8 unchanged sentences
There have not been any changes in our internal control over financial reporting during our most recent fiscal quarter that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.
−Removed: KPMG LLP, an independent registered public accounting firm that audited our consolidated financial statements included in this Annual Report on Form 10-K, has issued an attestation report on Omnicom’s internal control over financial reporting as of December 31, 2020, dated February 18, 2021, which is included on page F-2 of this 2020 10-K.
+Added: KPMG LLP, an independent registered public accounting firm that audited our consolidated financial statements included in this Annual Report on Form 10-K, has issued an attestation report on Omnicom’s internal control over financial reporting as of December 31, 2021, dated February 9, 2022, which is included on page F-2 of this 2021 Form 10-K.
Other Information
+Added: Disclosure Regarding Foreign Jurisdictions That Prevent Inspection
+Added: Not applicable.
Directors, Executive Officers and Corporate Governance
−Removed: The information regarding Executive Officers of the Registrant is included in Part I, Item 1, “Business.” Additional information called for by this Item, to the extent not included in this document, is incorporated herein by reference to the information to be included under the captions “Item 1 - Election of Directors,” “Stock Ownership Information” and “Additional Information - Shareholder Proposals and Director Nominations for the 2022 Annual Meeting” in our definitive proxy statement, or Proxy Statement, which is expected to be filed with the SEC within 120 days of the fiscal year ended December 31, 2020.
+Added: The information regarding our executive officers is included in Part I, Item 1, “Business.” Additional information called for by this Item, to the extent not included in this document, is incorporated herein by reference to the information to be included under the captions “Item 1 - Election of Directors,” and “Additional Information - Shareholder Proposals and Director Nominations for the 2023 Annual Meeting” in our definitive proxy statement, or Proxy Statement, which is expected to be filed with the SEC within 120 days of the fiscal year ended December 31, 2021.
Executive Compensation
5 unchanged sentences
Principal Accountant Fees and Services
+Added: Our independent registered public accounting firm is KPMG LLP , New York, NY , Auditor Firm ID:
The information called for by this Item is incorporated herein by reference to the information to be included under the caption “Item 3 - Ratification of the Appointment of Independent Auditors - Fees Paid to Independent Auditors” in our Proxy Statement.
18 unchanged sentences
1-10551) dated December 14, 2018 and incorporated herein by reference).
−Removed: 4.1 Indenture, dated as of July 1, 2009, among Omnicom Group Inc., Omnicom Capital Inc., Omnicom Finance Inc.
−Removed: and Deutsche Bank Trust Company Americas, as trustee (“2009 Base Indenture”) (Exhibit 4.1 to our Current Report on Form 8-K (File No.
−Removed: 1-10551) dated July 1, 2009 and incorporated herein by reference).
−Removed: 4.2 Third Supplemental Indenture to the 2009 Base Indenture, dated as of April 23, 2012, among Omnicom Group Inc., Omnicom Capital Inc., Omnicom Finance Inc.
−Removed: and Deutsche Bank Trust Company Americas, as trustee, in connection with our issuance of $750 million 3.625% Senior Notes due 2022 (Exhibit 4.1 to our Current Report on Form 8-K (File No.
−Removed: 1-10551) dated April 23, 2012 and incorporated herein by reference).
−Removed: 4.3 Fourth Supplemental Indenture to the 2009 Base Indenture, dated as of July 20, 2012, among Omnicom Group Inc., Omnicom Capital Inc.
−Removed: and Deutsche Bank Trust Company Americas, as trustee, (Exhibit 4.4 to our Current Report on Form 8-K (File No.
−Removed: 1-10551) dated July 20, 2012 and incorporated herein by reference).
−Removed: 4.4 Fifth Supplemental Indenture to the 2009 Base Indenture, dated as of August 9, 2012, among Omnicom Group Inc., Omnicom Capital Inc.
−Removed: and Deutsche Bank Trust Company Americas, as trustee, in connection with our issuance of $500 million 3.625% Senior Notes due 2022 (Exhibit 4.1 to our Current Report on Form 8-K (File No.
−Removed: 1-10551) dated August 9, 2012 (“August 9, 2012 8-K”) and incorporated herein by reference).
−Removed: 4.5 Form of 3.625% Notes due 2022 (Exhibit 4.2 to the August 9, 2012 8-K and incorporated herein by reference).
4.1 Base Indenture, dated as of October 29, 2014, among Omnicom Group Inc., Omnicom Capital Inc.
2 unchanged sentences
4.2 First Supplemental Indenture to the 2014 Base Indenture, dated as of October 29, 2014, among Omnicom Group Inc., Omnicom Capital Inc.
−Removed: and Deutsche Bank Trust Company Americas, as trustee, in connection with our issuance of $750 million 3.65% Senior Notes due 2024 (Exhibit 4.2 to the October 29, 2014 8-K and incorporated herein by reference).
+Added: and Deutsche Bank Trust Company Americas, as trustee, in connection with the issuance of $750 million 3.65% Senior Notes due 2024 (Exhibit 4.2 to the October 29, 2014 8-K and incorporated herein by reference).
4.3 Form of 3.65% Notes due 2024 (included in Exhibit 4.2 to the October 29, 2014 8-K and incorporated herein by reference).
10 unchanged sentences
4.9 Form of 1.40% Notes due 2031 (included in Exhibit 4.2 to the July 8, 2019 8-K and incorporated herein by reference).
−Removed: 4.15 Base Indenture, dated as of February 21, 2020, among Omnicom Group Inc., as issuer, and Deutsche Bank Trust Company Americas, as trustee (Exhibit 4.1 to our Current Report on Form 8-K (File No.
+Added: 4.10 Base Indenture, dated as of February 21, 2020, among Omnicom Group Inc., as issuer, and Deutsche Bank Trust Company Americas, as trustee ( “ 2020 Base Indenture ” ) (Exhibit 4.1 to our Current Report on Form 8-K (File No.
1-10551) filed on February 21, 2020 ( “ February 21, 2020 8-K ” ) and incorporated herein by reference).
−Removed: 4.16 First Supplemental Indenture, dated as of February 21, 2020, among Omnicom Group Inc., as issuer, and Deutsche Bank Trust Company Americas, as trustee (Exhibit 4.2 to the February 21, 2020 8-K and incorporated herein by reference).
+Added: 4.11 First Supplemental Indenture to the 2020 Base Indenture, dated as of February 21, 2020, among Omnicom Group Inc., as issuer, and Deutsche Bank Trust Company Americas, as trustee, in connection with the issuance of $600 million 2.450% Senior Notes due 2030 (Exhibit 4.2 to the February 21, 2020 8-K and incorporated herein by reference).
4.12 Form of 2.450% Notes due 2030 (Included in Exhibit 4.2 to the February 21, 2020 8-K and incorporated herein by reference).
−Removed: 4.18 Second Supplemental Indenture, dated as of April 1, 2020, among Omnicom Group Inc., as issuer, and Deutsche Bank Trust Company Americas, as trustee (Exhibit 4.1 to our Current Report on Form 8-K (File No.
+Added: 4.13 Second Supplemental Indenture to the 2020 Base Indenture, dated as of April 1, 2020, among Omnicom Group Inc., as issuer, and Deutsche Bank Trust Company Americas, as trustee, in connection with the issuance of $600 million 4.200% Senior Notes due 2030 (Exhibit 4.1 to our Current Report on Form 8-K (File No.
1-10551) filed on April 1, 2020 (“April 1, 2020 8-K”) and incorporated herein by reference).
4.14 Form of 4.200% Notes due 2030 (Included in Exhibit 4.1 to the April 1, 2020 8-K and incorporated herein by reference).
−Removed: 4.20 Description of Securities (Exhibit 4.17 to our Annual Report on Form 10-K (File No.
−Removed: 1-10551) for the year ended December 31, 2019 and incorporated herein by reference).
+Added: 4.15 Third Supplemental Indenture to the 2020 Base Indenture, dated as of April 28, 2021, among Omnicom Group Inc., as issuer, and Deutsche Bank Trust Company Americas, as trustee, in connection with the issuance of $800 million 2.600% Senior Notes due 2031 (Exhibit 4.1 to our Current Report on Form 8-K (File No.
+Added: 1-10551) filed on May 3, 2021 (the “May 3, 2021 8-K ” ) and incorporated herein by reference).
+Added: 4.16 Form of 2.600% Notes due 2031 (Included in Exhibit 4.1 to the May 3, 2021 8-K and incorporated herein by reference).
+Added: 4.17 Base Indenture, dated as of November 22, 2021, among Omnicom Capital Holdings plc, as issuer, Omnicom Group Inc., as guarantor, and Deutsche Bank Trust Company Americas, as trustee (“2021 Base Indenture ” ), (Exhibit 4.1 to our Current Report on Form 8-K (File No.
+Added: 1-10551) filed on November 22, 2021 (“November 22, 2021 8-K ” ) and incorporated herein by reference).
+Added: 4.18 First Supplemental Indenture to the 2021 Base Indenture, dated as of November 22, 2021, among Omnicom Capital Holdings plc, as issuer, Omnicom Group Inc., as guarantor, and Deutsche Bank Trust Company Americas, as trustee, in connection with the issuance of £325 million aggregate principal amount of 2.250% Senior Notes due 2033 (Exhibit 4.2 to the November 22, 2021 8-K) and incorporated herein by reference).
+Added: 4.19 Form of 2.250% Senior Notes due 2033 (Included in Exhibit 4.2 to the November 22, 2021 8-K and incorporated herein by reference).
+Added: 4.20 Description of Securities
10.1 Second Amended and Restated Five Year Credit Agreement, dated as of February 14, 2020, by and among Omnicom Capital Inc., a Connecticut corporation, Omnicom Finance Limited, a private limited company organized under the laws of England and Wales, Omnicom Group Inc., a New York corporation, any other subsidiary of Omnicom Group Inc.
3 unchanged sentences
1-10551) filed on February 19, 2020 and incorporated herein by reference).
−Removed: 10.2 364-Day Credit Agreement, dated as of April 3, 2020, by and among Omnicom Capital Inc., Omnicom Group Inc., the banks, financial institutions and other institutional lenders and initial issuing banks listed on the signature pages thereof, Citibank, N.A., BofA Securities, Inc., Mizuho Bank, Ltd.
−Removed: Bank National Association, as joint lead arrangers and joint book managers, Bank of America, N.A., Mizuho Bank, Ltd.
