Attached files
file | filename |
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8-K - INTERPUBLIC GROUP OF COMPANIES, INC. | ipg8k_0302.htm |
EX-99.3 - INTERPUBLIC GROUP OF COMPANIES, INC. | ipg8kex993_0302.htm |
EX-99.2 - INTERPUBLIC GROUP OF COMPANIES, INC. | ipg8kex992_0302.htm |
FOR IMMEDIATE
RELEASE
|
New
York, NY (February 26,
2010)
|
INTERPUBLIC
ANNOUNCES FOURTH QUARTER
AND
FULL YEAR 2009 RESULTS
·
|
Global
economic downturn impacted top line revenue, leading to 8.2% organic
revenue decrease for the fourth quarter of 2009 and 10.8% organic decrease
for full year 2009
|
·
|
Organic
decrease in operating expenses, excluding incremental severance, was 8.0%
for the fourth quarter of 2009 and 9.6% for full year
2009
|
·
|
Operating
income was $268.0 million for the fourth quarter of 2009 and $341.3
million for full year 2009
|
·
|
Cash
flow from operations was $739.4 million for the fourth quarter of 2009 and
$540.8 million for full year 2009
|
Summary
·
|
Revenue
|
o
|
Fourth
quarter 2009 revenue of $1.80 billion, compared to $1.90 billion in the
fourth quarter of 2008, with an organic revenue decrease of 8.2% compared
to the prior period.
|
o
|
Full
year 2009 revenue of $6.03 billion, compared to $6.96 billion in 2008,
with an organic revenue decrease of 10.8% compared to the prior
period.
|
Interpublic
Group 1114 Avenue of the Americas New
York, NY 10036 212-704-1200 tel 212-704-1201
fax
|
·
|
Operating
Results
|
o
|
Operating
income in the fourth quarter of 2009 was $268.0 million, compared to
operating income of $330.6 million in 2008. For the full year
2009, operating income was $341.3 million, compared to operating income of
$589.7 million in 2008.
|
o
|
Severance
charges recorded in the fourth quarter of 2009 were $70.6 million,
compared to $48.4 million in 2008. For the full year 2009,
severance charges recorded were $165.5 million, compared to $88.3 million
in 2008.
|
o
|
Operating
margin was 14.9% and 5.7% for the three and twelve months ended December
31, 2009, respectively, compared to 17.4% and 8.5% for the three and
twelve months ended December 31, 2008,
respectively.
|
o
|
Cash
flow from operations for the fourth quarter of 2009 was $739.4 million,
compared to $719.0 million in 2008. For the full year 2009, cash flow from
operations was $540.8 million, compared to $865.3 million in
2008.
|
·
|
Net
Results
|
o
|
Fourth
quarter 2009 net income attributable to IPG was $136.4 million and net
income available to IPG common stockholders was $129.4 million, or $0.27 per basic and $0.24
per diluted share. This compares to net income attributable to
IPG a year ago of $217.0 million and net income available to IPG common
stockholders of $209.8 million, or $0.45 per basic and $0.39 per diluted
share.
|
Interpublic
Group 1114 Avenue of the Americas New
York, NY 10036 212-704-1200 tel 212-704-1201
fax
o
|
Full
year 2009 net income attributable to IPG was $121.3 million and net income
available to IPG common stockholders was $93.6 million, or $0.20 per basic
and $0.19 per diluted share. This compares to net income
attributable to IPG a year ago of $295.0 million and net income available
to IPG common stockholders of $265.2 million, or $0.57 per basic and $0.52
per diluted share.
|
“Our 2009
results reflect the impact the recession had on revenue, but also the strong
focus on cost discipline brought to bear by our management teams across the
organization. Looking forward, economic conditions appear to have
stabilized, clients are beginning to re-focus on their brands and the tone of
the business is one of cautious optimism,” said Michael I. Roth, Interpublic’s
Chairman and CEO. “As important, last year our agencies received a
degree of industry recognition and honors, across all marketing disciplines,
that is unprecedented for our company. The strength of our
professional offerings positions us to grow in step with a broader economic
recovery. Our combination of contemporary, competitive agencies and
highly disciplined financial management will be key in driving significantly
improved profitability in 2010 and long-term success for IPG.”
