What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2023-02-08 compared with 2022-02-09 · 237 added, 214 removed, 1196 unchanged (27% of the section changed)

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Other Information

Disclosure Regarding Foreign Jurisdictions That Prevent Inspection

Disclosure Regarding Foreign Jurisdictions That Prevent Inspections

Not applicable.

Directors, Executive Officers and Corporate Governance

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.

The information required by this Item will be included in our definitive proxy statement, which is expected to be filed with the SEC within 120 days after December 31, 2022, in connection with the solicitation of proxies for our 2023 annual meeting of shareholders (the “2023 Proxy Statement”) and is incorporated herein by reference.

Executive Compensation

The information called for by this Item is incorporated herein by reference to the information to be included under the captions “Executive Compensation,” “Item 1 - Election of Directors - Directors' Compensation for Fiscal Year 2021” and “Item 1 - Election of Directors - Board Policies and Processes - Compensation Committee Interlocks and Insider Participation” in our Proxy Statement.

The information required by this Item will be included in the 2023 Proxy Statement and is incorporated herein by reference.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The information called for by this Item is incorporated herein by reference to the information to be included under the captions “Stock Ownership Information - Security Ownership of Certain Beneficial Owners and Management” and “Stock Ownership Information - Equity Compensation Plans” in our Proxy Statement.

The information required by this Item will be included in the 2023 Proxy Statement and is incorporated herein by reference.

Certain Relationships and Related Transactions, and Director Independence

The information called for by this Item is incorporated herein by reference to the information to be included under the captions “Item 1 - Election of Directors - Board Policies and Processes - Transactions with Related Persons” and “Item 1 - Election of Directors - Omnicom Board of Directors - Director Independence” in our Proxy Statement.

The information required by this Item will be included in the 2023 Proxy Statement and is incorporated herein by reference.

Principal Accountant Fees and Services

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.

The information required by this Item will be included in the 2023 Proxy Statement and is incorporated herein by reference.

Exhibit and Financial Statement Schedules

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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).

4.20 Description of Securities

4.20 Description of Securities ( Exhibit 4.2 0 to our Annual Report on Form 10-K (File No.

1-10551) for the year ended December 31, 2021 and incorporated herein by reference).

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.

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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).

21 Subsidiaries of the Registrant.

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Director February 8, 2023

/s/ S USAN S.

Director February 9, 2022

Gerstein Director February 8, 2023

/s/ R ONNIE S.

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Director February 8, 2023

/s/ Patricia Salas Pineda Director February 8, 2023

Patricia Salas Pineda

/s/ L INDA J OHNSON R ICE

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Evaluation of the sufficiency of audit evidence over revenue recognition

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.

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, practice areas and agencies, which operate in all major markets throughout the Americas, EMEA and Asia Pacific regions.

Consolidated revenues across all disciplines and geographic markets was $14,289.1 million for the year-ended December 31, 2022.

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Cash and cash equivalents $ 4,281.8 $ 5,316.8

Short-term investments 60.7 —

Accounts receivable, net of allowance for doubtful accounts of $ 24.7 and $ 21.7

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Occupancy and other costs 1,168.6 1,148.2 1,138.5

Charges arising from the effects of the war in Ukraine 113.4 — —

Gain on disposition of subsidiary — ( 50.5 ) —

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Beginning balance 622.0 747.8 760.9

Acquisition of noncontrolling interests ( 12.1 ) 5.7 ( 22.3 )

Net change in noncontrolling interests ( 17.1 ) ( 12.1 ) 5.7

Change in temporary equity ( 49.9 ) ( 143.5 ) 3.3

Share-based compensation 81.7 84.7 71.0

Stock issued, share-based compensation ( 54.9 ) ( 93.1 ) ( 56.3 )

Common stock issued, share-based compensation ( 65.6 ) ( 54.9 ) ( 93.1 )

Ending balance 571.1 622.0 747.8

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Beginning balance 8,998.8 8,190.6 7,806.3

Cumulative effect of accounting change — — 22.3

Net income 1,316.5 1,407.8 945.4

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Beginning balance ( 1,252.3 ) ( 1,213.8 ) ( 1,197.6 )

Cumulative effect of accounting change — — ( 22.3 )

Other comprehensive income (loss) ( 185.6 ) ( 38.5 ) ( 16.2 )

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Beginning balance ( 5,142.9 ) ( 4,684.8 ) ( 4,560.3 )

Stock issued, share-based compensation 69.2 97.5 63.8

Common stock issued, share-based compensation 89.3 69.2 97.5

Common stock repurchased ( 611.4 ) ( 527.3 ) ( 222.0 )

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Dividends to noncontrolling interests ( 79.5 ) ( 113.1 ) ( 95.5 )

Acquisition of noncontrolling interests ( 43.3 ) ( 42.0 ) ( 54.4 )

Net change in noncontrolling interests ( 18.5 ) ( 43.3 ) ( 42.0 )

Increase in noncontrolling interests from business combinations 48.0 84.5 30.7

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Amortization of intangible assets 80.3 80.0 83.1

Amortization of net deferred gain on interest rate swaps ( 8.8 ) ( 8.1 ) ( 14.8 )

Amortization of net deferred (gain) loss on interest rate swaps 5.4 ( 8.8 ) ( 8.1 )

Share-based compensation 81.7 84.7 70.8

Non-cash charges related to the effects of the war in Ukraine 65.8 — —

Gain on disposition of subsidiary — ( 50.5 ) —

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Other, net ( 5.6 ) 39.8 109.7

Increase in operating capital 160.5 30.9 125.1

Increase (decrease) in operating capital ( 844.0 ) 160.5 30.9

Net Cash Provided By Operating Activities 926.5 1,945.4 1,724.6

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Proceeds from disposition of subsidiaries — 114.1 3.2

Proceeds from sale of investments and other 2.5 3.2 1.9

Proceeds (purchases) from sale of investments and other ( 25.9 ) 2.5 3.2

Net Cash Used In Investing Activities ( 380.9 ) ( 709.2 ) ( 136.1 )

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All intercompany balances and transactions have been eliminated.

