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Quarterly report [Sections 13 or 15(d)]

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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Large accelerated filer ý Accelerated filer ¨
Non-accelerated filer ¨ Smaller reporting company ¨
(Do not check if a smaller reporting company)
INDEX
Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Consolidated Statements of Operations for the Three Months Ended March 31, 2016 and 2015 2
Consolidated Statements of Comprehensive Income for the Three Months Ended March 31, 2016 and 2015 3
Consolidated Balance Sheets as of March 31, 2016 and December 31, 2015 4
Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2016 and 2015 5
Consolidated Statements of Stockholders’ Equity for the Three Months Ended March 31, 2016 and 2015 6
Notes to Consolidated Financial Statements 8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 19
Item 3. Quantitative and Qualitative Disclosures about Market Risk 30
Item 4. Controls and Procedures 30
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 31
Item 1A. Risk Factors 31
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 31
Item 6. Exhibits 31
SIGNATURES 32
INDEX TO EXHIBITS 33
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;
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;
developments from changes in the regulatory and legal environment for advertising and marketing and communications services companies around the world.
Three months ended
March 31,
2016 2015
REVENUE $ 1,742.0
$ 1,676.0
OPERATING EXPENSES:
Salaries and related expenses 1,270.9
1,215.2
Office and general expenses 450.2
453.0
Total operating expenses 1,721.1
1,668.2
OPERATING INCOME 20.9
7.8
EXPENSES AND OTHER INCOME:
Interest expense (22.6 ) (20.9 )
Interest income 5.8
7.2
Other (expense) income, net (17.1 ) 0.3
Total (expenses) and other income (33.9 ) (13.4 )
Loss before income taxes (13.0 ) (5.6 )
Benefit of income taxes (15.6 ) (1.4 )
Income (loss) of consolidated companies 2.6
(4.2 )
Equity in net income of unconsolidated affiliates 0.1
0.0
NET INCOME (LOSS) 2.7
(4.2 )
Net loss attributable to noncontrolling interests 2.7
2.4
NET INCOME (LOSS) AVAILABLE TO IPG COMMON STOCKHOLDERS $ 5.4
$ (1.8 )
Earnings (loss) per share available to IPG common stockholders:
Basic $ 0.01
$ 0.00
Diluted $ 0.01
$ 0.00
Weighted-average number of common shares outstanding:
Basic 400.6
411.1
Diluted 409.3
411.1
Dividends declared per common share $ 0.15
$ 0.12
Three months ended
March 31,
2016 2015
NET INCOME (LOSS) $ 2.7
$ (4.2 )
OTHER COMPREHENSIVE INCOME (LOSS)
Foreign currency translation:
Foreign currency translation adjustments 50.0
(135.1 )
Less: reclassification adjustments recognized in net income (loss) 5.9
(0.5 )
55.9
(135.6 )
Available-for-sale securities:
Changes in fair value of available-for-sale securities 0.1
0.2
Income tax effect 0.0
(0.3 )
0.1
(0.1 )
Derivative instruments:
Recognition of previously unrealized losses included in net income (loss) 0.5
0.5
Income tax effect (0.2 ) (0.2 )
0.3
0.3
Defined benefit pension and other postretirement plans:
Net actuarial gains for the period 0.2
4.4
Less: amortization of unrecognized losses, transition obligation and prior service cost included in net income (loss) 2.7
3.0
Other 0.1
0.1
Income tax effect (0.7 ) (0.9 )
2.3
6.6
Other comprehensive income (loss), net of tax 58.6
(128.8 )
TOTAL COMPREHENSIVE INCOME (LOSS) 61.3
(133.0 )
Less: comprehensive loss attributable to noncontrolling interests (2.2 ) (3.2 )
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO IPG $ 63.5
$ (129.8 )