Operating
Results
Revenue
Revenue
of $1.80 billion in the fourth quarter of 2009 was down 5.3% compared with the
same period in 2008. During the quarter, the effect of foreign currency
translation was positive 2.9% and the resulting organic decrease in revenue was
8.2%.
Interpublic
Group 1114 Avenue of the Americas New
York, NY 10036 212-704-1200 tel 212-704-1201
fax
For the
full year 2009, revenue was $6.03 billion, down 13.4% compared to 2008. During
the full year 2009, the effect of foreign currency translation was negative
3.6%, the impact of net acquisitions was positive 1.0% and the resulting organic
decrease in revenue was 10.8%.
Operating
Expenses
During
the fourth quarter of 2009, salaries and related expenses were $1.05 billion,
down 2.6% compared to the same period in 2008. After adjusting for currency
effects, salaries and related expenses decreased 6.3% organically. For the full
year 2009, salaries and related expenses decreased 8.8% to $3.96 billion. After
adjusting for currency effects and the effect of net acquisitions, salaries and
related expenses decreased 6.4% organically. Staff cost ratio, which is total
salaries and related expenses as a percentage of total revenue, increased to
58.4% in the fourth quarter of 2009 from 56.8% in the fourth quarter of 2008,
and to 65.7% for the full year 2009 from 62.4% for the comparable prior-year
period.
Over the
past five quarters, the company incurred $213.9 million of severance expense
related to the separation of approximately 6,400 employees, or 14% of its
workforce.
During
the fourth quarter of 2009, office and general expenses were $475.1 million,
down 1.9% compared to the same period in 2008. After adjusting for
currency effects, office and general expenses decreased 7.0%
organically. For the full year 2009, office and general expenses were
$1.72 billion, down 14.5%
Interpublic
Group 1114 Avenue of the Americas New
York, NY 10036 212-704-1200 tel 212-704-1201
fax
compared
to the same period in 2008. After adjusting for currency effects and
the effect of net acquisitions, office and general expenses decreased 11.8%
organically.
Non-Operating
Results and Tax
Net cash
interest expense increased $1.4 million, or 5.6%, in the fourth quarter of 2009
compared to the same period in 2008. For the full year 2009, net cash
interest expense increased $11.0 million, or 11.9% compared to the same period
in 2008.
Other
income, net was $29.1 million and $11.7 million for the three and twelve months
ended December 31, 2009, respectively. Other income in the fourth
quarter included a gain on the sale of an investment and income due to the
settlement and expiration of certain liabilities related to vendor discounts and
credits.
The
income tax provision in the fourth quarter of 2009 was $108.1 million on income
before income taxes of $266.2 million, compared to a provision of $65.7 million
on income before income taxes of $297.4 million in the same period in
2008. The income tax provision for the full year 2009 was $90.1
million on income before income taxes of $232.4 million, compared to a provision
of $156.6 million on income before income taxes of $471.5 million in the same
period in 2008. The effective tax rate for the fourth quarter of 2009 was 40.6%,
compared to 22.1% for the same period a year ago. The effective tax rate for the
full year 2009 was 38.8%, compared to 33.2% for the same period a year
ago.
Balance
Sheet
Interpublic
Group 1114 Avenue of the Americas New
York, NY 10036 212-704-1200 tel 212-704-1201
fax
At
December 31, 2009, cash, cash equivalents and marketable securities totaled
$2.51 billion, compared to $2.27 billion at the end of 2008 and $1.77 billion at
the end of the third quarter of 2009. Total debt of $1.95 billion as
of December 31, 2009 decreased from $2.12 billion as of December 31, 2008,
primarily due to the net repurchases of our debt.
For more
information concerning the company’s financial results, please refer to the
accompanying slide presentation available on our website,
www.interpublic.com.
#
# #
About
Interpublic
Interpublic
is one of the world's leading organizations of advertising agencies and
marketing services companies. Major global brands include Draftfcb,
FutureBrand, GolinHarris International, Initiative, Jack Morton Worldwide, Lowe
Worldwide, Magna, McCann Erickson, Momentum, MRM Worldwide, Octagon, Universal
McCann and Weber Shandwick. Leading domestic brands include
Campbell-Ewald; Campbell Mithun; Carmichael Lynch; Deutsch, a Lowe &
Partners Company; Hill Holliday; ID Media; Mullen; The Martin Agency and
R/GA. For more information, please visit www.interpublic.com.