We prepare our financial statements in conformity with U.S.

GAAP and are required to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes.

The preparation of financial statements in conformity with U.S.

GAAP requires us to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes.

Actual results could differ from those estimates and assumptions.

Impact of the COVID-19 Pandemic on our Business

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.

In 2021, revenue increased $1,118.3 million, or 8.5%, compared to 2020.

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.

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.

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.

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.

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.

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

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.

The adoption of ASU 2019-12 did not have a material effect on our results of operations and financial position.

Risks and Uncertainties

Current global economic challenges, including the impact of the war in Ukraine, the lingering effects of the COVID-19 pandemic, high and sustained inflation, rising interest rates, and supply chain disruptions could cause economic uncertainty and volatility.

The impact of these issues on our business will vary by geographic market and discipline.

We monitor economic conditions closely, as well as client revenue levels and other factors.

In response to reductions in revenue, we can take actions to align our cost structure with changes in client demand and manage our working capital.

However, there can be no assurance as to the effectiveness of our efforts to mitigate any impact of the current and future adverse economic conditions, reductions in client revenue, changes in client creditworthiness and other developments.

Impact of the War in Ukraine

Historically, we conducted operations in Russia and Ukraine through local agencies in which we held a majority stake.

During the first quarter of 2022, the war in Ukraine required us to suspend our business operations in Ukraine.

The war resulted in the imposition of sanctions by the United States, the United Kingdom, and the European Union, that affected the cross-border operations of businesses operating in Russia.

In addition, Russian regulators imposed currency restrictions and regulations.

All of these actions created uncertainty regarding our ability to recover our investment in our operations in Russia, as well as our ability to exercise control over the operations.

Therefore, the ability to continue operations in Russia was uncertain.

As a result, we disposed of all of our businesses in Russia.

Accordingly, in the first quarter of 2022, we recorded pretax charges of $ 113.4 million, which primarily consisted of the net investment in our Russian businesses, and included charges related to the suspension of operations in Ukraine.

Lingering Effects of the COVID-19 Pandemic

The COVID-19 pandemic adversely affected global economic activity.

Beginning in March 2020 and continuing through the first quarter of 2021, our business was impacted by reductions in client spending due to the COVID-19 pandemic.

While mixed by business and geography, the spending reductions impacted all our businesses and markets.

Globally, the most impacted businesses were our Experiential discipline, especially in our event marketing businesses, and our Execution & Support discipline, primarily in field marketing.

Most markets began to improve in April 2021 .

Significant Accounting Policies

Revenue Recognition .

Revenue is recognized when a customer obtains control of promised goods or services (the performance obligation) in an amount that reflects the consideration we expect to receive in exchange for those goods or services (the transaction price).

Revenue is recognized when a customer obtains control and receives the benefit of the promised goods or services (the performance obligation) in an amount that reflects the consideration we expect to receive in exchange for those goods or services (the transaction price).

We measure revenue by estimating the transaction price based on the consideration specified in the client arrangement.

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Our revenue is primarily derived from the planning and execution of advertising communications and marketing services in the following fundamental disciplines:

Advertising, Precision Marketing, Commerce & Brand Consulting, Experiential, Execution & Support, Public Relations and Healthcare.

Advertising & Media, 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.

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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.

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.

In certain of our long-term client contracts, which have a term

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

components of a marketing message is essential to overall service.

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.

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.

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Out-of-pocket costs include, among others:

transportation, hotel, meals and telecommunication charges incurred by us in the course of providing our services.

transportation, hotel, meals, shipping and telecommunication charges incurred by us in the course of providing our services.

Billings related to out-of-pocket costs are included in revenue since we control the goods or services prior to delivery to the client.

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.

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 most of our businesses, including advertising, which also includes studio production efforts and media planning and buying services, public relations, healthcare advertising, precision marketing, commerce and brand consulting 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.

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In certain businesses we may act as principal when contracting for third-party services on behalf of our clients.

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 our experiential business and most of our execution and 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.

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Variable consideration is estimated and included in total consideration at contract inception based on either the expected value method or the most likely outcome method.

These estimates are based on historical award experience, anticipated performance and other factors known at the time.

Performance incentives are typically recognized in revenue over time.

Variable consideration for our

These estimates are based on historical award experience, anticipated performance and other

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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.

factors known at the time.

Performance incentives are typically recognized in revenue over time.

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.

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.

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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.

Short-Term Investments.

Short-term investments represent time deposits with original maturities ranging from 91 to 364 days.

These investments are classified as held-to-maturity securities because we have the positive intent and ability to hold until maturity.

Held-to-maturity securities are carried at amortized cost, which approximates fair value.

Fair value is based on observable interest rates for similar securities.

Work in Process.

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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.

Business Combin a tions.

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.

Business Combinations.

In a business combination, the assets acquired, including identified intangible assets, liabilities assumed and any noncontrolling interest in the acquired business are recorded at acquisition date fair value.

In circumstances where control is obtained and less than 100% of a business is acquired, goodwill is recorded as if 100% were acquired.

Acquisition-related costs, including advisory, legal, accounting, valuation and other costs are expensed as incurred.

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.