March 31,
2016
December 31,
2015
ASSETS:
Cash and cash equivalents $ 673.4
$ 1,502.9
Marketable securities 6.9
6.8
Accounts receivable, net of allowance of $52.7 and $54.2, respectively 3,718.9
4,361.0
Expenditures billable to clients 1,774.2
1,594.4
Other current assets 312.6
228.0
Total current assets 6,486.0
7,693.1
Property and equipment, net of accumulated depreciation of $969.7
and $961.9, respectively
565.1
567.2
Deferred income taxes 277.0
228.4
Goodwill 3,681.8
3,608.5
Other non-current assets 506.9
487.9
TOTAL ASSETS $ 11,516.8
$ 12,585.1
LIABILITIES:
Accounts payable $ 5,785.1
$ 6,672.0
Accrued liabilities 620.6
760.3
Short-term borrowings 131.7
150.1
Current portion of long-term debt 2.0
1.9
Total current liabilities 6,539.4
7,584.3
Long-term debt 1,609.9
1,610.3
Deferred compensation 414.1
464.2
Other non-current liabilities 733.2
672.6
TOTAL LIABILITIES 9,296.6
10,331.4
Redeemable noncontrolling interests (see Note 4) 246.3
251.9
STOCKHOLDERS’ EQUITY:
Common stock 40.7
40.4
Additional paid-in capital 1,434.0
1,404.1
Retained earnings 1,379.0
1,437.6
Accumulated other comprehensive loss, net of tax (787.5 ) (845.6 )
2,066.2
2,036.5
Less: Treasury stock (124.7 ) (71.0 )
Total IPG stockholders’ equity 1,941.5
1,965.5
Noncontrolling interests 32.4
36.3
TOTAL STOCKHOLDERS’ EQUITY 1,973.9
2,001.8
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 11,516.8
$ 12,585.1
Three months ended
March 31,
2016 2015
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 2.7
$ (4.2 )
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation and amortization of fixed assets and intangible assets 38.0
38.7
Provision for uncollectible receivables 3.2
2.7
Amortization of restricted stock and other non-cash compensation 23.1
16.8
Net amortization of bond discounts and deferred financing costs 1.4
1.4
Deferred income tax benefit (28.1 ) (31.8 )
Losses on sales of businesses 16.3
0.1
Other 25.2
10.8
Changes in assets and liabilities, net of acquisitions and dispositions, providing (using) cash:
Accounts receivable 686.5
460.5
Expenditures billable to clients (137.3 ) (111.1 )
Other current assets (59.2 ) (31.0 )
Accounts payable (981.1 ) (929.9 )
Accrued liabilities (198.8 ) (173.3 )
Other non-current assets and liabilities (41.0 ) (30.4 )
Net cash used in operating activities (649.1 ) (780.7 )
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (27.0 ) (20.2 )
Acquisitions, net of cash acquired (27.0 ) 0.0
Other investing activities (5.2 ) 0.2
Net cash used in investing activities (59.2 ) (20.0 )
CASH FLOWS FROM FINANCING ACTIVITIES:
Common stock dividends (59.9 ) (49.3 )
Repurchase of common stock (53.7 ) (51.2 )
Net (decrease) increase in short term bank borrowings (24.6 ) 34.3
Tax payments for employee shares withheld (19.5 ) (16.2 )
Distributions to noncontrolling interests (4.0 ) (1.2 )
Exercise of stock options 3.9
9.1
Excess tax benefit on share-based compensation 0.0
8.5
Acquisition-related payments 0.0
(2.4 )
Other financing activities (0.1 ) 1.1
Net cash used in financing activities (157.9 ) (67.3 )
Effect of foreign exchange rate changes on cash and cash equivalents 36.7
(58.3 )
Net decrease in cash and cash equivalents (829.5 ) (926.3 )
Cash and cash equivalents at beginning of period 1,502.9
1,660.6
Cash and cash equivalents at end of period $ 673.4
$ 734.3
Common Stock Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive Loss, Net of Tax Treasury Stock Total IPG Stockholders’ Equity Noncontrolling Interests Total Stockholders’ Equity
Shares Amount
Balance at December 31, 2015 406.3
$ 40.4
$ 1,404.1
$ 1,437.6
$ (845.6 ) $ (71.0 ) $ 1,965.5
