
9.9
|
|
|
$
|
1,902.6
|
|
|
0.5
|
%
|
|
(1.0
|
)%
|
Domestic
|
1,165.9
|
|
|
0.0
|
|
|
(25.0
|
)
|
|
15.1
|
|
|
1,156.0
|
|
|
1.3
|
%
|
|
(0.8
|
)%
|
|||||
International
|
756.3
|
|
|
7.7
|
|
|
(12.2
|
)
|
|
(5.2
|
)
|
|
746.6
|
|
|
(0.7
|
)%
|
|
(1.3
|
)%
|
|||||
United Kingdom
|
174.0
|
|
|
(4.3
|
)
|
|
1.4
|
|
|
5.3
|
|
|
176.4
|
|
|
3.0
|
%
|
|
1.4
|
%
|
|||||
Continental Europe
|
147.6
|
|
|
6.4
|
|
|
(4.0
|
)
|
|
0.6
|
|
|
150.6
|
|
|
0.4
|
%
|
|
2.0
|
%
|
|||||
Asia Pacific
|
217.9
|
|
|
0.8
|
|
|
(0.2
|
)
|
|
(4.6
|
)
|
|
213.9
|
|
|
(2.1
|
)%
|
|
(1.8
|
)%
|
|||||
Latin America
|
103.6
|
|
|
2.4
|
|
|
(10.4
|
)
|
|
(10.3
|
)
|
|
85.3
|
|
|
(9.9
|
)%
|
|
(17.7
|
)%
|
|||||
Other
|
113.2
|
|
|
2.4
|
|
|
1.0
|
|
|
3.8
|
|
|
120.4
|
|
|
3.4
|
%
|
|
6.4
|
%
|
|
|
|
Components of Change
|
|
|
|
Change
|
||||||||||||||||||
|
Nine months ended
September 30, 2016 |
Foreign
Currency
|
|
Net
Acquisitions/
(Divestitures)
|
|
Organic
|
|
Nine months ended
September 30, 2017 |
Organic
|
|
Total
|
||||||||||||||
Consolidated
|
$
|
5,582.1
|
|
|
$
|
(30.7
|
)
|
|
$
|
(73.8
|
)
|
|
$
|
63.8
|
|
|
$
|
5,541.4
|
|
|
1.1
|
%
|
|
(0.7
|
)%
|
Domestic
|
3,426.2
|
|
|
0.0
|
|
|
(52.5
|
)
|
|
54.6
|
|
|
3,428.3
|
|
|
1.6
|
%
|
|
0.1
|
%
|
|||||
International
|
2,155.9
|
|
|
(30.7
|
)
|
|
(21.3
|
)
|
|
9.2
|
|
|
2,113.1
|
|
|
0.4
|
%
|
|
(2.0
|
)%
|
|||||
United Kingdom
|
495.3
|
|
|
(44.5
|
)
|
|
12.5
|
|
|
8.5
|
|
|
471.8
|
|
|
1.7
|
%
|
|
(4.7
|
)%
|
|||||
Continental Europe
|
468.1
|
|
|
(3.9
|
)
|
|
(13.3
|
)
|
|
6.1
|
|
|
457.0
|
|
|
1.3
|
%
|
|
(2.4
|
)%
|
|||||
Asia Pacific
|
617.7
|
|
|
(0.7
|
)
|
|
2.4
|
|
|
(12.0
|
)
|
|
607.4
|
|
|
(1.9
|
)%
|
|
(1.7
|
)%
|
|||||
Latin America
|
255.7
|
|
|
14.3
|
|
|
(24.6
|
)
|
|
(7.9
|
)
|
|
237.5
|
|
|
(3.1
|
)%
|
|
(7.1
|
)%
|
|||||
Other
|
319.1
|
|
|
4.1
|
|
|
1.7
|
|
|
14.5
|
|
|
339.4
|
|
|
4.5
|
%
|
|
6.4
|
%
|
|
Three months ended
September 30, |
|
Nine months ended
September 30, |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Salaries and related expenses
|
$
|
1,227.6
|
|
|
$
|
1,228.0
|
|
|
$
|
3,742.3
|
|
|
$
|
3,726.3
|
|
Office and general expenses
|
455.9
|
|
|
486.2
|
|
|
1,343.8
|
|
|
1,400.5
|
|
||||
Total operating expenses
|
$
|
1,683.5
|
|
|
$
|
1,714.2
|
|
|
$
|
5,086.1
|
|
|
$
|
5,126.8
|
|
Operating income
|
$
|
219.1
|
|
|
$
|
208.0
|
|
|
$
|
455.3
|
|
|
$
|
455.3
|
|
|
|
|
Components of Change
|
|
|
|
Change
|
||||||||||||||||||
|
2016
|
Foreign
Currency
|
|
Net
Acquisitions/
(Divestitures)
|
|
Organic
|
|
2017
|
Organic
|
|
Total
|
||||||||||||||
Three months ended September 30,
|
$
|
1,228.0
|
|
|
$
|
4.6
|
|
|
$
|
(21.0
|
)
|
|
$
|
16.0
|
|
|
$
|
1,227.6
|
|
|
1.3
|
%
|
|
0.0
|
%
|
Nine months ended September 30,
|
3,726.3
|
|
|
(24.6
|
)
|
|
(49.4
|
)
|
|
90.0
|
|
|
3,742.3
|
|
|
2.4
|
%
|
|
0.4
|
%
|
|
Three months ended
September 30, |
|
Nine months ended
September 30, |
||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||
Salaries and related expenses
|
64.5
|
%
|
|
63.9
|
%
|
|
67.5
|
%
|
|
66.8
|
%
|
Base salaries, benefits and tax
|
55.7
|
%
|
|
53.5
|
%
|
|
57.3
|
%
|
|
55.6
|
%
|
Incentive expense
|
2.0
|
%
|
|
3.7
|
%
|
|
3.1
|
%
|
|
3.8
|
%
|
Severance expense
|
0.8
|
%
|
|
0.7
|
%
|
|
1.0
|
%
|
|
1.0
|
%
|
Temporary help
|
3.8
|
%
|
|
3.9
|
%
|
|
3.9
|
%
|
|
3.9
|
%
|
All other salaries and related expenses
|
2.2
|
%
|
|
2.1
|
%
|
|
2.2
|
%
|
|
2.5
|
%
|
|
|
|
Components of Change
|
|
|
|
Change
|
||||||||||||||||||
|
2016
|
Foreign
Currency
|
|
Net
Acquisitions/
(Divestitures)
|
|
Organic
|
|
2017
|
Organic
|
|
Total
|
||||||||||||||
Three months ended September 30,
|
$
|
486.2
|
|
|
$
|
(0.2
|
)
|
|
$
|
(13.9
|
)
|
|
$
|
(16.2
|
)
|
|
$
|
455.9
|
|
|
(3.3
|
)%
|
|
(6.2
|
)%
|
Nine months ended September 30,
|
1,400.5
|
|
|
(10.8
|
)
|
|
(27.9
|
)
|
|
(18.0
|
)
|
|
1,343.8
|
|
|
(1.3
|
)%
|
|
(4.0
|
)%
|
|
Three months ended
September 30, |
|
Nine months ended
September 30, |
||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||
Office and general expenses
|
24.0
|
%
|
|
25.3
|
%
|
|
24.3
|
%
|
|
25.1
|
%
|
Professional fees
|
1.4
|
%
|
|
1.4
|
%
|
|
1.6
|
%
|
|
1.5
|
%
|
Occupancy expense (excluding depreciation and amortization)
|
6.9
|
%
|
|
6.6
|
%
|
|
7.0
|
%
|
|
6.8
|
%
|
Travel & entertainment, office supplies and telecommunications
|
2.8
|
%
|
|
2.8
|
%
|
|
3.1
|
%
|
|
3.2
|
%
|
All other office and general expenses
1
|
12.9
|
%
|
|
14.5
|
%
|
|
12.6
|
%
|
|
13.6
|
%
|
|
1
|
Includes production expenses and, to a lesser extent, depreciation and amortization, bad debt expense, adjustments to contingent acquisition obligations, foreign currency losses (gains), spending to support new business activity, net restructuring and other reorganization-related charges (reversals), long-lived asset impairments and other expenses.
