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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)



Operating income increased during 2014 when compared to 2013 due to an increase in revenue of $301.7, partially offset by increases in salaries and related expenses of $185.2 and office and general expenses of $1.5. The increase in salaries and related expenses was primarily due to an increase in base salaries, benefits and temporary help, primarily attributable to an increase in our workforce in certain businesses where we had revenue growth or new business wins. Also contributing to the increase were higher incentive awards expense and certain agency-related bonus accruals resulting from improved financial performance, offset by lower severance expense. The increase in office and general expenses 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.
Operating income decreased during 2013 when compared to 2012 due to an increase in salaries and related expenses of $109.5, partially offset by an increase in revenue of $67.1 and a decrease in office and general expenses of $4.3. The increase in salaries and related expenses was primarily due to an increase in base salaries, benefits and temporary help, primarily attributable to an increase in our workforce in certain businesses where we had new business wins, as well as increases due to acquisitions during 2013. The decrease in office and general expenses was primarily attributable to lower production expenses related to pass-through costs for certain projects where we acted as principal that decreased in size or did not occur during 2013, certain adjustments to contingent acquisition obligations and lower discretionary spending, partially offset by an increase in occupancy costs.

CMG
REVENUE
 
Year ended December 31, 2013
 
Components of Change
 
Year ended December 31, 2014
 
Change
 
Foreign
Currency
 
Net
Acquisitions/
(Divestitures)
 
Organic
 
Organic
 
Total
Consolidated
$
1,326.7

 
$
1.2

 
$
34.3

 
$
77.6

 
$
1,439.8

 
5.8
%
 
8.5
%
Domestic
878.6

 
0.0

 
14.6

 
15.0

 
908.2

 
1.7
%
 
3.4
%
International
448.1

 
1.2

 
19.7

 
62.6

 
531.6

 
14.0
%
 
18.6
%
During 2014, CMG revenue increased by $113.1 compared to 2013, primarily comprised of an organic revenue increase of $77.6 and the effect of net acquisitions of $34.3. The organic revenue increase in our international markets was driven by growth across all disciplines, most notably at our public relations businesses, primarily in the Asia Pacific region and in the United Kingdom. Also contributing to the international organic revenue increase was our events marketing business in the United Kingdom and our sports marketing business in the Latin America region. The domestic organic revenue increase was primarily attributable to growth at our public relations and sports marketing businesses, partially offset by a decline at our events marketing business.
 
Year ended December 31, 2012
 
Components of Change
 
Year ended December 31, 2013
 
Change
 
Foreign
Currency
 
Net
Acquisitions/
(Divestitures)
 
Organic
 
Organic
 
Total
Consolidated
$
1,227.7

 
$
(7.2
)
 
$
9.9

 
$
96.3

 
$
1,326.7

 
7.8
%
 
8.1
%
Domestic
782.8

 
0.0

 
0.0

 
95.8

 
878.6

 
12.2
%
 
12.2
%
International
444.9

 
(7.2
)
 
9.9

 
0.5

 
448.1

 
0.1
%
 
0.7
%
During 2013, CMG revenue increased by $99.0 compared to 2012, comprised of an organic revenue increase of $96.3. We had growth in the domestic market, with our organic revenue increase primarily due to net client wins and net higher spending from existing clients across all disciplines, most notably in our events marketing and public relations businesses. The international organic revenue increase occurred primarily in our public relations business and was predominantly in the Latin America region, most notably in Brazil, and in the Asia Pacific region, primarily in China. Mostly offsetting the international organic revenue increase was an organic revenue decrease in the United Kingdom, due to a decrease in our events marketing business which in the prior-year included work performed for the London Olympics, and in the Continental Europe region due to a continued challenging economic climate.


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