$ 36.3
$ 2,001.8
Net income 5.4
5.4
(2.7 ) 2.7
Other comprehensive income 58.1
58.1
0.5
58.6
Reclassifications related to redeemable noncontrolling interests

2.9
2.9
Distributions to noncontrolling interests (4.0 ) (4.0 )
Change in redemption value of redeemable noncontrolling interests (3.8 ) (3.8 ) (3.8 )
Repurchase of common stock (53.7 ) (53.7 ) (53.7 )
Common stock dividends (59.9 ) (59.9 ) (59.9 )
Stock-based compensation 3.4
0.3
47.7
48.0
48.0
Exercise of stock options 0.5
0.1
3.9
4.0
4.0
Shares withheld for taxes (1.0 ) (0.1 ) (22.2 ) (22.3 ) (22.3 )
Other 0.5
(0.3 ) 0.2
(0.6 ) (0.4 )
Balance at March 31, 2016 409.2
$ 40.7
$ 1,434.0
$ 1,379.0
$ (787.5 ) $ (124.7 ) $ 1,941.5
$ 32.4
$ 1,973.9
Common Stock Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive Loss, Net of Tax Treasury Stock Total IPG Stockholders’ Equity Noncontrolling Interests Total Stockholders’ Equity
Shares Amount
Balance at December 31, 2014 414.6
$ 41.2
$ 1,547.5
$ 1,183.3
$ (636.7 ) $ (19.0 ) $ 2,116.3
$ 34.9
$ 2,151.2
Net loss (1.8 ) (1.8 ) (2.4 ) (4.2 )
Other comprehensive loss (128.0 ) (128.0 ) (0.8 ) (128.8 )
Reclassifications related to redeemable noncontrolling interests 1.5
1.5
Distributions to noncontrolling interests (1.2 ) (1.2 )
Change in redemption value of redeemable noncontrolling interests (5.8 ) (5.8 ) (5.8 )
Repurchase of common stock (51.2 ) (51.2 ) (51.2 )
Common stock dividends (49.3 ) (49.3 ) (49.3 )
Stock-based compensation 2.2
0.2
31.8
32.0
32.0
Exercise of stock options 0.9
0.1
9.1
9.2
9.2
Shares withheld for taxes (0.8 ) (0.1 ) (17.0 ) (17.1 ) (17.1 )
Excess tax benefit from stock-based compensation 8.5
8.5
8.5
Other 0.1
(0.2 ) (0.1 ) (0.1 )
Balance at March 31, 2015 416.9
$ 41.4
$ 1,580.0
$ 1,126.2
$ (764.7 ) $ (70.2 ) $ 1,912.7
$ 32.0
$ 1,944.7
Effective Interest Rate March 31,
2016
December 31,
2015
Book Value Fair Value 1 Book Value Fair Value 1
2.25% Senior Notes due 2017 (less unamortized discount and issuance costs of $0.2 and $0.8) 2.30% $ 299.0
$ 299.7
$ 298.8
$ 299.3
4.00% Senior Notes due 2022 (less unamortized discount and issuance costs of $1.9 and $1.5) 4.13% 246.6
257.5
246.4
250.9
3.75% Senior Notes due 2023 (less unamortized discount and issuance costs of $1.1 and $2.8) 4.32% 496.1
497.1
496.0
484.8
4.20% Senior Notes due 2024 (less unamortized discount and issuance costs of $0.8 and $3.3) 4.24% 495.9
517.2
495.8
496.4
Other notes payable and capitalized leases 74.3
74.3
75.2
75.2
Total long-term debt 1,611.9
1,612.2
Less: current portion 2.0
1.9
Long-term debt, excluding current portion $ 1,609.9
$ 1,610.3
Three months ended
March 31,
2016 2015
Net income (loss) available to IPG common stockholders $ 5.4
$ (1.8 )
Weighted-average number of common shares outstanding - basic 400.6
411.1
Add: Effect of dilutive securities
Restricted stock, stock options and other equity awards 8.7
N/A
Weighted-average number of common shares outstanding - diluted 409.3
411.1
Earnings (loss) per share available to IPG common stockholders:
Basic $ 0.01
$ 0.00
Diluted $ 0.01
$ 0.00
Three months ended
March 31,
2016 2015
Cost of investment: current-year acquisitions $ 29.8
$ 0.0
Cost of investment: prior-year acquisitions 0.5
2.4
Less: net cash acquired (3.3 ) 0.0
Total cost of investment 27.0
2.4
Operating expense 1 0.0
0.4
Total cash paid for acquisitions 2 $ 27.0
$ 2.8
1 Represents cash payments made that were either in excess of the initial value of contingent payments or contingent upon the future employment of the former owners of the acquired companies and are recorded in the operating section of the Consolidated Statements of Cash Flows.