|
|
Three months ended
September 30, |
|
Nine months ended
September 30, |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Cash interest on debt obligations
|
$
|
(21.0
|
)
|
|
$
|
(19.5
|
)
|
|
$
|
(60.1
|
)
|
|
$
|
(59.8
|
)
|
Non-cash interest
|
0.0
|
|
|
(2.2
|
)
|
|
(7.5
|
)
|
|
(9.0
|
)
|
||||
Interest expense
|
(21.0
|
)
|
|
(21.7
|
)
|
|
(67.6
|
)
|
|
(68.8
|
)
|
||||
Interest income
|
4.1
|
|
|
4.7
|
|
|
14.0
|
|
|
16.1
|
|
||||
Net interest expense
|
(16.9
|
)
|
|
(17.0
|
)
|
|
(53.6
|
)
|
|
(52.7
|
)
|
||||
Other (expense) income, net
|
(9.9
|
)
|
|
5.3
|
|
|
(24.5
|
)
|
|
(13.5
|
)
|
||||
Total (expenses) and other income
|
$
|
(26.8
|
)
|
|
$
|
(11.7
|
)
|
|
$
|
(78.1
|
)
|
|
$
|
(66.2
|
)
|
|
Three months ended
September 30, |
|
Nine months ended
September 30, |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Net (losses) gains on sales of businesses and investments
|
$
|
(6.2
|
)
|
|
$
|
3.9
|
|
|
$
|
(18.3
|
)
|
|
$
|
(14.6
|
)
|
Other (expense) income, net
|
(3.7
|
)
|
|
1.4
|
|
|
(6.2
|
)
|
|
1.1
|
|
||||
Total other (expense) income, net
|
$
|
(9.9
|
)
|
|
$
|
5.3
|
|
|
$
|
(24.5
|
)
|
|
$
|
(13.5
|
)
|
|
Three months ended
September 30, |
|
Nine months ended
September 30, |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Income before income taxes
|
$
|
192.3
|
|
|
$
|
196.3
|
|
|
$
|
377.2
|
|
|
$
|
389.1
|
|
Provision for income taxes
|
$
|
42.5
|
|
|
$
|
63.8
|
|
|
$
|
115.8
|
|
|
$
|
91.9
|
|
Effective income tax rate
|
22.1
|
%
|
|
32.5
|
%
|
|
30.7
|
%
|
|
23.6
|
%
|
|
|
|
Components of Change
|
|
|
|
Change
|
||||||||||||||||||
|
Three months ended
September 30, 2016 |
Foreign
Currency
|
|
Net
Acquisitions/
(Divestitures)
|
|
Organic
|
|
Three months ended
September 30, 2017 |
Organic
|
|
Total
|
||||||||||||||
Consolidated
|
$
|
1,503.2
|
|
|
$
|
8.7
|
|
|
$
|
(22.4
|
)
|
|
$
|
30.7
|
|
|
$
|
1,520.2
|
|
|
2.0
|
%
|
|
1.1
|
%
|
Domestic
|
893.8
|
|
|
0.0
|
|
|
(17.4
|
)
|
|
31.6
|
|
|
908.0
|
|
|
3.5
|
%
|
|
1.6
|
%
|
|||||
International
|
609.4
|
|
|
8.7
|
|
|
(5.0
|
)
|
|
(0.9
|
)
|
|
612.2
|
|
|
(0.1
|
)%
|
|
0.5
|
%
|
|
Three months ended
September 30, |
|
|
|
Nine months ended
September 30, |
|
|
||||||||||||||
|
2017
|
|
2016
|
|
Change
|
|
2017
|
|
2016
|
|
Change
|
||||||||||
Segment operating income
|
$
|
183.9
|
|
|
$
|
184.1
|
|
|
(0.1
|
)%
|
|
$
|
402.1
|
|
|
$
|
424.1
|
|
|
(5.2
|
)%
|
Operating margin
|
12.1
|
%
|
|
12.2
|
%
|
|
|
|
9.0
|
%
|
|
9.5
|
%
|
|
|
|
|
|
Components of Change
|
|
|
|
Change
|
||||||||||||||||||
|
Three months ended
September 30, 2016 |
Foreign
Currency
|
|
Net
Acquisitions/
(Divestitures)
|
|
Organic
|
|
Three months ended
September 30, 2017 |
Organic
|
|
Total
|
||||||||||||||
Consolidated
|
$
|
419.0
|
|
|
$
|
(1.0
|
)
|
|
$
|
(14.8
|
)
|
|
$
|
(20.8
|
)
|
|
$
|
382.4
|
|
|
(5.0
|
)%
|
|
(8.7
|
)%
|
Domestic
|
272.1
|
|
|
0.0
|
|
|
(7.6
|
)
|
|
(16.5
|
)
|
|
248.0
|
|
|
(6.1
|
)%
|
|
(8.9
|
)%
|
|||||
International
|
146.9
|
|
|
(1.0
|
)
|
|
(7.2
|
)
|
|
(4.3
|
)
|
|
134.4
|
|
|
(2.9
|
)%
|
|
(8.5
|
)%
|
|
|
|
Components of Change
|
|
|
|
Change
|
||||||||||||||||||
|
Nine months ended
September 30, 2016 |
Foreign
Currency
|
|
Net
Acquisitions/
(Divestitures)
|
|
Organic
|
|
Nine months ended
September 30, 2017 |
Organic
|
|
Total
|
||||||||||||||
Consolidated
|
$
|
1,128.8
|
|
|
$
|
(14.8
|
)
|
|
$
|
(24.7
|
)
|
|
$
|
(13.5
|
)
|
|
$
|
1,075.8
|
|
|
(1.2
|
)%
|
|
(4.7
|
)%
|
Domestic
|
750.3
|
|
|
0.0
|
|
|
(16.5
|
)
|
|
(13.1
|
)
|
|
720.7
|
|
|
(1.7
|
)%
|
|
(3.9
|
)%
|
|||||
International
|
378.5
|
|
|
(14.8
|
)
|
|
(8.2
|
)
|
|
(0.4
|
)
|
|
355.1
|
|
|
(0.1
|
)%
|
|
(6.2
|
)%
|
|
Three months ended
September 30, |
|
|
|
Nine months ended
September 30, |
|
|
||||||||||||||
|
2017
|
|
2016
|
|
Change
|
|
2017
|
|
2016
|
|
Change
|
||||||||||
Segment operating income
|
$
|
50.1
|
|
|
$
|
54.8
|
|
|
(8.6
|
)%
|
|
$
|
127.4
|
|
|
$
|
125.2
|
|
|
1.8
|
%
|
Operating margin
|
13.1
|
%
|
|
13.1
|
%
|
|
|
|
11.8
|
%
|
|
11.1
|
%
|
|
|
|
Nine months ended
September 30, |
||||||
Cash Flow Data
|
2017
|
|
2016
|
||||
Net income, adjusted to reconcile to net cash used in operating activities
1
|
$
|
494.9
|
|
|
$
|
538.4
|
|
Net cash used in working capital
2
|
(612.5
|
)
|
|
(491.8
|
)
|
||
Changes in other non-current assets and liabilities using cash
|
(21.4
|
)
|
|
(73.5
|
)
|
||
Net cash used in operating activities
|
$
|
(139.0
|
)
|
|
$
|
(26.9
|
)
|
Net cash used in investing activities
|
$
|
(140.5
|
)
|
|
$
|
(167.5
|
)
|
Net cash used in financing activities
|
$
|
(113.1
|
)
|
|
$
|
(466.9
|
)
|
|
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, net losses on sales of businesses and deferred income taxes.
|
2
|
Reflects changes in accounts receivable, expenditures billable to clients, other current assets, accounts payable and accrued liabilities.