Subsequent changes in the fair value of the liability are recorded in results of operations.

Amounts earned under the contingent purchase price arrangements may be subject to a maximum and payment is not contingent upon future employment.

The results of operations of acquired businesses are included in results of operations from the acquisition date.

Certain acquisitions include an initial payment at closing and provide for future additional contingent purchase price payments (earn-outs), which are recorded as a

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liability at the acquisition date fair value using the discount rate in effect on the acquisition date.

Subsequent changes in the fair value of the liability are recorded in results of operations.

Amounts earned under the contingent purchase price arrangements may be subject to a maximum and payment is not contingent upon future employment.

The results of operations of acquired businesses are included in results of operations from the acquisition date.

Goodwill and Intangible Assets.

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There is no estimated residual value for the intangible assets.

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.

We review the carrying value of goodwill for impairment annually at the end of the second quarter and whenever events or circumstances indicate the carrying value may not be recoverable.

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.

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Based on the results of the annual impairment test, we concluded that at June 30, 2022 and 2021 goodwill was not impaired because either the fair value of each reporting unit was substantially in excess of its respective net book value, or for reporting units with a negative book value, fair value of assets exceeds total assets.

Subsequent to the annual impairment test of goodwill at June 30, 2021, there have been no events or circumstances that triggered the need for an interim impairment test.

Subsequent to the annual goodwill impairment test, there have been no events or circumstances that triggered the need for an interim impairment test.

Debt Issuance Costs.

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Substantially all of our foreign subsidiaries use their local currency as their functional currency.

Assets and liabilities are translated into U.S.

Assets and liabilities are translated from the local functional currency into U.S.

Dollars at the exchange rate on the balance sheet date and revenue and expenses are translated at the average exchange rate for the period.

Translation adjustments are recorded in accumulated other comprehensive income.

Net foreign currency transaction gains and losses are recorded in results of operations.

In 2021, 2020 and 2019, we recorded losses of $ 3.3 million, $ 4.8 million and $ 11.2 million, respectively.

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adjustments are recorded in accumulated other comprehensive income.

Foreign currency gains and losses arising from transactions not in the subsidiaries local currency are recorded in results of operations.

In 2022, we recorded foreign currency transaction gains of $ 1.1 million, and recorded foreign currency transactions losses of $ 3.3 million and $ 4.8 million in 2021 and 2020, respectively.

Foreign currency gains and losses for hyper-inflationary economies are recorded in results of operations.

Share-Based Compensation.

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Interest and penalties related to tax positions taken in our tax returns are recorded in income tax expense.

We record a liability for uncertain tax positions that reflects the treatment of certain tax positions taken in our tax returns, or planned to be taken in future tax returns, which have not been reflected in income tax expense.

We record a liability for uncertain tax positions that reflects the treatment of certain tax positions taken in our tax returns that do not meet the more-likely-than not threshold.

Until these positions are sustained by the taxing authorities or the statute of limitations concerning such issues lapses, we do not generally recognize the tax benefits resulting from such positions.

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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.

OMNICOM GROUP INC.

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At the inception of a contract we assess whether the contract is, or contains, a lease.

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Substantially all our operating leases are leases for office space, and substantially all our finance leases are leases for office furniture and technology equipment.

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For all leases a right-of-use, or ROU, asset and lease liability are recognized at the lease commencement date.

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Hedge effectiveness is assessed, and hedge ineffectiveness is measured at least quarterly throughout the designated hedge period.

If the derivative is a hedge, depending on the nature of the hedge, changes in the fair value of the derivative will either be offset against the change in fair value of the hedged asset, liability or firm commitment through results of operations or recognized in other comprehensive income until the hedged item is recognized in results of operations.

Changes in the fair value of a fair value hedge are offset against the change in fair value of the hedged asset, liability or firm commitment through results of operations.

Changes in the fair value of a cash flow hedge are recognized in other comprehensive income until the hedged item is recognized in results of operations.

Foreign currency hedges of the net investment in our foreign operations are recorded in accumulated other comprehensive income (loss), or AOCI.

Any gain or loss will remain in AOCI until the complete or substantially complete liquidation of our investment in the underlying operation.

We do not use derivatives for trading or speculative purposes.

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• Level 3 - Unobservable inputs for the asset or liability.

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We use unadjusted quoted market prices to determine the fair value of our financial assets and liabilities and classify such items in Level 1.

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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:

counterparty credit risk adjustments applied to financial assets and liabilities, taking into account the actual credit risk of the counterparty when valuing assets measured at fair value and credit risk adjustments applied to reflect our credit risk when valuing liabilities measured at fair value.

Reclassifications.

Certain reclassifications have been made to the prior year financial information to conform to the current year presentation.

counterparty credit risk adjustments applied to financial assets

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and liabilities, taking into account the actual credit risk of the counterparty when valuing assets measured at fair value and credit risk adjustments applied to reflect our credit risk when valuing liabilities measured at fair value.

Nature of our services

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.

Our networks and agencies provide a comprehensive range of services in the following fundamental disciplines:

Advertising, Precision Marketing, Commerce & Brand Consulting, Experiential, Execution & Support, Public Relations and Healthcare.

Advertising includes creative services across digital and traditional media, strategic media planning and buying, and data analytics services.

Precision Marketing includes digital and direct marketing, digital transformation and data and analytics.

Commerce & Brand Consulting services include brand consulting, strategy and research, and retail ecommerce.

Our networks, practice areas and agencies provide a comprehensive range of services in the following fundamental disciplines:

Advertising & Media, Precision Marketing, Commerce & Brand Consulting, Experiential, Execution & Support, Public Relations and Healthcare.