2 $27.0 for the three months ended March 31, 2016 is classified under the investing section of the unaudited Consolidated Statements of Cash Flows, as acquisitions, net of cash acquired. This amount relates to initial payments for new transactions. $2.4 of cash paid for three months ended March 31, 2015 is classified under the financing section of the unaudited Consolidated Statements of Cash Flows as acquisition-related payments. This amount relates to deferred payments and increases in our ownership interest for prior acquisitions.
Three months ended
March 31,
2016 2015
Balance at beginning of period $ 251.9
$ 257.4
Change in related noncontrolling interests balance (2.9 ) (2.1 )
Changes in redemption value of redeemable noncontrolling interests:
Redemptions and other (9.0 ) (15.7 )
Redemption value adjustments 6.3
3.2
Balance at end of period $ 246.3
$ 242.8
March 31,
2016
December 31,
2015
Salaries, benefits and related expenses $ 333.2
$ 502.4
Acquisition obligations 72.5
50.1
Office and related expenses 43.0
51.0
Interest 16.7
17.3
Restructuring and other reorganization-related 2.8
3.3
Other 152.4
136.2
Total accrued liabilities $ 620.6
$ 760.3
Three months ended
March 31,
2016 2015
Losses on sales of businesses and investments $ (16.3 ) $ (0.1 )
Other (expense) income, net (0.8 ) 0.4
Total other (expense) income, net $ (17.1 ) $ 0.3
Three months ended
March 31,
2016 2015
Number of shares repurchased 2.5
2.5
Aggregate cost, including fees $ 53.7
$ 51.2
Average price per share, including fees $ 21.67
$ 20.84
Awards Weighted-average grant-date fair value (per award)
Stock-settled awards 0.9
$ 21.59
Performance-based awards 3.2
$ 19.54
Total stock-based compensation awards 4.1
Foreign Currency Translation Adjustments Available-for-Sale Securities Derivative Instruments Defined Benefit Pension and Other Postretirement Plans Total
Balance as of December 31, 2015 $ (665.6 ) $ 1.3
$ (9.6 ) $ (171.7 ) $ (845.6 )
Other comprehensive income before reclassifications 49.5
0.1
0.0
0.3
49.9
Amount reclassified from accumulated other comprehensive loss, net of tax 5.9
0.0
0.3
2.0
8.2
Balance as of March 31, 2016 $ (610.2 ) $ 1.4
$ (9.3 ) $ (169.4 ) $ (787.5 )
Foreign Currency Translation Adjustments Available-for-Sale Securities Derivative Instruments Defined Benefit Pension and Other Postretirement Plans Total
Balance as of December 31, 2014 $ (436.3 ) $ 0.8
$ (10.9 ) $ (190.3 ) $ (636.7 )
Other comprehensive (loss) income before reclassifications (134.3 ) 0.2
0.0
4.5
(129.6 )
Amount reclassified from accumulated other comprehensive loss, net of tax (0.5 ) (0.3 ) 0.3
2.1
1.6
Balance as of March 31, 2015 $ (571.1 ) $ 0.7
$ (10.6 ) $ (183.7 ) $ (764.7 )
Three months ended
March 31,
Affected Line Item in the Consolidated Statements of Operations
2016 2015
Foreign currency translation adjustments $ 5.9
$ (0.5 ) Other (expense) income, net
Losses on derivative instruments 0.5
0.5
Interest expense
Amortization of defined benefit pension and postretirement plans items 1 2.7
3.0