−Removed: Bank National Association, as syndication agents, and Citibank, N.A., as administrative agent for the lenders (Exhibit 10.1 to our Current Report on Form 8-K (File No.
−Removed: 1-10551) filed on April 6, 2020 and incorporated herein by reference).
10.2 Amendment No.
3 unchanged sentences
and HSBC Bank USA, National Association, as documentation agents, and Citibank, N.A., as administrative agent for the lenders (Exhibit 10.1 to our Quarterly Report on Form 10-Q (File No.
−Removed: 1-10551) for the quarter ended September 30, 2020 ("September 30, 2020 10-Q") and incorporated herein by reference ).
−Removed: 10.4 Amendment No.
−Removed: 1 to the Credit Agreement, dated October 26, 2020, to the 364-Day Credit Agreement, dated as of April 3, 2020, by and among Omnicom Capital Inc., Omnicom Group Inc., the banks, financial institutions and other institutional lenders party thereto, Citibank, N.A., BofA Securities, Inc., Mizuho Bank, Ltd.
−Removed: Bank National Association, as joint lead arrangers and joint book managers, Bank of America, N.A., Mizuho Bank, Ltd.
−Removed: Bank National Association, as syndication agents, and Citibank, N.A., as administrative agent for the lenders (Exhibit 10.2 to the September 30, 2020 10-Q and incorporated herein by reference ).
+Added: 1-10551) for the quarter ended September 30, 2020 and incorporated herein by reference ).
10.3 Director Compensation and Director Compensation and Deferred Stock Program Stock Program (Exhibit 10.1 to our Quarterly Report on Form 10-Q (File No.
34 unchanged sentences
1-10551) for the year ended December 31, 2016 and incorporated herein by reference).
−Removed: 10.23 Separation Agreement, dated October 12, 2018, by and between Omnicom Capital Inc.
−Removed: and Dennis Hewitt (Exhibit 10.1 to our Current Report on Form 8-K (File No.
−Removed: 1-10551) filed on October 18, 2018 and incorporated herein by reference).
+Added: 10.21 Omnicom Group Inc.
+Added: 2021 Incentive Award Plan (incorporated by reference to our Definitive Proxy Statement on Schedule 14A, filed on March 25, 2021).
+Added: 10.22 2021 Incentive Award Plan Restricted Stock Unit Agreement - Form of Grant Notice and Agreement (Exhibit 10.2 to our Quarterly Report on Form 10-Q (File No.
+Added: 1-10551) for the quarter ended June 30, 2021 ( “ June 30, 2021 10-Q ” ) and incorporated herein by reference).
+Added: 10.23 2021 Incentive Award Plan Option Agreement - Form of Grant Notice and Agreement (Exhibit 10.3 to June 30, 2021 10-Q and incorporated herein by reference).
+Added: 10.24 Employment Agreement dated as of July 21, 2021 by and between Omnicom Management Inc.
+Added: Wren (Exhibit 10.1 to our Current Report on Form 8-K (File No.
+Added: 1-10551) filed on July 23, 2021 and incorporated herein by reference).
10.25 Rochelle Tarlowe employment letter (Exhibit 10.3 to the March 31, 2020 10-Q and incorporated herein by reference).
49 unchanged sentences
Their report expresses the independent accountant’s judgment as to the fairness of management’s reported financial position, results of operations and cash flows.
−Removed: This judgment is based on the procedures described in the fifth and sixth paragraphs of their report.
+Added: This judgment is based on the procedures described in the fourth and fifth paragraphs of their report.
Omnicom management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Securities Exchange Act Rule 13a-15(f).
15 unchanged sentences
Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
−Removed: Change in Accounting Principle
−Removed: As discussed in Note 16 to the consolidated financial statements, the Company has changed its method of accounting for leases effective January 1, 2019 due to the adoption of Accounting Standards Codification Topic 842, Leases .
Basis for Opinions
23 unchanged sentences
Evaluation of the sufficiency of audit evidence over revenue recognition
−Removed: As discussed in Note 3 to the consolidated financial statements, the Company provides an extensive range of advertising, marketing and corporate communication services through its branded networks and agencies, which operate in all major markets throughout the Americas, EMEA and Asia Pacific regions.
−Removed: Consolidated revenues across all disciplines and global economic markets was $13,171.1 million for the year-ended December 31, 2020.
+Added: As discussed in Note 3 to the consolidated financial statements, the Company provides an extensive range of advertising, marketing and corporate communication services through its networks and agencies, which operate in all major markets throughout the Americas, EMEA and Asia Pacific regions.
+Added: Consolidated revenues across all disciplines and geographic markets was $14,289.4 million for the year-ended December 31, 2021.
We identified the evaluation of the sufficiency of audit evidence over revenue recognition as a critical audit matter.
Revenue is recognized from contracts with customers that are based on statements of work which are typically separately negotiated with the client at a local agency level and local agencies execute tens of thousands of contracts per year.
−Removed: Evaluating the sufficiency of audit evidence obtained required a high degree of auditor judgment because of the volume of contracts entered into across the branded networks and agencies for which revenue was recorded.
+Added: Evaluating the sufficiency of audit evidence obtained required a high degree of auditor judgment because of the volume of contracts entered into across the networks and agencies for which revenue was recorded.
This included selecting the locations where testing would be performed and the supervision and review of procedures performed at those locations.
12 unchanged sentences
Cash and cash equivalents $ 5,316.8 $ 5,600.5
−Removed: Short-term investments, at cost — 3.6
Accounts receivable, net of allowance for doubtful accounts of $ 21.7 and $ 30.4
14 unchanged sentences
Customer advances 1,644.5 1,361.3
−Removed: Current portion of debt — 602.4
Short-term debt 9.6 3.9
32 unchanged sentences
Occupancy and other costs 1,148.2 1,138.5 1,221.8
+Added: Gain on disposition of subsidiary ( 50.5 ) — —
COVID-19 repositioning costs — 277.9 —
−Removed: Net gain on disposition of subsidiaries — — ( 178.4 )
Cost of services 11,499.7 10,989.2 12,194.0
36 unchanged sentences
32.8 ( 11.1 ) ( 26.1 )
−Removed: Available-for-sale securities:
−Removed: Reclassification
Foreign currency translation adjustment
1 unchanged sentence
Other Comprehensive Income ( Loss) ( 55.4 ) ( 12.2 ) 52.7
−Removed: ( 12.2 ) 52.7 ( 295.7 )
Comprehensive Income
22 unchanged sentences
Beginning balance 8,190.6 7,806.3 7,016.1
−Removed: Cumulative effect of accounting changes — 22.3 23.6
+Added: Cumulative effect of accounting change — — 22.3
Net income 1,407.8 945.4 1,339.1
4 unchanged sentences
Beginning balance ( 1,213.8 ) ( 1,197.6 ) ( 1,228.5 )
−Removed: Cumulative effect of accounting changes — ( 22.3 ) —
+Added: Cumulative effect of accounting change — — ( 22.3 )
Other comprehensive income (loss) ( 38.5 ) ( 16.2 ) 53.2
8 unchanged sentences
Beginning balance 492.5 519.8 559.8
−Removed: Cumulative effect of accounting changes — — 0.4
Net income 99.8 75.4 96.8
20 unchanged sentences
Share-based compensation 84.7 70.8 72.5
+Added: Gain on disposition of subsidiary ( 50.5 ) — —
COVID-19 repositioning costs — 277.9 —
−Removed: Net gain from disposition of subsidiaries — — ( 178.4 )
−Removed: Impact of Tax Act — — 28.9
Other, net 39.8 109.7 5.8
36 unchanged sentences
Actual results could differ from those estimates and assumptions.
−Removed: Risks and Uncertainties
Impact of the COVID-19 Pandemic on our Business
−Removed: In 2020, the COVID-19 pandemic negatively impacted our business and results of operations.
−Removed: Efforts to mitigate the impact of the pandemic, including government actions to restrict travel, limit public gatherings, shelter-in-place orders and mandatory closures of businesses, resulted in many of our clients reducing or suspending their spending for our advertising, marketing and corporate communication services.
−Removed: As a result, for the year ended December 31, 2020, revenue decreased $1,782.6 million, or 11.9%, compared to 2019, primarily due to the impact of the COVID-19 pandemic.
−Removed: The impact of the COVID-19 pandemic on our revenue has been, and may continue to be, material, depending on several factors, including the potential for prolonged or additional governmental actions to mitigate the effects of the pandemic in the near-term, and the intermediate and long-term impact on marketers' spending plans.
−Removed: In response to the impact of the COVID-19 pandemic, in the second quarter of 2020, we took actions to align our cost structure and reduce our workforce and facility requirements and continued the review of businesses for disposal and assets for impairment.
−Removed: As a result, we recorded a pre-tax charge of $ 277.9 million, which is comprised of incremental severance of $ 150.0 million, real estate operating lease right-of-use, or ROU, asset and other asset impairment charges of $ 55.8 million, other exit costs of $ 47.0 million and dispositions and other charges of $ 25.1 million.
−Removed: In addition, during 2020 we reduced salary and service costs by $ 162.6 million related to reimbursements and tax credits under government programs in several countries, including the Coronavirus Aid, Relief, and Economic Security Act, or the CARES Act, in the United States, the Kurzarbeit program in Germany, and other government reimbursement programs in the U.K., France, Canada and other jurisdictions.
−Removed: The COVID-19 pandemic negatively impacted most of our clients' businesses.
−Removed: As a result, clients have cut costs, including postponing or reducing marketing communication expenditures.
−Removed: While certain industries such as healthcare and pharmaceuticals, technology and telecommunications, financial services and consumer products have been less affected, as long as the COVID-19 pandemic remains a threat, global economic conditions continue to be volatile and such uncertainty cuts across all clients, industries and geographies.
−Removed: Overall, while we have a diversified portfolio of service offerings, clients and geographies, demand for our services can be expected to continue to be adversely affected as marketers reduce expenditures in the short term due to the uncertain impact of the pandemic on the global economy.
−Removed: We expect global economic performance and our performance to vary by geography until the impact of the COVID-19 pandemic on the global economy moderates.
−Removed: Although we have experienced a decrease in our cash flow from operating activities, we took numerous proactive steps to strengthen our liquidity and financial position that are intended to mitigate the potential impact of the COVID-19 pandemic on our liquidity.
−Removed: In February 2020, we issued $ 600 million 2.45 % Senior Notes due April 30, 2030 , or the 2.45% Notes.