|
Balance Sheet Data
|
September 30,
2017 |
|
December 31,
2016 |
|
September 30,
2016 |
||||||
Cash, cash equivalents and marketable securities
|
$
|
705.0
|
|
|
$
|
1,100.6
|
|
|
$
|
894.6
|
|
|
|
|
|
|
|
||||||
Short-term borrowings
|
$
|
511.8
|
|
|
$
|
85.7
|
|
|
$
|
107.8
|
|
Current portion of long-term debt
|
301.9
|
|
|
323.9
|
|
|
24.5
|
|
|||
Long-term debt
|
1,285.0
|
|
|
1,280.7
|
|
|
1,583.3
|
|
|||
Total debt
|
$
|
2,098.7
|
|
|
$
|
1,690.3
|
|
|
$
|
1,715.6
|
|
•
|
Debt service – As of
September 30, 2017
, we had outstanding short-term borrowings of
$511.8
from our commercial paper program and uncommitted lines of credit used primarily to fund seasonal working capital needs. Our 2.25% Senior Notes in aggregate principal amount of $300.0 mature on November 15, 2017, and we expect to use proceeds from the issuance of commercial paper to repay the outstanding 2.25% Senior Notes upon maturity. The remainder of our debt is primarily long-term, with maturities scheduled through 2024.
|
•
|
Acquisitions – We paid cash of $21.7, net of cash acquired of
$6.4
, for acquisitions completed in the
first nine months
of
2017
. We also paid $0.9 in up-front payments and $86.6 in deferred payments for prior acquisitions as well as ownership increases in our consolidated subsidiaries. In addition to potential cash expenditures for new acquisitions, we expect to pay approximately $54.0 over the next twelve months related to prior acquisitions. We may also be required to pay approximately $32.0 related to put options held by minority shareholders if exercised over the next twelve months. We will continue to evaluate strategic opportunities to grow and continue to strengthen our market position, particularly in our digital and marketing services offerings, and to expand our presence in high-growth and key strategic world markets.
|
•
|
Dividends – In the
first nine months
of
2017
, we paid three quarterly cash dividends of
$0.18
per share on our common stock, which corresponded to an aggregate dividend payment of
$211.2
. Assuming we continue to pay a quarterly dividend of
$0.18
per share, and there is no significant change in the number of outstanding shares as of
September 30, 2017
, we would expect to pay approximately
$280.0
over the next twelve months.
|
|
|
Four Quarters Ended
|
|
|
|
Four Quarters Ended
|
||
Financial Covenants
|
|
September 30, 2017
|
|
EBITDA Reconciliation
|
|
September 30, 2017
|
||
Interest coverage ratio (not less than)
1
|
|
5.00x
|
|
Operating income
|
|
$
|
941.0
|
|
Actual interest coverage ratio
|
|
18.05x
|
|
Add:
|
|
|
||
Leverage ratio (not greater than)
1
|
|
3.50x
|
|
Depreciation and amortization
|
|
253.6
|
|
|
Actual leverage ratio
|
|
1.76x
|
|
EBITDA
1
|
|
$
|
1,194.6
|
|
|
1
|
The interest coverage ratio is defined as EBITDA, as defined in the Credit Agreement, to net interest expense for the four quarters then ended. The leverage ratio is defined as debt as of the last day of such fiscal quarter to EBITDA for the four quarters then ended.
|
|
Moody’s Investors Service
|
|
S&P Global Ratings
|
|
Fitch Ratings
|
Short-term rating
|
P-2
|
|
A-2
|
|
F2
|
Long-term rating
|
Baa2
|
|
BBB
|
|
BBB
|
Outlook
|
Stable
|
|
Stable
|
|
Positive
|
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,
2017
to
September 30, 2017
:
|
|
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
|
1,045,347
|
|
|
$
|
24.76
|
|
|
1,033,613
|
|
|
$
|
314,797,836
|
|
August 1 - 31
|
2,336,046
|
|
|
$
|
20.98
|
|
|
2,334,077
|
|
|
$
|
265,832,070
|
|
September 1 - 30
|
1,288,700
|
|
|
$
|
20.42
|
|
|
1,288,700
|
|
|
$
|
239,522,615
|
|
Total
|
4,670,093
|
|
|
$
|
21.67
|
|
|
4,656,390
|
|
|
|
|
1
|
Included shares of our common stock, par value $0.10 per share, withheld under the terms of grants under employee stock-based compensation plans to offset tax withholding obligations that arose upon vesting and release of restricted shares (the “Withheld Shares”). We repurchased 11,734 Withheld Shares in July
2017
, 1,969 Withheld Shares in August
2017
and no Withheld Shares in September
2017
, for a total of 13,703 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 share repurchase programs, described in Note
5
to the unaudited Consolidated Financial Statements, by (b) the sum of the number of Withheld Shares and the number of shares acquired in our share repurchase programs.
|
3
|
On February 10, 2017, we announced that our Board of Directors had approved a new share repurchase program to repurchase from time to time up to
$300.0 million
of our common stock, in addition to amounts available on existing authorizations. There is no expiration date associated with the share repurchase programs.
|
Item 5.
|
Other Information
|
Item 6.
|
Exhibits
|
Exhibit No.
|
|
Description
|
|
|
|
|
Credit Agreement, dated as of July 18, 2008, as amended and restated as of April 23, 2010, as further amended and restated as of May 31, 2011, as further amended as of November 6, 2012, as further amended and restated as of December 12, 2013, as further amended and restated as of October 20, 2015 and as further amended and restated as of October 25, 2017 among The Interpublic Group of Companies, Inc., the lenders named therein and Citibank, as administrative agent.
|
|
|
|
|
|
The Interpublic Executive Severance Plan, amended and restated, effective August 16, 2017.
|
|
|
|
|
|
Computation of Ratios of Earnings to Fixed Charges.
|
|
|
|
|
|
Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended.
|
|
|
|
|
|
Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended.
|
|
|
|
|
|
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, 2017.
|
|
|
|
|
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)
|
Public Debt Rating
S&P/Moody’s/Fitch
|
Applicable Margin for
Base Rate Advances
|
Applicable Margin for
Eurocurrency Rate Advances
|
Level 1
At least A- / A3 / A-
|
0.000%
|
0.900%
|
Level 2
BBB+ / Baa1 / BBB+
|
0.000%
|
1.000%
|
Level 3
BBB/ Baa2 / BBB
|
0.100%
|
1.100%
|
Level 4
BBB- / Baa3 / BBB-
|
0.300%
|
1.300%
|
Level 5
BB + / Ba1 / BB+
|
0.500%
|
1.500%
|
Level 6
Ratings less than BB+/Ba1/BB+ (or unrated by S&P, Moody’s and Fitch)
|
0.700%
|
1.700%
|
Name of Initial Lender
|
Revolving Credit Commitment
|
Letter of Credit Commitment
|
||||
Citibank, N.A.
|
|
$205,000,000
|
|
|
||
JPMorgan Chase Bank, N.A.
|
|
$205,000,000
|
|
|
$50,000,000
|
|
Bank of America, N.A.
|
|
$205,000,000
|
|
|
||
Morgan Stanley Bank, N.A.
|
|
$77,650,000
|
|
|
||
Morgan Stanley Senior Funding, Inc.
|
|
$4,850,000
|
|
|
||
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
|
|
$62,500,000
|
|
|
||
Banco Bilbao Vizcaya Argentaria, S.A., New York Branch
|
|
$75,000,000
|
|
|
||
BNP Paribas
|
|
$75,000,000
|
|
|
||
HSBC Bank USA, National Association
|
|
$75,000,000
|
|
|
||
ING Bank N.V., Dublin Branch
|
|
$75,000,000
|
|
|
||
Lloyds Bank plc
|
|
$75,000,000
|
|
|
||
Wells Fargo Bank, National Association
|
|
$75,000,000
|
|
|
||
Citizens Bank, N.A.