Tax effect (0.9 ) (1.4 ) Benefit of income taxes
Total amount reclassified from accumulated other comprehensive loss, net of tax $ 8.2
$ 1.6
Domestic Pension Plan Foreign Pension Plans Domestic Postretirement Benefit Plan
Three months ended March 31, 2016 2015 2016 2015 2016 2015
Service cost $ 0.0
$ 0.0
$ 2.7
$ 2.5
$ 0.0
$ 0.0
Interest cost 1.5
1.5
4.5
4.7
0.4
0.4
Expected return on plan assets (1.7 ) (1.9 ) (5.3 ) (5.1 ) 0.0
0.0
Amortization of:
Prior service credit 0.0
0.0
0.0
0.0
(0.1 ) 0.0
Unrecognized actuarial losses 1.9
2.0
0.9
1.0
0.0
0.0
Net periodic cost $ 1.7
$ 1.6
$ 2.8
$ 3.1
$ 0.3
$ 0.4
Three months ended
March 31,
2016 2015
Revenue:
IAN $ 1,401.6
$ 1,345.1
CMG 340.4
330.9
Total $ 1,742.0
$ 1,676.0
Segment operating income (loss):
IAN $ 39.7
$ 31.4
CMG 20.4
19.9
Corporate and other (39.2 ) (43.5 )
Total 20.9
7.8
Interest expense (22.6 ) (20.9 )
Interest income 5.8
7.2
Other (expense) income, net (17.1 ) 0.3
Loss before income taxes $ (13.0 ) $ (5.6 )
Depreciation and amortization of property and equipment and intangible assets:
IAN $ 27.6
$ 29.4
CMG 4.8
4.6
Corporate and other 5.6
4.7
Total $ 38.0
$ 38.7
Capital expenditures:
IAN $ 20.3
$ 12.1
CMG 1.5
1.1
Corporate and other 5.2
7.0
Total $ 27.0
$ 20.2
March 31,
2016
December 31,
2015
Total assets:
IAN $ 10,314.6
$ 10,738.2
CMG 1,359.1
1,338.6
Corporate and other (156.9 ) 508.3
Total $ 11,516.8
$ 12,585.1
Level 1 Unadjusted quoted prices in active markets for identical assets or liabilities. An active market for the asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.
Level 2 Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3 Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
March 31, 2016 Balance Sheet Classification
Level 1 Level 2 Level 3 Total
Assets
Cash equivalents $ 154.5
$ 0.0
$ 0.0
$ 154.5
Cash and cash equivalents
Short-term marketable securities 6.9
0.0
0.0
6.9
Marketable securities
Long-term investments 0.5
0.0
0.0
0.5
Other non-current assets
Total $ 161.9
$ 0.0
$ 0.0
$ 161.9
As a percentage of total assets 1.4 % 0.0 % 0.0 % 1.4 %
Liabilities
Mandatorily redeemable noncontrolling interests 1 $ 0.0
$ 0.0
$ 56.9
$ 56.9
December 31, 2015 Balance Sheet Classification
Level 1 Level 2 Level 3 Total
Assets
Cash equivalents $ 875.7
$ 0.0
$ 0.0
$ 875.7
Cash and cash equivalents
Short-term marketable securities 6.8
0.0
0.0
6.8
Marketable securities
Long-term investments 0.4
0.0
0.0
0.4
Other non-current assets
Total $ 882.9
$ 0.0
$ 0.0
$ 882.9
As a percentage of total assets 7.0 % 0.0 % 0.0 % 7.0 %
Liabilities
Mandatorily redeemable noncontrolling interests 1 $ 0.0
$ 0.0
$ 45.0
$ 45.0
1 Relates to unconditional obligations to purchase additional noncontrolling equity shares of consolidated subsidiaries. Fair value measurement of the obligation was based upon the amount payable as if the forward contracts were settled. The amount redeemable within the next twelve months is classified in accrued liabilities; any interests redeemable thereafter are classified in other non-current liabilities.