−Removed: In March 2020, the net proceeds from the issuance of the 2.45% Notes were used to redeem the remaining $ 600 million principal amount of our 4.45 % Senior Notes due August 15, 2020, or the 2020 Notes.
−Removed: As a result, we have no notes maturing until May 2022.
−Removed: In April 2020, we issued $ 600 million of 4.20 % Senior Notes due June 1, 2030, or the 4.20% Notes, and we entered into a new $ 400 million 364 day revolving credit facility, or the 364 Day Credit Facility.
−Removed: The 364 Day Credit Facility is in addition to our existing $ 2.5 billion multi-currency revolving credit facility, or Credit Facility, which we extended to mature in February 2025.
−Removed: In addition, in March 2020, we suspended our share repurchase activity.
−Removed: The impact on the global economy and resulting decline in the price of our common stock was determined to be a trigger event in the first quarter of 2020 that required us to perform a review of our long-lived assets for impairment, primarily related to goodwill, amortizable intangible assets and equity method investments.
−Removed: We updated our review in June 2020, and the result of the review of intangible assets and goodwill is discussed in Note 5.
−Removed: In the second quarter of 2020, we disposed of one of our equity method investments and recognized a non-cash after-tax charge of $ 3.9 million.
−Removed: In the fourth quarter of 2020 we recorded asset impairment charges of $ 55.8 million associated with underperforming assets, which is included in salary and service costs.
−Removed: OMNICOM GROUP INC.
−Removed: AND SUBSIDIARIES
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: The impact of these actions on operating profit and income (loss) from equity method investments was (in millions):
−Removed: Increase (Decrease)
−Removed: Operating Profit Income (Loss) from Equity Method Investments
−Removed: COVID-19 repositioning costs $ ( 277.9 )
−Removed: Impairment charges - underperforming assets ( 55.8 )
−Removed: Impairment charge - equity method investment $ ( 3.9 )
−Removed: Reimbursements and tax credits under government programs 162.6
−Removed: $ ( 171.1 ) $ ( 3.9 )
+Added: As the impact of the COVID-19 pandemic on the global economy moderated, we experienced an improvement in our business in 2021 as compared to 2020.
+Added: In 2021, revenue increased $1,118.3 million, or 8.5%, compared to 2020.
+Added: The increase in revenue primarily reflects increased client spending in all our disciplines and across all our geographic areas compared to the prior year period and the strengthening of most foreign currencies, primarily the British Pound and the Euro, against the U.S.
+Added: The increase in revenue year-over-year was partially offset by a reduction in acquisition revenue, net of disposition revenue, reflecting the sale of our wholly owned subsidiary ICON International, or ICON, a specialty media business, in the second quarter of 2021.
+Added: Global economic conditions may continue to be volatile as long as the COVID-19 pandemic remains a public health threat, which could negatively impact our clients’ spending plans.
+Added: We expect global economic performance and the performance of our businesses to vary by geography and discipline until the impact of the COVID-19 pandemic on the global economy subsides.
+Added: In response to the impact of the COVID-19 pandemic, in the second quarter of 2020, we took actions to align our cost structure and reduce our workforce and facility requirements.
+Added: As a result, we recorded a pre-tax charge of $ 277.9 million, which was partially offset by the benefit related to pandemic relief reimbursements of $ 162.6 million under government programs in several countries.
Accounting Changes
−Removed: Adoption of ASU 2016-13
−Removed: On January 1, 2020, we adopted ASU 2016-13, Financial Instruments - Credit Losses:
−Removed: Measurement of Credit Losses on Financial Instruments , or ASU 2016-13, which changes the impairment model for most financial assets, including accounts receivable.
−Removed: The new model uses a forward-looking expected loss method.
−Removed: Historically, the credit loss experience on our client billings has not resulted in material bad debt expense.
−Removed: Accordingly, the adoption of ASU 2016-13 did not have a significant impact on our financial position, or on our results of operations.
−Removed: As a result of the adoption of ASU 2016-13, we changed our accounting policy for allowance for doubtful accounts as follows:
−Removed: We maintain an allowance for doubtful accounts related to potential losses that could arise due to our customers' inability to make required payments.
−Removed: This allowance requires management to apply judgment in deriving the estimated reserve.
−Removed: In connection with the estimate of our allowance, we perform ongoing credit evaluations of our customers’ financial condition, including information related to their credit ratings obtained from independent third-party firms.
−Removed: If, as a result, we become aware that additional reserves may be necessary, we perform additional analysis including, but not limited to, factors such as a customer’s creditworthiness, intent and ability to pay and overall financial position.
−Removed: If the data we use to calculate the allowance for doubtful accounts does not timely reflect the future ability to collect outstanding receivables, including the effects of the COVID-19 pandemic on our clients' credit, additional provisions for doubtful accounts may be needed and our results of operations could be affected.
−Removed: For 2020, we recorded bad debt expense of $ 23.5 million and increased our allowance for doubtful accounts to $ 30.4 million.
−Removed: Adoption of ASU 2018-15
−Removed: On January 1, 2020, we adopted ASU 2018-15, Intangibles - Goodwill and Other, Internal-Use Software , or ASU 2018-15, which aligns the accounting for implementation costs incurred in a cloud computing arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software.
−Removed: We adopted ASU 2018-15 on a prospective basis for implementation costs for new or existing arrangements incurred on or after the adoption date.
−Removed: The adoption of ASU 2018-15 did not have a significant impact on our results of operations or financial position.
+Added: On January 1, 2021, we adopted FASB ASU 2019-12, Income Taxes (Topic 740), or ASU 2019-12, which, among other things, amended the rules for recognizing deferred taxes for investments, performing intra-period tax allocations and calculating income taxes in interim periods and reduced complexity in certain areas, including the accounting for transactions that result in a step-up in the tax basis of goodwill and allocating taxes to members of a consolidated group.
+Added: The adoption of ASU 2019-12 did not have a material effect on our results of operations and financial position.
Significant Accounting Policies
4 unchanged sentences
Our revenue is primarily derived from the planning and execution of advertising communications and marketing services in the following fundamental disciplines:
−Removed: advertising, which includes creative advertising services and strategic media planning and buying services, customer relationship management or CRM, which includes CRM Consumer Experience and CRM Execution & Support, public relations and healthcare advertising.
+Added: Advertising, Precision Marketing, Commerce & Brand Consulting, Experiential, Execution & Support, Public Relations and Healthcare.
Our client contracts are primarily fees for service on a rate per hour or per project basis.
10 unchanged sentences
Substantially all our client contracts provide that we are compensated for services performed to date and allow for cancellation by either party on short notice, typically 90 days, without penalty.
+Added: Generally, our short-term contracts, which normally take 30 to 90 days to complete, are performed by a single agency and consist of a single performance obligation.
+Added: As a result, we do not consider the underlying services as separate or distinct performance obligations because our services are highly interrelated, occur in close proximity, and the integration of the various components of a marketing message is essential to overall service.
+Added: In certain of our long-term client contracts, which have a term
OMNICOM GROUP INC.
1 unchanged sentence
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: Generally, our short-term contracts, which normally take 30 to 90 days to complete, are performed by a single agency and consist of a single performance obligation.
−Removed: As a result, we do not consider the underlying services as separate or distinct performance obligations because our services are highly interrelated, occur in close proximity, and the integration of the various components of a marketing message is essential to overall service.
−Removed: In certain of our long-term client contracts, which have a term of up to one year, the performance obligation is a stand-ready obligation, because we provide a constant level of similar services over the term of the contract.
+Added: of up to one year, the performance obligation is a stand-ready obligation, because we provide a constant level of similar services over the term of the contract.
In other long-term contracts, when our services are not a stand-ready obligation, we consider our services distinct performance obligations and allocate the transaction price to each separate performance obligation based on its stand-alone selling price, including contracts for strategic media planning and buying services, which are considered to be multiple performance obligations, and we allocate the transaction price to each distinct service based on the staffing plan and the stand-alone selling price.
17 unchanged sentences
However, the inclusion of billings related to third-party direct costs in revenue depends on whether we act as a principal or as an agent in the client arrangement.
−Removed: In most of our businesses, including advertising, which also includes studio production efforts and media planning and buying services, public relations, healthcare advertising and most of our CRM Consumer Experience businesses, we act as an agent and arrange, at the client's direction, for third parties to perform certain services.
+Added: In most of our businesses, including advertising, which also includes studio production efforts and media planning and buying services, public relations, healthcare advertising and most of our Experiential businesses, we act as an agent and arrange, at the client’s direction, for third parties to perform certain services.
In these cases, we do not control the goods or services prior to the transfer to the client.
1 unchanged sentence
In certain businesses we may act as principal when contracting for third-party services on behalf of our clients.
−Removed: In our events business and most of our CRM Execution & Support businesses, including field marketing and certain specialty marketing businesses, we act as principal because we control the specified goods or services before they are transferred to the client and we are responsible for providing the specified goods or services, or we are responsible for directing and integrating third-party vendors to fulfill our performance obligation at the agreed upon contractual price.
+Added: In our events business and most of our Execution & Support businesses, including field marketing and certain specialty marketing businesses, we act as principal because we control the specified goods or services before they are transferred to the client and we are responsible for providing the specified goods or services, or we are responsible for directing and integrating third-party vendors to fulfill our performance obligation at the agreed upon contractual price.
In such arrangements, we also take pricing risk under the terms of the client contract.
3 unchanged sentences
However, in media buying contracts where we act as principal, we recognize revenue at a point in time, typically when the media is run, including when it is not subject to cancellation by the client or media vendor.
−Removed: OMNICOM GROUP INC.
−Removed: AND SUBSIDIARIES
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Variable Consideration.
3 unchanged sentences
Performance incentives are typically recognized in revenue over time.
−Removed: Variable consideration for our media businesses in certain international markets includes rebate revenue and is recognized when it is probable that the media will be run, including when it is not subject to cancellation by the client.
+Added: Variable consideration for our
+Added: OMNICOM GROUP INC.
+Added: AND SUBSIDIARIES
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: media businesses in certain international markets includes rebate revenue and is recognized when it is probable that the media will be run, including when it is not subject to cancellation by the client.
In addition, when we receive rebates or credits from vendors for transactions entered into on behalf of clients, they are remitted to the clients in accordance with contractual requirements or retained by us based on the terms of the client contract or local law.
5 unchanged sentences
As a service business, salary and service costs make up the vast majority of our operating expenses and substantially all these costs comprise the essential components directly linked to the delivery of our services.