|
|
$50,000,000
|
|
|
||
PNC Bank, National Association
|
|
$50,000,000
|
|
|
||
U.S. Bank National Association
|
|
$50,000,000
|
|
|
||
Bank of China, New York Branch
|
|
$35,000,000
|
|
|
||
Danske Bank A/S
|
|
$35,000,000
|
|
|
||
Goldman Sachs Bank USA
|
|
$35,000,000
|
|
|
||
Intesa Sanpaolo S.p.A., New York Branch
|
|
$35,000,000
|
|
|
||
Total:
|
|
$1,500,000,000
|
|
|
$50,000,000
|
|
LC Issuing Bank
|
LC Expiry Date
|
Closing Balance
(as of 9/30/2017)
|
JP Morgan Chase
|
4/30/2021
|
$1,299,524.52
|
JP Morgan Chase
|
2/28/2018
|
$718,000.00
|
JP Morgan Chase
|
12/31/2017
|
$2,161,270.00
|
JP Morgan Chase
|
9/29/2029
|
$3,612,583.50
|
JP Morgan Chase
|
1/31/2022
|
$240,000.00
|
JP Morgan Chase
|
2/28/2022
|
$50,000.00
|
JP Morgan Chase
|
11/30/2019
|
$266,169.33
|
JP Morgan Chase
|
9/30/2020
|
$50,000.00
|
|
GRAND TOTAL:
|
$8,397,547.35
|
Date
|
Amount of
Advance
|
Amount of
Principal Paid
or Prepaid
|
Unpaid Principal
Balance
|
Notation
Made By
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2.
|
Assignee[s]: ______________________________
|
3.
|
Borrower(s): The Interpublic Group of Companies, Inc. and its Designated Subsidiaries
|
4.
|
Agent: Citibank, N.A., as the administrative agent under the Credit Agreement
|
5.
|
Credit Agreement: The Credit Agreement dated as of July 18, 2008, amended and restated as of April 23, 2010, further amended and restated as of May 31, 2011, amended as of November 6, 2012, further amended and restated as of December 12, 2013, as further amended and restated as of October 20, 2015, and as further amended and restated as of October 25, 2017 among The Interpublic Group of Companies, Inc., the Lenders parties thereto, Citibank, N.A., as administrative agent, and the other agents parties thereto
|
6.
|
Assigned Interest[s]:
|
Assignor[s]
5
|
Assignee[s]
6
|
Facility Assigned
7
|
Aggregate Amount of Commitment/Advances for all Lenders
8
|
Amount of Commitment/Advances Assigned
8
|
Percentage Assigned of Commitment/
Advances 9 |
CUSIP Number
|
|
|
|
$
|
$
|
%
|
|
|
|
|
$
|
$
|
%
|
|
|
|
|
$
|
$
|
%
|
|
(a)
|
“
Administrative Committee
” means Interpublic’s Management Human Resources Committee.
|
(b)
|
“
Base Salary
” for any Participant, expressed as an annual amount, means the Participant’s annual base salary in effect for the calendar year in which his Termination Date occurs; provided that if the Participant’s Notice Date or Termination Date occurs within 24 months after a Change of Control, his Base Salary for purposes of the Plan shall not be less than his annual base salary for the calendar year in which such Change of Control occurred, determined on the basis of the Participant’s annual salary in effect immediately prior to such Change of Control.
|
(c)
|
“
Board of Directors
” means the Board of Directors of Interpublic.
|
(d)
|
“
Cause
”
means, with respect to any Participant:
|
(1)
|
A material breach by the Participant of a provision in an employment agreement with Interpublic or a Subsidiary that, if capable of being cured,
|
(2)
|
Misappropriation by the Participant of funds or property of Interpublic or a Subsidiary;
|
(3)
|
Any attempt by the Participant to secure any personal profit related to the business of Interpublic or a Subsidiary that is not approved in writing by the Board of Directors or by the person to whom the Participant reports directly;
|
(4)
|
Fraud, material dishonesty, gross negligence, gross malfeasance, or insubordination by the Executive, or willful (A) failure by the Participant to follow the code of conduct of Interpublic or a Subsidiary or (B) misconduct by the Participant in the performance of his duties as an employee of Interpublic or a Subsidiary, excluding in each case any act (or series of acts) taken in good faith by the Participant that does not (and in the aggregate do not) cause material harm to Interpublic or a Subsidiary;
|
(5)
|
Refusal or failure by the Executive to attempt in good faith to perform the Participant’s duties as an employee or to follow a reasonable good-faith direction of the Board of Directors or the person to whom the Participant reports directly
that has not been cured within 15 days after the Participant receives written notice from his Employer of such refusal or failure;
|
(6)
|
Commission by the Participant, or a formal charge or indictment alleging commission by the Participant, of a felony or a crime involving dishonesty, fraud, or moral turpitude; or
|
(7)
|
Conduct by the Participant that is prohibited by the
policy of Interpublic or a Subsidiary prohibiting discrimination or harassment based on age, gender, race, religion, disability, national origin or any other protected category.
|
(e)
|
“
Change of Control
”
means:
|
(1)
|
Subject to paragraphs (2) and (3), below, the first to occur of the following events:
|
(A)
|
Any person (within the meaning of sections 13(d) and 14(d) of the Securities Exchange Act of 1934 (the "1934 Act")) becomes the beneficial owner (within the meaning of Rule 13d-3 under the 1934 Act) of stock that, together with other stock held by such
|
(B)
|
Any person (within the meaning of sections 13(d) and 14(d) of the 1934 Act) acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person) ownership of stock of Interpublic possessing 30 percent or more of the combined voting power of Interpublic's then-outstanding stock;
|
(C)
|
Any person (within the meaning of sections 13(d) and 14(d) of the 1934 Act) acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person) assets from Interpublic that have a total gross fair market value equal to 40 percent or more of the total gross fair market value of all of the assets of Interpublic immediately prior to such acquisition or acquisitions (where gross fair market value is determined without regard to any associated liabilities); or
|
(D)
|
During any 12-month period, a majority of the members of the Board of Directors is replaced by directors whose appointment or election is not endorsed by a majority of the members of the Board of Directors before the date of their appointment or election.
|
(2)
|
A Change of Control shall not be deemed to occur by reason of:
|
(A)
|
The acquisition of additional control of Interpublic by any person or persons acting as a group that is considered to “effectively control” Interpublic (within the meaning of guidance issued under section 409A of the Code) or
|
(B)
|
A transfer of assets to any entity controlled by the shareholders of Interpublic immediately after such transfer, including a transfer to (i) a shareholder of Interpublic (immediately before such transfer) in exchange for or with respect to its stock, (ii) an entity, 50 percent or more of the total value or voting power of which is owned (immediately after such transfer) directly or indirectly by Interpublic, (iii) a person or persons acting as a group that owns (immediately after such transfer) directly or indirectly 50 percent or more of the total value or voting power of all outstanding stock of Interpublic, or (iv) an entity, at least 50 percent of the total value or voting power of which is owned (immediately after such transfer) directly or indirectly by a person described in clause (iii), above.
|
(3)
|
Notwithstanding any other provision of this Section 2.1(e), a Change of Control shall not be deemed to have occurred unless the relevant facts and circumstances give rise to a change in the ownership or effective control of Interpublic, or in the ownership of a substantial portion of the assets of Interpublic, within the meaning of section 409A(a)(2)(A)(v) of the Code.
|
(f)
|
“
COBRA
” means the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended.
|
(g)
|
“
Code
” means the Internal Revenue Code of 1986, as amended.
|
(h)
|
“
Commencement Date
” means, for any Participant, Interpublic’s first semi-monthly pay date that occurs after the Participant’s Termination Date.
|
(i)
|
“
Designated Number
” means, for any Participant, the number of months - 6, 9, 12, 18, or 24 - that the Administrative Committee or its designee communicates to the Participant in writing. The Designated Number for Interpublic’s Chief Executive Officer and any other executive officer (within the meaning of the Interpublic Group of Companies, Inc. 2009 Performance Incentive Plan or any successor thereto) shall be approved by the Compensation and Leadership Talent Committee of the Board of Directors, or such committee’s designee.