Three months ended
March 31,
Liabilities 2016 2015
Mandatorily redeemable noncontrolling interests - Balance at beginning of period $ 45.0
$ 32.8
Level 3 additions 10.4
15.0
Level 3 reductions (0.1 ) (1.4 )
Realized losses included in net income 1.8
0.4
Foreign currency translation (0.2 ) 0.0
Mandatorily redeemable noncontrolling interests - Balance at end of period $ 56.9
$ 46.8
March 31, 2016 December 31, 2015
Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
Total long-term debt $ 0.0
$ 1,571.5
$ 74.3
$ 1,645.8
$ 0.0
$ 1,531.4
$ 75.2
$ 1,606.6
Three months ended
March 31, 2016
% Increase/(Decrease) Total Organic
Revenue 3.9 % 6.7 %
Salaries and related expenses 4.6 % 7.6 %
Office and general expenses (0.6 )% 2.7 %
Three months ended
March 31,
2016 2015
Operating margin 1.2 % 0.5 %
Expenses as % of revenue:
Salaries and related expenses 73.0 % 72.5 %
Office and general expenses 25.8 % 27.0 %
Net income (loss) available to IPG common stockholders $ 5.4
$ (1.8 )
Earnings (loss) per share available to IPG common stockholders:
Basic $ 0.01
$ 0.00
Diluted $ 0.01
$ 0.00
Components of Change Change
Three months ended
March 31, 2015
Foreign Currency Net Acquisitions/ (Divestitures) Organic Three months ended
March 31, 2016
Organic Total
Consolidated $ 1,676.0
$ (51.9 ) $ 5.5
$ 112.4
$ 1,742.0
6.7 % 3.9 %
Domestic 1,003.8
0.0
3.7
83.7
1,091.2
8.3 % 8.7 %
International 672.2
(51.9 ) 1.8
28.7
650.8
4.3 % (3.2 )%
United Kingdom 164.9
(9.3 ) 4.3
5.7
165.6
3.5 % 0.4 %
Continental Europe 155.1
(6.2 ) (3.9 ) 2.6
147.6
1.7 % (4.8 )%
Asia Pacific 187.8
(10.9 ) 0.2
5.0
182.1
2.7 % (3.0 )%
Latin America 77.5
(18.7 ) (2.5 ) 9.0
65.3
11.6 % (15.7 )%
Other 86.9
(6.8 ) 3.7
6.4
90.2
7.4 % 3.8 %
Three months ended
March 31,
2016 2015
Salaries and related expenses $ 1,270.9
$ 1,215.2
Office and general expenses 450.2
453.0
Total operating expenses $ 1,721.1
$ 1,668.2
Operating income $ 20.9
$ 7.8
Components of Change Change
2015 Foreign Currency Net Acquisitions/ (Divestitures) Organic 2016 Organic Total
Three months ended March 31, $ 1,215.2
$ (38.1 ) $ 1.5
$ 92.3
$ 1,270.9
7.6 % 4.6 %
Three months ended
March 31,
2016 2015
Salaries and related expenses 73.0 % 72.5 %
Base salaries, benefits and tax 59.6 % 60.5 %
Incentive expense 4.6 % 3.9 %
Severance expense 1.4 % 1.0 %
Temporary help 4.0 % 3.9 %
All other salaries and related expenses 3.4 % 3.2 %
Components of Change Change
2015 Foreign Currency Net Acquisitions/ (Divestitures) Organic 2016 Organic Total
Three months ended March 31, $ 453.0
$ (15.6 ) $ 0.4
$ 12.4
$ 450.2
2.7 % (0.6 )%
Three months ended
March 31,
2016 2015
Office and general expenses 25.8 % 27.0 %
Professional fees 1.8 % 1.7 %
Occupancy expense (excluding depreciation and amortization) 7.2 % 7.3 %
Travel & entertainment, office supplies and telecommunications 3.4 % 3.6 %
All other office and general expenses 13.4 % 14.4 %
Three months ended
March 31,
2016
2015
Cash interest on debt obligations $ (19.3 ) $ (19.1 )
Non-cash interest (3.3 ) (1.8 )
Interest expense (22.6 ) (20.9 )
Interest income 5.8
7.2
Net interest expense (16.8 ) (13.7 )
Other (expense) income, net (17.1 ) 0.3
Total (expenses) and other income $ (33.9 ) $ (13.4 )