−Removed: Salary and service costs include employee compensation and benefits, freelance labor and direct service costs, which include third-party supplier costs and client-related travel costs.
−Removed: Occupancy and other costs consist of the indirect costs related to the delivery of our services, including office rent and other occupancy costs, equipment rent, technology costs, general office expenses and other expenses.
+Added: Salary and service costs include employee compensation and benefits, freelance labor and service costs, which primarily include third-party supplier costs and out-of-pocket costs.
+Added: Occupancy and other costs consist of the indirect costs related to the delivery of our services, including office rent and other occupancy costs, equipment rent, technology costs, general office and other expenses.
SG&A expenses primarily consist of third-party marketing costs, professional fees and compensation and benefits and occupancy and other costs of our corporate and executive offices, which includes group-wide finance and accounting, treasury, legal and governance, human resource oversight and similar costs.
+Added: Receipt of reimbursements under government programs for certain operating expenses are recorded as a reduction to the related operating expense.
Cash and Cash Equivalents.
2 unchanged sentences
We have a policy governing counterparty credit risk for financial institutions that hold our cash and cash equivalents and we have deposit limits for each institution.
−Removed: Short-Term Investments.
−Removed: Short-term investments include interest-bearing time deposits with maturities of less than twelve months.
−Removed: Short-term investments are carried at cost, which approximates fair value.
Work in Process.
3 unchanged sentences
Property and Equipment.
−Removed: Property and equipment are carried at cost and are depreciated over the estimated useful lives of the assets using the straight-line method.
−Removed: The estimated useful lives range from seven to ten years for furniture and three to five years for equipment.
+Added: Property and equipment are carried at cost and are depreciated over the estimated useful lives of the assets using the straight-line method ranging from:
+Added: three to five years for equipment, seven to ten years for furniture, and up to 40 years for office buildings.
Leasehold improvements are amortized on a straight-line basis over the shorter of the lease term or the estimated useful life of the asset.
13 unchanged sentences
Non-marketable equity securities do not have a readily determinable fair value and are measured at cost, less any impairment, and are adjusted for observable changes in fair value from transactions for identical or similar securities of the same issuer.
−Removed: Goodwill and Intangible Assets.
−Removed: Goodwill represents the excess of the acquisition cost over the fair value of the net assets acquired.
−Removed: Goodwill is not amortized but is periodically reviewed for impairment.
−Removed: Intangible assets comprise customer relationships, including the related customer contracts and trade names, and purchased and internally developed software and are
+Added: Business Combin a tions.
+Added: Business combinations are accounted for using the acquisition method, and accordingly, the assets acquired, including identified intangible assets, liabilities assumed and any noncontrolling interest in the acquired business are recorded at acquisition date fair value.
+Added: In circumstances where control is obtained and less than 100% of a business is acquired, goodwill is recorded as if 100% were acquired.
+Added: Acquisition-related costs, including advisory, legal, accounting, valuation and other costs are expensed as incurred.
+Added: Certain acquisitions include an initial payment at closing and provide for future additional contingent purchase price payments (earn-outs), which are recorded as a liability at the acquisition date fair value using the discount rate in effect on the acquisition date.
+Added: Subsequent changes in the fair value of the liability are recorded in results of operations.
+Added: Amounts earned under the contingent purchase price arrangements may be subject to a maximum and payment is not contingent upon future employment.
+Added: The results of operations of acquired businesses are included in results of operations from the acquisition date.
OMNICOM GROUP INC.
1 unchanged sentence
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: amortized over their estimated useful lives ranging from five to twelve years .
+Added: Goodwill and Intangible Assets.
+Added: Goodwill represents the excess of the acquisition cost over the fair value of the net assets acquired.
+Added: Goodwill is not amortized but is periodically reviewed for impairment.
+Added: Intangible assets comprise customer relationships, including the related customer contracts and trade names, and purchased and internally developed software and are amortized over their estimated useful lives ranging from five to twelve years .
We consider a number of factors in determining the useful lives and amortization method, including the pattern in which the economic benefits are consumed, as well as trade name recognition and customer attrition.
1 unchanged sentence
We review the carrying value of goodwill for impairment annually at June 30 and whenever events or circumstances indicate the carrying value may not be recoverable.
−Removed: The impairment evaluation compares the fair value of each reporting unit, which we identified as our five agency networks, to its carrying value, including goodwill.
+Added: The impairment evaluation compares the fair value of each reporting unit, which we identified as our six agency networks, to its carrying value, including goodwill.
If the fair value of the reporting unit is equal to or greater than its carrying value, goodwill is not impaired.
1 unchanged sentence
Goodwill is written down to its fair value through a non-cash expense recorded in results of operations in the period the impairment is identified.
−Removed: We identified our regional reporting units as components of our operating segments, which are our five agency networks.
+Added: We identified our regional reporting units as components of our operating segments, which are our six agency networks.
The regional reporting units and practice areas of each agency network monitor the performance and are responsible for the agencies in their region.
19 unchanged sentences
Gains or losses on reissued treasury stock arising from the difference between the average cost and the fair value of the award are recorded in additional paid-in capital and do not affect results of operations.
−Removed: Business Combin a tions.
−Removed: Business combinations are accounted for using the acquisition method and accordingly, the assets acquired, including identified intangible assets, liabilities assumed and any noncontrolling interest in the acquired business are recorded at acquisition date fair value.
−Removed: In circumstances where control is obtained and less than 100% of a business is acquired, goodwill is recorded as if 100% were acquired.
−Removed: Acquisition-related costs, including advisory, legal, accounting, valuation and other costs are expensed as incurred.
−Removed: Certain acquisitions include an initial payment at closing and provide for future additional contingent purchase price payments (earn-outs), which are recorded as a liability at the acquisition date fair value using the discount rate in effect on the acquisition date.
−Removed: Subsequent changes in the fair value of the liability are recorded in results of operations.
−Removed: Amounts earned under the contingent purchase price arrangements may be subject to a maximum and payment is not contingent upon future employment.
−Removed: The results of operations of acquired businesses are included in results of operations from the acquisition date.
Noncontrolling Interests.
3 unchanged sentences
Gains and losses resulting from a loss of control are recorded in results of operations.
−Removed: OMNICOM GROUP INC.
−Removed: AND SUBSIDIARIES
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Foreign Currency Translation and Transactions.
4 unchanged sentences
Net foreign currency transaction gains and losses are recorded in results of operations.
−Removed: In 2020 and 2019, we recorded losses of $ 4.8 million and $ 11.2 million, respectively, and in 2018, we recorded gains of $ 2.1 million.
+Added: In 2021, 2020 and 2019, we recorded losses of $ 3.3 million, $ 4.8 million and $ 11.2 million, respectively.
+Added: OMNICOM GROUP INC.
+Added: AND SUBSIDIARIES
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Share-Based Compensation.
14 unchanged sentences
Funded status is the difference between the fair value of plan assets and the benefit obligation at December 31, the measurement date, determined on a plan-by-plan basis.
−Removed: The benefit obligation for the defined benefit plans is the projected benefit obligation (“PBO”), which represents the actuarial present value of benefits expected to be paid upon retirement based on estimated future compensation levels.
+Added: The benefit obligation for the defined benefit plans is the projected benefit obligation, or PBO, which represents the actuarial present value of benefits expected to be paid upon retirement based on estimated future compensation levels.
The fair value of plan assets represents the current market value.
19 unchanged sentences
Diluted net income per share is based on the weighted average number of common shares outstanding, plus the dilutive effect of common share equivalents, which include outstanding stock options and restricted stock awards.
−Removed: At the inception of a contract we assess whether the contract is, or contains, a lease.
−Removed: A lease is classified as a finance lease if any one of the following criteria are met:
−Removed: the lease transfers ownership of the asset by the end of the lease term, the lease
OMNICOM GROUP INC.
1 unchanged sentence
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: contains an option to purchase the asset that is reasonably certain to be exercised, the lease term is for a major part of the remaining useful life of the asset or the present value of the lease payments equals or exceeds substantially all of the fair value of the asset.
+Added: At the inception of a contract we assess whether the contract is, or contains, a lease.
+Added: A lease is classified as a finance lease if any one of the following criteria are met:
+Added: the lease transfers ownership of the asset by the end of the lease term, the lease contains an option to purchase the asset that is reasonably certain to be exercised, the lease term is for a major part of the remaining useful life of the asset or the present value of the lease payments equals or exceeds substantially all of the fair value of the asset.
A lease is classified as an operating lease if it does not meet any one of the criteria.
Substantially all our operating leases are leases for office space, and substantially all our finance leases are leases for office furniture and technology equipment.
−Removed: For all leases a ROU asset and lease liability are recognized at the lease commencement date.
+Added: For all leases a right-of-use, or ROU, asset and lease liability are recognized at the lease commencement date.
The lease liability represents the present value of the lease payments under the lease.
37 unchanged sentences
• Level 3 - Unobservable inputs for the asset or liability.
−Removed: We use unadjusted quoted market prices to determine the fair value of our financial assets and liabilities and classify such items in Level 1.
−Removed: We use unadjusted quoted market prices for similar assets and liabilities in active markets and model-derived valuations and classify such items in Level 2.
OMNICOM GROUP INC.
1 unchanged sentence
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: We use unadjusted quoted market prices to determine the fair value of our financial assets and liabilities and classify such items in Level 1.
+Added: We use unadjusted quoted market prices for similar assets and liabilities in active markets and model-derived valuations and classify such items in Level 2.
In determining the fair value of financial assets and liabilities, we consider certain market valuation adjustments that market participants would consider in determining fair value, including:
4 unchanged sentences
We provide an extensive range of advertising, marketing and corporate communications services through various client-centric networks that are organized to meet specific client objectives.
−Removed: Our branded networks and agencies operate in all major markets and provide services in the following fundamental disciplines:
−Removed: advertising, customer relationship management, or CRM, which includes CRM Consumer Experience and CRM Execution & Support, public relations and healthcare.
−Removed: Advertising includes creative services, as well as strategic media planning and buying and data analytics services.
−Removed: CRM Consumer Experience includes Omnicom’s Precision Marketing Group and digital/direct agencies, as well as our brand consulting, shopper marketing and experiential marketing agencies.
−Removed: CRM Execution & Support includes field marketing, sales support, merchandising and point of sale, as well as other specialized marketing and custom communications services.
+Added: Our networks and agencies provide a comprehensive range of services in the following fundamental disciplines:
+Added: Advertising, Precision Marketing, Commerce & Brand Consulting, Experiential, Execution & Support, Public Relations and Healthcare.
