The Interpublic Group of Companies

2019

A Letter from Our Chairman

2019 HIGHLIGHTS

To our shareholders:

Increased net revenue 7.4% to  
$8.63 billion

While 2019 was a successful year for IPG, our focus at present is on the 
current crisis we all are facing together.

Delivered industry-leading organic 
net revenue growth of 3.3%

Expanded adjusted EBITA1 margin 
by 50 basis points to 14.0%

Returned $363 million to 
shareholders through dividends, 
bringing capital returns to our 
owners to $4.4 billion since 2011

Completed the successful 
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clients and position IPG for the 
future

Marked our eighth consecutive year 
of dividend increases

1 See full reconciliations of adjusted results included at 

the end of this Annual Report.

As the world responds to the outbreak of COVID-19, our thoughts are with 
the people affected and the medical professionals working around the clock 
to help those most in need. At IPG, we’re working to do our part by ensuring 
the safety of our employees, developing creative ideas to protect the health 
and well-being of our communities, and setting up our people to help them 
do their best work for our clients while working remotely.

During this time, we have seen our agencies and our people rally around 
one another and our clients, harnessing our individual and collective talents 
to create work that is raising awareness around many of the issues related to 
COVID-19. This communal effort has been both inspiring and effective.

At some point soon, we hope to return to business-as-usual. For the last 
several years, we have shown in our performance when compared to our 
peers that IPG is in a class of its own thanks to our people, our differentiated 
offering, and our modern marketing solutions. We expect to be in a strong 
position to continue this level of performance.

2019 FINANCIAL HIGHLIGHTS

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our targets. Our results again demonstrated that IPG remains highly relevant 
to marketers in an increasingly crowded and complex environment. We have 
a strong portfolio of companies that combine marketing expertise and future-
facing media, data and technology capabilities, which we can deliver through our 
collaborative open architecture model. Our differentiated culture and strategy 
are key reasons our long-term trajectory has been so strong, which has helped us 
to deliver leading organic growth and margin improvement in recent years.

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year was 3.3%, which exceeded the high end of our targeted range for the 
year, and again placed us at the forefront of our industry. In each of the past 
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(cid:156)(cid:213)(cid:192)(cid:3)(cid:86)(cid:156)(cid:152)(cid:195)(cid:136)(cid:195)(cid:204)(cid:105)(cid:152)(cid:204)(cid:3)(cid:143)(cid:105)(cid:219)(cid:105)(cid:143)(cid:3)(cid:156)(cid:118)(cid:3)(cid:62)(cid:86)(cid:133)(cid:136)(cid:105)(cid:219)(cid:105)(cid:147)(cid:105)(cid:152)(cid:204)(cid:3)(cid:62)(cid:147)(cid:136)(cid:96)(cid:3)(cid:195)(cid:136)(cid:125)(cid:152)(cid:136)(cid:119)(cid:86)(cid:62)(cid:152)(cid:204)(cid:3)(cid:86)(cid:133)(cid:62)(cid:152)(cid:125)(cid:105)(cid:3)(cid:136)(cid:152)(cid:3)(cid:156)(cid:213)(cid:192)(cid:3)(cid:136)(cid:152)(cid:96)(cid:213)(cid:195)(cid:204)(cid:192)(cid:222)(cid:3)
and the dynamic environment in which we are all operating.

Our strong operating disciplines continued to contribute to our results, as we 
attained full year adjusted EBITA1 of $1.2 billion, an increase of 11.3%. Our 
adjusted EBITA1 margin in 2019 was 14.0%, an increase of 50 basis points 
from a year ago, the high end of our targeted range for the year. Full year 
2019 diluted reported earnings per share was $1.93 as adjusted1, which is 
comparable to $1.86 per share in the prior year.

Along with this strong performance, we have continued our investments in 
outstanding talent across our agencies, and in the tools and capabilities that 
keep us on the leading edge of our industry. This is especially true in key 
areas like digital, data services and analytics, strategy and creative.

1

6.1%

3.4%

5.0%

2.4%

2015

2016

2017

2018

2019

1.5%

1.0%

0.8%

ORGANIC GROWTH1

INVESTING IN OUR COMPANY FOR THE FUTURE

For some time, we’ve seen our key role as supporting and nurturing strong 
agency brands so they can continue to produce great advertising for our 
clients. Simultaneously, we have never lost sight of the evolving landscape and 
the disruption taking place in marketing, media and communications.  
To address these challenges, we have invested in key areas to create an IPG that 
is positioned for the future. These have included embedded digital expertise 
across the portfolio, leading-edge media and data capabilities, and open 
architecture solutions. All of which have helped us build a future-facing company.

Today’s IPG is in a preeminent position to help brands reach consumers in 
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to deliver advertising that is valued by consumers and valuable for brands. 

5.5%

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of technology, craft and collaboration. And we have created a modern holding 
company with a culture of integrity and transparency, where IPG sets the standard 
regarding conscious and respectful privacy, accountability and brand safety.

3.3%

-0.2%

DATA SCIENCE AS A BUSINESS STRATEGY 

IPG

Peer Average

1 For Omnicom Group, growth on total revenue is used. 

2

Interpublic Group 2019 Annual Report

Understanding data and its power is absolutely essential, and has been a 
priority for us over many years, well before we acquired Acxiom. Today’s IPG 
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data in the service of enhancing the customer experience, and in helping our 
clients reach their business goals. Thanks to our long-term strategy, there are 
many more use cases with which we are increasingly involved, ranging from 
powering e-commerce to the execution of omnichannel media. 

To further enhance our media, data and tech offering, in 2019 we launched 
Kinesso, a marketing technology company that leverages our data science skills 
to provide services that help marketers make media activation faster and more 
effective. Kinesso is creating new software and products that deliver marketing 
intelligence, including data-driven campaign optimization and precision 
audiences. Currently, the new company is working in close partnership with IPG 
Mediabrands, where there is the most adjacency and therefore the greatest 
opportunity. However, Acxiom and Kinesso capabilities are being brought to 
bear on all of our major clients and new business opportunities. 

CORPORATE PURPOSE IS MORE IMPORTANT THAN EVER

For years now, we have articulated a corporate purpose that acknowledges 
our responsibility around the world’s most pressing challenges. We have 
worked on issues that align with the UN’s Sustainable Development Goals, 
with a particular focus on SDG#6, access to water and sanitation for all, and 
including work in gender equality, zero hunger, health and well-being. 

Now more than ever, a focus on purpose and our role in society must 
continue. The COVID-19 crisis has posed an unprecedented challenge 
to modern society, and a unique one to the private sector. This at a time 
when we have joined with The Business Roundtable in its restatement on 
the purpose of a corporation, which includes the notion that businesses 
should support the communities in which we work, respect the people in 
our communities and protect the environment by embracing sustainable 
practices across our businesses.

Accordingly, we will continue to act constructively across a range of issues, 
including expanding our role in protecting the environment, promoting 
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corporate missions.

For as long as our company has been in existence, we have worked on issues 
that matter to all of our stakeholders. Our history of purpose-driven work 
includes our stewardship of Smokey Bear for more than 75 years, our work 
on “Love Has No Labels,” one of the most-watched PSAs of all time, and 
our more recent work in support of encouraging people around the world to 
stay home to stave the spread of COVID-19, and to focus on the facts of the 
disease rather than on particular groups of people.

SUSTAINABILITY 

IPG continues to strengthen its commitment to environmental sustainability—
working to reduce our carbon footprint, and to work with our clients to create 
demand for sustainable products among consumers.

We continue to report on our sustainability initiatives utilizing the Global 
Reporting (GRI) framework, and this year, have expanded the measurement 
of our emissions and other environmental impacts using GHG Protocol 
Standards. And, in terms of our greenhouse gas emissions, we remain 
committed to our Scope 2 relative intensity target for 10% reduction by 2030 
in metric tons CO2e per employee.

We once again renewed our support of the United Nations Global Compact and 
committed to uphold the Compact’s 10 principles in the areas of environmental 
sustainability, fair labor practices, human rights and anti-corruption.

Throughout the year, IPG agencies continue to engage on issues of concern 
in their local communities and globally. Recent projects as we have started 
the year have included our #IStayHomeFor and #WashtheHate campaigns 
around COVID-19 precautions and racism associated with the virus, breaking 
down gender stereotypes and bringing awareness to mental health.

DIVERSITY, EQUITY AND INCLUSION

The single most important factor in our company’s success is talent—our 
human capital. And our talent is drawn from people of varying ages, 
backgrounds, cultures, faiths, genders, physical abilities, races, gender 
identity, and sexual orientations—to name but a few of the qualities that 
make each of us unique. As part of our human capital management, IPG 
has committed substantial resources and expertise to increasing diversity in 
our ranks and to forging a sustainable culture of inclusion at our company. 
Furthering our commitment to a diverse and welcoming workplace, IPG 
agencies also apply a diversity lens on succession planning and leadership 
development across our network.

IPG also supports diverse suppliers, and partners with minority businesses 
and women-owned organizations. This year, IPG agencies partnered with 
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search for underrepresented creators. 

This past year, IPG’s diversity and inclusion group executed programs that 
reached thousands of people around the network. At IPG, we encourage, 

3

protect and celebrate our diversity, understanding its importance to our success 
as an employer, and in the marketplace. We also work to ensure that we 
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COLLABORATIVE CULTURE AND STRONG BRANDS

(cid:55)(cid:105)(cid:3)(cid:62)(cid:192)(cid:105)(cid:3)(cid:62)(cid:3)(cid:171)(cid:105)(cid:156)(cid:171)(cid:143)(cid:105)(cid:135)(cid:119)(cid:192)(cid:195)(cid:204)(cid:3)(cid:133)(cid:156)(cid:143)(cid:96)(cid:136)(cid:152)(cid:125)(cid:3)(cid:86)(cid:156)(cid:147)(cid:171)(cid:62)(cid:152)(cid:222)(cid:3)(cid:136)(cid:152)(cid:195)(cid:136)(cid:96)(cid:105)(cid:3)(cid:62)(cid:152)(cid:96)(cid:3)(cid:156)(cid:213)(cid:204)(cid:176)(cid:3)(cid:42)(cid:105)(cid:156)(cid:171)(cid:143)(cid:105)(cid:3)(cid:152)(cid:105)(cid:105)(cid:96)(cid:3)(cid:204)(cid:156)(cid:3)
be part of a culture that feels right for them, working in an environment 
where they feel connected and appreciated, and with colleagues they can 
learn from. Our job is to nurture our people and create a culture in which 
they can thrive. At IPG, we invest in developing tools to ensure long-
term success for our people—from ongoing professional development to 
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us retain and develop the world’s best people, who in turn form better 
teams to help solve the complex and creative challenges facing marketers 
in a fast-changing world.

And we stand by the same principles when it comes to our brands. We 
are a client-centric holding company, which means we support and invest 
in our company brands. This investment has meant we remain vital in new 
business, we drive high levels of industry recognition and we are able to 
attract and retain talent who want to develop their careers with us. Open 
Architecture unlocks the power of our diverse array of talent across our 
holding company on behalf of clients—making us a place where people 
want to work, and clients want to do business.

EXCEPTIONAL INDUSTRY RECOGNITION

The quality of our strategic and creative offerings continue to fuel IPG as we 
outperform our industry across so many key measures of excellence, including 
the recognition of our agencies, talent, and creativity, as well as our growth 
and value-creation.

As a holding company, we were recognized as a Top Company to Work 
For by LinkedIn. IPG was the highest ranked company in the advertising 
and marketing sector on the 2019 list. IPG was also ranked one of the Best 
Managed Companies according to The Management Top 250 Ranking, 
developed by the Drucker Institute and The Wall Street Journal. We were 
the only company from the advertising sector represented on the list.

Globally, at major competitions, our agencies are recognized with the 
highest honors, and our group performance is outstanding. We had a strong 
showing at the Cannes Lions Festival of Creativity, outperforming industry 
competitors, with eleven grand prix, the Festival’s high honor, and more 
than all global holding companies combined. 

IPG once again led the pack in terms of awards per dollar revenue at the 
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Holding Company of the Year. Our agency brands and people dominated 
the Ad Age A-List Awards, with ten agencies represented, with more 
awards than any other holding company. IPG’s best-in-class marketing 
services received unprecedented levels of industry honors, and many 
of our operating units were named to Best Places to Work lists over the 
course of the year.