# #
#
Contact
Information
Philippe
Krakowsky
(212)
704-1328
|
Jerry
Leshne
(Analysts,
Investors)
(212)
704-1439
|
Interpublic
Group 1114 Avenue of the Americas New
York, NY 10036 212-704-1200 tel 212-704-1201
fax
Cautionary
Statement
This
release contains forward-looking statements. Statements in this
release that are not historical facts, including statements about management’s
beliefs and expectations, constitute forward-looking
statements. These statements are based on current plans, estimates
and projections, and are subject to change based on a number of factors,
including those outlined under Item 1A, Risk Factors, in our most recent Annual
Report on Form 10-K. Forward-looking statements speak only as of the
date they are made, and we undertake no obligation to update publicly any of
them in light of new information or future events.
Forward-looking
statements involve inherent risks and uncertainties. A number of
important factors could cause actual results to differ materially from those
contained in any forward-looking statement. Such factors include, but
are not limited to, the following:
·
|
potential
effects of a challenging economy, for example, on the demand for our
advertising and marketing services, on our clients’ financial condition
and on our business or financial
condition;
|
·
|
our
ability to attract new clients and retain existing
clients;
|
·
|
our
ability to retain and attract key
employees;
|
·
|
risks
associated with assumptions we make in connection with our critical
accounting estimates, including changes in assumptions associated with any
effects of a weakened economy;
|
·
|
potential
adverse effects if we are required to recognize impairment charges or
other adverse accounting-related
developments;
|
·
|
risks
associated with the effects of global, national and regional economic and
political conditions, including counterparty risks and fluctuations in
economic growth rates, interest rates and currency exchange rates;
and
|
·
|
developments
from changes in the regulatory and legal environment for advertising and
marketing and communications services companies around the
world.
|
Investors
should carefully consider these factors and the additional risk factors outlined
in more detail under Item 1A, Risk Factors, in our most recent Annual Report on
Form 10-K.
Interpublic
Group 1114 Avenue of the Americas New
York, NY 10036 212-704-1200 tel 212-704-1201
fax
THE
INTERPUBLIC GROUP OF COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED
SUMMARY OF EARNINGS
FOURTH
QUARTER REPORT 2009 AND 2008
(Amounts
in Millions except Per Share Data)
(UNAUDITED)
Three
Months Ended December 31,
|
||||||||||||
2009
|
2008
|
Fav.
(Unfav.)
%
Variance
|
||||||||||
Revenue:
|
||||||||||||
United
States
|
$ | 909.7 | $ | 982.5 | (7.4 | )% | ||||||
International
|
891.5 | 919.3 | (3.0 | )% | ||||||||
Total
Revenue
|
1,801.2 | 1,901.8 | (5.3 | )% | ||||||||
Operating
Expenses:
|
||||||||||||
Salaries
and Related Expenses
|
1,052.8 | 1,081.1 | 2.6 | % | ||||||||
Office
and General Expenses
|
475.1 | 484.2 | 1.9 | % | ||||||||
Restructuring
and Other Reorganization-Related Charges
|
5.3 | 5.9 | N/A | |||||||||
Total
Operating Expenses
|
1,533.2 | 1,571.2 | 2.4 | % | ||||||||
Operating
Income
|
268.0 | 330.6 | (18.9 | )% | ||||||||
Operating
Margin %
|
14.9 | % | 17.4 | % | ||||||||
Expenses
and Other Income:
|
||||||||||||
Interest
Expense
|
(37.9 | ) | (48.0 | ) | ||||||||
Interest
Income
|
7.0 | 15.6 | ||||||||||
Other
Income (Expense), Net
|
29.1 | (0.8 | ) | |||||||||
Total
(Expenses) and Other Income
|
(1.8 | ) | (33.2 | ) | ||||||||
Income
before Income Taxes
|
266.2 | 297.4 | ||||||||||
Provision
for Income Taxes
|
108.1 | 65.7 | ||||||||||
Income
of Consolidated Companies
|
158.1 | 231.7 | ||||||||||
Equity
in Net Income of Unconsolidated Affiliates
|
1.6 | 1.0 | ||||||||||
Net
Income
|
159.7 | 232.7 | ||||||||||
Net
Income Attributable to Noncontrolling Interests 1
|
(23.3 | ) | (15.7 | ) | ||||||||
Net
Income Attributable to IPG 1
|
136.4 | 217.0 | ||||||||||
Dividends
on Preferred Stock
|
(6.9 | ) | (6.9 | ) | ||||||||
Allocation
to Participating Securities
|
(0.1 | ) | (0.3 | ) | ||||||||
Net
Income Available to IPG Common Stockholders 1
|
$ | 129.4 | $ | 209.8 | ||||||||
Earnings
Per Share Available to IPG Common Stockholders –
Basic
|
$ | 0.27 | $ | 0.45 | ||||||||
Diluted
|
$ | 0.24 | $ | 0.39 | ||||||||
Weighted-Average
Number of Common Shares Outstanding –
Basic
|
471.0 | 463.4 | ||||||||||
Diluted
|
568.4 | 562.7 |
1 Effective
January 1, 2009, we adopted authoritative guidance related to noncontrolling
interests. Prior year amounts have been reclassified to conform to
current period presentation.
