What changed in this filing

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Item 1. Financial Statements

2023-10-18 compared with 2023-07-19 · 70 added, 100 removed, 422 unchanged (29% of the section changed)

4 unchanged sentences

(In millions)

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

Current Assets:

43 unchanged sentences

(In millions, except per share amounts)

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

2023 2022 2023 2022

31 unchanged sentences

(In millions)

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

2023 2022 2023 2022

NET INCOME $ 388.3 $ 383.3 $ 1,015.4 $ 947.9

OTHER COMPREHENSIVE INCOME:

OTHER COMPREHENSIVE INCOME (LOSS):

Cash flow hedge:

8 unchanged sentences

Foreign currency translation adjustment ( 110.4 ) ( 261.2 ) ( 34.2 ) ( 520.3 )

Other Comprehensive Income 26.8 ( 284.8 ) 79.9 ( 254.4 )

Other Comprehensive Income (Loss) ( 109.1 ) ( 258.4 ) ( 29.2 ) ( 512.8 )

TOTAL COMPREHENSIVE INCOME 279.2 124.9 986.2 435.1

7 unchanged sentences

(In millions, except per share amounts)

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

2023 2022 2023 2022

16 unchanged sentences

Beginning Balance ( 1,354.2 ) ( 1,488.7 ) ( 1,437.9 ) ( 1,252.3 )

Other comprehensive income 30.3 ( 266.1 ) 83.7 ( 236.4 )

Other comprehensive income (loss) ( 104.3 ) ( 245.8 ) ( 20.6 ) ( 482.2 )

Ending Balance ( 1,458.5 ) ( 1,734.5 ) ( 1,458.5 ) ( 1,734.5 )

20 unchanged sentences

(In millions)

Six Months Ended June 30,

Nine Months Ended September 30,

CASH FLOWS FROM OPERATING ACTIVITIES:

14 unchanged sentences

Acquisition of businesses and interests in affiliates, net of cash acquired ( 80.6 ) ( 276.9 )

Maturity (purchase) of short-term investments 60.8 ( 100.0 )

Proceeds from disposition of subsidiary and other 192.6 35.6

29 unchanged sentences

Risks and Uncertainties

Current global economic challenges, including the impact of the war in Ukraine, high and persistent inflation, rising interest rates, supply chain disruptions, credit market deterioration, and other macroeconomic factors, could cause economic uncertainty and volatility.

Current global economic challenges, including the impact of the ongoing war in Ukraine, high and persistent inflation, rising interest rates, supply chain disruptions, credit market deterioration, and other macroeconomic factors, 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.

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.

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.

Nature of our services

1 unchanged sentence

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, Precision Marketing, Commerce & Branding, Experiential, Execution & Support, Public Relations and Healthcare.

Advertising & Media includes 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.

Commerce & Branding 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.

7 unchanged sentences

Revenue by discipline:

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

2023 2022 2023 2022

1 unchanged sentence

Precision Marketing 383.7 363.3 1,112.7 1,066.4

Commerce & Brand Consulting 210.5 207.0 420.1 418.4

Commerce & Branding 211.6 211.9 631.7 630.3

Experiential 133.3 120.6 445.5 412.3

3 unchanged sentences

Revenue $ 3,578.1 $ 3,443.4 $ 10,631.3 $ 10,420.9

OMNICOM GROUP INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(Amounts in tables in millions, except per share data or unless otherwise noted)

Effective January 1, 2023, we realigned the classification of certain services primarily within our Commerce & Brand Consulting, Execution & Support, and Experiential disciplines and prior year amounts have been reclassified .

Effective January 1, 2023, we realigned the classification of certain services primarily within our Commerce & Branding, Execution & Support, and Experiential disciplines and prior year amounts have been reclassified .

Revenue by geographic market:

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

2023 2022 2023 2022

8 unchanged sentences

Asia-Pacific includes Australia, Greater China, India, Japan, Korea, New Zealand, Singapore and other Asian countries.

Revenue in the United States for the three months ended June 30, 2023, and 2022 was $ 1,850.6 million and $ 1,842.8 million, respectively, and revenue in the United States for six months ended June 30, 2023, and 2022 was $ 3,662.8 million and $ 3,567.4 million, respectively.