|
(j)
|
“
Dismissed
” means, with respect to any Participant, that the Participant has a “separation from service” (within the meaning of Section 409A(2)(A)(i) of the Code) with his Employer, Interpublic, and its Subsidiaries, and such separation:
|
(1)
|
Is a resignation for Good Reason; or
|
(2)
|
Is (i) initiated by his Employer, Interpublic, or a Subsidiary, (ii) involuntary (within the meaning of Treas. Reg. § 1.409A-1(n)(1)), and (iii) for a reason other than Cause.
|
(k)
|
“
Eligible Executive
” means an employee of Interpublic or a Subsidiary who is designated in writing by the Administrative Committee as a member of the select group of management or highly paid employees of Interpublic and its Subsidiaries who are eligible to participate in the Plan.
|
(l)
|
“
Employer
” means, with respect to a Participant, Interpublic or the Subsidiary of Interpublic that employs the Participant immediately before the Participant’s Termination Date.
|
(m)
|
“
ERISA
” means the Employee Retirement Income Security Act of 1974, as amended.
|
(n)
|
“
Good Reason
.”
|
(1)
|
A Participant shall be deemed to resign for Good Reason if and only if he resigns by reason of a Covered Action (as defined in paragraph (2), below), and the conditions of paragraph (3), below, are satisfied.
|
(2)
|
A “
Covered Action
” for a Participant means one of the following events:
|
(A)
|
The Participant’s Employer or Interpublic or a Subsidiary materially reduces the Participant’s Base Salary;
|
(B)
|
An action by the Participant’s Employer or Interpublic or a Subsidiary results in a material diminution in the Participant’s authority, duties, or responsibilities with respect to his Employer;
|
(C)
|
An action by the Participant’s Employer or Interpublic or a Subsidiary results in a material diminution in the Participant’s reporting structure, such as insertion of a new position between the Participant and the position to which the Participant reports;
|
(D)
|
The Participant’s Employer or Interpublic or a Subsidiary materially diminishes the budget over which the Participant retains authority;
|
(E)
|
The Participant’s principal place of work is moved to a location more than 50 miles outside the city in which he is principally based, unless (i) the relocation decision is made by the Participant or (ii) the Participant is notified in writing that Interpublic or his Employer is seriously considering such a relocation and the Participant does not object in writing (based on a reasonable concern) within 10 days after he receives such written notice; or
|
(F)
|
The Participant’s Employer or Interpublic or a Subsidiary materially breaches any employment agreement between the Participant and his Employer.
|
(3)
|
A Participant shall not have Good Reason to resign as a result of a Covered Action unless:
|
(A)
|
Within the 90-day period immediately following the date on which such Covered Action first occurs, the Participant notifies his Employer in writing that such Covered Action has occurred;
|
(B)
|
Such Covered Action is not remedied within the 30-day period immediately following the date on which the Participant’s Employer receives the notice provided in accordance with subparagraph (A), above;
|
(C)
|
The Participant did not provide notice of his intent to resign at any time before the Covered Action occurred; and
|
(D)
|
The Participant’s Termination Date occurs as soon as practicable (and no more than 10 days) after the earlier of (1) the end of the cure period described in subparagraph (B), above, or (2) the date the Participant’s Employer provides written notice of its express waiver of such cure period.
|
(o)
|
“
Interpublic
” means The Interpublic Group of Companies, Inc., and any successor thereto.
|
(p)
|
“
Notice Date
” means, for any Participant, the date the Employer or Interpublic or a Subsidiary provides written notice to the Participant that his employment will be terminated involuntarily as of a specified Termination Date in the future.
|
(q)
|
“
Other Arrangement
”
means (1) any employment agreement with the Employer or Interpublic or a Subsidiary or (2) any plan, program, policy or other arrangement maintained by the Employer or Interpublic or a Subsidiary.
|
(r)
|
“
Participant
” means an Eligible Executive who has become a participant in the Plan under Article 3.
|
(s)
|
“
Plan
” means the Interpublic Executive Severance Plan, as set forth herein and subsequently amended from time to time.
|
(t)
|
“
Salary Continuation Benefit”
means the benefit prescribed by Section 4.1.
|
(u)
|
“
Section
” means a section of this Plan as in effect from time to time.
|
(v)
|
“
Severance Period
” means, for any Participant, the period starting on the Participant’s Notice Date (if the Employer or Interpublic or a Subsidiary provides written notice to the Participant that his employment will be terminated involuntarily) or the Participant’s Termination Date (if he resigns for Good Reason or written notice of the Participant’s involuntary termination is not provided) and ending on the last day of the calendar month that is the Designated Number of months after such Notice Date or Termination Date, as applicable.
|
(w)
|
“
Subsidiary
” means, with respect to Interpublic, any corporation or other entity that is required to be combined with Interpublic as a single employer under section 414(b) or (c) of the Code.
|
(x)
|
“
Termination Date
” means, for any Participant, the date of the Participant’s “separation from service” (within the meaning of section 409A(a)(2)(A)(i) of the Code) with his Employer and Interpublic and its Subsidiaries, as determined by Interpublic. For purposes of the Plan:
|
(1)
|
A Participant who is on a bona fide leave of absence and does not have a statutory or contractual right to reemployment shall be deemed to have had a “separation for service” on the first date that is more than six months after the commencement of such leave of absence. However, if the leave of absence is due to any medically determinable physical or mental impairment that can be expected to last for a continuous period of six months or more, and such impairment causes the Participant to be
|
(2)
|
A sale of assets by Interpublic or a Subsidiary to an unrelated buyer that results in the Participant working for the buyer or one of its affiliates shall not, by itself, constitute a “separation from service” unless Interpublic, with the buyer’s written consent, so provides in writing 60 or fewer days before the closing of such sale.
|
(a)
|
The use of the masculine gender shall also include within its meaning the feminine and vice versa;
|
(b)
|
The use of the singular shall also include within its meaning the plural and vice versa;
|
(c)
|
The word “include” shall mean to include, but not to be limited to;
|
(d)
|
Any reference to a statute or section of a statute shall further be a reference to any successor or amended statute or section, and any regulations or other guidance of general applicability issued thereunder; and
|
(e)
|
“As soon as practicable,” with respect to any date or event, shall mean on the earliest administratively practicable date after the relevant date or event, but no later than (1) the last day of the calendar year in which the relevant date or event occurs or (2) the 90th day following the occurrence of the relevant date or event, whichever occurs later. Such earliest administratively practicable date shall be determined by Interpublic in its sole discretion.
|
(f)
|
References to “termination of employment,” “separation,” and similar terms mean the Participant’s “separation from service” within the meaning of section 409A(a)(2)(A)(i) of the Code. No benefit shall be payable under this Plan unless the Participant has incurred a qualifying separation from service (within the meaning of Section 409A(a)(2)(A)(i) of the Code) with his Employer, Interpublic, and its Subsidiaries.
|
(a)
|
Eligibility and Amount
. If a Participant is Dismissed, separates from service, and timely executes and submits to Interpublic the agreement required by Article 5, Interpublic shall pay to the Participant the Salary Continuation Benefit prescribed by this Section 4.1. Except as otherwise specified by the provisions of subsection (c), below, and Sections 4.4, 4.5, and 5.1, the total amount of such Salary Continuation Benefit shall equal the excess of (1) the Participant’s Base Salary for his Designated Number of months over (2) any base salary paid to the Participant for the period starting on his Notice Date (if applicable) and ending on his Termination Date.
|
(b)
|
Form and Time of Payment of Salary Continuation Benefit
.
|
(1)
|
Interpublic shall pay the Salary Continuation Benefit required by subsection (a), above, in semi-monthly installments (without interest); provided, however, that if the Participant’s Termination Date occurs within two years after a Change of Control, such Salary Continuation Benefit shall be paid in a lump sum. Before withholding, each installment shall be equal to one-half of the Participant’s Base Salary for one month, except that any residual amount in respect of a period of less than one-half of a month shall be paid together with the last installment.