Advertising & Media include creative services across digital and traditional media, strategic media planning and buying, performance media and data analytics services.

Precision Marketing includes digital and direct marketing, digital transformation consulting and data and analytics.

Commerce & Brand Consulting services include brand and product consulting, strategy and research, retail and ecommerce.

Experiential marketing services include live and digital events and experience design and execution.

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.

Execution & Support includes field marketing, sales support, digital and physical merchandising, point-of-sale and product placement, 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.

Healthcare includes advertising and media services to global healthcare and pharmaceutical clients.

Healthcare includes corporate communications and advertising and media services to global healthcare and pharmaceutical companies.

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.

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2022 2021 2020

Advertising $ 7,959.3 $ 7,511.4 $ 8,664.2

Advertising & Media $ 7,424.7 $ 7,959.3 $ 7,511.4

Precision Marketing 1,417.9 1,194.8 944.6

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$ 14,289.1 $ 14,289.4 $ 13,171.1

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

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Adverse economic conditions pose a risk that our clients may reduce, postpone or cancel spending for our services, which would impact our revenue.

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Revenue in our geographic markets was (in millions):

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Revenue in the United States in 2022 and 2021 was $ 7,367.3 million and $ 7,245.9 million, respectively.

The sale of ICON impacted revenue in the United States in 2021.

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Contract assets and liabilities

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Work in process:

Contract assets and unbilled fees and costs $ 469.9 $ 501.1

Media and production costs $ 725.1 $ 731.1

Contract assets and unbilled fees and costs 529.5 469.9

$ 1,254.6 $ 1,201.0

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Substantially all unbilled fees and costs will be billed within the next 30 days.

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.

Contract liabilities primarily represent 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.

There were no impairment losses to the contract assets recorded in 2022 or 2021.

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2022 2021 2020

Net income available for common shares:

Net income - Omnicom Group Inc.

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Diluted $ 6.36 $ 6.53 $ 4.37

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Business Combinations

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Certain acquisitions include an initial payment at closing and provide for future additional contingent purchase price payments (earn-outs), which are derived using the performance of the acquired company and are based on predetermined formulas.

At December 31, 2021 and 2020, contingent purchase price obligations were $ 167.1 million and $ 71.9 million, respectively, of which $ 43.1 million and $ 32.1 million, respectively, are included in other current liabilities.

At December 31, 2022 and 2021, contingent purchase price obligations were $ 115.0 million and $ 167.1 million, respectively, of which $ 39.2 million and $ 43.1 million, respectively, are recorded in other current liabilities.

For each acquisition, we undertake a detailed review to identify other intangible assets that are required to be valued separately.

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A significant portion of the identifiable intangible assets acquired is derived from customer relationships, including the related customer contracts, as well as trade names.

One of the primary drivers in executing our acquisition strategy is the existence of, or the ability to, expand our existing client relationships.

One of the primary drivers in executing

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our acquisition strategy is the existence of, or the ability to, expand our existing client relationships.

The expected benefits of our acquisitions are typically shared across multiple agencies and regions.

Goodwill and Intangible Assets

Goodwill and intangible assets were (in millions):

Goodwill $ 10,259.6 $ ( 521.0 ) $ 9,738.6 $ 10,141.6 $ ( 531.9 ) $ 9,609.7

Intangible assets:

Purchased and internally developed software

$ 382.2 $ ( 318.7 ) $ 63.5 $ 377.6 $ ( 307.0 ) $ 70.6

Customer related and other 772.3 ( 537.8 ) 234.5 738.1 ( 510.2 ) 227.9

$ 1,154.5 $ ( 856.5 ) $ 298.0 $ 1,115.7 $ ( 817.2 ) $ 298.5

Changes in goodwill were (in millions):

Year Ended December 31,

Goodwill (in millions):

January 1 $ 9,738.6 $ 9,609.7

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December 31 $ 9,734.3 $ 9,738.6

No goodwill impairment losses were recorded in 2021 or 2020, and there are no accumulated goodwill impairment losses.

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There were no goodwill impairment losses recorded in 2022 or 2021, and there are no accumulated goodwill impairment losses.

Intangible assets (in millions):

Intangible assets:

Purchased and internally developed software

$ 374.8 $ ( 309.1 ) $ 65.7 $ 382.2 $ ( 318.7 ) $ 63.5

Customer related and other 758.5 ( 510.8 ) 247.7 772.3 ( 537.8 ) 234.5

$ 1,133.3 $ ( 819.9 ) $ 313.4 $ 1,154.5 $ ( 856.5 ) $ 298.0

Credit Facility and Credit Lines

We maintain a $ 2.5 billion multi-currency revolving credit facility, or Credit Facility, that matures on February 14, 2025 .

In addition, we have uncommitted credit lines aggregating $ 863.9 million and the ability to issue up to $ 2 billion of commercial paper.

We have a $ 2.5 billion multi-currency revolving credit facility, or Credit Facility, with a termination date of February 14, 2025 .

In addition, we have the ability to issue up to $ 2 billion of U.S.

Dollar denominated commercial paper and issue up to the equivalent of $ 500 million in British Pounds or Euro under a Euro commercial paper program.

Certain of our international subsidiaries have uncommitted credit lines aggregating $ 582.9 million, which are guaranteed by Omnicom.

These facilities provide additional liquidity sources for operating capital and general corporate purposes.

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.

During 2022, there were no borrowings under the Credit Facility, and there were no commercial paper issuances.

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.

In October 2020, we amended the Credit Facility to increase the maximum Leverage Ratio to 4.0 times through December 31, 2021.