Three months ended
March 31,
2016 2015
Losses on sales of businesses and investments $ (16.3 ) $ (0.1 )
Other (expense) income, net (0.8 ) 0.4
Total other (expense) income, net $ (17.1 ) $ 0.3
Three months ended
March 31,
2016 2015
Loss before income taxes $ (13.0 ) $ (5.6 )
Benefit of income taxes $ (15.6 ) $ (1.4 )
Components of Change Change
Three months ended
March 31, 2015
Foreign Currency Net Acquisitions/ (Divestitures) Organic Three months ended
March 31, 2016
Organic Total
Consolidated $ 1,345.1
$ (44.2 ) $ (1.2 ) $ 101.9
$ 1,401.6
7.6 % 4.2 %
Domestic 790.9
0.0
0.0
74.5
865.4
9.4 % 9.4 %
International 554.2
(44.2 ) (1.2 ) 27.4
536.2
4.9 % (3.2 )%
Three months ended
March 31,
2016 2015 Change
Segment operating income $ 39.7
$ 31.4
26.4 %
Operating margin 2.8 % 2.3 %
Components of Change Change
Three months ended
March 31, 2015
Foreign Currency Net Acquisitions/ (Divestitures) Organic Three months ended
March 31, 2016
Organic Total
Consolidated $ 330.9
$ (7.7 ) $ 6.7
$ 10.5
$ 340.4
3.2 % 2.9 %
Domestic 212.9
0.0
3.7
9.2
225.8
4.3 % 6.1 %
International 118.0
(7.7 ) 3.0
1.3
114.6
1.1 % (2.9 )%
Three months ended
March 31,
2016 2015 Change
Segment operating income $ 20.4
$ 19.9
2.5 %
Operating margin 6.0 % 6.0 %
Three months ended
March 31,
Cash Flow Data 2016 2015
Net income (loss), adjusted to reconcile net income (loss) to net cash used in operating activities 1 $ 81.8
$ 34.5
Net cash used in working capital 2 (689.9 ) (784.8 )
Changes in other non-current assets and liabilities using cash (41.0 ) (30.4 )
Net cash used in operating activities $ (649.1 ) $ (780.7 )
Net cash used in investing activities (59.2 ) (20.0 )
Net cash used in financing activities (157.9 ) (67.3 )
Balance Sheet Data March 31,
2016
December 31,
2015
March 31,
2015
Cash, cash equivalents and marketable securities $ 680.3
$ 1,509.7
$ 741.2
Short-term borrowings $ 131.7
$ 150.1
$ 135.7
Current portion of long-term debt 2.0
1.9
2.0
Long-term debt 1,609.9
1,610.3
1,610.4
Total debt $ 1,743.6
$ 1,762.3
$ 1,748.1
Acquisitions – We paid cash of $26.5, which was net of cash acquired of $3.3, for acquisitions completed in the first quarter of 2016 . We also paid cash of $0.5 in up-front payments related to prior-year acquisitions. In addition to potential cash expenditures for new acquisitions, we expect to pay approximately $66.0 over the remainder of 2016 related to prior-year acquisitions. We may also be required to pay approximately $35.0 in 2016 related to put options held by minority shareholders if exercised. We will continue to evaluate strategic opportunities to grow and continue to strengthen our market position, particularly in our digital and marketing services offerings, and to expand our presence in high-growth and key strategic world markets.
Dividends – In the first quarter of 2016 , we paid a cash dividend of $0.15 per share on our common stock, which corresponded to an aggregate dividend payment of $59.9 . Assuming we continue to pay a quarterly dividend of $0.15 per share, and there is no significant change in the number of outstanding shares as of March 31, 2016 , we would expect to pay an additional approximately $182.0 in 2016 .