|
(2)
|
Except as required by Section 4.3, payment of the Salary Continuation Benefit shall commence on or as soon as practicable after the Participant’s Commencement Date, and no more than 60 days after the Participant’s Termination Date. If the first payment is made on a date that is after the Commencement Date, the first installment shall include a make-up payment equal to the sum of the semi-monthly installments that
|
(c)
|
Employment with Another Interpublic Agency
. If a Participant is Dismissed but is later hired or rehired by Interpublic or a Subsidiary, the amount of each remaining semi-monthly payment required by subsections (a) and (b), above, shall be reduced (but not below zero) by the amount of the base salary payable to the Participant for the applicable semi-monthly pay period under the terms of his re-employment.
|
(d)
|
Death
. If a Participant dies after being Dismissed or being notified that he will be Dismissed, but before receiving his entire Salary Continuation Benefit, Interpublic shall pay to the Participant’s estate an amount equal to the portion of the Participant’s Salary Continuation Benefit that has not yet been paid to the Participant. Such payment shall be made in a lump sum (without any discount or interest to reflect the time value of money) as soon as practicable after the Participant’s death. For purposes of this Section 4.1(d), if the Participant’s death occurs before his Termination Date, the date of his death shall be treated as his Termination Date.
|
(e)
|
Separate Payments
. For purposes of section 409A of the Code, each installment required by this Section 4.1 shall be treated as a separate payment.
|
(a)
|
Subject to the provisions of Sections 4.4, 4.5, and 5.1, the amount of the payment for each month from the first month that begins after the Participant’s Termination Date through the last day of the Participant’s Severance Period shall equal 167 percent of the excess of:
|
(1)
|
The aggregate premium or premiums that the Participant would be required to pay for medical, dental, and vision coverage for such month at the level elected by the Participant in accordance with the terms of the applicable plan or plans, purchased through COBRA continuation coverage, over
|
(2)
|
The active employee rate for such coverage for such month. The “active employee rate” means the rate charged to an active employee who holds the position that the Participant held (or, if none, the employee who holds the position most nearly comparable to the position that the Participant held) immediately before his Termination Date for the same level of coverage under such plan or plans.
|
(b)
|
Except as required by Section 4.3, the payments required by this Section 4.2 shall be made in quarterly installments (with each installment equal to the sum of the amount prescribed by paragraph (a), above, for the next three months, but not for any month after the earliest date described in paragraph (c), below), starting on the same date as the Salary Continuation Benefit. For purposes of section 409A of the Code, each installment required by this Section 4.2(b) shall be treated as a separate payment.
|
(c)
|
Interpublic shall not be required to make any payment to or on behalf of a Participant pursuant to this Section 4.2 for any month after the earliest of:
|
(1)
|
The last day of the Participant’s Severance Period;
|
(2)
|
The Participant’s death;
|
(3)
|
The first day after the Participant’s Termination Date on which he (I) commences employment (or re-employment) with Interpublic a Subsidiary or (II) becomes eligible to be covered by another employer’s plan (or plans) providing medical benefits by reason of being employed by such other employer; or
|
(4)
|
The Participant’s failure to provide, on or before a reasonable deadline (of not less than 30 days) specified by Interpublic in a written notice that Interpublic provides to the Participant at least 30 days in advance, documentation establishing that (I) the Participant has purchased medical, dental, and/or vision coverage (as applicable) at the level on which the amount of any prior payments pursuant to this Section 4.2 were based, and (II) such coverage remains in effect when the Participant provides such documentation.
|
(a)
|
Payments under the Plan to a Participant who is a “specified employee” (as defined by Interpublic in accordance with Treas. Reg. § 1.409A-1(i)) as of his Termination Date shall be subject to the six-month delay required by Section 409A(a)(2)(B)(i). Such six-month delay shall not be required with respect to any payment that is exempt from Section 409A by reason of the “short-term deferral” rule described in Treas. Reg. § 1.409A-1(b)(4), the “two-year, two-time” rule described in Treas. Reg. § 1.409A-1(b)(9) (as applicable), or another exemption.
|
(b)
|
To the extent that any payment under the Plan is subject to the six-month delay described in subsection (a), above, such payment shall be made on the later of -
|
(1)
|
Interpublic’s first semi-monthly pay date for the seventh month after the Participant’s Termination Date (or, if earlier, as soon as practicable after the Participant’s death), or
|
(2)
|
The date when such payment would otherwise be due in accordance with Section 4.1 or 4.2, as applicable.
|
(a)
|
No provision of this Plan shall require (or be interpreted to require) Interpublic or any Subsidiary to duplicate any payment or other compensation or benefit that a Participant is entitled to receive under any Other Arrangement.
|
(b)
|
No provision of this Plan shall require (or be interpreted to require) payment of a benefit under the Plan if employment terminates as a result of a sale of assets, merger, liquidation, reorganization, transfer of business to a client or other third party, disposition, or similar transaction; provided that the Participant (1) continues employment with his Employer or a successor thereto immediately after such transaction occurs, or (2) is offered continued employment with his Employer or a successor thereto, under terms that are materially comparable in the aggregate to the terms in effect immediately before such transaction.
|
(c)
|
The amount of the Salary Continuation Benefit payment required by Section 4.1 for each pay period (determined without regard to any delay in payment) shall be reduced dollar-for-dollar (but not below zero) by the amount of any salary continuation or similar severance payment that the Participant is entitled to receive for the applicable semi-monthly pay period (determined without regard to any delay in payment) pursuant to any Other Arrangement. If the Plan or an Other Arrangement provides for a salary continuation or similar severance benefit paid in a form other than semi-monthly installments, such benefit shall be expressed for purposes of applying this Section 4.4(c) as an equivalent benefit payable in semi-monthly installments, without regard to any delay in payment and without any adjustment for interest. For example, for purposes of applying this Section 4.4(c)
|
(1)
|
A lump-sum severance payment equal to 12 months’ base salary shall be treated as if it were paid for 12 months in 24 semi-monthly installments, each equal to
1
/
24
th of the Participant’s annual base salary, commencing on the date prescribed by the Other Arrangement;
|
(2)
|
A severance benefit payable in monthly installments shall be treated as if it were paid in semi-monthly installments, with each semi-monthly installment equal to one-half of the monthly installment required by the Other Arrangement; and
|
(3)
|
If payment to a Participant is delayed by reason of Section 4.3, the amount of the Participant’s Salary Continuation Benefit payment required by Section 4.1 for each pay period shall be determined as if payments commenced on the Commencement Date. Any delay of payment required by an Other Arrangement shall be similarly disregarded.
|
(d)
|
The amount of any payment required by Section 4.2 for a quarter (determined without regard to any delay in payment) shall be reduced dollar-for-dollar (but not below zero) by the amount of any reimbursement or allowance for medical,
|
(e)
|
Unless expressly provided otherwise, no Other Arrangement involving a Participant that is executed after the Participant becomes an Eligible Executive shall be interpreted to change the form or time of payment of any benefits that such Participant had a legally binding right to receive under the Plan before execution of such Other Arrangement.
|
(f)
|
Subject to this Section 4.4, the benefits provided under the Plan (after reduction pursuant to subsections (b) and (d), above) shall be in addition to any compensation or benefits the Participant is eligible to receive under any Other Arrangement.
|
(g)
|
No provision of this Plan shall restrict the ability of Interpublic or any Subsidiary to amend, suspend, or terminate any or all of its employee benefit plans and programs (not including this Plan) from time to time, or prevent any such amendment, suspension, or termination from affecting any Participant; provided, that the restrictions set forth in Section 7.4 shall apply with respect to any amendment, suspension, or termination of this Plan.
|
(a)
|
Notwithstanding any provision in the Plan to the contrary, if subsection (b), below, applies, a Participant shall forfeit amounts payable to him under the Plan to the extent that a firm selected in accordance with subsection (c), below, determines is necessary to ensure that the Participant is not reasonably likely to receive a “parachute payment” under section 280G(b)(2) of the Code.