+Added: Advertising includes creative services across digital and traditional media, strategic media planning and buying, and data analytics services.
+Added: Precision Marketing includes digital and direct marketing, digital transformation and data and analytics.
+Added: Commerce & Brand Consulting services include brand consulting, strategy and research, and retail ecommerce.
+Added: Experiential marketing services include live and digital events and experience design and execution.
+Added: Execution & Support includes field marketing, sales support, digital and physical merchandising and point-of-sale, as well as other specialized marketing and custom communications services.
Public relations services include corporate communications, crisis management, public affairs, and media and media relations services.
−Removed: Healthcare includes advertising and media services to global healthcare clients.
+Added: Healthcare includes advertising and media services to global healthcare and pharmaceutical clients.
At the core of all our services is the ability to create or develop a client’s marketing or corporate communications message into content that can be delivered to a target audience across different communications mediums.
−Removed: Primarily as a result of the COVID-19 pandemic (see Note 1), our revenue decreased in all our major markets and all disciplines except for healthcare, as compared to the prior year periods.
Revenue by discipline was (in millions):
2 unchanged sentences
Advertising $ 7,959.3 $ 7,511.4 $ 8,664.2
−Removed: CRM Consumer Experience 2,175.7 2,577.9 2,629.6
−Removed: CRM Execution & Support 1,133.5 1,361.2 1,891.6
+Added: Precision Marketing 1,194.8 944.6 927.2
+Added: Commerce & Brand Consulting 910.7 821.8 971.8
+Added: Experiential 545.9 426.8 670.0
+Added: Execution & Support 1,026.6 961.3 1,177.2
Public Relations 1,391.7 1,310.9 1,386.7
1 unchanged sentence
$ 14,289.4 $ 13,171.1 $ 14,953.7
+Added: Primarily as a result of the COVID-19 pandemic, revenue for 2020 as compared to 2019 decreased in all our major markets and all disciplines except for Healthcare and Precision Marketing.
Economic factors affecting our revenue
Global economic conditions have a direct impact on our revenue.
−Removed: Adverse economic conditions pose a risk that our clients may reduce, postpone or cancel spending for our services, which would impact our revenue (see Note 1).
−Removed: Revenue in our principal geographic markets was (in millions):
+Added: Adverse economic conditions pose a risk that our clients may reduce, postpone or cancel spending for our services, which would impact our revenue.
+Added: OMNICOM GROUP INC.
+Added: AND SUBSIDIARIES
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: Revenue in our geographic markets was (in millions):
Year Ended December 31,
10 unchanged sentences
Revenue in the United States in 2021 and 2020 was $ 7,245.9 million and $ 7,186.1 million, respectively.
−Removed: OMNICOM GROUP INC.
−Removed: AND SUBSIDIARIES
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: The sale of ICON impacted revenue in the United States in 2021.
Contract assets and liabilities
13 unchanged sentences
The contract liability primarily represents advance billings to customers in accordance with the terms of the client contracts, primarily for the reimbursement of third-party costs that are generally incurred in the near term.
−Removed: No impairment losses to the contract assets were recorded in 2020 and 2019.
+Added: There were no impairment losses to the contract assets recorded in 2021 or 2020.
Net Income per Share
13 unchanged sentences
Diluted $ 6.53 $ 4.37 $ 6.06
+Added: OMNICOM GROUP INC.
+Added: AND SUBSIDIARIES
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Business Combinations
−Removed: Acquisitions completed in 2020 increased goodwill $ 82.4 million.
+Added: In 2021, we completed five acquisitions that increased goodwill by $ 285.9 million.
In addition, during 2021, we acquired additional equity interests in certain majority owned subsidiaries, which are accounted for as equity transactions, and no additional goodwill was recorded.
7 unchanged sentences
This approach includes consideration of similar and recent transactions, as well as utilizing discounted expected cash flow methodologies, and when available and as appropriate, we use comparative market multiples to supplement our analysis.
−Removed: As is typical for most service businesses, a substantial portion of the intangible asset value we acquire is the specialized know-how of the workforce, which is treated as part
−Removed: OMNICOM GROUP INC.
−Removed: AND SUBSIDIARIES
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: of goodwill and is not valued separately.
+Added: As is typical for most service businesses, a substantial portion of the intangible asset value we acquire is the specialized know-how of the workforce, which is treated as part of goodwill and is not valued separately.
A significant portion of the identifiable intangible assets acquired is derived from customer relationships, including the related customer contracts, as well as trade names.
18 unchanged sentences
December 31 $ 9,738.6 $ 9,609.7
−Removed: The decline in our stock price at the onset of the COVID-19 pandemic in March 2020 was determined to be a trigger event requiring us to perform an impairment review of our goodwill.
−Removed: We concluded our goodwill was not impaired.
−Removed: At June 30, 2020, we updated our first quarter 2020 assessment and performed our annual goodwill impairment test.
−Removed: Our assumptions reflect the economic conditions in light of the impact of the COVID-19 pandemic on our business, including downward adjustment to our revenue and earnings assumptions, reducing our long-term growth rate to 3.0%, compared to 3.5% in the prior year, increasing the weighted average cost of capital, or WACC, for each reporting unit to between 10.6% and 10.8%, compared to between 10.1% and 10.6% in the prior year, and limiting our estimate of our equity value to reflect the decline in our share price that occurred during the first half of 2020.
−Removed: In addition, the assumptions reflect the expected cost reductions from our severance and real estate repositioning actions (see Notes 1 and 13).
−Removed: Based on the results of the impairment test, we concluded that at June 30, 2020 our goodwill was not impaired because the fair value of each of our reporting units was significantly in excess of its respective carrying value, and for our reporting units with negative book value, we concluded that the fair value of their total assets was in excess of book value.
−Removed: We performed a sensitivity analysis of our assumptions, including a 1 percent change to our WACC or long-term growth assumptions.
−Removed: The results of the sensitivity analysis confirmed our conclusion that goodwill at June 30, 2020 was not impaired.
−Removed: If economic conditions further deteriorate from June 30, 2020, including further declines in GDP estimates, our share price, increased interest rates or other factors, our goodwill could become impaired, and we could incur a non-cash charge against our earnings.
−Removed: The minimum decline in fair value that one of our reporting units would need to experience in order to fail the goodwill impairment test was approximately 20%.
−Removed: In addition, we evaluated our customer related and other intangible assets for impairment.
−Removed: We compared the carrying value of these assets against the undiscounted cash flows expected to be generated from the assets, and we concluded that at June 30, 2020, our customer related and other intangible assets were not impaired.
−Removed: There were no events through December 31, 2020 that would change our assumptions and resulting impairment assessments.
No goodwill impairment losses were recorded in 2021 or 2020, and there are no accumulated goodwill impairment losses.
2 unchanged sentences
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: Credit Facilities
−Removed: On February 14, 2020, we amended our $ 2.5 billion Credit Facility to extend its term to February 14, 2025 .
−Removed: To strengthen our liquidity position to mitigate the impact of the COVID-19 pandemic (see Note 1), on April 3, 2020, we entered into the $ 400 million 364 Day Credit Facility, maturing on April 2, 2021 .
−Removed: We have uncommitted credit lines aggregating $ 1.1 billion and the ability to issue up to $ 2 billion of commercial paper.
+Added: Credit Facility and Credit Lines
+Added: We maintain a $ 2.5 billion multi-currency revolving credit facility, or Credit Facility, that matures on February 14, 2025 .
+Added: In addition, we have uncommitted credit lines aggregating $ 863.9 million and the ability to issue up to $ 2 billion of commercial paper.
These facilities provide additional liquidity sources for operating capital and general corporate purposes.
−Removed: At December 31, 2020, there were no outstanding commercial paper issuances or borrowings under the Credit Facility, the 364 Day Credit Facility or the uncommitted credit lines.
−Removed: The Credit Facility and the 364 Day Credit Facility each contain a financial covenant that requires us to maintain a Leverage Ratio of consolidated indebtedness to consolidated EBITDA (earnings before interest, taxes, depreciation, amortization and non-cash charges) of no more than 3.5 times for the most recently ended 12-month period.
−Removed: On October 26, 2020, we amended the Credit Facility and the 364 Day Credit Facility to provide additional flexibility with respect to the Leverage Ratio covenant.
−Removed: The amendments increase the maximum Leverage Ratio to 4.0 times through December 31, 2021 for the Credit Agreement and to 4.0 times through the maturity for the 364 Day Credit Facility.
−Removed: At December 31, 2020, we were in compliance with these covenants as our Leverage Ratio was 3.0 times.
−Removed: The Credit Facility and the 364 Day Credit Facility do not limit our ability to declare or pay dividends or repurchase our common stock.
+Added: At December 31, 2021, there were no borrowings under the Credit Facility or the uncommitted credit lines, and there were no outstanding commercial paper issuances.
+Added: The Credit Facility contains a financial covenant that requires us to maintain a Leverage Ratio of consolidated indebtedness to consolidated EBITDA (earnings before interest, taxes, depreciation, amortization and non-cash charges) of no more than 3.5 times for the most recently ended 12-month period.
+Added: In October 2020, we amended the Credit Facility to increase the maximum Leverage Ratio to 4.0 times through December 31, 2021.
+Added: At December 31, 2021, we were in compliance with this covenant as our Leverage Ratio was 2.3 times.
+Added: The Credit Facility does not limit our ability to declare or pay dividends or repurchase our common stock.
Short-Term Debt
5 unchanged sentences
3.625 % Senior Notes due 2022
−Removed: 3.625 % Senior Notes due 2022
$ — $ 1,250.0
6 unchanged sentences
€ 500 Million 1.40 % Senior Notes due 2031
+Added: 2.60 % Senior Notes due 2031
+Added: £ 325 Million 2.25 % Senior Notes due 2033
5,727.0 5,823.0
−Removed: Unamortized premium (discount), net ( 5.1 ) 0.8
+Added: Unamortized discount ( 10.8 ) ( 5.1 )
Unamortized debt issuance costs ( 31.8 ) ( 27.0 )
1 unchanged sentence
$ 5,685.7 $ 5,807.3
−Removed: Current portion — ( 602.4 )
−Removed: Long-term debt $ 5,807.3 $ 4,531.9
−Removed: On February 19, 2020, we issued $ 600 million of the 2.45 % Notes.
