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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)



LIQUIDITY AND CAPITAL RESOURCES
CASH FLOW OVERVIEW
The following tables summarize key financial data relating to our liquidity, capital resources and uses of capital.
 
Years ended December 31,
Cash Flow Data
2014
 
2013
 
2012
Net income, adjusted to reconcile net income to net cash
    provided by operating activities 1
$
831.2

 
$
598.4

 
$
697.2

Net cash used in working capital ²
(131.1
)
 
(9.6
)
 
(293.2
)
Changes in other non-current assets and liabilities using cash
(30.6
)
 
4.1

 
(46.8
)
Net cash provided by operating activities
$
669.5

 
$
592.9

 
$
357.2

Net cash used in investing activities
(200.8
)
 
(224.5
)
 
(210.2
)
Net cash (used in) provided by financing activities
(343.9
)
 
(1,212.3
)
 
131.3

 
1
Reflects net income adjusted primarily for depreciation and amortization of fixed assets and intangible assets, amortization of restricted stock and other non-cash compensation, non-cash (gain) loss related to early extinguishment of debt, and deferred income taxes.

2
Reflects changes in accounts receivable, expenditures billable to clients, other current assets, accounts payable and accrued liabilities.
 
Operating Activities
Net cash provided by operating activities during 2014 was $669.5, which was an improvement of $76.6 as compared to 2013, primarily as a result of an increase in net income, offset by an increase in working capital usage of $121.5. Due to the seasonality of our business, we typically generate cash from working capital in the second half of a year and use cash from working capital in the first half of a year, with the largest impacts in the first and fourth quarters. Our net working capital usage in 2014 was impacted by our media businesses.
Net cash provided by operating activities during 2013 was $592.9, which was an increase of $235.7 as compared to 2012, primarily as a result of an improvement in working capital usage of $283.6, offset by a decrease in net income. The improvement in working capital in 2013 was impacted by our media businesses and an ongoing focus on working capital management at our agencies.
The timing of media buying on behalf of our clients affects our working capital and operating cash flow. In most of our businesses, our agencies enter into commitments to pay production and media costs on behalf of clients. To the extent possible we pay production and media charges after we have received funds from our clients. The amounts involved substantially exceed our revenues and primarily affect the level of accounts receivable, expenditures billable to clients, accounts payable and accrued liabilities. Our assets include both cash received and accounts receivable from clients for these pass-through arrangements, while our liabilities include amounts owed on behalf of clients to media and production suppliers.
Our accrued liabilities are also affected by the timing of certain other payments. For example, while annual cash incentive awards are accrued throughout the year, they are generally paid during the first quarter of the subsequent year.

Investing Activities
Net cash used in investing activities during 2014 primarily related to payments for capital expenditures and acquisitions. Capital expenditures of $148.7 related primarily to computer hardware and software and leasehold improvements. We made payments of $67.8 related to acquisitions completed during 2014, net of cash acquired.
Net cash used in investing activities during 2013 primarily related to payments for capital expenditures and acquisitions. Capital expenditures of $173.0 related primarily to computer hardware and software and leasehold improvements. We made payments of $61.5 related to acquisitions completed during 2013, net of cash acquired.

Financing Activities
Net cash used in financing activities during 2014 primarily related to the purchase of long-term debt, the repurchase of our common stock and payment of dividends. During 2014, we redeemed all $350.0 in aggregate principal amount of the 6.25% Notes, repurchased 14.9 shares of our common stock for an aggregate cost of $275.1, including fees, and made dividend payments of $159.0 on our common stock. This was offset by the issuance of $500.0 in aggregate principal amount of our 4.20% Notes.
Net cash used in financing activities during 2013 primarily related to the purchase of long-term debt, the repurchase of our common stock and payment of dividends. We redeemed all $600.0 in aggregate principal amount of our 10.00% Notes. In addition,

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