At December 31, 2022, we were in compliance with this covenant as our Leverage Ratio was 2.4 times.

1 unchanged sentence

Short-Term Debt

At December 31, 2021 and 2020, short-term debt of $ 9.6 million and $ 3.9 million, respectively, represented bank overdrafts and short-term borrowings primarily of our international subsidiaries.

Short-term debt of $ 16.9 million and $ 9.6 million at December 31, 2022 and 2021, respectively, represented bank overdrafts and short-term borrowings primarily of our international subsidiaries.

The weighted average interest rate was 10.3 % and 1.6 %, respectively.

Due to the short-term nature of this debt, carrying value approximates fair value.

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Long-Term Debt

3 unchanged sentences

3.60 % Senior Notes due 2026

1,400.0 1,400.0

10 unchanged sentences

$ 5,577.2 $ 5,685.7

On May 3, 2021, we issued $ 800 million 2.60 % Senior Notes due 2031.

The net proceeds from the issuance, after deducting the underwriting discount and offering expenses, were $ 791.7 million.

The net proceeds plus cash on hand were used to redeem all the outstanding 3.625% Senior Notes due 2022 in May 2021.

In connection with the early redemption, we recorded a loss on extinguishment of $ 26.6 million in interest expense.

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.

Dollar equivalent of the net proceeds from the issuance, after deducting the underwriting discount and offering expenses, was $ 429.6 million.

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.

Our 2.45 % Senior Notes due 2030, 4.20 % Senior Notes due 2030 and 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.

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.

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Such notes are senior unsecured obligations that rank equal in right of payment with all existing and future unsecured senior indebtedness.

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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.

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.

OFH’s assets consist of its investments in several wholly owned finance companies that function as treasury centers, providing funding for various operating companies in Europe, 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.

1 unchanged sentence

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.

Omnicom has fully and unconditionally guaranteed the obligations of OCH, with respect to the Sterling Notes.

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.

Omnicom has fully and unconditionally guaranteed the obligations of Omnicom Capital Holdings plc, or OCH, a U.K.-based wholly owned subsidiary of Omnicom, with respect to the £ 325 million 2.25 % Senior Notes due 2033, or Sterling Notes.

OCH’s assets consist of its investments in several wholly owned finance companies that function as treasury centers, providing funding for various operating companies in EMEA, Australia and other countries in the Asia-Pacific region.

3 unchanged sentences

Thereafter 2,926.9

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Interest Expense

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Pension and other interest 35.8 35.3 38.0

Interest rate swaps ( 9.6 ) ( 8.9 ) ( 8.7 )

Interest rate and cross currency swaps 3.5 ( 9.6 ) ( 8.9 )

$ 208.6 $ 236.4 $ 221.8

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Therefore, given these similarities, we aggregate our operating segments, which are our agency networks, into one reporting segment.

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.

As a result, the number of operating segments increased from five to six.

The agency networks' regional reporting units comprise three principal regions:

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Agencies within the regional reporting units serve similar clients in similar industries and in many cases the same clients and have similar economic characteristics.

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Revenue and long-lived assets and goodwill by geographic region were (in millions):

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Equity Method Investments

Income (loss) from our equity method investments in 2021, 2020 and 2019 was $ 7.5 million, $( 6.8 ) million and $ 2.0 million, respectively.

Income (loss) from our equity method investments was $ 5.2 million, $ 7.5 million and $( 6.8 ) million in 2022, 2021 and 2020, respectively.

At December 31, 2022 and 2021, our proportionate share in the net assets of the equity method investments was $ 18.3 million and $ 26.0 million, respectively.

2 unchanged sentences

Share-Based Compensation Plans

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.

Share-based incentive awards are granted to employees under the 2021 Incentive Award Plan, or the 2021 Plan, which was approved by the shareholders.

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.

Awards include stock options, restricted stock and other performance-based 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.

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At December 31, 2022, there were 8,899,375 shares available for grant under the 2021 Plan.

Share-based compensation expense in 2021, 2020 and 2019 was $ 84.7 million, $ 70.8 million and $ 72.5 million, respectively.

Share-based compensation expense was $ 81.7 million, $ 84.7 million and $ 70.8 million in 2022, 2021 and 2020, respectively.

At December 31, 2022, unamortized share-based compensation that will be expensed over the next five years is $ 196.5 million.

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.

We recognize a tax benefit in income tax expense and 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.

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.

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.

In 2021, we recognized a tax benefit of $ 2.9 million, and in 2020, we recognized a tax deficiency of $ 3.6 million.

Any excess tax benefit or deficiency related to share-based compensation is recorded in results of operations, as a component of

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income tax expense, upon vesting of restricted stock awards or exercise of stock options.

We recognized a tax benefit of $ 1.9 million and $ 2.9 million in 2022 and 2021, respectively.

Stock Options

12 unchanged sentences

Exercisable December 31 423,750 $ 84.94 689,250 $ 84.94 768,750 $ 83.65

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At December 31, 2022, options outstanding and exercisable were:

7 unchanged sentences

$ 69.00 to $ 70.00 803,875 9.6 years $ 69.23 — $ 0.00

$ 72.00 to $ 73.00 3,850,000 8.9 years $ 72.47 — $ 0.00

$ 84.00 to $ 85.00 423,750 0.3 years $ 84.94 423,750 $ 84.94

5,127,625 423,750

The 2021 option award grant date fair value of $ 8.47 was determined using the Black-Scholes option valuation model.

The assumptions used, without adjusting for forfeitures and lack of liquidity were:

expected life of 8 years, risk free interest rate of 1.4 %, expected volatility of 23 %, and dividend yield of 4.6 %.