|
(b)
|
This subsection (b) shall apply if:
|
(1)
|
Any payment to be made under the Plan is reasonably likely to result in the Participant receiving a “parachute payment” (as defined in section 280G(b)(2) of the Code), and
|
(2)
|
The Participant’s forfeiture of payments due under the Plan would result in the aggregate after-tax amount the Participant would receive being greater than the aggregate after-tax amount the Participant would receive if there were no such forfeiture.
|
(c)
|
The amount of any forfeiture pursuant to subsection (a), above, shall be conclusively determined by either of the following firms, as engaged by Interpublic at Interpublic’s expense:
|
(1)
|
The outside auditing firm retained by Interpublic for the last fiscal year ending before a Change of Control, or
|
(2)
|
A national auditing firm acceptable to the Participant.
|
(d)
|
If the firm engaged pursuant to subsection (c), above, determines that a Participant could avoid adverse tax consequences relating to section 280G of the Code (determined on a net after-tax basis) by forfeiting payments under one or more Other Arrangements, and such Other Arrangements permit a forfeiture to avoid adverse tax consequences relating to section 280G of the Code, the Participant shall not forfeit his right to receive any amount due under this Plan unless and until he has forfeited his right to all payments under such Other Arrangements; provided, however, that the Participant shall not forfeit any right to severance under a Change of Control or employment agreement unless and until he has forfeited his right to severance under this Plan.
|
(a)
|
Include a release that is materially the same as the release of claims in paragraph 3 of the model agreement set forth in Exhibit A to the Plan;
|
(b)
|
Include intellectual property, non-disparagement, return of property, and confidentiality covenants that are materially the same as the covenants set forth in paragraphs 8, 10, and 11 of the model agreement set forth in Exhibit A to the Plan, which shall be binding on the Participant for all time;
|
(c)
|
Provide that, during the period that begins on the Participant’s Termination Date and ends on the later of (x) the date the last payment to the Participant under this Plan is due or (y) the first anniversary of the Participant’s Termination Date, the Participant shall not:
|
(1)
|
Directly or indirectly, either on the Participant’s own behalf or on behalf of any other person, firm, or corporation, solicit any Client;
|
(2)
|
Perform any services relating to advertising, marketing, research, public relations, or related services for any Client;
|
(3)
|
Directly or indirectly employ or attempt to employ, or assist anyone else to employ, any person who was in the employ of the Participant’s Employer
at any time during the one-year period ending on the Participant’s Termination Date;
|
(4)
|
Directly or indirectly solicit any employee described in paragraph (3), above, to leave the employment of the Employer, or otherwise interfere with the relationship between the Employer and any of its employees; or
|
(5)
|
Engage in a Prohibited Activity. “Prohibited Activity” includes: (i) any activity that would give rise to termination for Cause; (ii) a material violation of any rule, policy or procedure of Interpublic or the Participant’s Employer, including but not limited to the Code of Conduct of Interpublic and the Employer; and (iii) any other conduct or act that the Administrative Committee or the Compensation and Leadership Talent Committee of the Board of Directors determines is injurious, detrimental, or prejudicial to any interest of Interpublic;
|
(d)
|
Provide that if the Participant commences any form of employment or partnership (including as an advisor, consultant or otherwise) with any business that is in competition with the business of the Participant’s Employer, he shall immediately forfeit his right to all then-remaining payments to which he would otherwise be entitled under the Plan.
|
(a)
|
Interpublic or a Subsidiary shall deliver, or cause to be delivered, an executable copy of the agreement required by Section 5.1 on or before the fifth business day after the Participant’s Termination Date.
|
(b)
|
The Participant shall submit to Interpublic an executed copy of the agreement by the following deadline:
|
(1)
|
Unless the Participant is Dismissed in connection with an exit incentive or other employment termination program that affects more than one employee, the deadline shall be 21 days after the agreement is delivered to the Participant.
|
(2)
|
If the Participant is Dismissed in connection with an exit incentive or other employment termination program that affects more than one employee, the deadline shall be 45 days after the agreement is delivered to the Participant.
|
(c)
|
Failure to deliver an executed copy of the Agreement by the deadline described above shall result in forfeiture of the Participant’s benefit under the Plan.
|
(a)
|
Prior to a Change of Control, the Administrative Committee shall have complete and exclusive discretionary authority and responsibility to:
|
(1)
|
Administer, construe, and interpret the Plan;
|
(2)
|
Establish such rules and regulations as it deems necessary or desirable for the proper and effective administration of the Plan;
|
(3)
|
Resolve any ambiguity, inconsistency, or omission by general rule or particular decision;
|
(4)
|
Make factual determinations;
|
(5)
|
Settle and determine any contributions and disputes as to rights or benefits under the Plan; and
|
(6)
|
Take such actions in connection with and for the purposes of the Plan as it believes advisable to carry out the purposes of the Plan and to maintain its operation.
|
(b)
|
The Administrative Committee is authorized to delegate any of its duties and responsibilities under the Plan as the Administrative Committee deems appropriate. In addition, the Administrative Committee is authorized to employ one or more persons to render advice with regard to any of its administrative responsibilities.
|
(c)
|
Review by a court of any determination by the Administrative Committee shall be subject to the following standard of review:
|
(1)
|
Prior to a Change of Control, the standard of review shall be the “arbitrary and capricious” standard.
|
(2)
|
Following a Change of Control, the standard of review shall be
de novo
.
|
(a)
|
The Plan shall be operated, administered, and interpreted in accordance with the intent that all payments hereunder shall be exempt from, or in compliance with, the requirements of section 409A of the Code.
|
(b)
|
If Interpublic or the Administrative Committee determines that any provision of the Plan is or might be inconsistent with the restrictions imposed by section 409A of the Code, Interpublic or the Administrative Committee may amend the Plan to the extent that Interpublic or the Administrative Committee determines, based on the advice of outside counsel, is necessary to bring it into compliance with section 409A of the Code.
|
(c)
|
No provision in the Plan shall be interpreted or construed to transfer any liability for any tax (including a tax or penalty due as a result of a failure to comply with section 409A of the Code) from a Participant or other individual to Interpublic, any Subsidiary, or any other entity or individual affiliated with Interpublic and its Subsidiaries.
|
(d)
|
If the period during which a Participant has discretion to execute or revoke the agreement required by Section 5.1 straddles two calendar years, no payment that is subject to the requirements of Section 409A shall be made before January 1st of the second of such calendar years.
|
(a)
|
Subject to the restrictions set forth in this Section 7.4, the Board of Directors or any person duly authorized by the Board of Directors (including the Board’s Compensation and Leadership Talent Committee) may, pursuant to a written instrument, amend, suspend, or terminate the Plan at any time. In addition, the Administrative Committee may amend the Plan to the extent that it deems necessary or desirable:
|
(1)
|
To improve the administration of the Plan, so long as such amendment does not materially affect the substance of the Plan or the level of benefits the Plan provides, or
|
(2)
|
To comply with any applicable federal, state, or local law (including tax laws that could result in adverse tax consequences to any Participant or Interpublic or any Subsidiary).
|
(b)
|
No amendment, suspension, or termination of the Plan that might reduce the level of benefits available under the Plan shall be given effect with respect to any Participant who:
|
(1)
|
Was a Participant on the day before the later of (A) the effective date of such amendment, suspension, or termination, or (B) the date such amendment, suspension, or termination is adopted (such later date being the “Amendment Date”), and
|
(2)
|
On or before the second anniversary of the Amendment Date is either (A) Dismissed or (B) notified that he will be Dismissed,
|
(a)
|
The provisions of this Article 8 shall apply to any claim for a benefit under the Plan, regardless of the basis asserted for the claim and regardless of when the act or omission upon which the claim is based occurred.
|
(b)
|
No claim for non-payment or underpayment of benefits allegedly owed under the Plan may be filed in court until the claimant has exhausted the claims review procedures established in accordance with this Article 8.