Contract assets and liabilities

Revenue in the United States for the three months ended September 30, 2023, and 2022 was $ 1,868.8 million and $ 1,847.8 million, respectively, and revenue in the United States for nine months ended September 30, 2023, and 2022 was $ 5,531.6 million and $ 5,415.2 million, respectively.

Contract assets and contract liabilities

June 30, 2023 December 31, 2022 June 30, 2022

September 30, 2023 December 31, 2022 September 30, 2022

Contract assets:

Media and production costs $ 761.5 $ 725.1 $ 678.4

7 unchanged sentences

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

There were no impairment losses to the contract assets recorded in the six months ended June 30, 2023 and 2022.

There were no impairment losses to the contract assets recorded in the nine months ended September 30, 2023 and 2022.

Contract liabilities primarily represent advance billings to customers in accordance with the terms of the client contracts, principally for the reimbursement of third-party costs that are generally incurred in the near term.

1 unchanged sentence

The computations of basic and diluted net income per share:

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

2023 2022 2023 2022

9 unchanged sentences

Diluted $ 1.86 $ 1.77 $ 4.78 $ 4.27

OMNICOM GROUP INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(Amounts in tables in millions, except per share data or unless otherwise noted)

Goodwill and Intangible Assets

Change in goodwill:

Six Months Ended June 30,

Nine Months Ended September 30,

January 1 $ 9,734.3 $ 9,738.6

5 unchanged sentences

$ 9,889.4 $ 9,499.7

There were no goodwill impairment losses recorded in the six months ended June 30, 2023 and 2022, and there are no accumulated goodwill impairment losses.

There were no goodwill impairment losses recorded in the nine months ended September 30, 2023 and 2022, and there are no accumulated goodwill impairment losses.

Intangible assets:

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

Value Accumulated

8 unchanged sentences

The market assumptions used in our assessment reflected the current economic environment (see Note 1- Risks and Uncertainties ).

Based on the results of our impairment test, we concluded that at May 1, 2023 our goodwill was not impaired.

To better align with our internal financial processes, in 2023, the date of our annual impairment test was changed from June 30 to May 1.

Based on the results of our impairment test, we concluded that as of May 1, 2023 our goodwill was not impaired.

In 2023, to better align with our internal financial processes, the date of our annual impairment test was changed from June 30 to May 1.

Credit Facilities

We have a $ 2.5 billion multi-currency revolving credit facility, or Credit Facility.

In June 2023, the Credit Facility was amended to, among other things, extend the termination date of the Credit Facility to June 2, 2028 and transition the benchmark rate for U.S.

In June 2023, we amended our existing $ 2.5 billion unsecured multi-currency revolving credit facility, or Credit Facility, to, among other things, extend the termination date of the Credit Facility to June 2, 2028 and transition the benchmark rate for U.S.

Dollar denominated loans from LIBOR to the Secured Overnight Financing Rate, or SOFR.

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

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.

During the second quarter of 2023, the maximum amount of commercial paper outstanding was $ 200 million, which was redeemed.

Certain of our international subsidiaries have uncommitted credit lines that are guaranteed by Omnicom aggregating $ 585.5 million.

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

At June 30, 2023, there were no outstanding borrowings under the Credit Facility, and no outstanding commercial paper.

In the third quarter of 2023, we issued commercial paper with a maximum amount outstanding of $ 60 million.

At September 30, 2023, there were no outstanding borrowings under the Credit Facility, and no outstanding commercial paper issuances.

In addition, certain of our international subsidiaries have uncommitted credit lines aggregating $ 576.0 million, that are guaranteed by Omnicom.

All these credit facilities provide additional liquidity sources for operating capital and general corporate purposes.

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.

At June 30, 2023, we were in compliance with this covenant as our Leverage Ratio was 2.4 times.

At September 30, 2023, we were in compliance with this covenant as our Leverage Ratio was 2.4 times.

The Credit Facility does not limit our ability to declare or pay dividends or repurchase our common stock.

Short-Term Debt

Short-term debt of $ 20.5 million and $ 16.9 million at June 30, 2023 and December 31, 2022, respectively, represented bank overdrafts and short-term borrowings primarily of our international subsidiaries.