4

Interpublic Group 2019 Annual Report

RECOVERY AND RESILIENCE

IPG has been a trusted partner to the world’s greatest brands. Together, 
we have weathered many storms and come back even stronger. As we 
have in past downturns, we are focused on meeting our clients’ needs and 
(cid:147)(cid:62)(cid:136)(cid:152)(cid:204)(cid:62)(cid:136)(cid:152)(cid:136)(cid:152)(cid:125)(cid:3)(cid:62)(cid:3)(cid:86)(cid:156)(cid:195)(cid:204)(cid:3)(cid:171)(cid:192)(cid:156)(cid:119)(cid:143)(cid:105)(cid:3)(cid:86)(cid:156)(cid:152)(cid:195)(cid:136)(cid:195)(cid:204)(cid:105)(cid:152)(cid:204)(cid:3)(cid:220)(cid:136)(cid:204)(cid:133)(cid:3)(cid:156)(cid:213)(cid:192)(cid:3)(cid:192)(cid:105)(cid:219)(cid:105)(cid:152)(cid:213)(cid:105)(cid:176)(cid:3)(cid:22)(cid:152)(cid:3)(cid:156)(cid:192)(cid:96)(cid:105)(cid:192)(cid:3)(cid:204)(cid:156)(cid:3)(cid:105)(cid:152)(cid:133)(cid:62)(cid:152)(cid:86)(cid:105)(cid:3)
(cid:156)(cid:213)(cid:192)(cid:3)(cid:62)(cid:143)(cid:192)(cid:105)(cid:62)(cid:96)(cid:222)(cid:3)(cid:195)(cid:204)(cid:192)(cid:156)(cid:152)(cid:125)(cid:3)(cid:119)(cid:152)(cid:62)(cid:152)(cid:86)(cid:136)(cid:62)(cid:143)(cid:3)(cid:171)(cid:156)(cid:195)(cid:136)(cid:204)(cid:136)(cid:156)(cid:152)(cid:3)(cid:96)(cid:213)(cid:192)(cid:136)(cid:152)(cid:125)(cid:3)(cid:204)(cid:133)(cid:136)(cid:195)(cid:3)(cid:171)(cid:105)(cid:192)(cid:136)(cid:156)(cid:96)(cid:3)(cid:156)(cid:118)(cid:3)(cid:133)(cid:105)(cid:136)(cid:125)(cid:133)(cid:204)(cid:105)(cid:152)(cid:105)(cid:96)(cid:3)
(cid:213)(cid:152)(cid:86)(cid:105)(cid:192)(cid:204)(cid:62)(cid:136)(cid:152)(cid:204)(cid:222)(cid:93)(cid:3)(cid:220)(cid:105)(cid:3)(cid:195)(cid:105)(cid:136)(cid:226)(cid:105)(cid:96)(cid:3)(cid:213)(cid:171)(cid:156)(cid:152)(cid:3)(cid:62)(cid:152)(cid:3)(cid:156)(cid:171)(cid:171)(cid:156)(cid:192)(cid:204)(cid:213)(cid:152)(cid:136)(cid:204)(cid:222)(cid:3)(cid:204)(cid:156)(cid:3)(cid:62)(cid:86)(cid:86)(cid:105)(cid:195)(cid:195)(cid:3)(cid:204)(cid:133)(cid:105)(cid:3)(cid:119)(cid:152)(cid:62)(cid:152)(cid:86)(cid:136)(cid:62)(cid:143)(cid:3)(cid:147)(cid:62)(cid:192)(cid:142)(cid:105)(cid:204)(cid:195)(cid:3)
in early 2020. Furthermore, based on the strength of our company and our 
(cid:171)(cid:192)(cid:156)(cid:195)(cid:171)(cid:105)(cid:86)(cid:204)(cid:195)(cid:93)(cid:3)(cid:220)(cid:105)(cid:3)(cid:220)(cid:105)(cid:192)(cid:105)(cid:3)(cid:62)(cid:143)(cid:195)(cid:156)(cid:3)(cid:62)(cid:76)(cid:143)(cid:105)(cid:3)(cid:204)(cid:156)(cid:3)(cid:62)(cid:96)(cid:96)(cid:3)(cid:62)(cid:96)(cid:96)(cid:136)(cid:204)(cid:136)(cid:156)(cid:152)(cid:62)(cid:143)(cid:3)(cid:121)(cid:105)(cid:221)(cid:136)(cid:76)(cid:136)(cid:143)(cid:136)(cid:204)(cid:222)(cid:3)(cid:204)(cid:156)(cid:3)(cid:156)(cid:213)(cid:192)(cid:3)(cid:86)(cid:192)(cid:105)(cid:96)(cid:136)(cid:204)(cid:3)(cid:118)(cid:62)(cid:86)(cid:136)(cid:143)(cid:136)(cid:204)(cid:136)(cid:105)(cid:195)(cid:3)
(cid:105)(cid:62)(cid:192)(cid:143)(cid:136)(cid:105)(cid:192)(cid:3)(cid:204)(cid:133)(cid:136)(cid:195)(cid:3)(cid:222)(cid:105)(cid:62)(cid:192)(cid:176)(cid:3)(cid:47)(cid:133)(cid:105)(cid:195)(cid:105)(cid:3)(cid:147)(cid:156)(cid:219)(cid:105)(cid:195)(cid:3)(cid:220)(cid:136)(cid:143)(cid:143)(cid:3)(cid:105)(cid:152)(cid:133)(cid:62)(cid:152)(cid:86)(cid:105)(cid:3)(cid:156)(cid:213)(cid:192)(cid:3)(cid:119)(cid:152)(cid:62)(cid:152)(cid:86)(cid:136)(cid:62)(cid:143)(cid:3)(cid:192)(cid:105)(cid:195)(cid:156)(cid:213)(cid:192)(cid:86)(cid:105)(cid:195)(cid:3)(cid:136)(cid:152)(cid:3)(cid:204)(cid:133)(cid:105)(cid:3)(cid:222)(cid:105)(cid:62)(cid:192)(cid:195)(cid:3)
to come and help us to protect our future.

The strength of our talent, and our focus on open architecture provide us with 
ways to keep evolving to meet our clients’ changing needs during this time. 
We can draw on our best-in-class companies across marketing disciplines to 
add talent and resources to each other’s expertise. In times like this, when 
it’s anything but business-as-usual, we can collaborate to meet our clients’ 
changing demands as they move ahead in steering their businesses.

As always, we thank our clients, our people, and our owners, who are the 
foundation of our success.

Michael I. Roth

(cid:10)(cid:133)(cid:62)(cid:136)(cid:192)(cid:147)(cid:62)(cid:152)(cid:3)(cid:62)(cid:152)(cid:96)(cid:3)(cid:10)(cid:133)(cid:136)(cid:105)(cid:118)(cid:3)(cid:13)(cid:221)(cid:105)(cid:86)(cid:213)(cid:204)(cid:136)(cid:219)(cid:105)(cid:3)(cid:34)(cid:118)(cid:119)(cid:86)(cid:105)(cid:192)

5

CORPORATE 
HEADQUARTERS

909 Third Avenue 
New York, NY 10022 
(212) 704-1200

TRANSFER AGENT 
& REGISTRAR FOR 
COMMON STOCK

Computershare

Regular mail: 
P.O. Box 505000 
Louisville, KY 40233-5000

Overnight mail: 
462 South 4th Street, Suite 1600 
Louisville, KY 40202

The Common Stock of  
The Interpublic Group of 
Companies, Inc., is traded on 
the New York Stock Exchange.

At February 13, 2020, there 
were 9,000 shareholders of 
record.

ANNUAL MEETING

The annual meeting will be held 
on May 21, 2020 at 9:30 am at: 
Paley Center for Media 
25 West 52nd Street 
New York, NY 10019

AUTOMATIC DIVIDEND 
REINVESTMENT PLAN

An Automatic Dividend 
Reinvestment Plan is offered to 
all shareholders of record.  
The Plan, which is administered 
by Computershare Trust 
Company, N.A., provides a way 
to acquire additional shares of 
Interpublic Common Stock in a 
systematic and convenient 
manner that affords savings 
in commissions for most 
shareholders. Those interested 
in participating in this plan are 
invited to write for details and 
an authorization form to:

The Interpublic Group 
of Companies, Inc. 
c/o Computershare 
Attn: Shareholder Relations 
P.O. Box 505000 
Louisville, KY 40233-5000 

FORM 10-K

A copy of the Company’s annual 
report (Form 10-K) to the Securities 
and Exchange Commission may 
be obtained without charge by 
writing to:

Andrew Bonzani 
Executive Vice President, 
General Counsel & Secretary, 
The Interpublic Group of 
Companies, Inc. 
909 Third Avenue 
New York, NY 10022

Exhibits to the annual report will 
also be furnished, but will be 
sent only upon payment of the 
Company’s reasonable expense in 
furnishing them.

SHARE OWNER INTERNET 
ACCOUNT ACCESS

Share owners of record may access 
their accounts via the Internet.  
By accessing their account they 
may view share balances, obtain 
current market price of shares, 
historical stock prices, and the 
total value of their investment. In 
addition, they may sell or request 
issuance of dividend and cash 
investment plan shares.

For information on how to access 
this secure site, please call 
Computershare toll free at  
(877) 363-6398, or visit 
www.computershare.com/investor

Outside the US and Canada, call: 
(201) 680-6578

For hearing impaired:  
(800) 231-5469 

E-MAIL: 
shrrelations@computershare.com

INTERNET: 
www.computershare.com/investor 

For more information regarding 
The Interpublic Group of 
Companies, visit its Web site at 
www.interpublic.com.

BOARD OF DIRECTORS

EXECUTIVE OFFICERS

MICHAEL I. ROTH 
Chairman and 
(cid:10)(cid:133)(cid:136)(cid:105)(cid:118)(cid:3)(cid:13)(cid:221)(cid:105)(cid:86)(cid:213)(cid:204)(cid:136)(cid:219)(cid:105)(cid:3)(cid:34)(cid:118)(cid:119)(cid:86)(cid:105)(cid:192)(cid:93)(cid:3)(cid:22)(cid:42)(cid:20)

PHILIPPE KRAKOWSKY 
Executive Vice President, 
(cid:10)(cid:133)(cid:136)(cid:105)(cid:118)(cid:3)(cid:34)(cid:171)(cid:105)(cid:192)(cid:62)(cid:204)(cid:136)(cid:152)(cid:125)(cid:3)(cid:34)(cid:118)(cid:119)(cid:86)(cid:105)(cid:192)(cid:93)(cid:3)(cid:22)(cid:42)(cid:20)

ELLEN JOHNSON 
Executive Vice President, 
(cid:10)(cid:133)(cid:136)(cid:105)(cid:118)(cid:3)(cid:19)(cid:136)(cid:152)(cid:62)(cid:152)(cid:86)(cid:136)(cid:62)(cid:143)(cid:3)(cid:34)(cid:118)(cid:119)(cid:86)(cid:105)(cid:192)(cid:93)(cid:3)(cid:22)(cid:42)(cid:20)

ANDREW BONZANI 
Executive Vice President, 
General Counsel and 
Secretary, IPG

CHRISTOPHER F. 
CARROLL 
Senior Vice President, 
Controller and 
(cid:10)(cid:133)(cid:136)(cid:105)(cid:118)(cid:3)(cid:269)(cid:86)(cid:86)(cid:156)(cid:213)(cid:152)(cid:204)(cid:136)(cid:152)(cid:125)(cid:3)(cid:34)(cid:118)(cid:119)(cid:86)(cid:105)(cid:192)(cid:93)(cid:3)(cid:22)(cid:42)(cid:20)(cid:3)
(cid:62)(cid:152)(cid:96)(cid:3)(cid:10)(cid:133)(cid:136)(cid:105)(cid:118)(cid:3)(cid:19)(cid:136)(cid:152)(cid:62)(cid:152)(cid:86)(cid:136)(cid:62)(cid:143)(cid:3)(cid:34)(cid:118)(cid:119)(cid:86)(cid:105)(cid:192)(cid:93)(cid:3)
CMG

JULIE M. CONNORS 
Senior Vice President, 
(cid:269)(cid:213)(cid:96)(cid:136)(cid:204)(cid:3)(cid:62)(cid:152)(cid:96)(cid:3)(cid:10)(cid:133)(cid:136)(cid:105)(cid:118)(cid:3)(cid:44)(cid:136)(cid:195)(cid:142)(cid:3)(cid:34)(cid:118)(cid:119)(cid:86)(cid:105)(cid:192)(cid:93)(cid:3)
IPG

MICHAEL I. ROTH 
(2002) 4 
Chairman and 
(cid:10)(cid:133)(cid:136)(cid:105)(cid:118)(cid:3)(cid:13)(cid:221)(cid:105)(cid:86)(cid:213)(cid:204)(cid:136)(cid:219)(cid:105)(cid:3)(cid:34)(cid:118)(cid:119)(cid:86)(cid:105)(cid:192)(cid:93)(cid:3)(cid:22)(cid:42)(cid:20)

JOCELYN CARTER-MILLER 
(2007) 1, 3, 4 
President, TechEdVentures

H. JOHN GREENIAUS 
(2001) 1, 2 
Former Chairman & Chief 
(cid:13)(cid:221)(cid:105)(cid:86)(cid:213)(cid:204)(cid:136)(cid:219)(cid:105)(cid:3)(cid:34)(cid:118)(cid:119)(cid:86)(cid:105)(cid:192)(cid:93)(cid:3)(cid:32)(cid:62)(cid:76)(cid:136)(cid:195)(cid:86)(cid:156)(cid:93)(cid:3)(cid:22)(cid:152)(cid:86)(cid:176)

MARY J. STEELE GUILFOILE 
(2007) 1, 3, 4 
Chairman 
MG Advisors, Inc.