On the grant date, the exercise price of the award was greater than the closing price of our common stock.

The grant date fair value of $ 12.60 and $ 8.47 for the 2022 and 2021 option awards, respectively, was determined using the Black-Scholes option valuation model.

The assumptions, without adjusting for forfeitures and lack of liquidity, in 2022 were:

an expected life ranging from 6.5 years to 7.5 years, risk free interest rate ranging from 3.0 % to 3.1 %, expected volatility ranging from 24.5 % to 24.7 %, and dividend yield ranging from 4.2 % to 4.5 % , and in 2021 were:

an expected life of 8.0 years, risk free interest rate of 1.4 %, expected volatility of 23 %, and dividend yield of 4.6 %.

Restricted Stock

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Generally, restricted shares vest ratably over five years from the grant date provided the employee remains employed by us.

Restricted shares may not be sold, transferred, pledged or otherwise encumbered until the forfeiture restrictions lapse.

Restricted shares do not pay a dividend, and may not be sold, transferred, pledged or otherwise encumbered until the forfeiture restrictions lapse.

Under most circumstances, the employee forfeits the shares if employment ceases prior to the end of the restriction period.

2 unchanged sentences

Each PRSU represents the right to receive one share of common stock on vesting.

The ultimate number of PRSUs received by the employee depends on the Company's average return on equity over a three year period compared to the average return on equity of a peer group of principal competitors over the same period.

The ultimate number of PRSUs received by the employee depends on

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the Company's average return on equity over a three year period compared to the average return on equity of a peer group of principal competitors over the same period.

The PRSUs vest three years from the grant date.

1 unchanged sentence

Over the performance period, compensation expense is adjusted upward or downward based on our estimate of the probability of achieving the performance target for the portion of the awards subject to the performance vesting condition.

We have assumed that all the PRSUs will vest.

We have assumed that all PRSUs will vest.

PRSU activity was:

11 unchanged sentences

Purchases are limited to 10 % of eligible compensation as defined by the Employee Retirement Income Security Act of 1974, or ERISA.

In 2021, 2020 and 2019, employees purchased 73,250 shares, 91,605 shares and 76,040 shares, respectively.

All shares purchased were treasury stock, for which we received $ 5.0 million, $ 5.2 million and $ 5.6 million, respectively.

Employees purchased 72,672 shares, 73,250 shares and 91,605 shares in 2022, 2021 and 2020, respectively.

All shares purchased were issued from treasury stock, for which we received $ 5.2 million, $ 5.0 million and $ 5.2 million, respectively.

At December 31, 2022, there were 8,361,784 shares available under the ESPP.

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The components of income before income taxes were (in millions):

25 unchanged sentences

Impact of foreign operations 3.5 3.6 3.4

Other ( 0.2 ) 0.5 —

Impact of war in Ukraine and other 1.3 ( 0.2 ) 0.5

Effective tax rate 28.1 % 24.6 % 27.1 %

Our effective tax rate for 2021 decreased year-over-year to 24.6% from 27.1%.

In connection with the sale of ICON in the second quarter of 2021, we recorded a pre-tax gain of $ 50.5 million.

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.

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.

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Our effective tax rate for 2022 increased year-over-year to 28.1 % from 24.6 %.

The higher effective tax rate for 2022 was predominantly the result of the non-deductibility of the $ 113.4 million charges recorded in the first quarter of 2022, arising from the effects of the war in Ukraine, as well as an additional increase in income tax expense of $ 4.8 million related to the disposition of our businesses in Russia.

These charges were partially offset by the tax benefit arising from our share-based compensation awards.

The effective tax rate for 2021 reflects a nominal tax applied to the book gain on the disposition in the Advertising & Media discipline resulting from the excess of tax over book basis and a reduction in income tax expense of $ 32.8 million, primarily related to the favorable settlements of uncertain tax positions in certain jurisdictions.

On August 16, 2022, the Inflation Reduction Act of 2022, or IRA, was signed into law.

Among other things, the IRA imposes a 15% corporate alternative minimum tax for tax years beginning after December 31, 2022, levies a 1% excise tax on net stock repurchases after December 31, 2022, and provides tax incentives to promote clean energy.

Historically, we have made discretionary share repurchases.

Beginning in 2023, these purchases would be subject to the excise tax.

Based on the historical net repurchase activity, the excise tax and the other provisions of the IRA are not expected to have a material impact on our results of operations or financial position.

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.

8 unchanged sentences

federal statutory income tax rate.

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.

The international tax rate differentials in 2022 and 2021 are primarily attributed to our earnings in Germany, Australia, France, Japan and Canada being taxed at higher rates than the U.S.

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.

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.

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We provided $ 10.9 million and $ 8.8 million in 2022 and 2021, respectively, for tax impact of GILTI.

The components of deferred tax assets and liabilities and balance sheet classification were (in millions):

4 unchanged sentences

Basis differences from short-term assets and liabilities 20.5 15.5

Other ( 14.2 ) ( 5.8 )

Other, net ( 18.6 ) ( 14.2 )

Deferred tax assets 307.6 336.4

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Tax loss and credit carryforwards for which there is no valuation allowance are available for periods ranging from 2023 to 2042, which is longer than the forecasted utilization of such carryforwards.

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A reconciliation of our unrecognized tax benefits is (in millions):

6 unchanged sentences

December 31 $ 167.6 $ 162.8

The majority of the liability for uncertain tax positions is recorded in long-term liabilities.

Substantially all the liability for uncertain tax positions is recorded in long-term liabilities.