Short-term debt of $ 14.5 million and $ 16.9 million at September 30, 2023 and December 31, 2022, respectively, represented bank overdrafts and short-term borrowings primarily of our international subsidiaries.

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

OMNICOM GROUP INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(Amounts in tables in millions, except per share data or unless otherwise noted)

Long-Term Debt

Long-term debt:

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

3.65 % Senior Notes due 2024

11 unchanged sentences

Unamortized debt issuance costs ( 23.1 ) ( 26.2 )

Unamortized deferred gain from settlement of interest rate swaps 0.1 0.6

Unamortized deferred gain (loss) from settlement of interest rate swaps, net — 0.6

Long-Term Debt $ 5,572.1 $ 5,577.2

19 unchanged sentences

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.

The main economic components of each agency are employee compensation and related costs, direct service costs and occupancy and other costs, which include rent and occupancy costs, technology costs and other overhead expenses.

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

OMNICOM GROUP INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(Amounts in tables in millions, except per share data or unless otherwise noted)

The agency networks' regional reporting units comprise three regions:

4 unchanged sentences

Americas EMEA Asia-Pacific

June 30, 2023

September 30, 2023

Revenue - Three months ended $ 2,082.6 $ 1,068.4 $ 427.1

Revenue - Six months ended $ 4,064.2 $ 2,145.0 $ 844.0

Revenue - Nine months ended $ 6,146.8 $ 3,213.4 $ 1,271.1

Long-lived assets and goodwill $ 7,742.2 $ 3,355.4 $ 695.4

June 30, 2022

September 30, 2022

Revenue - Three months ended $ 2,046.3 $ 970.2 $ 426.9

Revenue - Six months ended $ 3,956.1 $ 2,163.7 $ 857.7

Revenue - Nine months ended $ 6,002.4 $ 3,133.9 $ 1,284.6

Long-lived assets and goodwill $ 7,753.2 $ 3,039.2 $ 724.2

Our effective tax rate for the six months ended June 30, 2023 decreased period-over-period to 26.4 % from 30.6 %.

The six months ended June 30, 2023 includes an increase of $ 10.7 million in income tax expense related to a lower tax benefit in certain jurisdictions for the real estate and other repositioning costs and an increase in the U.K.

Our effective tax rate for the nine months ended September 30, 2023 decreased period-over-period to 26.3 % from 28.8 %.

The nine months ended September 30, 2023 includes an increase of $ 10.7 million in income tax expense related to a lower tax benefit in certain jurisdictions for the real estate and other repositioning costs and an increase in the U.K.

statutory tax rate, partially offset by $ 10.0 million of previously unrecognized tax benefits.

The higher effective tax rate for the six months ended June 30, 2022 was predominantly due to 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.

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

The IRA levies a 1% excise tax on net stock repurchases after December 31, 2022.

The higher effective tax rate for the nine months ended September 30, 2022 was predominantly due to the non-deductibility of the $ 113.4 million of 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.

The Inflation Reduction Act of 2022, or IRA, levies a 1% excise tax on net stock repurchases after December 31, 2022.

The excise tax is recorded as part of the cost of acquiring treasury stock and is not material.

1 unchanged sentence

The CAMT is not expected to have a material impact on our results of operations or financial position.

Various foreign jurisdictions are in the process of enacting legislation to adopt a minimum effective tax rate described in the Global Anti-Base Erosion, GloBE or Pillar Two, model rules issued by the Organization for Economic Cooperation and Development.

A minimum effective tax rate of 15% would apply to multinational companies with consolidated revenue above €750 million.

Currently, only South Korea and Japan have enacted legislation consistent with the GloBE rules.

Other countries are expected to adopt GloBE rules in 2023 with effective dates beginning in 2024.

Currently, Japan, South Korea and the United Kingdom have enacted legislation effective beginning in 2024 that is consistent with the GloBE rules.

Other countries are expected to adopt GloBE rules within the next year.

Under the GloBE rules, a company would be required to determine a combined effective tax rate for all entities located in a jurisdiction.