DAWN HUDSON 
(2011) 2, 3 
(cid:19)(cid:156)(cid:192)(cid:147)(cid:105)(cid:192)(cid:3)(cid:10)(cid:133)(cid:136)(cid:105)(cid:118)(cid:3)(cid:31)(cid:62)(cid:192)(cid:142)(cid:105)(cid:204)(cid:136)(cid:152)(cid:125)(cid:3)(cid:34)(cid:118)(cid:119)(cid:86)(cid:105)(cid:192) 
(cid:47)(cid:133)(cid:105)(cid:3)(cid:32)(cid:62)(cid:204)(cid:136)(cid:156)(cid:152)(cid:62)(cid:143)(cid:3)(cid:19)(cid:156)(cid:156)(cid:204)(cid:76)(cid:62)(cid:143)(cid:143)(cid:3)(cid:29)(cid:105)(cid:62)(cid:125)(cid:213)(cid:105)

WILLIAM T. KERR 
(2006) 1, 2, 4 
Partner 
Eaglepoint Advisors

HENRY S. MILLER 
(2015) 1, 3 
Chairman, Marblegate Asset 
(cid:31)(cid:62)(cid:152)(cid:62)(cid:125)(cid:105)(cid:147)(cid:105)(cid:152)(cid:204)(cid:93)(cid:3)(cid:29)(cid:29)(cid:10)

JONATHAN F. MILLER 
(2015) 2, 3 
(cid:10)(cid:133)(cid:136)(cid:105)(cid:118)(cid:3)(cid:13)(cid:221)(cid:105)(cid:86)(cid:213)(cid:204)(cid:136)(cid:219)(cid:105)(cid:3)(cid:34)(cid:118)(cid:119)(cid:86)(cid:105)(cid:192) 
Integrated Media Co.

PATRICK MOORE 
(2018) 1, 2 
Executive Vice President 
(cid:32)(cid:156)(cid:192)(cid:204)(cid:133)(cid:3)(cid:269)(cid:147)(cid:105)(cid:192)(cid:136)(cid:86)(cid:62)(cid:152)(cid:3)(cid:44)(cid:105)(cid:204)(cid:62)(cid:136)(cid:143)(cid:3)(cid:62)(cid:204) 
Carter's Inc.

LINDA S. SANFORD 
(2019) 1, 3 
Former Senior Vice President, 
Enterprise Transformation, 
International Business 
Machines Corporation (IBM)

DAVID M. THOMAS 
(2004) 2, 3, 4 
Presiding Director 
Former Chairman & Chief 
(cid:13)(cid:221)(cid:105)(cid:86)(cid:213)(cid:204)(cid:136)(cid:219)(cid:105)(cid:3)(cid:34)(cid:118)(cid:119)(cid:86)(cid:105)(cid:192)(cid:93) 
IMS Health Inc.

E. LEE WYATT JR. 
(2017) 1, 2 
(cid:19)(cid:156)(cid:192)(cid:147)(cid:105)(cid:192)(cid:3)(cid:10)(cid:133)(cid:136)(cid:105)(cid:118)(cid:3)(cid:19)(cid:136)(cid:152)(cid:62)(cid:152)(cid:86)(cid:136)(cid:62)(cid:143)(cid:3)(cid:34)(cid:118)(cid:119)(cid:86)(cid:105)(cid:192)(cid:93)(cid:3)
Fortune Brands Home & Security, 
Inc.

(Year Elected)
1 Audit Committee
(cid:211)(cid:3)(cid:10)(cid:156)(cid:147)(cid:171)(cid:105)(cid:152)(cid:195)(cid:62)(cid:204)(cid:136)(cid:156)(cid:152)(cid:3)(cid:62)(cid:152)(cid:96)(cid:3)(cid:29)(cid:105)(cid:62)(cid:96)(cid:105)(cid:192)(cid:195)(cid:133)(cid:136)(cid:171)(cid:3)(cid:47)(cid:62)(cid:143)(cid:105)(cid:152)(cid:204)(cid:3)(cid:10)(cid:156)(cid:147)(cid:147)(cid:136)(cid:204)(cid:204)(cid:105)(cid:105)
3 Corporate Governance Committee
4 Executive Committee

6

Interpublic Group 2019 Annual Report

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
È ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE

ACT OF 1934

For the fiscal year ended December 31, 2019
or

‘ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

Commission file number: 1-6686

THE INTERPUBLIC GROUP OF COMPANIES, INC.

(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of
incorporation or organization)

13-1024020
(I.R.S. Employer
Identification No.)

909 Third Avenue, New York, New York 10022
(Address of principal executive offices) (Zip Code)
(212)704-1200
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Trading
Symbol(s)

IPG

Name of each exchange
on which registered

The New York Stock
Exchange

Title of each class

Common Stock, par value $0.10 per
share

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Securities Registered Pursuant to Section 12(g) of the Act: None

Yes È No ‘

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

Yes ‘ No È
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

Yes È No ‘
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of

Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes È No ‘
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an
emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in
Rule 12b-2 of the Exchange Act.
Large accelerated filer È
Non-accelerated filer ‘

‘
Accelerated filer
Smaller reporting company ‘
Emerging growth company ‘

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any

new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ‘

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ‘ No È
As of June 28, 2019, the aggregate market value of the shares of the registrant’s common stock held by non-affiliates was approximately $8.7 billion.

The number of shares of the registrant’s common stock outstanding as of February 13, 2020 was 387,824,443.

DOCUMENTS INCORPORATED BY REFERENCE

The following sections of the Proxy Statement for the Annual Meeting of Stockholders to be held on May 21, 2020 are incorporated by reference in Part
III: “Election of Directors,” “Director Selection Process,” “Code of Conduct,” “Committees of the Board of Directors,” “Audit Committee,” “Section 16(a)
Beneficial Ownership Reporting Compliance,” “Executive Compensation,” “Non-Management Director Compensation,” “Compensation Discussion and
Analysis,” “Compensation and Leadership Talent Committee Report,” “Outstanding Shares and Ownership of Common Stock,” “Securities Authorized for
Issuance under Equity Compensation Plans,” “Transactions with Related Persons,” “Director Independence” and “Appointment of Registered Public
Accounting Firm.”

TABLE OF CONTENTS

PART I

Item 1.

Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Item 1A. Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Item 1B. Unresolved Staff Comments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Item 2.

Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Item 3.

Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Item 4. Mine Safety Disclosures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity

Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Item 6.

Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations . . . . . . . . . . . . . . . . . . .

Item 7A. Quantitative and Qualitative Disclosures About Market Risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Item 8.

Financial Statements and Supplementary Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Item 9.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure . . . . . . . . . . . . . . . . . . .

Item 9A. Controls and Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Item 9B. Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

PART III

Item 10. Directors, Executive Officers and Corporate Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Item 11.

Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Item 12.

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

Item 13. Certain Relationships and Related Transactions, and Director Independence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Item 14.

Principal Accountant Fees and Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Item 15.

Exhibits, Financial Statement Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Item 16.

Form 10-K Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

PART IV

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STATEMENT REGARDING FORWARD-LOOKING DISCLOSURE

This annual report on Form 10-K contains forward-looking statements. Statements in this report that are not historical
facts, including statements about management’s beliefs and expectations, constitute forward-looking statements. Without
limiting the generality of the foregoing, words such as “may,” “will,” “expect,” “believe,” “anticipate,” “intend,” “could,”
“would,” “estimate,” “continue” or comparable terminology are intended to identify 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 this report. 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;

developments from changes in the regulatory and legal environment for advertising and marketing and
communications services companies around the world; and

failure to realize the anticipated benefits of the acquisition of the Acxiom business.

Investors should carefully consider these factors and the additional risk factors outlined in more detail under Item 1A,

Risk Factors, in this report.

1

PART I

Item 1. Business

The Interpublic Group of Companies, Inc. (“Interpublic,” the “Company,” “IPG,” “we,” “us” or “our”) was incorporated
in Delaware in September 1930 under the name of McCann-Erickson Incorporated as the successor to the advertising agency
businesses founded in 1902 by A.W. Erickson and in 1911 by Harrison K. McCann. The Company has operated under the
Interpublic name since January 1961.

About Us

We are one of the world’s premier global advertising and marketing services companies. With approximately 54,300
employees and operations in all major world markets, our companies specialize in consumer advertising, digital marketing,
communications planning and media buying, public relations, specialized communications disciplines and data management.
Our agencies create customized marketing solutions for clients that range in scale from large global marketers to regional and
local clients. Comprehensive global services are critical to effectively serve our multinational and local clients in markets
throughout the world as they seek to build brands, increase sales of their products and services, and gain market share.

The work we produce for our clients is specific to their unique needs. Our solutions vary from project-based activity
involving one agency to long-term, fully integrated campaigns created by multiple IPG agencies working together. With
offices in over 100 countries, we can operate in a single region or deliver global integrated programs.

The role of our holding company is to provide resources and support to ensure that our agencies can best meet clients’
needs and to selectively facilitate collaborative client service among our agencies. Based in New York City, our holding
company sets company-wide financial objectives and corporate strategy, establishes financial management and operational
controls, guides personnel policy, directs collaborative inter-agency programs, conducts investor relations, manages
environmental, social and governance (ESG) programs, provides enterprise risk management and oversees mergers and
acquisitions. In addition, we provide certain centralized functional services that offer our companies operational efficiencies,
including accounting and finance, executive compensation management and recruitment assistance, employee benefits,
marketing information retrieval and analysis, internal audit, legal services, real estate expertise and travel services.

IPG ranked as one of the best-managed companies of 2019, according to The Management Top 250 ranking, and was
the only company from the advertising industry included in the list. Developed by the Drucker Institute and The Wall Street
Journal, the ranking measures corporate effectiveness by examining performance in customer satisfaction, employee
engagement and development, innovation, social responsibility and financial strength. Additionally, IPG was named a top
company to work for by LinkedIn and was the highest-ranked company in the advertising sector on the list of the 50 most
sought-after companies where Americans want to work and develop their careers.

Our Brands

Interpublic is home to some of the world’s best-known and most innovative communications specialists. We have three
global networks: McCann Worldgroup, Foote, Cone & Belding (“FCB”) and MullenLowe Group, which provide integrated,
large-scale advertising and marketing solutions for clients. Our Media, Data and Technology offerings are comprised of
Mediabrands’ global media services, Acxiom’s data and technology capabilities, and Kinesso’s data-driven marketing
solutions. We also have a range of best-in-class global specialized communications assets as well as premier domestic
integrated and global digital agencies that are industry leaders.

• Media, Data and Technology offerings provide strategic media planning and buying services as well as data
management and leading marketing technology services. Our media services agencies manage tens of billions of
dollars in marketing investment on behalf of their clients, providing strategic counsel and advisory services to
navigate the fast-evolving consumer and media landscape. Full-service global media agencies within the
Mediabrands network include UM and Initiative. Additional leading brands and specialist business units include
Healix, IPG Media Lab, MAGNA, Orion Holdings, Rapport and Reprise. Media solutions are developed and
executed through integrated, data-driven marketing strategies. Acxiom, which IPG acquired in 2018, provides the

2

data foundation for many of the world’s largest and most sophisticated marketers. Acxiom’s solutions help clients
organize, cleanse and store data in a responsible and ethical manner, and enhances our ability to provide data-
driven marketing insights to our clients. Kinesso, the marketing technology company IPG launched in October of
2019, provides the tools and services required to help marketers make traditional and addressable media activation
faster, better and more effective through the use of data.

• McCann Worldgroup is a leading global marketing solutions network united across 100+ countries by a single
vision: to help brands play a meaningful role in people’s lives. McCann was recognized by Cannes Lions as the
2019 Network of the Year and by the Effies as the world’s most creatively-effective marketing services company
in 2019. The network is comprised of McCann (advertising), MRM (science/technology/relationship marketing),
Momentum Worldwide (total brand experience), McCann Health (professional/dtc communications), and CRAFT
(production). McCann is aligned with our marketing services agencies including Weber Shandwick (public
relations) and FutureBrand (consulting/design).

•

FCB is a global marketing communications company, named to the Ad Age Agency A-List in 2019. Based on an
understanding of diversified markets and cultures, FCB focuses on creating “Never Finished” ideas for clients that
reflect each brand’s past and anticipate its future. FCB also offers a range of best-in-class, integrated and specialist
marketing capabilities: FCB Health, one of the world’s most awarded healthcare marketing networks; shopper-first
agency FCB/RED; design agency Chute Gerdeman; experiential agency FCBX; production studios Lord + Thomas
and FuelContent; CRM agency FCB/SIX; and digital agency New Honor Society.