Interpublic
Group 1114 Avenue of the Americas New
York, NY 10036 212-704-1200 tel 212-704-1201
fax
THE
INTERPUBLIC GROUP OF COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED
SUMMARY OF EARNINGS
ANNUAL
REPORT 2009 AND 2008
(Amounts
in Millions except Per Share Data)
(UNAUDITED)
Twelve
Months Ended December 31,
|
||||||||||||
2009
|
2008
|
Fav.
(Unfav.)
%
Variance
|
||||||||||
Revenue:
|
||||||||||||
United
States
|
$ | 3,372.3 | $ | 3,786.3 | (10.9 | )% | ||||||
International
|
2,655.3 | 3,176.4 | (16.4 | )% | ||||||||
Total
Revenue
|
6,027.6 | 6,962.7 | (13.4 | )% | ||||||||
Operating
Expenses:
|
||||||||||||
Salaries
and Related Expenses
|
3,961.2 | 4,342.6 | 8.8 | % | ||||||||
Office
and General Expenses
|
1,720.5 | 2,013.3 | 14.5 | % | ||||||||
Restructuring
and Other Reorganization-Related Charges
|
4.6 | 17.1 | N/A | |||||||||
Total
Operating Expenses
|
5,686.3 | 6,373.0 | 10.8 | % | ||||||||
Operating
Income
|
341.3 | 589.7 | (42.1 | )% | ||||||||
Operating
Margin %
|
5.7 | % | 8.5 | % | ||||||||
Expenses
and Other Income:
|
||||||||||||
Interest
Expense
|
(155.6 | ) | (211.9 | ) | ||||||||
Interest
Income
|
35.0 | 90.6 | ||||||||||
Other
Income, Net
|
11.7 | 3.1 | ||||||||||
Total
(Expenses) and Other Income
|
(108.9 | ) | (118.2 | ) | ||||||||
Income
before Income Taxes
|
232.4 | 471.5 | ||||||||||
Provision
for Income Taxes
|
90.1 | 156.6 | ||||||||||
Income
of Consolidated Companies
|
142.3 | 314.9 | ||||||||||
Equity
in Net Income of Unconsolidated Affiliates
|
1.1 | 3.1 | ||||||||||
Net
Income
|
143.4 | 318.0 | ||||||||||
Net
Income Attributable to Noncontrolling Interests 1
|
(22.1 | ) | (23.0 | ) | ||||||||
Net
Income Attributable to IPG 1
|
121.3 | 295.0 | ||||||||||
Dividends
on Preferred Stock
|
(27.6 | ) | (27.6 | ) | ||||||||
Allocation
to Participating Securities
|
(0.1 | ) | (2.2 | ) | ||||||||
Net
Income Available to IPG Common Stockholders 1
|
$ | 93.6 | $ | 265.2 | ||||||||
Earnings
Per Share Available to IPG Common Stockholders –
Basic
|
$ | 0.20 | $ | 0.57 | ||||||||
Diluted
|
$ | 0.19 | $ | 0.52 | ||||||||
Weighted-Average
Number of Common Shares Outstanding –
Basic
|
468.2 | 461.5 | ||||||||||
Diluted
|
508.1 | 518.3 |
1 Effective
January 1, 2009, we adopted authoritative guidance related to noncontrolling
interests. Prior year amounts have been reclassified to conform to
current period presentation.
Interpublic
Group 1114 Avenue of the Americas New
York, NY 10036 212-704-1200 tel 212-704-1201
fax