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SEC Filings

10-Q
INTERPUBLIC GROUP OF COMPANIES, INC. filed this Form 10-Q on 04/21/2017
Entire Document
 

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


 
 
 
Components of Change
 
 
 
Change
 
Three months ended
March 31, 2016
Foreign
Currency
 
Net
Acquisitions/
(Divestitures)
 
Organic
 
Three months ended
March 31, 2017
Organic
 
Total
Consolidated
$
1,742.0

 
$
(17.1
)
 
$
(17.2
)
 
$
46.2

 
$
1,753.9

 
2.7
 %
 
0.7
 %
Domestic
1,091.2

 
0.0

 
(11.0
)
 
31.6

 
1,111.8

 
2.9
 %
 
1.9
 %
International
650.8

 
(17.1
)
 
(6.2
)
 
14.6

 
642.1

 
2.2
 %
 
(1.3
)%
United Kingdom
165.6

 
(22.6
)
 
5.2

 
0.3

 
148.5

 
0.2
 %
 
(10.3
)%
Continental Europe
147.6

 
(4.9
)
 
(6.3
)
 
9.9

 
146.3

 
6.7
 %
 
(0.9
)%
Asia Pacific
182.1

 
0.3

 
1.5

 
(5.0
)
 
178.9

 
(2.7
)%
 
(1.8
)%
Latin America
65.3

 
7.3

 
(6.6
)
 
2.4

 
68.4

 
3.7
 %
 
4.7
 %
Other
90.2

 
2.8

 
0.0

 
7.0

 
100.0

 
7.8
 %
 
10.9
 %
During the first quarter of 2017, our revenue increased by $11.9, or 0.7%, compared to the first quarter of 2016, comprised of an organic revenue increase of $46.2, or 2.7%, partially offset by the effect of net divestitures of $17.2 and an adverse foreign currency rate impact of $17.1. Our organic revenue increase was throughout nearly all geographic regions, primarily attributable to a combination of net higher spending from existing clients and net client wins, most notably in the healthcare sector, partially offset by decreases in the consumer goods and technology and telecom sectors. The organic revenue increase in our domestic market was driven by growth across most disciplines, primarily at our digital specialist agencies, media businesses and events businesses. In our international markets, the organic revenue increase was driven by our media businesses in all regions and our public relations businesses, primarily in the United Kingdom and Continental Europe, partially offset by declines at our advertising businesses in the Asia Pacific region and our events business in the United Kingdom.
Refer to the segment discussion later in this MD&A for information on changes in revenue by segment.
OPERATING EXPENSES
 
Three months ended
March 31,
 
2017
 
2016
Salaries and related expenses
$
1,275.4

 
$
1,268.8

Office and general expenses
448.8

 
450.2

Total operating expenses
$
1,724.2

 
$
1,719.0

Operating income
$
29.7

 
$
23.0

In the first quarter of 2017, total operating expenses increased 0.3%, compared to our revenue increase of 0.7%, from the first quarter of 2016, resulting in operating margin expansion to 1.7% from 1.3%.
Salaries and Related Expenses
 
 
 
Components of Change
 
 
 
Change
 
2016
Foreign
Currency
 
Net
Acquisitions/
(Divestitures)
 
Organic
 
2017
Organic
 
Total
Three months ended March 31,
$
1,268.8

 
$
(13.8
)
 
$
(16.0
)
 
$
36.4

 
$
1,275.4

 
2.9
%
 
0.5
%
Salaries and related expenses in the first quarter of 2017 increased by $6.6 compared to the first quarter of 2016, comprised of an organic increase of $36.4, partially offset by the effect of net divestitures of $16.0 and a favorable foreign currency rate impact of $13.8. The organic increase was primarily attributable to an increase in base salaries, benefits and tax as a result of increases in our workforce at businesses and in regions where we had revenue growth or new business wins over the last twelve months, partially offset by lower acquisition-related contractual compensation, which is classified within all other salaries and related expenses in the table below. Our staff cost ratio, defined as salaries and related expenses as a percentage of total consolidated revenue, decreased in the first quarter of 2017 to 72.7% from 72.8%, when compared to the prior-year period.


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