• MullenLowe Group is a creatively driven integrated marketing communications network with a strong
entrepreneurial heritage and challenger mentality. A global creative boutique of distinctive diverse agencies,
MullenLowe Group is networked in more than 65 markets. Within the Group’s distinctive hyperbundled-operating
model, global specializations include expertise in brand strategy, and through-the-line advertising with
MullenLowe; digital transformation with MullenLowe Profero; media and communications planning and buying
with Mediahub; customer experience activation with MullenLowe Open; and consumer and corporate PR with
MullenLowe PR and MullenLowe salt. The group is focused on delivering an “Unfair Share of Attention” for
clients and is consistently ranked among the most awarded creative and effective agency networks in the world.
Mediahub was named Ad Age Media Agency of the Year in 2019.

• Our CMG group has exceptional global marketing specialists across a range of disciplines, including industry-
leading public relations agencies such as Weber Shandwick, Golin, DeVries Global, Axis, and Current Global have
expertise in every significant area of communication management. Jack Morton is a global brand experience
agency, and FutureBrand is a leading brand consultancy. Octagon is a global sports, entertainment and lifestyle
marketing agency.

• Our domestic integrated independent and digital specialist agencies include some of advertising’s most
recognizable and storied agency brands, including Carmichael Lynch, Deutsch, Hill Holliday, Huge, R/GA and
The Martin Agency. The marketing programs created by these agencies incorporate all media channels, CRM,
public relations and other digital marketing activities and have helped build some of the most powerful brands in
the U.S., across all sectors and industries.

We list approximately 100 of our companies on our website under the “Our Companies” section, with descriptions,
capabilities and office locations for each. To learn more about our broad range of capabilities, visit our website at
www.interpublic.com. Information on our website is not part of this report.

Market Strategy

We operate in a media landscape that continues to evolve at a rapid pace. Media channels continue to fragment, and
clients face an increasingly complex consumer environment. To stay ahead of these challenges and to achieve our objectives,
we have made and continue to make investments in creative, strategic and technology talent in areas including fast-growth
digital marketing channels, high-growth geographic regions and strategic world markets. In addition, we consistently review
opportunities within our Company to enhance our operations through acquisitions and strategic alliances and internal
programs that encourage intra-company collaboration. As appropriate, we also develop relationships with technology and
emerging media companies that are building leading-edge marketing tools that complement our agencies’ skill sets and
capabilities.

3

In recent years, we have taken several major strategic steps to position our agencies as leaders in the global advertising

and communications market. These include:

•

Investment in leading talent: We believe our continued ability to attract and develop top talent and to be the
industry’s employer of choice for an increasingly diverse workforce have been key differentiators for IPG. We
continue to acquire and develop top strategic, creative and digital talent from a range of backgrounds.

• Growing digital capabilities: Our investments in talent and technology – organically growing digital capabilities
such as search, social, user experience (UX), content creation, analytics, and mobile across the portfolio – promise
to drive further growth in this dynamic sector of our business. We continue to internationalize our powerful digital
specialist agencies.

• Data-fueled offerings: Media and marketing is increasingly centered around the ability to manage data to create
deeper direct customer relationships. Acxiom provides the tools to help our clients connect with individual
consumers at scale. Kinesso furthers this vision by bringing together top data and technology talent with
addressable media experts to develop software that amplifies clients’ marketing and leverages Acxiom’s assets and
capabilities.

•

•

Investments in emerging and strategic markets: We strengthen our position in global markets by driving organic
growth as well as completing strategic acquisitions in Asia, the U.K., Europe, Latin America, and North America.

Integrated marketing solutions: A differentiating aspect of our business is our utilization of “open architecture”
solutions that integrate the best talent from throughout the organization to fulfill the needs of our clients.

Together, these steps have built a culture of strategic creativity and high performance across IPG, resulting in IPG

posting strong organic growth, as well as increased honors and awards for our Company.

For the third year in a row, IPG was recognized as the Holding Company of the Year at the North American Effie
Awards; McCann Worldgroup was named Most Effective Agency Office of the Year and its “22 Years of Priceless” work for
Mastercard was awarded a “5 for 50” award, marking Effie’s 50th Anniversary. At the 2019 Cannes Lions Festival of
Creativity, IPG agencies dominated at the festival and took home 11 of the Festival’s highest honor, the Grand Prix. IPG
agencies won over a third of all Grand Prix awarded in 2019, and more than all other global holding companies combined.
McCann Worldgroup won five Grand Prix in Brand Experience & Activation, Industry Craft, Pharma and Health & Wellness
categories as the Festival named McCann Worldgroup as Network of the Year, McCann Health the Healthcare Network of
the Year, and McCann Health China the Healthcare Agency of the Year. FCB took home five Grand Prix in the Direct,
Creative Data, Innovation, Titanium, and Mobile categories. UM received its first-ever Grand Prix in the Entertainment
category. In total, IPG agencies won 163 Cannes Lions, including 11 Grand Prix, one Titanium, 38 Gold Lions, 44 Silver
Lions, and 69 Bronze Lions.

Our specialty marketing firms received top honors at the 2019 PRWeek Global Awards. Weber Shandwick was the most
awarded agency, winning a total of six awards, including four in partnership with clients: Best Campaign in Asia-Pacific,
Corporate and Social Responsibility, Global Citizenship and Issues and Crisis. Golin was named “Agency of the Year” and
DeVries Global, dna Communications and McCann were also among awards recipients. The PRWeek Global Awards
celebrate the best campaigns, people and organizations involved in cross-region communications.

In the U.S. market, IPG once again led the industry in Ad Age’s annual “A-List,” a ranking of the industry’s ten most
innovative and creative agencies. FCB and McCann ranked among the industry’s best-performing agencies and Mediahub
was named the “Media Agency of the Year.” Additionally, FCB/Six was named the “Data/Analytics Agency of the Year”
and Initiative as the “Comeback Agency of the Year.” IPG agencies EP+Co., The Martin Agency, MullenLowe and UM were
also identified as “Agency Standouts” and R/GA as “Agencies To Watch” in the awards issue. Ad Age selects agencies based
on account wins, quality of work and business results delivered on behalf of their clients.

Digital Growth

Demand for our digital marketing services continues to evolve rapidly. In order to meet this need and provide high-
value resources to clients, we have focused on embedding digital talent and technology throughout the organization. This

4

reflects our belief that digital marketing should be integrated within all of our companies. This structure mirrors the way in
which consumers incorporate digital media into their other media habits and, ultimately, their daily lives. We continue to
invest in recruiting and developing digital expertise at all our agencies and in all marketing disciplines.

To meet the changing needs of the marketplace, we have been active in making new acquisitions and minority
investments in specialty digital assets. In addition, we have consistently invested in existing assets such as the IPG Media
Lab, Huge, MRM and R/GA, which serve as key digital partners to many of the agencies within IPG.

Emerging Economies and Strategic Regions

We continue to invest and expand our presence in emerging and strategic geographic regions. In recent years, we have
made significant investments in Brazil, India and China, further strengthening our position in these important developing
markets. Our operations in India are best-in-class, and we will continue to invest in partnerships and talent in this key market.
We also hold a majority stake in the Middle East Communication Networks (“MCN”), among the region’s premier
marketing services companies. MCN is headquartered in Dubai, with offices across 12 countries. In China, where we operate
with most of our global networks and across the full spectrum of marketing services, we continue to invest organically in the
talent of our agency brands and opportunistically acquire specialty offerings. Additional areas of investment include key
strategic markets in North America, the U.K., Europe, Asia Pacific, Latin America and Africa.

Diversity and Inclusion

IPG and our agencies are committed to diversity and inclusion, and we reinforce these values through a comprehensive
set of award-winning programs. These include business resource groups that develop career building programs, as well as
training around topics like unconscious bias. We seek to ensure accountability by tying executive compensation directly to
the ability of our leaders to hire, promote and retain diverse talent, and we regularly measure the inclusiveness of our culture
with a company-wide climate for inclusion survey.

We began our formal programs over a decade ago. Since then, IPG has seen dramatic improvements in the diversity of
our workforce, and further progress is a management priority. In the U.S., IPG exceeded the ad industry’s representation
rates for women and minorities for both professional-level and management positions in the most recent filings. We believe
that an environment that encourages respect and trust is key to a creative business like ours, and that a competitive advantage
comes with having a variety of perspectives and beliefs in our workforce.

Acquisition Strategy

A disciplined acquisition strategy, focused on high-growth capabilities and regions of the world, is one component of
growing our services in today’s rapidly-changing marketing services and media landscape. When an outstanding resource or
a strong tactical fit becomes available, we have been opportunistic over the years in making tuck-in, niche acquisitions that
enhance our service offerings.

In recent years, IPG has acquired agencies across the marketing spectrum, including firms specializing in digital, mobile
marketing, social media, healthcare communications and public relations, as well as agencies with full-service capabilities.
These acquired agencies have been integrated into one of our global networks or specialist agencies. In 2019, we completed
one acquisition, a content communications agency based in the United Kingdom. In 2018, we pursued and completed the
transformative acquisition of Acxiom. By adding Acxiom to our offering, we have positioned our company for a future in
which data-driven marketing solutions are increasingly core to brands’ success. With Acxiom, we go to market as a trusted,
high-value partner that will deliver on the promise of combining data management and marketing services to drive
personalized marketing solutions at scale and measurable business outcomes for our clients.

Financial Objectives

Our financial goals include competitive organic net revenue growth and expansion of EBITA margin, as defined and
discussed within the Non-GAAP Financial Measure section of this MD&A, which we expect will further strengthen our
balance sheet and total liquidity and increase value to our shareholders. Accordingly, we remain focused on meeting the

5

evolving needs of our clients while concurrently managing our cost structure. We continually seek greater efficiency in the
delivery of our services, focusing on more effective resource utilization, including the productivity of our employees, real
estate, information technology and shared services, such as finance, human resources and legal. The improvements we have
made and continue to make in our financial reporting and business information systems in recent years allow us more timely
and actionable insights from our global operations. Our disciplined approach to our balance sheet and liquidity provides us
with a solid financial foundation and financial flexibility to manage and grow our business. We believe that our strategy and
execution position us to meet our financial goals and to deliver long-term shareholder value.

Financial Reporting Segments

We have two reportable segments, which are Integrated Agency Networks (“IAN”) and Constituency Management
Group (“CMG”). IAN is comprised of McCann Worldgroup, FCB, MullenLowe Group, Media, Data and Technology which
includes Mediabrands and Acxiom, our digital specialist agencies and our domestic integrated agencies. CMG is comprised
of a number of our specialist marketing services offerings. We also report results for the “Corporate and other” group. See
Note 15 in Item 8, Financial Statements and Supplementary Data, for further information.

Sources of Revenue

Our revenues are primarily derived from the planning and execution of multi-channel advertising, marketing and
communications programs around the world. Our revenues are directly dependent upon the advertising, marketing and
corporate communications requirements of our existing clients and our ability to win new clients. Most of our client contracts
are individually negotiated, and, accordingly, the terms of client engagements and the bases on which we earn commissions
and fees vary significantly. As is customary in the industry, our contracts generally provide for termination by either party on
relatively short notice, usually 30 to 90 days, although our data management contracts typically have non-cancelable terms of
more than one year.

Revenues for the creation and production of advertising or the planning and placement of media are determined
primarily on a negotiated fee basis and, to a lesser extent, on a commission basis. Fees are usually calculated to reflect hourly
rates plus proportional overhead and a mark-up. Many clients include an incentive compensation component in their total
compensation package. This provides added revenue based on achieving mutually agreed-upon qualitative or quantitative
metrics within specified time periods. Commissions are earned based on services provided.

We also generate revenue from data and technology offerings and in negotiated fees from our public relations, sales

promotion, event marketing, sports and entertainment marketing, and corporate and brand identity services.

In most of our businesses, our agencies enter into commitments to pay production and media costs on behalf of clients,
as is customary in the advertising and marketing industries. To the extent possible, we pay production and media charges
after we have received funds from our clients, and in some instances we agree with the provider that we will only be liable to
pay the production and media costs after the client has paid us for the charges. Generally, we act as the client’s agent rather
than the primary obligor in these arrangements.

Our revenue is typically lowest in the first quarter and highest in the fourth quarter.

(Amounts in Millions)

March 31 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
June 30 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
September 30 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
December 31 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Consolidated Total Revenues for the Three Months Ended

2019

2018

2017

% of Total

% of Total

% of Total

$ 2,361.2
2,520.2
2,438.1
2,901.8

$10,221.3

23.0% $2,169.1
2,391.8
24.7%
2,297.5
23.9%
2,856.0
28.4%

22.3% $2,063.8
2,185.8
24.6%
2,208.2
23.7%
2,589.8
29.4%

22.8%
24.2%
24.4%
28.6%

$9,714.4

$9,047.6

6

Clients

Our large and diverse client base includes many of the most recognizable companies and brands throughout the world.
Our holding company structure allows us to maintain a diversified client base across and within a full range of industry
sectors. In the aggregate, our top ten clients based on net revenue accounted for approximately 17% of net revenue in 2019
and 18% in 2018. Our largest client accounted for approximately 3% of net revenue in 2019 and 4% of net revenue in 2018.
Based on net revenue for the year ended December 31, 2019, our largest client sectors (in alphabetical order) were auto and
transportation, healthcare and technology and telecom. We represent several different clients, brands or divisions within each
of these sectors in a number of geographic markets, as well as provide services across multiple advertising and marketing
disciplines, in each case through more than one of our agency brands. Representation of a client rarely means that we handle
advertising for all brands or product lines of the client in all geographical locations. Any client may transfer its business from
one of our agencies to another one of our agencies or to a competing agency, and a client may change its marketing budget at
any time.