At December 31, 2022 and 2021, approximately $ 161.8 million and $ 157.3 million, respectively, of the liability for uncertain tax positions would affect our effective tax rate upon resolution of the uncertain tax positions.

Income tax expense in 2022, 2021 and 2020 includes $ 4.3 million, $ 2.1 million and $ 3.8 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, 2022 and 2021, accrued interest and penalties were $ 15.9 million and $ 10.7 million, respectively.

We file a consolidated U.S.

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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.

Contribution expense in 2021, 2020 and 2019 was $ 115.5 million, $ 108.1 million and $ 115.2 million, respectively.

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Contribution expense was $ 123.2 million, $ 115.5 million and $ 108.1 million in 2022, 2021 and 2020, respectively.

Defined Benefit Pension Plans

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These plans provide benefits to employees based on formulas recognizing length of service and earnings.

plans cover approximately 700 participants, are closed to new participants and do not accrue future benefit credits.

plans, which include plans required by local law, cover approximately 7,600 participants and are not subject to ERISA.

plans are subject to ERISA and cover approximately 700 participants.

These plans are closed to new participants and do not accrue future benefit credits.

plans, which include statutory plans, are not subject to ERISA and cover approximately 7,300 participants.

We have a Senior Executive Restrictive Covenant and Retention Plan, or Retention Plan, for certain executive officers selected by the Compensation Committee.

The Retention Plan is a non-qualified deferred compensation severance plan that was adopted to secure non-competition, non-solicitation, non-disparagement and ongoing consulting services from such executive officers and to strengthen the retention aspect of executive officer compensation.

The Retention Plan is a non-qualified deferred compensation severance plan that is not subject to ERISA and was adopted to secure non-competition, non-solicitation, non-disparagement and ongoing consulting services from such executive officers and to strengthen the retention aspect of executive officer compensation.

The Retention Plan provides annual payments upon termination following at least seven years of service with Omnicom or its subsidiaries to the participants or to their beneficiaries.

11 unchanged sentences

$ 11.4 $ 18.0 $ 20.1

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Included in accumulated other comprehensive income at December 31, 2022 and 2021 were unrecognized costs for actuarial losses and prior service cost of $ 23.4 million ($ 15.9 million net of income taxes) and $ 67.2 million ($ 46.8 million net of income taxes), respectively, that have not yet been recognized in net periodic benefit cost.

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We do not expect the contributions for 2023 to differ materially from the 2022 contributions.

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The change in benefit obligation and fair value of plan assets of the defined benefit pension plans were (in millions):

21 unchanged sentences

$ ( 184.6 ) $ ( 226.4 )

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At December 31, 2022 and 2021, the accumulated benefit obligation for our defined benefit pension plans was $ 181.4 million and $ 226.6 million, respectively.

8 unchanged sentences

2028 - 2032 97.1

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Postemployment Arrangements

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Experience gains and losses and effects of changes in actuarial assumptions are amortized over a period no longer than the expected average future service of active employees.

At December 31, 2021 and 2020, the benefit obligation and balance sheet classification were (in millions):

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The benefit obligation and balance sheet classification at December 31, 2022 and 2021, were (in millions):

January 1 $ 153.0 $ 164.6

11 unchanged sentences

Compensation increases 3.5 % 3.5 %

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At December 31, 2022, the estimated benefits expected to be paid over the next 10 years are (in millions):

2028 - 2032 50.2

Disposition of Subsidiary

In the second quarter of 2021, we sold ICON, a specialty media company, to ICON’s management team.

As a result, we recorded a pre-tax gain of $ 50.5 million from the sale.

As discussed in Note 11, the after-tax gain approximated the pre-tax gain.

The disposition of ICON will not have a material impact on our ongoing results of operations or financial position.

Charges Arising from the Effects of the War in Ukraine

As discussed in Note 1, in the first quarter of 2022, we recorded pretax charges arising from the effects of the war in Ukraine of $ 113.4 million, which included cash charges of $ 47.6 million, primarily consisting of the loss on the disposition of the net investment in our Russian businesses, as well as impairment and other charges related to the suspension of operations in Ukraine.

Supplemental Cash Flow Data

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Change in other assets and liabilities, net ( 69.1 ) 171.2 ( 40.6 )

Increase in operating capital $ 160.5 $ 30.9 $ 125.1

Increase (decrease) in operating capital $ ( 844.0 ) $ 160.5 $ 30.9

Supplemental financial information (in millions):

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Interest paid $ 173.9 $ 219.3 $ 205.5

Interest paid for 2021 includes a $ 37.7 million cash payment on the early redemption of all the outstanding $1.25 billion principal amount of 3.625% Senior Notes due 2022.

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Non-cash increase in lease liabilities (in millions):

12 unchanged sentences

$ 1,299.4 $ 1,395.6 $ 951.2

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Leases and Property and Equipment

5 unchanged sentences

Sublease income ( 3.8 ) ( 3.8 )

$ 304.2 $ 335.5

Finance lease cost:

1 unchanged sentence

Interest 5.7 4.9

$ 57.5 $ 55.5

Total lease cost $ 326.8 $ 361.7

The maturities of our lease liabilities at December 31, 2021 were (in millions):

Future lease payments at December 31, 2022 are (in millions):

Operating Leases Finance Leases

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Total lease payments 1,374.5 153.3

Imputed interest 299.5 5.5

Present value of lease liability $ 1,177.2 $ 133.4

The balance sheet classification of our operating leases was (in millions):

Interest 266.6 7.1

Present value of lease liabilities $ 1,107.9 $ 146.2

The balance sheet classification of our operating leases at December 31 was (in millions):

Operating lease ROU assets $ 1,165.0 $ 1,202.9

3 unchanged sentences

$ 1,107.9 $ 1,177.2

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.

