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10-Q
INTERPUBLIC GROUP OF COMPANIES, INC. filed this Form 10-Q on 07/27/2017
Entire Document
 

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


For the six months ended June 30, 2016, net income available to IPG common stockholders also included losses of $19.6, net of tax, on sales of businesses in our international markets, and a benefit of $12.2 related to the reversals of valuation allowances as a consequence of the sales of businesses, resulting in impacts of ($0.05) and $0.03, respectively, to basic and diluted earnings per share.

Segment Results of Operations – Three and Six Months Ended June 30, 2017 Compared to Three and Six Months Ended June 30, 2016
As discussed in Note 10 to the unaudited Consolidated Financial Statements, we have two reportable segments as of June 30, 2017: IAN and Constituency Management Group ("CMG"). We also report results for the "Corporate and other" group.
IAN
REVENUE
 
 
 
Components of Change
 
 
 
Change
 
Three months ended
June 30, 2016
Foreign
Currency
 
Net
Acquisitions/
(Divestitures)
 
Organic
 
Three months ended
June 30, 2017
Organic
 
Total
Consolidated
$
1,548.5

 
$
(14.8
)
 
$
(11.8
)
 
$
15.9

 
$
1,537.8

 
1.0
 %
 
(0.7
)%
Domestic
916.7

 
0.0

 
(9.7
)
 
21.1

 
928.1

 
2.3
 %
 
1.2
 %
International
631.8

 
(14.8
)
 
(2.1
)
 
(5.2
)
 
609.7

 
(0.8
)%
 
(3.5
)%
During the second quarter of 2017, IAN revenue decreased by $10.7 compared to the second quarter of 2016, comprised of an organic revenue increase of $15.9, offset by an adverse foreign currency rate impact of $14.8 and the effect of net divestitures of $11.8. The organic revenue increase was primarily attributable to growth within the healthcare sector, partially offset by decreases in the technology and telecom and financial services sectors. The organic revenue increase in our domestic market was driven by growth across all disciplines, most notably at our advertising and media businesses. In our international markets, the organic revenue decrease was primarily driven by our advertising businesses in the Asia Pacific region and Latin America, mainly within Brazil, and our media businesses in Continental Europe. The organic revenue decrease was partially offset by increases at our media businesses in Latin America, led by Mexico, the Asia Pacific region and our Other region, driven by growth in Canada, as well as growth within our advertising and media businesses in the United Kingdom.
 
 
 
Components of Change
 
 
 
Change
 
Six months ended
June 30, 2016
Foreign
Currency
 
Net
Acquisitions/
(Divestitures)
 
Organic
 
Six months ended
June 30, 2017
Organic
 
Total
Consolidated
$
2,950.1

 
$
(24.6
)
 
$
(26.7
)
 
$
46.6

 
$
2,945.4

 
1.6
%
 
(0.2
)%
Domestic
1,782.1

 
0.0

 
(18.6
)
 
36.1

 
1,799.6

 
2.0
%
 
1.0
 %
International
1,168.0

 
(24.6
)
 
(8.1
)
 
10.5

 
1,145.8

 
0.9
%
 
(1.9
)%
During the first half of 2017, IAN revenue decreased by $4.7 compared to the first half of 2016, comprised of an organic revenue increase of $46.6, offset by the effect of net divestitures of $26.7 and an adverse foreign currency rate impact of $24.6. The organic revenue increase in our domestic market was driven by growth across most disciplines, most notably at our media businesses and digital specialist agencies. In our international markets, the organic increase was primarily driven by our media businesses in all regions, partially offset by decreases at our advertising businesses in the Asia Pacific and Latin America regions.
SEGMENT OPERATING INCOME
 
Three months ended
June 30,
 
 
 
Six months ended
June 30,
 
 
 
2017
 
2016
 
Change
 
2017
 
2016
 
Change
Segment operating income
$
174.4

 
$
198.2

 
(12.0
)%
 
$
218.2

 
$
240.0

 
(9.1
)%
Operating margin
11.3
%
 
12.8
%
 
 
 
7.4
%
 
8.1
%
 
 
 
Operating income decreased during the second quarter of 2017 when compared to the second quarter of 2016, due to a decrease in revenue of $10.7, as discussed above, and an increase in salaries and related expenses of $20.2, partially offset by a decrease in office and general expenses of $7.1. The increase in salaries and related expenses was primarily due to an increase in base

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