We operate in a highly competitive advertising and marketing communications industry. Our operating companies
compete against other large multinational advertising and marketing communications companies as well as numerous
independent and niche agencies and new forms of market participants to win new clients and maintain existing client
relationships.

Regulatory Environment

The advertising and marketing services that our agencies provide are subject to governmental regulation and other
action in all of the jurisdictions in which the Company operates. While these governmental regulations and other actions can
impact the Company’s operations, the specific marketing regulations we may face in a given market do not as a general
matter significantly impact the Company’s overall service offerings or the nature in which we provide these services.

Governments, government agencies and industry self-regulatory bodies have adopted laws, regulations and standards,
and judicial bodies have issued rulings, that directly or indirectly affect the form and content of advertising, public relations
and other marketing activities we produce or conduct on behalf of our clients. These laws, regulations and other actions
include content-related rules with respect to specific products and services, restrictions on media scheduling and placement,
and labeling or warning requirements with respect to certain products, for example pharmaceuticals, alcoholic beverages,
cigarettes and other tobacco products, and food and nutritional supplements. We are also subject to rules related to marketing
directed to certain groups, such as children.

Digital marketing services are a dynamic and growing sector of our business. Our service offerings in this area are
covered by laws and regulations concerning user privacy, use of personal information, data protection and online tracking
technologies. We are also subject to laws and regulations that govern whether and how we can transfer, process or receive
certain data that we use in our operations, including data shared between countries or regions in which we operate. While we
maintain policies and operational procedures to promote effective privacy protection and data management, existing and
proposed laws and regulations in this area, such as the General Data Protection Regulation (“GDPR”) in the European Union,
the California Consumer Privacy Act (“CCPA”) that recently went into effect and other different forms of privacy legislation
under consideration across the markets in which we operate, can impact the development, efficacy and profitability of
internet-based and other digital marketing. Limitations on the scheduling, content or delivery of direct marketing activities
can likewise impact the activities of our agencies offering those services.

With agencies and clients located in over 100 countries worldwide, we are also subject to laws governing our
international operations. These include broad anti-corruption laws such as the U.S. Foreign Corrupt Practices Act (“FCPA”)
and the U.K. Bribery Act (2010), which generally prohibit the making or offering of improper payments to government
officials and political figures. Export controls and economic sanctions regimes, such as those maintained by the U.S.
government and comparable ones by the U.K., the member states of the European Union and the U.N., impose limitations on
the Company’s ability to operate in certain geographic regions or to seek or service certain potential clients. Likewise, our
Treasury operations must comply with exchange controls, restrictions on currency repatriation and the control requirements
of applicable anti-money-laundering statutes.

7

Personnel

As of December 31, 2019, we employed approximately 54,300 people, of whom approximately 22,400 were employed
in the United States. Because of the service character of the advertising and marketing communications business, the quality
of personnel is of crucial importance to our continuing success. We conduct extensive employee training and development
throughout our agencies and benchmark our compensation programs against those of our industry for their competitiveness
and effectiveness in recruitment and retention. There is keen competition for qualified employees.

Available Information

Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and any amendments to
these reports are available, free of charge, on our website at www.interpublic.com under the “For Investors” section, as soon
as reasonably practicable after we electronically file such reports with, or furnish them to, the U.S. Securities and Exchange
Commission (“SEC”) at www.sec.gov. The public may also read and copy materials we file with the SEC at the SEC’s
Public Reference Room, which is located at 100 F Street, NE, Room 1580, Washington, DC 20549. You can obtain
information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.

Our Corporate Governance Guidelines, Interpublic Group Code of Conduct and the charters for each of the Audit
Committee, Compensation and Leadership Talent Committee, and Corporate Governance Committee are available, free of
charge, on our website at www.interpublic.com in the “Corporate Governance” subsection of the “About” section, or by
writing to The Interpublic Group of Companies, Inc., 909 Third Avenue, New York, New York 10022, Attention: Secretary.
Information on our website is not part of this report.

Executive Officers of IPG

Name

Age

Office

Michael I. Roth 1
. . . . . . . . . . . . . . . . . . .
Andrew Bonzani . . . . . . . . . . . . . . . . . . . .
Christopher F. Carroll
. . . . . . . . . . . . . . .
Julie M. Connors . . . . . . . . . . . . . . . . . . .
Ellen Johnson . . . . . . . . . . . . . . . . . . . . . .
Philippe Krakowsky . . . . . . . . . . . . . . . . .

74 Chairman of the Board and Chief Executive Officer
56 Executive Vice President, General Counsel and Secretary
53
48
54 Executive Vice President and Chief Financial Officer
57 Executive Vice President and Chief Operating Officer

Senior Vice President, Controller and Chief Accounting Officer
Senior Vice President, Audit and Chief Risk Officer

1

Also a Director

There is no family relationship among any of the executive officers.

Mr. Roth became our Chairman of the Board and Chief Executive Officer in January 2005. Prior to that time, Mr. Roth
served as our Chairman of the Board from July 2004 to January 2005. Mr. Roth served as Chairman and Chief Executive
Officer of The MONY Group Inc. from February 1994 to June 2004. Mr. Roth has been a member of the Board of Directors
of IPG since February 2002. He is also non-executive chairman of the board of Pitney Bowes Inc. and a director of Ryman
Hospitality Properties.

Mr. Bonzani was hired as Senior Vice President, General Counsel and Secretary in April 2012 and as of February 2019
was promoted to Executive Vice President, General Counsel and Secretary. Prior to joining IPG, Mr. Bonzani worked at IBM
for 18 years, holding a number of positions in the legal department, most recently as Vice President, Assistant General
Counsel and Secretary from July 2008 to March 2012.

Mr. Carroll was named Senior Vice President, Controller and Chief Accounting Officer in April 2006. In 2017,
Mr. Carroll assumed additional responsibilities as Chief Financial Officer for the Constituency Management Group (CMG).
Mr. Carroll served as Senior Vice President and Controller of McCann Worldgroup from November 2005 to March 2006.
Prior to joining us, Mr. Carroll served in various Chief Accounting Officer and Controller roles. Prior to that time, he served
as a Financial Vice President at Lucent Technologies, Inc. and began his professional career at PricewaterhouseCoopers from
October 1991 to September 2000.

8

Ms. Connors was hired in February 2010 as Senior Vice President, Audit and Chief Risk Officer. Prior to joining us, she

served as a partner at Deloitte & Touche, LLP from September 2003 to January 2010.

Ms. Johnson was hired as Assistant Treasurer, International in February 2000. In May 2004, Ms. Johnson was appointed
Executive Vice President, Chief Financial Officer of The Partnership, a division of Interpublic which included Lowe
Worldwide and Draft. She was elected Senior Vice President and Treasurer in October 2004, in February 2013 was elected to
Senior Vice President of Finance and Treasurer and as of January 1, 2020 was promoted to Executive Vice President and
Chief Financial Officer.

Mr. Krakowsky was hired in January 2002 as Senior Vice President, Director of Corporate Communications. He was
elected to Executive Vice President, Strategy and Corporate Relations in December 2005, Executive Vice President, Chief
Strategy and Talent Officer in February 2011 and in September 2019 was promoted to Executive Vice President, Chief
Operating Officer. Prior to joining us, he served as Senior Vice President, Communications Director for Young & Rubicam
from August 1996 to December 2000.

Item 1A. Risk Factors

We are subject to a variety of possible risks that could adversely impact our revenues, results of operations or financial
condition. Some of these risks relate to general economic and financial conditions, while others are more specific to us and
the industry in which we operate. The following factors set out potential risks we have identified that could adversely affect
us. The risks described below may not be the only risks we face. Additional risks that we do not yet know of, or that we
currently think are immaterial, could also have a negative impact on our business operations or financial condition. See also
Statement Regarding Forward-Looking Disclosure.

• We operate in a highly competitive industry.

The advertising and marketing communications business is highly competitive and constantly changing. Our agencies
and media services compete with other agencies and other providers of creative, marketing or media services to maintain
existing client relationships and to win new business. Our competitors include not only other large multinational advertising
and marketing communications companies, but also smaller entities that operate in local or regional markets as well as new
forms of market participants.

Competitive challenges also arise from rapidly-evolving and new technologies in the marketing and advertising space,
creating opportunities for new and existing competitors and a need for continued significant investment in tools, technologies
and process improvements. As data-driven marketing solutions become increasingly core to the success of our brands, any
failure to keep up with rapidly changing technologies and standards in this space could harm our competitive position.

The client’s perception of the quality of our agencies’ creative work, its confidence in our ability to protect the
confidentiality of their and their customers’ data and its relationships with key personnel at the Company or our agencies are
important factors that affect our competitive position. An agency’s ability to serve clients, particularly large international
clients, on a broad geographic basis and across a range of services and technologies may also be an important competitive
consideration. On the other hand, because an agency’s principal asset is its people and freedom of entry into the industry is
almost unlimited, our relationships with clients can be affected by the departure of key personnel and a small agency is, on
occasion, able to take all or some portion of a client’s account from a much larger competitor.

•

Clients may terminate or reduce their relationships with us on short notice.

Many companies put their advertising and marketing communications business up for competitive review from time to
time, and we have won and lost client accounts in the past as a result of such periodic competitions. Our clients may choose
to terminate their contracts, or reduce their relationships with us, on a relatively short time frame and for any reason. A
relatively small number of clients contribute a significant portion of our revenue. In the aggregate, our top ten clients based
on revenue accounted for approximately 17% of revenue in 2019. A substantial decline in a large client’s advertising and
marketing spending, or the loss of a significant part of its business, could have a material adverse effect upon our business
and results of operations.

9

Our ability to attract new clients and to retain existing clients may also, in some cases, be limited by clients’ policies or
perceptions about conflicts of interest, or our own exclusivity arrangements with certain clients. These policies can, in some
cases, prevent one agency, or even different agencies under our ownership, from performing similar services for competing
products or companies.

•

Our results of operations are highly susceptible to unfavorable economic conditions.

We are exposed to risks associated with weak or uncertain regional or global economic conditions and disruption in the
financial markets. The global economy continues to be challenging in some markets. Uncertainty about the continued
strength of the global economy generally, or economic conditions in certain regions or market sectors, and a degree of
caution on the part of some marketers, can have an effect on the demand for advertising and marketing communication
services. In addition, market conditions can be adversely affected by natural and human disruptions, such as natural disasters,
severe weather events, military conflict or public health crises. Our industry can be affected more severely than other sectors
by an economic downturn and can recover more slowly than the economy in general. In the past, some clients have
responded to weak economic and financial conditions by reducing their marketing budgets, which include discretionary
components that are easier to reduce in the short term than other operating expenses. This pattern may recur in the future.
Furthermore, unexpected revenue shortfalls can result in misalignments of costs and revenues, resulting in a negative impact
to our operating margins. If our business is significantly adversely affected by unfavorable economic conditions or other
market disruptions that adversely affect client spending, the negative impact on our revenue could pose a challenge to our
operating income and cash generation from operations.

• We may lose or fail to attract and retain key employees and management personnel.

Our employees, including creative, digital, research, media and account specialists, and their skills and relationships
with clients, are among our most valuable assets. An important aspect of our competitiveness is our ability to identify and
develop the appropriate talent and to attract and retain key employees and management personnel. Our ability to do so is
influenced by a variety of factors, including the compensation we award and factors which may be beyond our control.
Changes to U.S. or other immigration policies or travel restrictions imposed as a result of public health, political or security
concerns, that restrain the flow of professional talent may inhibit our ability to staff our offices or projects. In addition, the
advertising and marketing services industry is characterized by a high degree of employee mobility and significant use of
third-party or temporary workers to staff new, growing or temporary assignments. If we were to fail to attract key personnel
or lose them to competitors or clients, or fail to manage our workforce effectively, our business and results of operations
could be adversely affected.

•

If our clients experience financial distress, or seek to change or delay payment terms, it could negatively affect our
own financial position and results.

We have a large and diverse client base, and at any given time, one or more of our clients may experience financial
difficulty, file for bankruptcy protection or go out of business. Unfavorable economic and financial conditions could result in
an increase in client financial difficulties that affect us. The direct impact on us could include reduced revenues and write-
offs of accounts receivable and expenditures billable to clients, and if these effects were severe, the indirect impact could
include impairments of intangible assets, credit facility covenant violations and reduced liquidity.