Contributions to pension plans – Our funding policy regarding our pension plans is to make contributions necessary to satisfy minimum pension funding requirements, plus such additional contributions as we consider appropriate to improve the plans’ funded status. During the first quarter of 2016 , we contributed $8.5 of cash to our foreign pension plans. For the remainder of 2016 , we expect to contribute approximately $15.0 of cash to our foreign pension plans. We do not expect to make any contributions to our domestic pension plan in 2016 .
March 31, 2016
Total Facility Amount Outstanding Letters of Credit 1 Total Available
Cash, cash equivalents and marketable securities $ 680.3
Committed credit agreement $ 1,000.0
$ 0.0
$ 4.5
$ 995.5
Uncommitted credit arrangements $ 764.1
$ 131.7
$ 2.8
$ 629.6
Four Quarters Ended Four Quarters Ended
Financial Covenants March 31, 2016 EBITDA Reconciliation March 31, 2016
Interest coverage ratio (not less than) 1 5.00x Operating income $ 885.0
Actual interest coverage ratio 18.83x Add:
Leverage ratio (not greater than) 1 3.50x Depreciation and amortization 232.9
Actual leverage ratio 1.56x Other non-cash amounts 0.5
EBITDA 1 $ 1,118.4
Moody’s Investor Service Standard and Poor’s Fitch Ratings
Rating Baa3 BBB- BBB
Outlook On Review for Upgrade Positive Stable
Total Number of Shares (or Units) Purchased 1 Average Price Paid per Share (or Unit) 2 Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs 3 Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs 3
January 1 - 31 1,213,913
$ 21.82
1,208,932
$ 132,172,400
February 1 - 29 1,434,110
$ 21.62
422,803
$ 422,962,355
March 1 - 31 863,087
$ 21.39
845,000
$ 404,911,328
Total 3,511,110
$ 21.63
2,476,735
1 Included shares of our common stock, par value $0.10 per share, withheld under the terms of grants under employee stock-based compensation plans to offset tax withholding obligations that arose upon vesting and release of restricted shares (the “Withheld Shares”). We repurchased 4,981 Withheld Shares in January 2016 , 1,011,307 Withheld Shares in February 2016 and 18,087 Withheld Shares in March 2016 , for a total of 1,034,375 Withheld Shares during the three month period.
2 The average price per share for each of the months in the fiscal quarter and for the three month period was calculated by dividing (a) the sum for the applicable period of the aggregate value of the tax withholding obligations and the aggregate amount we paid for shares acquired under our stock repurchase program, described in Note 5 to the unaudited Consolidated Financial Statements, by (b) the sum of the number of Withheld Shares and the number of shares acquired in our stock repurchase program.
3 On February 12, 2016, we announced that our Board of Directors had approved a new share repurchase program to repurchase from time to time up to $300.0 million of our common stock, in addition to amounts available on existing authorizations. There is no expiration date associated with the share repurchase programs.
THE INTERPUBLIC GROUP OF COMPANIES, INC.
By /s/ Michael I. Roth
Michael I. Roth Chairman and Chief Executive Officer
By /s/ Christopher F. Carroll
Christopher F. Carroll Senior Vice President, Controller and Chief Accounting Officer (Principal Accounting Officer)
EXHIBIT NO. DESCRIPTION
10(iii)(A)(1) Description of Changes to the Compensation for Non-Management Directors is incorporated by reference to Exhibit 10(iii)(A)(69) to the Annual Report on Form 10-K of The Interpublic Group of Companies, Inc. for the year ended December 31, 2015, which was filed with the Securities and Exchange Commission on February 22, 2016.
12.1 Computation of Ratios of Earnings to Fixed Charges.
31.1 Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended.
31.2 Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended.
32 Certification of the Chief Executive Officer and the Chief Financial Officer furnished pursuant to 18 U.S.C. Section 1350 and Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended.
101 Interactive Data File, for the period ended March 31, 2016.

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Interpublic Group of: Form, Schedule Or Registration Statement No Filing Party: Date Filed: - April 8, 2016
Other definitive proxy statements - April 8, 2016