−Removed: The net proceeds from the issuance, after deducting the underwriting discount and offering expenses, were $ 592.6 million and were used to redeem the remaining $ 600 million principal amount of the 2020 Notes on March 23, 2020.
−Removed: In connection with the redemption of the 2020 Notes, we recorded a loss on extinguishment of $ 7.7 million in interest expense.
−Removed: Following the redemption, there were no 2020 Notes outstanding.
−Removed: Additionally, to strengthen our liquidity and financial position and to mitigate the potential impact of the COVID-19 pandemic, on April 1, 2020, we issued $ 600 million of the 4.20 % Notes.
−Removed: The net proceeds from the issuance, after deducting the underwriting discount and offering expenses, were $ 592.5 million and were used for general corporate purposes, which included working capital expenditures, fixed asset expenditures, acquisitions, repayment of commercial paper and short-term debt, refinancing of other debt, or other capital transactions.
−Removed: The 2.45% Notes and the 4.20% Notes are senior unsecured obligations of Omnicom that rank equal in right of payment with all existing and future unsecured senior indebtedness.
−Removed: OMNICOM GROUP INC.
−Removed: AND SUBSIDIARIES
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: Omnicom and its wholly owned finance subsidiary, Omnicom Capital Inc., or OCI, are co-obligors under the senior notes due 2022, 2024 and 2026.
+Added: On May 3, 2021, we issued $ 800 million 2.60 % Senior Notes due 2031.
+Added: The net proceeds from the issuance, after deducting the underwriting discount and offering expenses, were $ 791.7 million.
+Added: The net proceeds plus cash on hand were used to redeem all the outstanding 3.625% Senior Notes due 2022 in May 2021.
+Added: In connection with the early redemption, we recorded a loss on extinguishment of $ 26.6 million in interest expense.
+Added: On November 22, 2021, Omnicom Capital Holdings plc, or OCH, a U.K.-based wholly owned subsidiary of Omnicom, issued £ 325 million 2.25 % Senior Notes due 2033, or the Sterling Notes.
+Added: Dollar equivalent of the net proceeds from the issuance, after deducting the underwriting discount and offering expenses, was $ 429.6 million.
+Added: The 2.45 % Senior Notes due 2030, the 4.20 % Senior Notes due 2030 and the 2.60 % Senior Notes due 2031 are senior unsecured obligations of Omnicom that rank equal in right of payment with all existing and future unsecured senior indebtedness.
+Added: Omnicom and its wholly owned finance subsidiary, Omnicom Capital Inc., or OCI, are co-obligors under the 3.65 % Senior Notes due 2024 and the 3.60 % Senior Notes due 2026.
These notes are a joint and several liability of Omnicom and OCI, and Omnicom unconditionally guarantees OCI’s obligations with respect to the notes.
3 unchanged sentences
Such notes are senior unsecured obligations that rank equal in right of payment with all existing and future unsecured senior indebtedness.
−Removed: Omnicom and OCI have, jointly and severally, fully and unconditionally guaranteed the obligations of Omnicom Finance Holdings plc, or OFHP, a U.K.-based wholly owned subsidiary of Omnicom, with respect to the Euro denominated notes due 2027 and 2031.
−Removed: OFHP’s assets consist of its investments in several wholly owned finance companies that function as treasury centers, which provide funding for various operating companies in Europe, Brazil, Australia and other countries in the Asia-Pacific region.
+Added: OMNICOM GROUP INC.
+Added: AND SUBSIDIARIES
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: Omnicom and OCI have, jointly and severally, fully and unconditionally guaranteed the obligations of Omnicom Finance Holdings plc, or OFH, a U.K.-based wholly owned subsidiary of Omnicom, with respect to the € 500 million 0.80 % Senior Notes due 2027 and the € 500 million 1.40 % Senior Notes due 2031, collectively the Euro Notes.
+Added: OFH’s assets consist of its investments in several wholly owned finance companies that function as treasury centers, which provide funding for various operating companies in Europe, Brazil, Australia and other countries in the Asia-Pacific region.
The finance companies’ assets consist of cash and cash equivalents and intercompany loans that they make or have made to the operating companies in their respective regions and the related interest receivable.
−Removed: There are no restrictions on the ability of Omnicom, OCI or OFHP to obtain funds from their subsidiaries through dividends, loans or advances.
−Removed: The Euro denominated notes and the related guarantees are senior unsecured obligations that rank equal in right of payment with all existing and future unsecured senior indebtedness of OFHP and each of Omnicom and OCI, respectively.
+Added: There are no restrictions on the ability of Omnicom, OCI or OFH to obtain funds from their subsidiaries through dividends, loans or advances.
+Added: The Euro Notes and the related guarantees are senior unsecured obligations that rank equal in right of payment with all existing and future unsecured senior indebtedness of OFH and each of Omnicom and OCI, respectively.
+Added: Omnicom has fully and unconditionally guaranteed the obligations of OCH, with respect to the Sterling Notes.
+Added: OCH’s assets consist of its investments in several wholly owned finance companies that function as treasury centers, which provide funding for various operating companies in EMEA, Australia and other countries in the Asia-Pacific region.
+Added: The finance companies’ assets consist of cash and cash equivalents and intercompany loans that they make or have made to the operating companies in their respective regions and the related interest receivable.
+Added: There are no restrictions on the ability of Omnicom or OCH to obtain funds from their subsidiaries through dividends, loans or advances.
+Added: The Sterling Notes and the related guarantee are senior unsecured obligations that rank equal in right of payment with all existing and future unsecured senior indebtedness of OCH and Omnicom, respectively.
At December 31, 2021, the maturities of our long-term debt were (in millions):
Thereafter 3,577.0
−Removed: Total principal payments $ 5,823.0
Interest Expense
3 unchanged sentences
Long-term debt $ 167.3 $ 178.6 $ 185.7
−Removed: Commercial paper 0.9 6.5 9.6
−Removed: Interest rate swaps — 6.1 5.2
−Removed: Amortization of deferred gain on interest rate swaps ( 8.1 ) ( 14.8 ) ( 12.9 )
−Removed: Fees 6.5 4.7 5.6
+Added: Early redemption payments and other fees 43.4 14.1 14.1
Pension and other interest 35.3 38.0 53.2
+Added: Interest rate swaps ( 9.6 ) ( 8.9 ) ( 8.7 )
$ 236.4 $ 221.8 $ 244.3
Segment Reporting
−Removed: Our five branded agency networks operate in the advertising, marketing and corporate communications services industry, and are organized into agency networks, virtual client networks, regional reporting units and operating groups or practice areas.
+Added: Our branded agency networks operate in the advertising, marketing and corporate communications services industry, and are organized into agency networks, virtual client networks, regional reporting units and operating groups or practice areas.
Our networks, virtual client networks and agencies increasingly share clients and provide clients with integrated services.
The main economic components of each agency are employee compensation and related costs and direct service costs and occupancy and other costs which include rent and occupancy costs, technology costs and other overhead expenses.
−Removed: Therefore, given these similarities, we aggregate our operating segments, which are our five agency networks, into one reporting segment.
+Added: Therefore, given these similarities, we aggregate our operating segments, which are our agency networks, into one reporting segment.
+Added: In June 2021, we combined certain practice areas into a new reporting unit that primarily comprises the Omnicom Public Relations Group and assigned a segment manager to that reporting unit.
+Added: As a result, the number of operating segments increased from five to six.
The agency networks' regional reporting units comprise three principal regions:
21 unchanged sentences
therefore, summarized financial information is not required to be presented.
−Removed: In the second quarter 2020, we sold an equity method investment and recorded a loss of $ 3.9 million (see Note 1).
Share-Based Compensation Plans
−Removed: Share-based incentive awards are granted to employees under the 2013 Incentive Award Plan, or the 2013 Plan, which is administered by the Compensation Committee of the Board of Directors, or the Compensation Committee.
+Added: Share-based incentive awards are granted to employees under the 2021 Incentive Award Plan, or the 2021 Plan, which was approved by the shareholders in May 2021.
+Added: The 2021 Plan is administered by the Compensation Committee of the Board of Directors, or the Compensation Committee.
Awards include stock options, restricted stock and other stock awards.
The maximum number of shares of common stock that can be granted under the 2021 Plan is 14.7 million shares plus any shares awarded under the 2021 Plan and any prior plan that have been forfeited or have expired.
−Removed: Stock option awards reduce the number of shares available for grant on a one-for-one basis and all other awards reduce the number of shares available for grant by 3.5 shares for each share awarded.
+Added: All awards reduce the number of shares available for grant on a one-for-one basis.
The terms of each award and the exercise date are determined by the Compensation Committee.
1 unchanged sentence
At December 31, 2021, there were 10,157,026 shares available for grant under the 2021 Plan.
−Removed: If all shares available for grant were for awards other than stock options, shares available for grant would be 6,119,984 .
Share-based compensation expense in 2021, 2020 and 2019 was $ 84.7 million, $ 70.8 million and $ 72.5 million, respectively.
1 unchanged sentence
We record a deferred tax asset for the share-based compensation expense recognized for financial reporting purposes that has not been deducted on our income tax return.
−Removed: Any excess tax benefit or deficiency related to share-based compensation is recorded as compensation expense in results of operations upon vesting of restricted stock awards or exercise of stock options.
Excess tax benefits and deficiencies represent the difference between the actual compensation deduction for tax purposes, which is calculated as the difference between the grant date price of the award, and the price of our common stock on the vesting or exercise date.
−Removed: In 2020, we recognized a tax deficiency of $ 3.6 million, and in 2019, we recognized a tax benefit of $ 2.8 million.
+Added: Any excess tax benefit or deficiency related to share-based compensation is recorded in results of operations, as a component of income tax expense, upon vesting of restricted stock awards or exercise of stock options.
+Added: In 2021, we recognized a tax benefit of $ 2.9 million, and in 2020, we recognized a tax deficiency of $ 3.6 million.
Stock Options
7 unchanged sentences
January 1 768,750 $ 83.65 866,000 $ 83.80 988,050 $ 80.37
+Added: Granted 4,025,000 $ 72.47 — — — —
Exercised ( 60,000 ) $ 60.17 — — ( 57,300 ) $ 23.40
15 unchanged sentences
4,689,250 689,250
+Added: The 2021 option award grant date fair value of $ 8.47 was determined using the Black-Scholes option valuation model.
+Added: The assumptions used, without adjusting for forfeitures and lack of liquidity were:
+Added: expected life of 8 years, risk free interest rate of 1.4 %, expected volatility of 23 %, and dividend yield of 4.6 %.
