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10-K
INTERPUBLIC GROUP OF COMPANIES, INC. filed this Form 10-K on 02/22/2016
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 $303.5, partially offset by increases in salaries and related expenses of $186.4 and office and general expenses of $2.4. 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.

CMG
REVENUE
 
Year ended December 31, 2014
 
Components of Change
 
Year ended December 31, 2015
 
Change
 
Foreign
Currency
 
Net
Acquisitions/
(Divestitures)
 
Organic
 
Organic
 
Total
Consolidated
$
1,460.8

 
$
(54.9
)
 
$
11.1

 
$
51.9

 
$
1,468.9

 
3.6
%
 
0.6
 %
Domestic
929.2

 
0.0

 
6.2

 
19.3

 
954.7

 
2.1
%
 
2.7
 %
International
531.6

 
(54.9
)
 
4.9

 
32.6

 
514.2

 
6.1
%
 
(3.3
)%
During 2015, CMG revenue increased by $8.1 compared to 2014, comprised of an organic revenue increase of $51.9 and the effect of net acquisitions of $11.1, largely offset by an adverse foreign currency rate impact of $54.9. In our international markets, the organic revenue increase was driven by our public relations and events marketing businesses, predominantly in the Asia Pacific region. The domestic organic revenue increase was primarily attributable to growth at our public relations business, partially offset by a decline at our events marketing business.
 
Year ended December 31, 2013
 
Components of Change
 
Year ended December 31, 2014
 
Change
 
Foreign
Currency
 
Net
Acquisitions/
(Divestitures)
 
Organic
 
Organic
 
Total
Consolidated
$
1,349.5

 
$
1.2

 
$
34.3

 
$
75.8

 
$
1,460.8

 
5.6
%
 
8.2
%
Domestic
901.4

 
0.0

 
14.6

 
13.2

 
929.2

 
1.5
%
 
3.1
%
International
448.1

 
1.2

 
19.7

 
62.6

 
531.6

 
14.0
%
 
18.6
%
During 2014, CMG revenue increased by $111.3 compared to 2013, primarily comprised of an organic revenue increase of $75.8 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.

SEGMENT OPERATING INCOME
 
Years ended December 31,
 
Change
 
2015
 
2014
 
2013
 
2015 vs 2014
 
2014 vs 2013
Segment operating income1
$
166.3

 
$
163.4

 
$
139.7

 
1.8
%
 
17.0
%
Operating margin1
11.3
%
 
11.2
%
 
10.4
%
 
 
 
 

1
Segment operating income and operating margin exclude restructuring and other reorganization-related reversals of approximately $0.5 for the year ended December 31, 2014, and charges of approximately $4.5 for the year ended December 31, 2013. There were no restructuring and other reorganization-related charges within the CMG segment for the year ended December 31, 2015. See "Restructuring and Other Reorganization-Related (Reversals) Charges, net" in Management's Discussion and Analysis of Financial Condition and Results of Operations and Note 8 to the Consolidated Financial Statements for further information.

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