Furthermore, in most of our businesses, our agencies enter into commitments to pay production and media costs on
behalf of clients. The amounts involved substantially exceed our revenues and primarily affect the level of accounts
receivable, expenditures billable to clients, accounts payable and accrued liabilities. To the extent possible, we pay
production and media charges only after we have received funds from our clients. However, if clients are unable to pay for
commitments that we have entered into on their behalf, or if clients seek to significantly delay or otherwise alter payment
terms, there could be an adverse effect on our working capital, which would negatively impact our operating cash flow.

•

International business risks could adversely affect our operations.

We are a global business, with agencies located in over 100 countries, including every significant world market.
Operations outside the United States represent a significant portion of our net revenues, approximately 38% in 2019. These

10

operations are exposed to risks that include local legislation, currency variation, exchange control restrictions, local labor and
employment laws that hinder workforce flexibility, large-scale local or regional public health crises, and other difficult
social, political or economic conditions. We also must comply with applicable U.S., local and other international anti-
corruption laws, including the FCPA and the U.K. Anti-Bribery Act (2010), which can be comprehensive, complex and
stringent, in all jurisdictions where we operate, certain of which present heightened compliance challenges. Export controls
and economic sanctions, such as those maintained by the Office of Foreign Assets Control of the U.S. Department of the
Treasury, can impose limitations on our ability to operate in certain geographic regions or to seek or service certain potential
clients. These restrictions can place us at a competitive disadvantage with respect to those competitors who may not be
subject to comparable restrictions. Failure to comply or to implement business practices that sufficiently prevent corruption
or violation of sanctions laws could result in significant remediation expense and expose us to significant civil and criminal
penalties and reputational harm.

Given our substantial operations in the United Kingdom and Continental Europe, we face continued uncertainty
surrounding the implementation and consequences of the U.K.’s June 2016 referendum in which voters approved the United
Kingdom’s exit from the European Union, commonly referred to as “Brexit.” Under the withdrawal agreement negotiated
between the U.K. and the E.U., the U.K. as of January 31, 2020, is no longer a member of the European Union, and a
transitional period will occur through December 31, 2020, during which the parties intend to negotiate the terms of their
future economic and trade relationship. During and following this transitional period, it is possible that Brexit and changes
resulting from Brexit will cause increased regulatory and legal complexities, large exchange rate fluctuations and negative
economic impacts. These impacts and any increased restrictions on the free movement of labor, capital, goods and services
between the United Kingdom and the remaining members of the European Union, could create uncertainty surrounding our
business, including our relationships with existing and future clients, suppliers and employees, and have an adverse effect on
our business, financial results and operations.

In developing countries or regions, we may face further risks, such as slower receipt of payments, nationalization, social
and economic instability, currency repatriation restrictions and undeveloped or inconsistently enforced commercial laws.
These risks may limit our ability to grow our business and effectively manage our operations in those countries.

In addition, because a significant portion of our business is denominated in currencies other than the U.S. Dollar, such
as the Australian Dollar, Brazilian Real, British Pound Sterling, Canadian Dollar, Chinese Yuan Renminbi, Euro and Indian
Rupee, fluctuations in exchange rates between the U.S. Dollar and such currencies, including the persistent strength of the
U.S. Dollar in recent periods, may adversely affect our financial results.

• We are subject to industry regulations and other legal or reputational risks that could restrict our activities or

negatively impact our performance or financial condition.

Our industry is subject to government regulation and other governmental action, both domestic and foreign. Advertisers
and consumer groups may challenge advertising through legislation, regulation, judicial actions or otherwise, for example on
the grounds that the advertising is false and deceptive or injurious to public welfare. Our business is also subject to specific
rules, prohibitions, media restrictions, labeling disclosures and warning requirements applicable to advertising for certain
products. Existing and proposed laws and regulations, in particular in the European Union and the United States, concerning
user privacy, use of personal information and on-line tracking technologies could affect the efficacy and profitability of
internet-based, digital and targeted marketing. We are also subject to laws and regulations that govern whether and how we
can transfer, process or receive certain data that we use in our operations. The costs of compliance with these laws may
increase in the future as a result of the implementation of new laws or regulations, such as the GDPR and the CCPA, or
changes in interpretations of current ones, such as the interpretation of existing consumer protection laws as imposing
restrictions on the online collection, storage and use of personal data. The imposition of restrictions on certain technologies
by private market participants in response to privacy concerns could also have a negative impact on our digital business. If
we are unable to transfer data between countries and regions in which we operate, or if we are prohibited from sharing data
among our products and services, it could affect the manner in which we provide our services or adversely affect our
financial results. Any failure on our part to comply with these legal requirements, or their application in an unanticipated
manner, could harm our business and result in penalties or significant legal liability. Legislators, agencies and other
governmental units may also continue to initiate proposals to ban the advertising of specific products, such as alcohol,
tobacco or marijuana products, and to impose taxes on or deny deductions for advertising, which, if successful, may hinder

11

our ability to accomplish our clients’ goals and have an adverse effect on advertising expenditures and, consequently, on our
revenues. Governmental action, including judicial rulings, on the relative responsibilities of clients and their marketing
agencies for the content of their marketing can also impact our operations. Furthermore, we could suffer reputational risk as a
result of governmental or legal action or from undertaking work that may be challenged by consumer groups or considered
controversial.

• We face risks associated with our acquisitions and other investments.

We regularly undertake acquisitions and other investments that we believe will enhance our service offerings to our
clients, such as our acquisition of Acxiom in 2018. These transactions can involve significant challenges and risks, including
that the transaction does not advance our business strategy or fails to produce a satisfactory return on our investment. While
our evaluation of any potential acquisition includes business, legal and financial due diligence with the goal of identifying
and evaluating the material risks involved, we may be unsuccessful in ascertaining or evaluating all such risks. Though we
typically structure our acquisitions to provide for future contingent purchase payments that are based on the future
performance of the acquired entity, our forecasts of the investment’s future performance also factor into the initial
consideration. When actual financial results differ, our returns on the investment could be adversely affected.

We may also experience difficulty integrating new employees, businesses, assets or systems into our organization,
including with respect to our internal policies and required controls. We may face reputational and legal risks in situations
where we have a significant minority investment but limited control over the investment’s operations. Furthermore, it may
take longer than anticipated to realize the expected benefits from these transactions, or those benefits may ultimately be
smaller than anticipated or may not be realized at all. Talent is among our most valuable assets, and we also may not realize
the intended benefits of a transaction if we fail to retain targeted personnel. Acquisition and integration activity may also
divert management’s attention and other corporate resources from other business needs. If we fail to realize the intended
advantages of any given investment or acquisition, or if we do not identify or correctly measure the associated risks and
liabilities, our results of operations and financial position could be adversely affected.

• We rely extensively on information technology systems and could face cybersecurity risks.

We rely extensively and increasingly on information technologies and infrastructure to manage our business, including
digital storage of marketing strategies and client information, develop new business opportunities and digital products, and
process business transactions. The incidence of malicious technology-related events, such as cyberattacks, computer hacking,
computer viruses, worms or other destructive or disruptive software, phishing attacks and other attempts to gain access to
confidential or personal data, denial of service attacks or other malicious activities is on the rise worldwide and highlights the
need for continual and effective cybersecurity awareness and education. Our business, which increasingly involves the
collection, use and transmission of customer data, may make us and our agencies attractive targets for malicious third-party
attempts to access this data. Power outages, equipment failure, natural disasters (including extreme weather), terrorist
activities or human error may also affect our systems and result in disruption of our services or loss or improper disclosure of
personal data, business information, including intellectual property, or other confidential information. We operate in many
respects on a decentralized basis, with a large number of agencies and legal entities, and the resulting size, diversity and
disparity of our technology systems and complications in implementing standardized technologies and procedures could
increase our potential vulnerability to such breakdowns, malicious intrusions or attacks.

Likewise, data privacy breaches, as well as improper use of social media, by employees and others may pose a risk that
sensitive data, such as personally identifiable information, strategic plans and trade secrets, could be exposed to third parties
or to the general public. We operate worldwide, and the legal rules governing data transfers are often complex, conflicting,
unclear or ever-changing. We also utilize third parties, including third-party “cloud” computing services, to store, transfer or
process data, and system failures or network disruptions or breaches in the systems of such third parties could adversely
affect our reputation or business.

Any such breaches or breakdowns could expose us to legal liability, be expensive to remedy, result in a loss of our or
our clients’ or vendors’ proprietary information and damage our reputation. Efforts to develop, implement and maintain
security measures are costly, may not be successful in preventing these events from occurring and require ongoing
monitoring and updating as technologies and cyberattack techniques change frequently, or are not recognized until successful
and efforts to overcome security measures become more sophisticated.

12

•

Our earnings would be adversely affected if we were required to recognize asset impairment charges or increase our
deferred tax valuation allowances.

We evaluate all of our long-lived assets (including goodwill, other intangible assets and fixed assets), investments and
deferred tax assets for possible impairment or realizability annually or whenever there is an indication that they are impaired
or not realizable. If certain criteria are met, we are required to record an impairment charge or valuation allowance.

As of December 31, 2019, we have substantial amounts of long-lived assets, deferred tax assets and investments on our
Consolidated Balance Sheet, including approximately $4.9 billion of goodwill. Future events, including our financial
performance, market valuation of us or market multiples of comparable companies, loss of a significant client’s business or
strategic decisions, could cause us to conclude that impairment indicators exist and that the asset values associated with long-
lived assets, deferred tax assets and investments may have become impaired. Any significant impairment loss would have an
adverse impact on our reported earnings in the period in which the charge is recognized. For further discussion of goodwill
and other intangible assets, as well as our sensitivity analysis of our valuation of these assets, see Critical Accounting
Estimates in Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations.

• We may not be able to meet our performance targets and milestones.

From time to time, we communicate to the public certain targets and milestones for our financial and operating
performance that are intended to provide metrics against which to evaluate our performance. They should not be understood
as predictions or guidance about our expected performance. Our ability to meet any target or milestone is subject to inherent
risks and uncertainties, and we caution investors against placing undue reliance on them. See Statement Regarding Forward-
Looking Disclosure.

•

Our financial condition could be adversely affected if our available liquidity is insufficient.

Agency operating cash flows have a significant impact on our liquidity, and we maintain a commercial paper program, a
committed corporate credit facility and uncommitted lines of credit to increase flexibility in support of our operating needs.
If any of these sources were unavailable or insufficient, our liquidity and ability to adequately fund our operations could be
adversely affected. Furthermore, if our business or financial needs lead us to seek new or additional sources of liquidity,
including in the capital markets, there can be no guarantee that we would be able to access any new sources of liquidity on
commercially reasonable terms or at all.

Under our commercial paper program, we are authorized to issue short-term debt up to an aggregate amount outstanding
at any time of $1.5 billion, which we use for working capital and general corporate purposes. Borrowings under the
commercial paper program are supported by our $1.5 billion committed corporate credit facility (the “Credit Agreement”) . If
credit under the Credit Agreement or our ability to access the commercial paper market were unavailable or insufficient, our
liquidity could be adversely affected.

The Credit Agreement contains a leverage ratio and other, non-financial, covenants, and events like a material economic
downturn could adversely affect our ability to comply with them. For example, compliance with the financial covenant
would be more difficult to achieve if we were to experience increased indebtedness or substantially lower revenues,
including as a result of economic downturns, client losses or a substantial increase in client defaults. If we were unable to
comply with any of the covenants contained in the Credit Agreement, we could be required to seek an amendment or waiver
from our lenders, and our costs under these agreements could increase. If we were unable to obtain a necessary amendment
or waiver, the Credit Agreement could be terminated, any outstanding amounts could be subject to acceleration, and we
could lose access to certain uncommitted financing arrangements and commercial paper.

For further discussion of our liquidity profile and outlook, see Liquidity and Capital Resources in Part II, Item 7,

Management’s Discussion and Analysis of Financial Condition and Results of Operations.

•

In connection with the Acxiom acquisition, we incurred a substantial amount of additional debt.

On October 1, 2018, we completed the acquisition of Acxiom for approximately $2.3 billion, including customary
closing adjustments. The indebtedness we incurred to fund the Acxiom acquisition significantly increased our outstanding

13

debt levels and will require us to dedicate a substantial portion of our cash flow to servicing this debt. As of December 31,
2019, $1.0 billion of this indebtedness matures within two years. If we are unable to generate sufficient funds to meet our
obligations under our credit facilities or the debt securities we issued in connection with the acquisition, we may be required
to refinance, restructure or otherwise amend some or all of our obligations, sell assets or raise additional cash through the
sale of our common stock or convertible securities, and there could be a negative impact on our credit ratings. We cannot
assure you that we would be able to obtain refinancing on terms as favorable as our current financing or that any
restructuring, sales of assets or issuances of equity can be accomplished or, if accomplished, would raise sufficient funds to
meet our obligations. If we were to raise additional funds through the issuance of equity or convertible securities, that
issuance could also result in substantial dilution to existing stockholders.

•

Downgrades of our credit ratings could adversely affect us.