+Added: On the grant date, the exercise price of the award was greater than the closing price of our common stock.
Restricted Stock
59 unchanged sentences
federal income tax rate to our effective tax rate is:
+Added: Year Ended December 31,
2021 2020 2019
3 unchanged sentences
federal income tax benefit 0.2 2.2 0.5
−Removed: Effect of Tax Act — — 1.5
Impact of foreign operations 3.6 3.4 4.5
1 unchanged sentence
Effective tax rate 24.6 % 27.1 % 26.0 %
−Removed: Our effective tax rate for 2020 increased year-over-year to 27.1% from 26.0%.
−Removed: The non-deductibility in certain jurisdictions of a portion of the COVID-19 repositioning costs recorded in the second quarter of 2020 had the effect of increasing our effective tax rate for 2020.
−Removed: This increase was substantially offset by a lower effective tax rate on our foreign earnings resulting from a change in legislation.
−Removed: The effective tax rate for 2019 includes a reduction of $ 10.8 million primarily from the net favorable settlement of uncertain tax positions in various jurisdictions in the second quarter of 2019.
−Removed: The international tax rate differentials in 2020 and 2019 are primarily attributed to our earnings in Germany, Australia, France, Japan and Brazil being taxed at higher rates than the U.S.
−Removed: statutory tax rate.
−Removed: The Tax Cuts and Jobs Act of 2017, or Tax Act, among other things, implemented a territorial tax system and imposed a one-time transition tax on the deemed repatriation of accumulated earnings of foreign subsidiaries.
−Removed: At December 31, 2020 and 2019, the transition tax liability was $ 112.0 million and $ 123.6 million, respectively.
−Removed: The territorial tax system allows us to repatriate earnings of our foreign subsidiaries without incurring additional U.S.
+Added: Our effective tax rate for 2021 decreased year-over-year to 24.6% from 27.1%.
+Added: In connection with the sale of ICON in the second quarter of 2021, we recorded a pre-tax gain of $ 50.5 million.
+Added: The lower effective tax rate for 2021 was predominantly the result of $ 32.8 million of favorable settlements of uncertain tax positions in certain domestic jurisdictions, as well as a nominal tax applied against the book gain on the sale of ICON resulting from excess tax over book basis.
+Added: The effective tax rate for 2020 reflects an increase due to the non-deductibility in certain jurisdictions of a portion of the COVID-19 repositioning charges recorded in the second quarter of 2020.
+Added: The Tax Cuts and Jobs Act of 2017, or the Tax Act, imposed a one-time tax, the transition tax, on the accumulated earnings of foreign subsidiaries.
+Added: At December 31, 2021 and 2020, the remaining transition tax liability was $ 100.4 million and $ 112.0 million, respectively.
+Added: The transition tax is expected to be fully paid by 2026.
+Added: The Tax Act also implemented a territorial tax system that allows us to repatriate earnings of our foreign subsidiaries without incurring additional U.S.
tax by providing a 100% dividend exemption.
2 unchanged sentences
federal statutory income tax rate of 21%.
−Removed: As a result, the foreign tax rate differential will cause our effective tax rate to be higher than the U.S.
+Added: Therefore, the foreign tax rate differential will cause our effective tax rate to be higher than the U.S.
federal statutory income tax rate.
+Added: The international tax rate differentials in 2021 and 2020 are primarily attributed to our earnings in Germany, Australia, France, Japan and Brazil being taxed at higher rates than the U.S.
+Added: statutory tax rate.
We have elected to account for any tax on the global intangible low-taxed income, or GILTI, in the period in which it is incurred.
In 2021 and 2020, we provided $ 8.8 million and $ 3.0 million, respectively, for tax impacts of GILTI.
−Removed: Income tax expense in 2020, 2019 and 2018 includes $ 3.8 million, $ 2.2 million and $ 3.6 million, respectively, of interest, net of tax benefit, and penalties related to tax positions taken on our tax returns.
+Added: Income tax expense in 2021, 2020 and 2019 includes $ 2.1 million, $ 3.8 million and $ 2.2 million, respectively, of interest, net of tax benefit, and penalties related to tax positions taken on our tax returns that have not been settled as of December 31, 2021.
At December 31, 2021 and 2020, accrued interest and penalties were $ 10.7 million and $ 23.5 million, respectively.
41 unchanged sentences
Tax returns in the United Kingdom, France and Germany have been examined through 2018, 2017 and 2009, respectively.
−Removed: In response to the economic impact of the COVID-19 pandemic, the CARES Act, was signed into law on March 27, 2020.
−Removed: We have determined that the CARES Act did not have a material impact on our income tax expense or effective tax rate for 2020.
Pension and Other Postemployment Benefits
1 unchanged sentence
Our domestic and international subsidiaries provide retirement benefits for their employees primarily through defined contribution profit sharing and savings plans.
−Removed: Contributions to the plans vary by subsidiary and have generally been in amounts up
+Added: Contributions to the plans vary by subsidiary and have generally been in amounts up to the maximum percentage of total eligible compensation of participating employees that is deductible for income tax purposes.
+Added: Contribution expense in 2021, 2020 and 2019 was $ 115.5 million, $ 108.1 million and $ 115.2 million, respectively.
OMNICOM GROUP INC.
1 unchanged sentence
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: to the maximum percentage of total eligible compensation of participating employees that is deductible for income tax purposes.
−Removed: Contribution expense in 2020, 2019 and 2018 was $ 108.1 million, $ 115.2 million and $ 118.8 million, respectively.
Defined Benefit Pension Plans
20 unchanged sentences
$ 18.0 $ 20.1 $ 15.9
−Removed: Included in accumulated other comprehensive income at December 31, 2020 and 2019 were unrecognized actuarial losses and unrecognized prior service cost of $ 96.5 million ($ 60.2 million net of income taxes) and $ 93.9 million ($ 58.3 million net of income taxes), respectively, that have not yet been recognized in net periodic benefit cost.
−Removed: The unrecognized actuarial gains and losses and unrecognized prior service cost included in accumulated other comprehensive income and expected to be recognized in net periodic benefit cost in 2021 is $ 7.5 million.
+Added: Included in accumulated other comprehensive income at December 31, 2021 and 2020 were unrecognized costs for actuarial losses and prior service cost of $ 67.2 million ($ 46.8 million net of income taxes) and $ 96.5 million ($ 67.6 million net of income taxes), respectively, that have not yet been recognized in net periodic benefit cost.
+Added: The unrecognized costs for actuarial gains and losses and prior service cost included in accumulated other comprehensive income and expected to be recognized in net periodic benefit cost in 2022 is $ 6.3 million.
The weighted average assumptions used to determine net periodic benefit expense were:
24 unchanged sentences
Amendments, curtailments and settlements ( 0.4 ) ( 0.2 )
−Removed: Actuarial loss 17.2 28.8
+Added: Actuarial (gain) loss ( 13.9 ) 17.2
Benefits paid ( 8.1 ) ( 13.5 )
38 unchanged sentences
$ 14.9 $ 14.4 $ 14.1
−Removed: Included in accumulated other comprehensive income at December 31, 2020 and 2019 were unrecognized actuarial losses and unrecognized prior service cost of $ 73.8 million ($ 46.4 million net of income taxes) and $ 60.8 million ($ 37.2 million net of income taxes), respectively, that have not yet been recognized in the net periodic benefit cost.
−Removed: The unrecognized actuarial gains and losses and unrecognized prior service cost included in accumulated other comprehensive income and expected to be recognized in net periodic benefit cost in 2021 is $ 8.0 million.
+Added: Included in accumulated other comprehensive income at December 31, 2021 and 2020 were unrecognized costs for actuarial losses and prior service cost of $ 56.7 million ($ 39.5 million net of income taxes) and $ 73.8 million ($ 51.8 million net of income taxes), respectively, that have not yet been recognized in the net periodic benefit cost.
+Added: The unrecognized costs for actuarial gains and losses and prior service cost included in accumulated other comprehensive income and expected to be recognized in net periodic benefit cost in 2022 is $ 6.3 million.
The weighted average assumptions used to determine net periodic benefit expense were:
9 unchanged sentences
Amendments ( 1.2 ) 3.0
−Removed: Actuarial loss 16.3 14.1
+Added: Actuarial (gain) loss ( 7.8 ) 16.3
Benefits paid ( 9.5 ) ( 8.7 )
6 unchanged sentences
Compensation increases 3.5 % 3.5 %
−Removed: At December 31, 2020, the estimated benefits expected to be paid over the next 10 years are (in millions):
−Removed: 2026 - 2030 50.7
OMNICOM GROUP INC.
1 unchanged sentence
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: COVID-19 Repositioning Costs
−Removed: In response to the impact of the COVID-19 pandemic, in the second quarter of 2020, we took actions to align our cost structure and reduce our workforce and facility requirements and reviewed businesses for disposal and assets for impairment.
−Removed: As a result of these actions, we recorded a pre-tax charge of $ 277.9 million, which is comprised of incremental severance of $ 150.0 million, real estate operating lease ROU asset and other asset impairment charges of $ 55.8 million, other exit costs of $ 47.0 million and dispositions and other charges of $ 25.1 million.
−Removed: Substantially all the liability related to real estate will be paid over the applicable lease term.
−Removed: The ROU asset and other asset impairment charges and the disposition and other charges are non-cash charges.
−Removed: At December 31, 2020 the liability for the COVID-19 repositioning costs was (in millions):
−Removed: Opening balance $ 197.0
−Removed: Payments ( 113.2 )
−Removed: December 31, 2020 $ 83.8
−Removed: We expect that the liability for the COVID-19 repositioning costs will be substantially paid by the end of 2021.
−Removed: Net Gain on Dispositions and Repositioning Actions.
−Removed: In the third quarter of 2018, we disposed of certain businesses, primarily in our CRM Execution & Support discipline, and recorded a net gain of $ 178.4 million.
−Removed: Additionally, we took certain repositioning actions in an effort to continue to improve our strategic position and achieve operating efficiencies and recorded charges of $ 149.4 million, which included $ 68.4 million for severance, $ 73.5 million for office lease consolidation and termination and other costs of $ 7.5 million.
−Removed: At December 31, 2020, substantially all the liability was paid.
+Added: At December 31, 2021, the estimated benefits expected to be paid over the next 10 years are (in millions):
+Added: 2027 - 2031 48.2
+Added: Disposition of Subsidiary
+Added: In the second quarter of 2021, we sold ICON, a specialty media company, to ICON’s management team.
