IPG
    Print Page  Close Window

SEC Filings

10-K
INTERPUBLIC GROUP OF COMPANIES, INC. filed this Form 10-K on 02/21/2017
Entire Document
 

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



Segment Results of Operations
As discussed in Note 12 to the Consolidated Financial Statements, we have two reportable segments as of December 31, 2016: IAN and CMG. We also report results for the "Corporate and other" group.

IAN
REVENUE
 
Year ended December 31, 2015
 
Components of Change
 
Year ended December 31, 2016
 
Change
 
Foreign
Currency
 
Net
Acquisitions/
(Divestitures)
 
Organic
 
Organic
 
Total
Consolidated
$
6,144.9

 
$
(128.8
)
 
$
(21.7
)
 
$
324.5

 
$
6,318.9

 
5.3
%
 
2.8
%
Domestic
3,520.8

 
0.0

 
(7.7
)
 
175.6

 
3,688.7

 
5.0
%
 
4.8
%
International
2,624.1

 
(128.8
)
 
(14.0
)
 
148.9

 
2,630.2

 
5.7
%
 
0.2
%
During 2016, IAN revenue increased by $174.0 compared to 2015, comprised of an organic revenue increase of $324.5, partially offset by an adverse foreign currency rate impact of $128.8 and the effect of net divestitures of $21.7. The organic revenue increase was primarily attributable to a combination of higher spending and net client wins in most client sectors, most notably in the healthcare sector. The organic revenue increase in our domestic market was driven by growth across all disciplines, most notably at our digital specialist agencies and advertising businesses. The international organic revenue increase was driven by growth across all disciplines, most notably at our media businesses in all geographic regions, primarily in Continental Europe, led by Germany, and our Other region, primarily in Canada, and our digital specialist agencies in the Latin America region and Canada.
 
Year ended December 31, 2014
 
Components of Change
 
Year ended December 31, 2015
 
Change
 
Foreign
Currency
 
Net
Acquisitions/
(Divestitures)
 
Organic
 
Organic
 
Total
Consolidated
$
6,076.3

 
$
(353.6
)
 
$
12.6

 
$
409.6

 
$
6,144.9

 
6.7
%
 
1.1
 %
Domestic
3,254.8

 
0.0

 
1.6

 
264.4

 
3,520.8

 
8.1
%
 
8.2
 %
International
2,821.5

 
(353.6
)
 
11.0

 
145.2

 
2,624.1

 
5.1
%
 
(7.0
)%
During 2015, IAN revenue increased by $68.6 compared to 2014, comprised of an organic revenue increase of $409.6 and the effect of net acquisitions of $12.6, largely offset by an adverse foreign currency rate impact of $353.6. The organic revenue increase was primarily attributable to a combination of net client wins and higher spending in most client sectors, most notably in the technology and telecom and healthcare sectors. The organic revenue increase in our domestic market was driven by growth across all disciplines, most notably at our advertising businesses. The international organic revenue increase was driven by growth across all disciplines, notably at our advertising businesses and digital specialist agencies in the Asia Pacific region and the United Kingdom.

SEGMENT OPERATING INCOME
 
Years ended December 31,
 
Change
 
2016
 
2015
 
2014
 
2016 vs 2015

2015 vs 2014
Segment operating income
$
895.3

 
$
847.4

 
$
774.0

 
5.7
%
 
9.5
%
Operating margin
14.2
%
 
13.8
%
 
12.7
%
 
 
 
 
 
Operating income increased during 2016 when compared to 2015 due to an increase in revenue of $174.0 and a decrease in office and general expenses of $2.7, partially offset by an increase in salaries and related expenses of $128.8. The increase in salaries and related expenses was primarily due to an increase in base salaries, benefits and tax as well as temporary help, primarily attributable to increases in our workforce at businesses and in regions where we had revenue growth or new business wins over the last twelve months. The decrease in office and general expenses was attributable to lower charges for contingencies and lower professional consulting fees, partially offset by higher occupancy costs and increases in adjustments to contingent acquisition obligations as compared to the prior year.
Operating income increased during 2015 when compared to 2014 due to an increase in revenue of $68.6 and a decrease in office and general expenses of $14.7, partially offset by an increase in salaries and related expenses of $9.9. The decrease in office and general expenses was attributable to lower occupancy costs, including an incentive from a lease buyout, and lower adjustments

22