Because ratings are an important factor influencing our ability to access capital and the terms of any new indebtedness,
including covenants and interest rates, we could be adversely affected if our credit ratings were downgraded or if they were
significantly weaker than those of our competitors. Our access to the commercial paper market is contingent on our
maintenance of sufficient short-term debt ratings, and any downgrades to those ratings could increase our borrowing costs
and reduce the market capacity for, or our ability to issue, commercial paper. Our clients and vendors may also consider our
credit profile when negotiating contract terms, and if they were to change the terms on which they deal with us, it could have
an adverse effect on our liquidity.

•

The costs of compliance with sustainability or other social responsibility laws, regulations or policies, including
client-driven policies and standards, could adversely affect our business.

As a non–location–specific, non–manufacturing service business we have to date been sheltered from or able to mitigate
many direct impacts from climate change and related laws and regulations. We are, however, increasingly impacted by the
effects of climate change and laws and regulations related to other sustainability concerns, and, we could incur related costs
indirectly through our clients. Increasingly our clients request
that we comply with their own social responsibility,
sustainability or other business policies or standards, which may be more restrictive than current laws and regulations, before
they commence, or continue, doing business with us, and sustainability and governance issues are increasingly a focus of the
investor community. Our compliance with these policies and related certification requirements could be costly, and our
failure to comply could adversely affect our business relationships or reputation. If large shareholders were to reduce their
ownership stakes in our Company as a result of dissatisfaction with our policies or efforts in this area, there could be negative
impact on our stock price, and we could also suffer reputational harm. Further, if clients’ costs are adversely affected by
climate change or related laws and regulations, this could negatively impact their spending on our advertising and marketing
services. We could also face increased prices from our own suppliers that face climate change-related costs and seek to pass
on their increased costs to their customers.

14

Item 1B. Unresolved Staff Comments

None.

Item 2.

Properties

Substantially all of our office space is leased from third parties. Certain leases are subject to rent reviews or contain
escalation clauses, and certain of our leases require the payment of various operating expenses, which may also be subject to
escalation. Physical properties include leasehold improvements, furniture, fixtures and equipment located in our offices. We
believe that facilities leased or owned by us are adequate for the purposes for which they are currently used and are well
maintained. See Note 3 in Item 8, Financial Statements and Supplementary Data for further information on our lease
commitments.

Item 3.

Legal Proceedings

We are involved in various legal proceedings, and subject to investigations, inspections, audits, inquiries and similar
actions by governmental authorities, arising in the normal course of our business. The types of allegations that arise in
connection with such legal proceedings vary in nature, but can include claims related to contract, employment, tax and
intellectual property matters. While any outcome related to litigation or such governmental proceedings in which we are
involved cannot be predicted with certainty, we believe that the outcome of these matters, individually and in the aggregate,
will not have a material adverse effect on our financial condition, results of operations or cash flows. See Note 16 in Item 8,
Financial Statements and Supplementary Data for further information relating to our legal matters.

Item 4.

Mine Safety Disclosures

Not applicable.

15

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity

PART II

Securities

Market Information

Our common stock is listed and traded on the New York Stock Exchange under the symbol “IPG”. As of February 13,

2020, there were approximately 9,000 registered holders of our outstanding common stock.

On February 12, 2020, we announced that our Board of Directors (the “Board”) had declared a common stock cash
dividend of $0.255 per share, payable on March 16, 2020 to holders of record as of the close of business on March 2, 2020.
Although it is the Board’s current intention to declare and pay future dividends, there can be no assurance that such
additional dividends will in fact be declared and paid. Any and the amount of any such declaration is at the discretion of the
Board and will depend upon factors such as our earnings, financial position and cash requirements.

Equity Compensation Plans

See Item 12 for information about our equity compensation plans.

Transfer Agent and Registrar for Common Stock

The transfer agent and registrar for our common stock is:

Computershare Shareowner Services LLC
480 Washington Boulevard
29th Floor
Jersey City, New Jersey 07310
Telephone: (877) 363-6398

Sales of Unregistered Securities

Not applicable.

Repurchases of Equity Securities

The following table provides information regarding our purchases of our equity securities during the period from

October 1, 2019 to December 31, 2019.

Total Number of
Shares (or Units)
Purchased

Average Price Paid
per Share (or Unit)

Total Number of
Shares (or Units)
Purchased as Part of
Publicly Announced
Plans or Programs

Maximum Number (or
Approximate Dollar Value)
of Shares (or Units)
that May Yet Be
Purchased Under the
Plans or Programs 1

October 1 – 31 . . . . . . . . . . . . . . . . . . . . . . . . .
November 1 – 30 . . . . . . . . . . . . . . . . . . . . . . .
December 1 – 31 . . . . . . . . . . . . . . . . . . . . . . .

Total

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

—
—
—

—

$—
$—
$—

$—

—
—
—

—

$338,421,933
$338,421,933
$338,421,933

1

In February 2017, the Board authorized a share repurchase program to repurchase from time to time up to $300.0 million, excluding fees, of our
common stock (the “2017 Share Repurchase Program”). In February 2018, the Board authorized a share repurchase program to repurchase from time to
time up to $300.0 million, excluding fees, of our common stock, which was in addition to any amounts remaining under the 2017 Share Repurchase
Program. On July 2, 2018, in connection with the announcement of the Acxiom acquisition, we announced that share repurchases will be suspended for
a period of time in order to reduce the increased debt levels incurred in conjunction with the acquisition, and no shares were repurchased pursuant to the
share repurchase programs in the periods reflected. There are no expiration dates associated with the share repurchase programs.

16

Item 6. Selected Financial Data

THE INTERPUBLIC GROUP OF COMPANIES, INC. AND SUBSIDIARIES
Selected Financial Data
(Amounts in Millions, Except Per Share Amounts and Ratios)

Statement of Operations Data

Revenue:

Years ended December 31,

2019

2018 1

2017

2016

2015

Net revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Billable expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 8,625.1
1,596.2

$ 8,031.6
1,682.8

$ 7,473.5
1,574.1

$ 7,452.3
1,603.9

N/A
N/A

Total Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating Expenses:

Salaries and related expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Office and other direct expenses 2 . . . . . . . . . . . . . . . . . . . . . . . . . .
Billable expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Cost of services 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Selling, general and administrative expenses 3 . . . . . . . . . . . . . . . .
Depreciation and amortization 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restructuring charges 5
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Provision for income taxes 6
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Net income 7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income available to IPG common stockholders 7 . . . . . . . . . . . . .

10,221.3

9,714.4

9,047.6

9,056.2

$ 7,613.8

5,568.8
1,564.1
1,596.2

8,729.1
93.8
278.5
33.9

9,135.3
1,086.0
204.8

673.9
656.0

5,298.3
1,355.1
1,682.8

8,336.2
166.5
202.9
0.0

8,705.6
1,008.8
199.2

637.7
618.9

4,990.7
1,269.2
1,574.1

7,834.0
118.5
157.1
(0.4)

8,109.2
938.4
271.3

570.4
554.4

4,942.2
1,274.6
1,603.9

7,820.7
138.6
160.2
0.3

8,119.8
936.4
196.9

629.0
605.0

4,765.8
1,683.3
N/A

6,449.1
133.8
156.9
(0.8)

6,739.0
874.8
282.8

480.5
454.6

Earnings per share available to IPG common stockholders:

Basic 8
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted 8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Weighted-average number of common shares outstanding:

Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dividends declared per common share . . . . . . . . . . . . . . . . . . . . . . . .

$
$

$

1.70
1.68

386.1
391.2
0.94

Other Financial Data
Net cash provided by operating activities . . . . . . . . . . . . . . . . . . . . . .

$ 1,529.2

$
$

$

$

1.61
1.59

383.3
389.0
0.84

565.1

$
$

$

$

1.42
1.40

389.6
397.3
0.72

881.8

$
$

$

$

As of December 31,

1.52
1.48

397.9
408.0
0.60

512.8

$
$

$

$

1.11
1.09

408.1
415.7
0.48

688.5

Balance Sheet Data

2019

2018

2017

2016

2015

Cash and cash equivalents and marketable securities . . . . . . . . . . . . .
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 1,192.2
17,751.9
3,326.3
14,761.6
2,825.6

$

673.5
15,620.3
3,734.0
13,019.6
2,432.8

$

791.0
12,704.7
1,372.5
10,206.3
2,246.3

$ 1,100.6
12,511.8
1,690.3
10,168.6
2,090.4

$ 1,509.7
12,585.1
1,745.1
10,331.4
2,001.8

1

2

3

4

On October 1, 2018, the Company completed its acquisition of Acxiom. See Note 6 in Item 8, Financial Statements and Supplementary Data, for
further detail on the acquisition.

Results for the years ended December 31, 2017, 2016 and 2015 have been recast to conform to the current-period presentation.

The year ended December 31, 2018 included transaction costs directly related to the acquisition of Acxiom of $35.0.

The years ended December 31, 2019, 2018, 2017, 2016 and 2015 included amortization of acquired intangibles of $86.0, $37.6, $21.1, $21.9 and $26.1,
respectively.

17

5

6

7

8

In the first quarter of 2019, the Company implemented a cost initiative to better align our cost structure with our revenue primarily related to specific
client losses occurring in 2018. See Note 11 in Item 8, Financial Statements and Supplementary Data, for further detail regarding the restructuring
charges.

The year ended December 31, 2019 included a benefit of $16.9 related to amortization of acquired intangibles, a benefit of $7.6 related to Q1 2019
restructuring charges, a benefit of $0.4 related to net losses on the sale of businesses, and a benefit of $39.2 related to the net impact of various discrete
tax items. The year ended December 31, 2018 included a benefit of $12.1 from transaction costs directly related to the acquisition of Acxiom, a benefit
of $23.4 related to the net impact of various discrete tax items, and a benefit of $4.8 related to amortization of acquired intangibles. The year ended
December 31, 2017 primarily included a benefit of $36.0 related to the net effect of the Tax Cuts and Jobs Act. The year ended December 31, 2016
primarily included a net reversal of valuation allowances of $12.2, a benefit of $23.4 related to the conclusion and settlement of a tax examination of
previous years and a benefit of $44.6 related to refunds to be claimed on future amended U.S. federal returns.

The years ended December 31, 2019, 2018, 2017, 2016 and 2015 included after-tax losses of $45.9, $59.7, $16.7, $39.0 and $47.1, respectively, on
sales of businesses. The year ended December 31, 2018 included after-tax transaction costs directly related to the acquisition of Acxiom of $36.5.

Refer to “Earnings Per Share” in Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, for further
detail on the basic and diluted earnings per share impacts for the years ended December 31, 2019, 2018, and 2017. Basic and diluted earnings per share
for the year ended December 31, 2016 included a positive impact of $0.20 per share from various discrete tax items, partially offset by a negative
impact of $0.10 from losses on sales of businesses and the classification of certain assets as held for sale and $0.05 from the amortization of acquired
intangibles. Basic and diluted earnings per share for the year ended December 31, 2015 included a negative impact of $0.12 per share from losses on
sales of businesses.

18

Management’s Discussion and Analysis of Financial Condition and Results of Operations
(Amounts in Millions, Except Per Share Amounts)

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is
intended to help you understand The Interpublic Group of Companies, Inc. and its subsidiaries (the “Company,” “IPG,”
“we,” “us” or “our”). MD&A should be read in conjunction with our Consolidated Financial Statements and the
accompanying notes included in this report. Our MD&A includes the following sections:

EXECUTIVE SUMMARY provides a discussion about our strategic outlook, factors influencing our business and an

overview of our results of operations and liquidity.

RESULTS OF OPERATIONS provides an analysis of the consolidated and segment results of operations for 2019

compared to 2018 and 2018 compared to 2017.

LIQUIDITY AND CAPITAL RESOURCES provides an overview of our cash flows, funding requirements, contractual

obligations, financing and sources of funds, and debt credit ratings.

CRITICAL ACCOUNTING ESTIMATES provides a discussion of our accounting policies that require critical

judgment, assumptions and estimates.

RECENT ACCOUNTING STANDARDS, by reference to Note 17 to the Consolidated Financial Statements, provides a
discussion of certain accounting standards that have been adopted during 2019 or that have not yet been required to be
implemented and may be applicable to our future operations.

NON-GAAP FINANCIAL MEASURE provides a reconciliation of non-GAAP financial measure with the most directly
comparable generally accepted accounting principles in the United States (“U.S. GAAP”) financial measures and sets forth
the reasons we believe that presentation of the non-GAAP financial measure contained therein provides useful information to
investors regarding our results of operations and financial condition.

EXECUTIVE SUMMARY

We are one of the world’s premier global advertising and marketing services companies. Our companies specialize in
consumer advertising, digital marketing, media planning and buying, public relations, specialized communications
disciplines and data management. Our agencies create customized marketing programs for clients that range in scale from
large global marketers to regional and local clients. Comprehensive global services are critical to effectively serve our
multinational and local clients in markets throughout the world as they seek to build brands, increase sales of their products
and services, and gain market share.