+Added: As a result, we recorded a pre-tax gain of $ 50.5 million from the sale.
+Added: As discussed in Note 11, the after-tax gain approximated the pre-tax gain.
+Added: The disposition of ICON will not have a material impact on our ongoing results of operations or financial position.
Supplemental Cash Flow Data
11 unchanged sentences
Increase in operating capital $ 160.5 $ 30.9 $ 125.1
+Added: Supplemental financial information (in millions):
+Added: Year Ended December 31,
+Added: 2021 2020 2019
Income taxes paid $ 454.4 $ 376.5 $ 361.0
Interest paid $ 219.3 $ 205.5 $ 246.3
−Removed: Supplemental non-cash information related to leases was (in millions):
+Added: Non-cash increase in lease liabilities (in millions):
Year Ended December 31,
−Removed: Net increase in lease liability:
Operating leases $ 123.3 $ 133.9
13 unchanged sentences
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: On January 1, 2019, we adopted FASB Accounting Standards Codification, or ASC, Topic 842, Leases , or ASC 842.
−Removed: As permitted by ASC 842, we elected the adoption date of January 1, 2019, which is the date of initial application.
−Removed: Prior to January 1, 2019, rent expense continues to be reported under ASC Topic 840, Leases , or ASC 840
−Removed: The components of lease cost under ASC 842 were (in millions):
+Added: Leases and Property and Equipment
+Added: The components of lease cost were (in millions):
Year Ended December 31,
3 unchanged sentences
Sublease income ( 3.8 ) ( 0.9 )
+Added: $ 304.2 $ 335.5
Finance lease cost:
−Removed: Amortization of ROU assets 50.2 43.2
+Added: Depreciation of ROU assets $ 52.6 $ 50.2
Interest 4.9 5.3
−Removed: Total lease cost $ 391.0 $ 404.1
−Removed: Rent expense under ASC 840 for the year ended December 31, 2018 was (in millions):
−Removed: Office rent $ 295.0
−Removed: Equipment rent 16.6
−Removed: Third-party sublease rent ( 7.2 )
−Removed: Total rent cost $ 304.4
−Removed: Amortization expense for assets under capital lease was $ 36.7 million in 2018.
−Removed: The balance sheet classification, weighted average remaining lease term and weighted average discount rate related to our operating and finance leases were (in millions):
−Removed: Operating leases:
−Removed: ROU asset $ 1,223.4 $ 1,398.3
−Removed: Lease liability:
−Removed: Other current liabilities $ 270.5 $ 290.3
−Removed: Long-term liability - operating leases 1,114.0 1,274.7
$ 57.5 $ 55.5
−Removed: Weighted average remaining lease term (years) 7.9 8.2
−Removed: Weighted average discount rate 3.7 % 3.8 %
−Removed: Finance leases:
−Removed: Property and equipment, net $ 120.7 $ 138.7
−Removed: Lease liability:
−Removed: Other current liabilities $ 49.5 $ 46.6
−Removed: Long-term liabilities 74.6 92.1
−Removed: $ 124.1 $ 138.7
−Removed: Weighted average remaining lease term (years) 3.0 3.4
−Removed: Weighted average discount rate 4.2 % 4.3 %
−Removed: OMNICOM GROUP INC.
−Removed: AND SUBSIDIARIES
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: At December 31, 2020, the maturities of the lease liabilities were (in millions):
+Added: Total lease cost $ 361.7 $ 391.0
+Added: The maturities of our lease liabilities at December 31, 2021 were (in millions):
Operating Leases Finance Leases
8 unchanged sentences
Present value of lease liability $ 1,177.2 $ 133.4
+Added: The balance sheet classification of our operating leases was (in millions):
+Added: Operating lease ROU assets $ 1,202.9 $ 1,223.4
+Added: Lease liability:
+Added: Other current liabilities $ 225.1 $ 270.5
+Added: Long-term liability - operating leases 952.1 1,114.0
+Added: $ 1,177.2 $ 1,384.5
+Added: Operating leases for office space and equipment at December 31, 2021 and 2020, had a weighted average remaining lease term of 7.5 and 7.9 years, respectively, and a weighted average discount rate of 3.2 % and 3.7 %, respectively.
+Added: Property and Equipment
+Added: Property and equipment at December 31 were (in millions):
+Added: Property and equipment - owned $ 1,805.5 $ 1,427.7
+Added: Equipment under finance leases 352.3 314.2
+Added: 2,157.8 1,741.9
+Added: Accumulated depreciation ( 1,165.7 ) ( 1,156.7 )
+Added: $ 992.1 $ 585.2
+Added: Finance leases at December 31, 2021 and 2020, had a weighted average remaining lease term of 3.1 years and 3.0 years, respectively, and a weighted average discount rate of 4.3 % and 4.2 %, respectively.
+Added: OMNICOM GROUP INC.
+Added: AND SUBSIDIARIES
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Temporary Equity - Redeemable Noncontrolling Interests
12 unchanged sentences
Other comprehensive income (loss) before reclassifications — ( 21.0 ) ( 9.0 ) ( 30.0 )
−Removed: Cumulative effect of accounting change ( 5.6 ) ( 16.7 ) — ( 22.3 )
Reclassification from accumulated other comprehensive income (loss) 3.9 9.9 — 13.8
3 unchanged sentences
December 31, 2021 $ ( 16.1 ) $ ( 90.4 ) $ ( 1,145.8 ) $ ( 1,252.3 )
−Removed: OMNICOM GROUP INC.
−Removed: AND SUBSIDIARIES
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Financial assets and liabilities measured at fair value on a recurring basis were (in millions):
7 unchanged sentences
Cash and cash equivalents $ 5,600.5 $ 5,600.5
−Removed: Short-term investments 3.6 3.6
Marketable equity securities 1.6 1.6
2 unchanged sentences
Contingent purchase price obligations $ 71.9 71.9
+Added: OMNICOM GROUP INC.
+Added: AND SUBSIDIARIES
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Changes in contingent purchase price obligations were (in millions):
7 unchanged sentences
Cash and cash equivalents $ 5,316.8 $ 5,316.8 $ 5,600.5 $ 5,600.5
−Removed: Short-term investments — — 3.6 3.6
Marketable equity securities 1.1 1.1 1.6 1.6
4 unchanged sentences
Contingent purchase price obligations 167.1 167.1 71.9 71.9
−Removed: Long-term debt, including current portion 5,807.3 6,380.6 5,134.3 5,316.4
−Removed: OMNICOM GROUP INC.
−Removed: AND SUBSIDIARIES
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: The estimated fair value of the foreign currency and interest rate derivative instruments is determined using model-derived valuations, taking into consideration foreign currency rates for the foreign currency derivatives and readily observable inputs for LIBOR interest rates and yield curves to derive the present value of the future cash flows for the interest rate derivatives and counterparty credit risk for each.
+Added: Long-term debt 5,685.7 6,011.6 5,807.3 6,380.6
+Added: The estimated fair value of the foreign currency derivative instruments is determined using model-derived valuations, taking into consideration foreign currency rates and counterparty credit risk.
The estimated fair value of the contingent purchase price obligations is calculated in accordance with the terms of each acquisition agreement and is discounted.
1 unchanged sentence
Derivative Instruments and Hedging Activities
−Removed: We manage our exposure to foreign currency exchange rate risk and interest rate risk through various strategies, including the use of derivative financial instruments.
−Removed: We use forward foreign exchange contracts as economic hedges to manage the cash flow volatility arising from foreign currency exchange rate fluctuations.
−Removed: We may use interest rate swaps to manage our interest expense and structure our long-term debt portfolio to achieve a mix of fixed rate and floating rate debt.
+Added: We manage our exposure to foreign exchange rate risk and interest rate risk through various strategies, including the use of derivative financial instruments.
+Added: We use forward foreign exchange contracts as economic hedges to manage the cash flow volatility arising from foreign exchange rate fluctuations.
We do not use derivatives for trading or speculative purposes.
2 unchanged sentences
We evaluate the effects of changes in foreign currency exchange rates, interest rates and other relevant market risks on our derivatives.
−Removed: We periodically determine the potential loss from market risk on our derivatives by performing a value-at-risk analysis, or VaR.
+Added: We periodically determine the potential loss from market risk on our derivatives by performing a value-at-risk, or VaR, analysis.
VaR is a statistical model that uses historical currency exchange rate data to measure the potential impact on future earnings of our derivative financial instruments assuming normal market conditions.
6 unchanged sentences
To manage this risk, we had outstanding forward foreign exchange contracts with an aggregate notional amount of $ 77.3 million and $ 169.6 million at December 31, 2021 and 2020, respectively.
+Added: OMNICOM GROUP INC.
+Added: AND SUBSIDIARIES
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Foreign currency derivatives are designated as fair value hedges;
2 unchanged sentences
The terms of our forward foreign exchange contracts are generally less than 90 days.
+Added: Interest Rate Risk
+Added: We may use interest rate swaps to manage our interest cost and structure our long-term debt portfolio to achieve a mix of fixed rate and floating rate debt.
+Added: During 2021, there were no interest rate swaps and, at December 31, 2021, long-term debt consisted entirely of fixed-rate debt.
New Accounting Standards
−Removed: In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740) or ASU 2019-12, which, among other things, amends the rules for recognizing deferred taxes for investments, performing intra-period tax allocations and calculating income taxes in interim periods and reduces complexity in certain areas, including the accounting for transactions that result in a step-up in the tax basis of goodwill and allocating taxes to members of a consolidated group.
−Removed: ASU 2019-12 is effective January 1, 2021.
−Removed: We do not expect the adoption of ASU 2019-12 will have a material effect on our results of operations and financial position.
+Added: In October 2021, the FASB issued ASU 2021-08, Accounting for Contract Assets and Contract Liabilities From Contracts With Customers , or ASU 2021-08, that requires acquiring companies to apply ASC 606 to recognize and measure contract assets and contract liabilities from contracts with customers acquired in a business combination consistent with those recorded by the acquiring company.
+Added: ASU 2021-08 is effective January 1, 2023, and early adoption is permitted.
+Added: Contracts with customers in the advertising and marketing business are typically short duration contracts.
+Added: To the extent we acquire companies in the advertising and marketing communications business, we do not expect this standard to have a material impact on our results of operations or financial position.
+Added: However, we are still in the process of assessing the impact of ASU 2021-08 on our results of operations and financial position.
Subsequent Events
17 unchanged sentences
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.