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SEC Filings

10-K
INTERPUBLIC GROUP OF COMPANIES, INC. filed this Form 10-K on 02/23/2015
Entire Document
 

Management’s Discussion and Analysis of Financial Condition and Results of Operations - (continued)
(Amounts in Millions, Except Per Share Amounts)



The following table details our staff cost ratio.
 
Years ended December 31,
 
2014
 
2013
 
2012
Salaries and related expenses
64.0
%
 
63.8
%
 
63.1
%
Base salaries, benefits and tax
52.6
%
 
52.9
%
 
52.2
%
Incentive expense
3.5
%
 
3.0
%
 
3.0
%
Severance expense
0.9
%
 
1.1
%
 
1.3
%
Temporary help
3.8
%
 
3.6
%
 
3.6
%
All other salaries and related expenses
3.2
%
 
3.2
%
 
3.0
%

Office and General Expenses
Office and general expenses primarily include rent expense, professional fees, certain expenses incurred by our staff in servicing our clients and depreciation and amortization costs. Office and general expenses also include costs directly attributable to client engagements, including production costs, out-of-pocket costs such as travel for client service staff and other direct costs that are rebilled to our clients. Production expenses can vary significantly between periods depending upon the timing of completion of certain projects where we act as principal, which could impact trends between various periods in the future.
 
Prior Year Amount
 
Components of Change
 
Total Amount
 
Change
 
Foreign
Currency
 
Net
Acquisitions/
(Divestitures)
 
Organic
 
Organic
 
Total
2013 - 2014
$
1,917.9

 
$
(19.7
)
 
$
20.1

 
$
9.8

 
$
1,928.1

 
0.5
%
 
0.5
%
2012 - 2013
1,887.2

 
(27.3
)
 
10.2

 
47.8

 
1,917.9

 
2.5
%
 
1.6
%
Our office and general expense ratio, defined as office and general expenses as a percentage of total consolidated revenue, decreased in 2014 to 25.6% from 26.9% in 2013. Office and general expenses in 2014 increased by $10.2 compared to 2013, due to the effect of net acquisitions of $20.1 and an organic increase of $9.8, partially offset by a favorable foreign currency rate impact of $19.7. The organic increase was primarily attributable to increases in adjustments to contingent acquisition obligations as compared to the prior year and increased spending to support new business activity, partially offset by lower production expenses related to pass-through costs, which are also reflected in revenue, primarily in the domestic market.
Our office and general expense ratio decreased in 2013 to 26.9% from 27.1% in 2012. Office and general expenses in 2013 increased by $30.7 compared to 2012, due to an organic increase of $47.8 and the effect of net acquisitions of $10.2, partially offset by a favorable foreign currency rate impact of $27.3. The organic increase was primarily attributable to an increase in occupancy costs and higher production expenses in our domestic market related to pass-through costs, which are also reflected in revenue, partially offset by certain adjustments to contingent acquisition obligations.
The following table details our office and general expense ratio. All other office and general expenses primarily include production expenses, and, to a lesser extent, depreciation and amortization, bad debt expense, adjustments for contingent acquisition obligations, foreign currency gains (losses), long-lived asset impairments and other expenses.
 
Years ended December 31,
 
2014
 
2013
 
2012
Office and general expenses
25.6
%
 
26.9
%
 
27.1
%
Professional fees
1.5
%
 
1.7
%
 
1.7
%
Occupancy expense (excluding depreciation and amortization)
6.7
%
 
7.1
%
 
7.0
%
Travel & entertainment, office supplies and telecommunications
3.4
%
 
3.6
%
 
3.6
%
All other office and general expenses
14.0
%
 
14.5
%
 
14.8
%


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