|
(a)
|
Any claim for benefits shall be in writing (which may be electronic if permitted by the Administrative Committee) and shall be delivered to a claims administrator designated in writing by the Administrative Committee.
|
(b)
|
Each claim for benefits shall be decided by the claims administrator or the Administrative Committee (as determined by the Administrative Committee) within a reasonable period of time, but not later than 90 days after such claim is received by the claims administrator (without regard to whether the claim submission includes sufficient information to make a determination), unless the claims administrator or the Administrative Committee determines that special circumstances require an extension of time for processing the claim. If the claims administrator or the Administrative Committee determines that an extension of time for processing is required, the claims administrator or the Administrative Committee shall notify the claimant in writing before the end of the initial 90-day period of the circumstances requiring an extension of time and the date by which a decision is expected.
|
(c)
|
If any claim is denied in whole or in part, the claims administrator or the Administrative Committee shall provide to the claimant a written decision, issued by the end of the period prescribed by subsection (b), above, that includes the following information:
|
(1)
|
The specific reason or reasons for denial of the claim;
|
(2)
|
References to the specific Plan provisions upon which such denial is based;
|
(3)
|
A description of any additional material or information necessary to perfect the claim, and an explanation of why such material or information is necessary;
|
(4)
|
An explanation of the appeal procedures Plan’s and the applicable time limits; and
|
(5)
|
A statement of the claimant’s right to bring a civil action under section 502(a) of ERISA, if his claim is denied upon review.
|
(a)
|
If a claim for benefits is denied in whole or in part, the claimant may appeal the denial to the Administrative Committee. Such appeal shall be in writing (which may be electronic, if permitted by the Administrative Committee), may include any written comments, documents, records, or other information relating to the claim for benefits, and shall be delivered to the Administrative Committee within 60 days after the claimant receives written notice that his claim has been denied.
|
(b)
|
The Administrative Committee shall decide each appeal within a reasonable period of time, but not later than 60 days after such claim is received by the Administrative Committee, unless the Administrative Committee determines that special circumstances require an extension of time for processing the appeal.
|
(1)
|
If the Administrative Committee determines that an extension of time for processing is required, the Administrative Committee shall notify the claimant in writing before the end of the initial 60-day period of the circumstances requiring an extension of time and the date by which the claims administrator expects to render a decision.
|
(2)
|
If an extension of time pursuant to paragraph (1), above, is due to a claimant’s failure to submit information necessary to decide the appeal, the period for deciding the appeal shall be tolled from the date on which the notification of extension is sent to the claimant until the date on which the claimant responds to the request for additional information.
|
(c)
|
In connection with any appeal, a claimant shall be provided, upon request and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to his claim for benefits. A document, record, or other information shall be considered relevant to a claim for benefits if such document, record, or other information:
|
(1)
|
Was relied upon in making the benefit determination;
|
(2)
|
Was submitted, considered, or generated in the course of making the benefit determination, without regard to whether such document, record, or other information was relied upon in making the benefit determination; or
|
(3)
|
Demonstrates compliance with processes and safeguards designed to ensure and to verify that the benefit determination was made in accordance with the terms of the Plan and that such terms of the Plan have been applied consistently with respect to similarly situated claimants.
|
(d)
|
The Administrative Committee’s review on appeal shall take into account all comments, documents, records and other information submitted by the claimant,
|
(e)
|
If any appeal is denied in whole or in part, the Administrative Committee shall provide to the claimant a written decision, issued by the end of the period prescribed by subsection (b), above, that includes the following information:
|
(1)
|
The specific reason or reasons for the decision;
|
(2)
|
References to the specific Plan provisions upon which the decision is based;
|
(3)
|
An explanation of the claimant’s right to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to his claim for benefits (as determined pursuant to subsection (c), above); and
|
(4)
|
A statement of the claimant’s right to bring a civil action under section 502(a) of ERISA.
|
(a)
|
A claimant may authorize a representative to pursue any claim or appeal on his behalf. The Administrative Committee may establish reasonable procedures for verifying that any representative has in fact been authorized to act on his behalf.
|
(b)
|
Notwithstanding the deadlines prescribed by this Article 8, the Administrative Committee and any claimant may agree to a longer period for deciding a claim or appeal or for filing an appeal, provided that the Administrative Committee shall not extend any deadline for filing an appeal unless imposition of the deadline prescribed by Section 8.3(a) would be unreasonable under the applicable circumstances.
|
(a)
|
Interpublic shall require any successor (whether direct or indirect, by merger, consolidation, sale of stock or assets, or otherwise) to the business or assets of Interpublic, expressly, absolutely, and unconditionally to assume the Plan and to administer the Plan in accordance with its terms.
|
(b)
|
In the event of a sale, spin-off, disposition, or similar transaction that results in an Employer ceasing to be a Subsidiary of Interpublic, Interpublic shall require the Employer or successor thereto to assume all obligations under the Plan with respect to each Participant who continues employment with the Employer or successor immediately after such sale, divestiture or similar transaction (each, a “Transferred Participant”). Neither Interpublic nor any Subsidiary of Interpublic shall have any obligation under the Plan with respect to a Transferred Participant after the closing of the applicable sale, divestiture, or similar transaction. Any amendment, suspension, or termination of the Employer’s or successor’s obligations with respect to Transferred Participants shall be subject to Section 7.4(b).
|
COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
|
||||||||||||||||||||||||
(Amounts in Millions, Except Ratios)
|
||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
Nine months ended
September 30, |
|
Years ended December 31,
|
||||||||||||||||||||
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
2012
|
||||||||||||
Earnings
1
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Income from continuing operations before income taxes
|
|
$
|
377.2
|
|
|
$
|
830.2
|
|
|
$
|
762.2
|
|
|
$
|
720.7
|
|
|
$
|
468.0
|
|
|
$
|
674.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Fixed charges
2
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Interest expense
|
|
67.6
|
|
|
90.6
|
|
|
85.8
|
|
|
84.9
|
|
|
122.7
|
|
|
133.5
|
|
||||||
Interest factor of net operating rents
3
|
|
130.8
|
|
|
170.4
|
|
|
162.4
|
|
|
170.0
|
|
|
173.3
|
|
|
169.0
|
|
||||||
Total fixed charges
|
|
198.4
|
|
|
261.0
|
|
|
248.2
|
|
|
254.9
|
|
|
296.0
|
|
|
302.5
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Earnings, as adjusted
|
|
$
|
575.6
|
|
|
$
|
1,091.2
|
|
|
$
|
1,010.4
|
|
|
$
|
975.6
|
|
|
$
|
764.0
|
|
|
$
|
977.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Ratio of earnings to fixed charges
|
|
2.9
|
|
|
4.2
|
|
|
4.1
|
|
|
3.8
|
|
|
2.6
|
|
|
3.2
|
|
|
1
|
Earnings consist of income from continuing operations before income taxes, equity in net (loss) income of unconsolidated affiliates and adjustments for net (income) loss attributable to noncontrolling interests.
|
2
|
Fixed charges consist of interest on indebtedness, amortization of debt discount, waiver and other amendment fees, debt issuance costs (all of which are included in interest expense) and the portion of net rental expense deemed representative of the interest component (one-third).
|
3
|
We have calculated the interest factor of net operating rent as one third of our operating rent, as this represents a reasonable approximation of the interest factor.
|
1.
|
I have reviewed this quarterly report on Form 10-Q of The Interpublic Group of Companies, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
|
/s/
Michael I. Roth
|
|
Michael I. Roth
|
|
Chairman and Chief Executive Officer
|
1.
|
I have reviewed this quarterly report on Form 10-Q of The Interpublic Group of Companies, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
|
/s/
Frank Mergenthaler
|
|
Frank Mergenthaler
|
|
Executive Vice President and Chief Financial Officer
|
|
/s/
Michael I. Roth
|
|
Michael I. Roth
|
|
Chairman and Chief Executive Officer
|
|
/s/
Frank Mergenthaler
|
|
Frank Mergenthaler
|
|
Executive Vice President and Chief Financial Officer
|