If the jurisdictional effective tax rate is less than 15%, a top-up tax generally will be due to bring the jurisdictional effective tax rate up to 15%.

At June 30, 2023, our unrecognized tax benefits were $ 159.6 million.

At September 30, 2023, our unrecognized tax benefits were $ 159.8 million.

Of this amount, approximately $ 154.1 million would affect our effective tax rate upon resolution of the uncertain tax positions.

3 unchanged sentences

Postemployment Arrangements

Six Months Ended June 30,

Nine Months Ended September 30,

2023 2022 2023 2022

5 unchanged sentences

Total net periodic benefit expense $ 10.4 $ 7.6 $ 9.8 $ 10.0

We contributed $ 0.3 million to our defined benefit pension plans in both the six months ended June 30, 2023 and 2022 .

OMNICOM GROUP INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(Amounts in tables in millions, except per share data or unless otherwise noted)

We contributed $ 0.3 million and $ 0.4 million to our defined benefit pension plans in both the nine months ended September 30, 2023 and 2022, respectively .

Real Estate and Other Repositioning Costs

1 unchanged sentence

In the second quarter of 2023, as a result of our continuing efforts to increase efficiencies and relevant skill sets to meet client demands, we incurred severance charges and other exit costs associated with rebalancing our workforce and consolidating operations in certain markets.

For the three and six months ended June 30, 2023, operating expenses included $ 72.3 million ($ 54.5 million after tax), primarily related to severance actions in the second quarter of 2023 and $ 191.5 million ($ 145.5 million after tax), respectively, for non-cash impairment charges for the operating lease right-of-use, or ROU, assets, severance charges, and other exit costs.

As a result, for the nine months ended September 30, 2023, operating expenses included $ 191.5 million ($ 145.5 million after tax), primarily related to non-cash impairment charges for the operating lease right-of-use, or ROU, assets, severance charges, and other exit costs.

There were no real estate and other repositioning charges during the three months ended September 30, 2023.

All severance and other costs will be paid in less than one year.

7 unchanged sentences

In the first quarter of 2022, we recorded pretax charges of $ 113.4 million, which included cash charges of $ 47.6 million and primarily consisted of the loss on the disposition of our net investment in our Russian businesses and included charges related to the suspension of operations in Ukraine.

All of the charges related to the disposition of our businesses in Russia had been paid as of December 31, 2022, and substantially all of our commitments related to the suspension of operations in Ukraine have been paid as of March 31, 2023 .

Supplemental Cash Flow Data

Change in operating capital:

Six Months Ended June 30,

Nine Months Ended September 30,

(Increase) decrease in accounts receivable $ 713.1 $ 1,235.4

12 unchanged sentences

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

OMNICOM GROUP INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(Amounts in tables in millions, except per share data or unless otherwise noted)

Accumulated Other Comprehensive Income (Loss)

2 unchanged sentences

Currency Translation Total

Six Months Ended June 30, 2023

Nine Months Ended September 30, 2023

January 1 $ ( 12.1 ) $ ( 41.3 ) $ ( 1,384.5 ) $ ( 1,437.9 )

3 unchanged sentences

$ ( 9.1 ) $ ( 39.3 ) $ ( 1,410.1 ) $ ( 1,458.5 )

Six Months Ended June 30, 2022

Nine Months Ended September 30, 2022

January 1 $ ( 16.1 ) $ ( 90.4 ) $ ( 1,145.8 ) $ ( 1,252.3 )

10 unchanged sentences

Financial assets and liabilities measured at fair value on a recurring basis:

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total

7 unchanged sentences

Change in the Level 3 fair value measurement of contingent purchase price obligations:

Six Months Ended June 30,

Nine Months Ended September 30,

January 1 $ 115.0 $ 167.1

4 unchanged sentences

$ 292.2 $ 137.1

OMNICOM GROUP INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(Amounts in tables in millions, except per share data or unless otherwise noted)

C arrying amount and fair value of our financial assets and liabilities:

June 30, 2023 December 31, 2022

Carrying amount and fair value of our financial assets and liabilities:

September 30, 2023 December 31, 2022

Value Carrying

14 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.

What changed 10-Q

Item 1. Financial Statements