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Office and equipment operating leases at December 31, 2022 and 2021, had a weighted average remaining lease term of 6.9 and 7.5 years, respectively, and a weighted average discount rate of 3.4 % and 3.2 %, respectively.

Property and Equipment

6 unchanged sentences

Finance leases at December 31, 2022 and 2021, had a weighted average remaining lease term of 3.1 years and 3.1 years, respectively, and a weighted average discount rate of 5.1 % and 4.3 %, respectively.

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Temporary Equity - Redeemable Noncontrolling Interests

Owners of noncontrolling equity interests in some of our subsidiaries have the right in certain circumstances to require us to purchase all or a portion of their equity interest at fair value as defined in the applicable agreements.

Assuming that the subsidiaries perform over the relevant periods at their current profit levels, at December 31, 2021 the aggregate estimated maximum amount we could be required to pay in future periods is $ 345.3 million, of which $ 107.5 million is currently exercisable by the holders.

Assuming that the subsidiaries perform at their current and projected profit levels, at December 31, 2022, the aggregate estimated amount we could be required to pay in future periods is $ 382.9 million, of which $ 145.1 million is currently exercisable by the holders.

If these rights are exercised, there would be an increase in net income attributable to Omnicom as a result of our increased ownership interest and the reduction of net income attributable to noncontrolling interests.

The ultimate amount paid could be significantly different because the redemption amount depends on the future results of operations of the subject businesses, the timing of the exercise of these rights and changes in foreign currency exchange rates.

Upon redemption, the difference between the estimated redemption value and the actual amount paid is recorded in additional paid-in capital.

Commitments and Contingent Liabilities

1 unchanged sentence

We do not expect that these proceedings will have a material adverse effect on our results of operations or financial position.

Accumulated Other Comprehensive Income

Accumulated Other Comprehensive Income (Loss)

Changes in accumulated other comprehensive income (loss), net of income taxes were (in millions):

8 unchanged sentences

December 31, 2022 $ ( 12.1 ) $ ( 41.3 ) $ ( 1,384.5 ) $ ( 1,437.9 )

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Financial assets and liabilities measured at fair value on a recurring basis were (in millions):

1 unchanged sentence

Cash and cash equivalents $ 4,281.8 $ 4,281.8

Short-term investments $ 60.7 60.7

Marketable equity securities 0.9 0.9

Foreign currency derivatives $ 0.1 $ 0.1

Cross currency swaps - net investment hedge 16.5 16.5

Contingent purchase price obligations $ 115.0 115.0

5 unchanged sentences

Contingent purchase price obligations $ 167.1 167.1

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Changes in contingent purchase price obligations were (in millions):

7 unchanged sentences

Cash and cash equivalents $ 4,281.8 $ 4,281.8 $ 5,316.8 $ 5,316.8

Short-term investments 60.7 60.7 — —

Marketable equity securities 0.9 0.9 1.1 1.1

3 unchanged sentences

Foreign currency derivatives 0.1 0.1 0.1 0.1

Cross currency swaps - net investment hedge 16.5 16.5 — —

Contingent purchase price obligations 115.0 115.0 167.1 167.1

Long-term debt 5,577.2 4,993.4 5,685.7 6,011.6

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 values of the cross-currency swaps and foreign currency derivative instruments are determined using model-derived valuations, taking into consideration foreign currency rates, interest 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.

The fair value of long-term debt is based on quoted market prices.

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Derivative Instruments and Hedging Activities

1 unchanged sentence

We use forward foreign exchange contracts as economic hedges to manage the cash flow volatility arising from foreign exchange rate fluctuations.

We use net investment hedges to manage the volatility of foreign exchange rates on the investment in our foreign subsidiaries.

We do not use derivatives for trading or speculative purposes.

11 unchanged sentences

To manage this risk, we had outstanding forward foreign exchange contracts with an aggregate notional amount of $ 40.3 million and $ 77.3 million at December 31, 2022 and 2021, respectively.

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AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Foreign currency derivatives are designated as fair value hedges;

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The terms of our forward foreign exchange contracts are generally less than 90 days.

In 2022, we entered into fixed-to-fixed cross currency swaps with a notional value of $ 150 million to hedge a portion of the net investment in our Japanese subsidiaries against volatility in the Yen/U.S.

Dollar exchange rate.

These swaps are designated and qualify as a hedge of a net investment in a foreign subsidiary and are scheduled to mature in 2025 and 2029.

Changes in the fair value of the swaps are recognized in foreign currency translation and are reported in accumulated other comprehensive income (loss), or AOCI.

Any gain or loss will remain in AOCI until the complete or substantially complete liquidation of our investment in the underlying operations.

We have elected to assess the effectiveness of our net investment hedges based on changes in spot exchange rates.

We receive net fixed U.S.

Dollar interest payments, and in 2022, we recorded $ 1.2 million as a reduction of interest expense.

At December 31, 2022, the liability for the swap fair value was $ 16.5 million and is recorded in long-term liabilities.

Interest Rate Risk

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New Accounting Standards

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.

ASU 2021-08 is effective January 1, 2023, and early adoption is permitted.

On January 1, 2023, we adopted 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.

Contracts with customers in the advertising and marketing business are typically short duration contracts.

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.

However, we are still in the process of assessing the impact of ASU 2021-08 on our results of operations and financial position.

To the extent we acquire companies in the advertising and marketing communications business, the adoption of this standard will not have a material impact on our results of operations or financial position.

Subsequent Events

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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.

What changed 10-K

Item 9A. Controls and Procedures