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10-Q
INTERPUBLIC GROUP OF COMPANIES, INC. filed this Form 10-Q on 10/26/2017
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 nine months ended September 30, 2016, net income available to IPG common stockholders included the recognition of certain previously unrecognized tax benefits totaling $23.4, losses of $15.7, 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 $0.06, ($0.04) and $0.03, respectively, to basic and diluted earnings per share.

Segment Results of Operations – Three and Nine Months Ended September 30, 2017 Compared to Three and Nine Months Ended September 30, 2016
As discussed in Note 10 to the unaudited Consolidated Financial Statements, we have two reportable segments as of September 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
September 30, 2016
Foreign
Currency
 
Net
Acquisitions/
(Divestitures)
 
Organic
 
Three months ended
September 30, 2017
Organic
 
Total
Consolidated
$
1,503.2

 
$
8.7

 
$
(22.4
)
 
$
30.7

 
$
1,520.2

 
2.0
 %
 
1.1
%
Domestic
893.8

 
0.0

 
(17.4
)
 
31.6

 
908.0

 
3.5
 %
 
1.6
%
International
609.4

 
8.7

 
(5.0
)
 
(0.9
)
 
612.2

 
(0.1
)%
 
0.5
%
During the third quarter of 2017, IAN revenue increased by $17.0 compared to the third quarter of 2016, comprised of an organic revenue increase of $30.7 and a favorable foreign currency rate impact of $8.7, partially offset by the effect of net divestitures of $22.4. The organic revenue increase was primarily attributable to growth within the healthcare sector, partially offset by decreases in the financial services and technology and telecom sectors. The organic revenue increase in our domestic market was mainly driven by our media and advertising businesses, partially offset by a decline within our digital specialist agencies. In our international markets, the slight organic revenue decrease was primarily attributable to decreases at our advertising businesses in Latin America, most notably in Brazil, and the Asia Pacific region, as well as a decline in our digital specialist agencies in the United Kingdom, partially offset by growth across all regions at our media businesses as well as growth at our advertising businesses in the United Kingdom.
 
 
 
Components of Change
 
 
 
Change
 
Nine months ended
September 30, 2016
Foreign
Currency
 
Net
Acquisitions/
(Divestitures)
 
Organic
 
Nine months ended
September 30, 2017
Organic
 
Total
Consolidated
$
4,453.3

 
$
(15.9
)
 
$
(49.1
)
 
$
77.3

 
$
4,465.6

 
1.7
%
 
0.3
 %
Domestic
2,675.9

 
0.0

 
(36.0
)
 
67.7

 
2,707.6

 
2.5
%
 
1.2
 %
International
1,777.4

 
(15.9
)
 
(13.1
)
 
9.6

 
1,758.0

 
0.5
%
 
(1.1
)%
During the first nine months of 2017, IAN revenue increased by $12.3 compared to the first nine months of 2016, comprised of an organic revenue increase of $77.3, partially offset by the effect of net divestitures of $49.1 and an adverse foreign currency rate impact of $15.9. The organic revenue increase was primarily attributable to growth within the healthcare sector, partially offset by decreases in the financial services and technology and telecom sectors. The organic revenue increase in our domestic market was driven by growth across all disciplines, most notably at our media and advertising businesses. In our international markets, the organic increase was primarily driven by growth at our media businesses across all regions, most notably in Canada within our Other region and in Latin America, as well as our advertising businesses in the United Kingdom, partially offset by decreases at our advertising businesses in the Asia Pacific and Latin America regions.
SEGMENT OPERATING INCOME
 
Three months ended
September 30,
 
 
 
Nine months ended
September 30,
 
 
 
2017
 
2016
 
Change
 
2017
 
2016
 
Change
Segment operating income
$
183.9

 
$
184.1

 
(0.1
)%
 
$
402.1

 
$
424.1

 
(5.2
)%
Operating margin
12.1
%
 
12.2
%
 
 
 
9.0
%
 
9.5
%
 
 
 

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