We operate in a media landscape that continues to evolve at a rapid pace. Media channels continue to fragment, and
clients face an increasingly complex consumer environment. To stay ahead of these challenges and to achieve our objectives,
we have made and continue to make investments in creative, strategic and technology talent in areas including fast-growth
digital marketing channels, high-growth geographic regions and strategic world markets. We consistently review
opportunities within our Company to enhance our operations through acquisitions and strategic alliances and internal
programs that encourage intra-company collaboration. As appropriate, we also develop relationships with technology and
emerging media companies that are building leading-edge marketing tools that complement our agencies’ skill sets and
capabilities.

Our financial goals include competitive organic net revenue growth and expansion of EBITA margin, as defined and
discussed within the Non-GAAP Financial Measure section of this MD&A, which we expect will further strengthen our
balance sheet and total liquidity and increase value to our shareholders. Accordingly, we remain focused on meeting the
evolving needs of our clients while concurrently managing our cost structure. We continually seek greater efficiency in the
delivery of our services, focusing on more effective resource utilization, including the productivity of our employees, real
estate, information technology and shared services, such as finance, human resources and legal. The improvements we have

19

Management’s Discussion and Analysis of Financial Condition and Results of Operations – (continued)
(Amounts in Millions, Except Per Share Amounts)

made and continue to make in our financial reporting and business information systems in recent years allow us more timely
and actionable insights from our global operations. Our disciplined approach to our balance sheet and liquidity provides us
with a solid financial foundation and financial flexibility to manage and grow our business. We believe that our strategy and
execution position us to meet our financial goals and to deliver long-term shareholder value.

When we analyze period-to-period changes in our operating performance, we determine the portion of the change that is
attributable to changes in foreign currency rates and the net effect of acquisitions and divestitures, and the remainder we call
organic change, which indicates how our underlying business performed. We exclude the impact of billable expenses in
analyzing our operating performance as the fluctuations from period to period are not indicative of the performance of our
underlying businesses and have no impact on our operating income or net income.

The change in our operating performance attributable to changes in foreign currency rates is determined by converting
the prior-period reported results using the current-period exchange rates and comparing these prior-period adjusted amounts
to the prior-period reported results. Although the U.S. Dollar is our reporting currency, a substantial portion of our revenues
and expenses are generated in foreign currencies. Therefore, our reported results are affected by fluctuations in the currencies
in which we conduct our international businesses. Our exposure is mitigated as the majority of our revenues and expenses in
any given market are generally denominated in the same currency. Both positive and negative currency fluctuations against
the U.S. Dollar affect our consolidated results of operations, and the magnitude of the foreign currency impact to our
operations related to each geographic region depends on the significance and operating performance of the region. The
foreign currencies that most adversely impacted our results during the year ended December 31, 2019 were the British
Pound Sterling and Euro.

For purposes of analyzing changes in our operating performance attributable to the net effect of acquisitions and
divestitures, transactions are treated as if they occurred on the first day of the quarter during which the transaction occurred.
During the past few years, we have acquired companies that we believe will enhance our offerings and disposed of
businesses that are not consistent with our strategic plan.

The metrics that we use to evaluate our financial performance include organic change in net revenue as well as the
change in certain operating expenses, and the components thereof, expressed as a percentage of consolidated net revenue, as
well as EBITA. These metrics are also used by management to assess the financial performance of our reportable segments,
Integrated Agency Networks (“IAN”) and Constituency Management Group (“CMG”). In certain of our discussions, we
analyze net revenue by geographic region and by business sector, in which we focus on our top 100 clients, which typically
constitute approximately 55% to 60% of our annual consolidated net revenues.

20

Management’s Discussion and Analysis of Financial Condition and Results of Operations – (continued)
(Amounts in Millions, Except Per Share Amounts)

The following table presents a summary of our financial performance for the years ended December 31, 2019, 2018 and

2017.

Statement of Operations Data

REVENUE:

Years ended December 31,

2019 vs 2018

2018 vs 2017

2019

2018

2017

% Increase/
(Decrease)

% Increase/
(Decrease)

Change

7.4%
(5.1)%

5.2%

7.7%
12.0%

7.5%
6.9%

7.4%

7.5%
9.1%

Net revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Billable expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 8,625.1
1,596.2

$8,031.6
1,682.8

$7,473.5
1,574.1

Total revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$10,221.3

$9,714.4

$9,047.6

OPERATING INCOME 1, 2
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
EBITA 1, 2, 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
NET INCOME AVAILABLE TO IPG COMMON

STOCKHOLDERS

Earnings per share available to IPG common stockholders:

Basic 1, 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted 1, 2
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 1,086.0
$ 1,172.0

$1,008.8
$1,046.4

$ 938.4
$ 959.5

$

$
$

656.0

$ 618.9

$ 554.4

1.70
1.68

$
$

1.61
1.59

$
$

1.42
1.40

Operating Ratios

Organic change in net revenue . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating margin on net revenue 1, 2 . . . . . . . . . . . . . . . . . . . . . . . .
Operating margin on total revenue 1, 2 . . . . . . . . . . . . . . . . . . . . . . .
EBITA margin on net revenue 1, 2, 3 . . . . . . . . . . . . . . . . . . . . . . . . .
Expenses as a % of net revenue:

Salaries and related expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Office and other direct expenses . . . . . . . . . . . . . . . . . . . . . . . . .
Selling, general and administrative expenses 1 . . . . . . . . . . . . . .
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restructuring charges 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3.3%
12.6%
10.6%
13.6%

64.6%
18.1%
1.1%
3.2%
0.4%

5.5%
12.6%
10.4%
13.0%

66.0%
16.9%
2.1%
2.5%
0.0%

1.5%
12.6%
10.4%
12.8%

66.8%
17.0%
1.6%
2.1%
0.0%

1

2

3

In 2018, results include transaction costs of $35.0 related to the Acxiom acquisition.

In 2019, results include restructuring charges of $33.9. See “Restructuring Charges” in MD&A and Note 11 of Item 8, Financial Statements and
Supplementary Data for further information.

EBITA is a financial measure that is not defined by U.S. GAAP. EBITA is calculated as net income available to IPG common stockholder before
provision for incomes taxes, total (expenses) and other income, equity in net income (loss) of unconsolidated affiliates, net income attributable to
noncontrolling interests and amortization of acquired intangibles. Refer to the Non-GAAP Financial Measure section of this MD&A for additional
information and for a reconciliation to U.S. GAAP measures.

Our organic net revenue increase of 3.3% for the year ended December 31, 2019 was driven by growth across nearly all
geographic regions, attributable to a combination of net higher spending from existing clients and net client wins, most
notably in the healthcare, financial services, technology and telecom, and retail sectors, partially offset by a decrease in the
auto and transportation sector. During the year ended December 31, 2019, our EBITA margin on net revenue grew
to 13.6% from 13.0% in the prior-year period as the increase in net revenue outpaced the overall increase in our operating
expense, excluding billable expenses and amortization of acquired intangibles.

Our organic net revenue increase of 5.5% for the year ended December 31, 2018 was driven by growth throughout all
geographic regions, and attributable to a combination of net client wins and net higher spending from existing clients, most
notably in the healthcare sector, partially offset by decreases in the food and beverage sector. During the year ended
December 31, 2018, our EBITA margin on net revenue increased to 13.0% from 12.8% in the prior-year period as the
increase in net revenue outpaced the overall increase in our operating expense, excluding billable expenses and amortization
of acquired intangibles.

21

Management’s Discussion and Analysis of Financial Condition and Results of Operations – (continued)
(Amounts in Millions, Except Per Share Amounts)

RESULTS OF OPERATIONS

Consolidated Results of Operations

Net Revenue

Our net revenue is directly impacted by the retention and spending levels of existing clients and by our ability to win
new clients. Most of our expenses are recognized ratably throughout the year and are therefore less seasonal than revenue.
Our net revenue is typically lowest in the first quarter and highest in the fourth quarter, reflecting the seasonal spending of
our clients.

Components of Change

Change

Year ended
December 31, 2018

Foreign
Currency

Net
Acquisitions/
(Divestitures) Organic

Year ended
December 31, 2019

Organic Total

Consolidated . . . . . . . . . . . . . . . . . . . .

$8,031.6

$(143.1)

$467.8

$268.8

$8,625.1

3.3% 7.4%

Domestic . . . . . . . . . . . . . . . . . . . . . . . .

International . . . . . . . . . . . . . . . . . . . .
United Kingdom . . . . . . . . . . . . . .
Continental Europe . . . . . . . . . . . .
Asia Pacific . . . . . . . . . . . . . . . . . .
Latin America . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . .

4,825.0

3,206.6
711.7
737.5
896.8
350.1
510.5

0.0

469.9

(143.1)
(32.0)
(40.6)
(26.2)
(34.4)
(9.9)

(2.1)
20.8
(8.4)
(9.9)
(2.1)
(2.5)

91.2

177.6
26.5
53.9
(2.4)
76.3
23.3

5,386.1

3,239.0
727.0
742.4
858.3
389.9
521.4

1.9% 11.6%

5.5% 1.0%
3.7% 2.1%
7.3% 0.7%
(0.3)% (4.3)%
21.8% 11.4%
4.6% 2.1%

The organic increase in our domestic market was primarily driven by growth at our advertising and media businesses as
well as our data management business. In our international markets, the organic increase was primarily driven by strong
performance at our media businesses throughout all geographic regions. In addition, the organic increase was also driven by
growth at our advertising businesses and our public relations agencies as well as at our digital specialist agencies in Latin
America. Consolidated net acquisitions primarily includes net revenue during the first nine months ended September 30,
2019 from Acxiom, which we acquired on October 1, 2018, partially offset by divestitures, mostly in our domestic market,
Asia Pacific and Continental Europe regions.

Components of Change

Change

Year ended
December 31, 2017

Foreign
Currency

Net
Acquisitions/
(Divestitures) Organic

Year ended
December 31, 2018

Organic Total

Consolidated . . . . . . . . . . . . . . . . . . . .

$7,473.5

$ 15.9

$128.2

$414.0

$8,031.6

5.5% 7.5%

Domestic . . . . . . . . . . . . . . . . . . . . . . . .

International . . . . . . . . . . . . . . . . . . . .
United Kingdom . . . . . . . . . . . . . .
Continental Europe . . . . . . . . . . . .
Asia Pacific . . . . . . . . . . . . . . . . . .
Latin America . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . .

4,458.8

3,014.7
613.1
687.8
866.9
350.8
496.1

0.0

139.9

15.9
24.1
27.8
(2.0)
(35.6)
1.6

(11.7)
15.3
(14.7)
(2.0)
(6.1)
(4.2)

226.3

187.7
59.2
36.6
33.9
41.0
17.0

4,825.0

3,206.6
711.7
737.5
896.8
350.1
510.5

5.1% 8.2%

6.2% 6.4%
9.7% 16.1%
5.3% 7.2%
3.9% 3.4%
11.7% (0.2)%
3.4% 2.9%

The organic increase in our domestic market was driven by growth across all disciplines, most notably at our advertising
and media businesses. In our international markets, the organic increase was driven by growth across all geographic regions
and nearly all disciplines, primarily at our media and advertising businesses and our digital specialist agencies, including
strong performance at our advertising businesses in the United Kingdom and at our media businesses in the Continental
Europe, Latin America and United Kingdom regions. Consolidated net acquisitions primarily includes net revenue from
Acxiom, which we acquired on October 1, 2018.

Refer to the segment discussion later in this MD&A for information on changes in revenue by segment.

22

Management’s Discussion and Analysis of Financial Condition and Results of Operations – (continued)
(Amounts in Millions, Except Per Share Amounts)

Salaries and Related Expenses

Years ended December 31,

2019 vs 2018

2018 vs 2017

2019

2018

2017

% Increase/
(Decrease)

% Increase/
(Decrease)

Change

Salaries and related expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$5,568.8

$5,298.3

$4,990.7

5.1%

6.2%

As a % of net revenue:
Salaries and related expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Base salaries, benefits and tax . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Incentive expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Severance expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Temporary help . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
All other salaries and related expenses . . . . . . . . . . . . . . . . . . . . .

64.6%
54.5%
3.3%
0.6%
4.1%
2.1%

66.0%
54.9%
3.7%
0.9%
4.2%
2.3%

66.8%
56.1%
3.3%
1.0%
3.9%
2.5%

Net revenue growth of 7.4% outpaced the increase in salaries and related expenses of 5.1% during the year ended
December 31, 2019 as compared to the prior-year period, primarily due to base salaries, benefits and tax, and temporary help
expenses increasing at rates less than net revenue growth. The improved ratio was also attributable to the inclusion of
Acxiom, for the full year in 2019, which has a lower ratio of salaries and related expenses as a percentage of its net revenue
as well as a result of carefully managing our employee costs.

Net revenue growth of 7.5% outpaced the increase in salaries and related expenses of 6.2% in 2018 as compared to the
prior-year period, primarily driven by leverage in base salaries, benefits and tax, partially offset by higher incentive expense
as a result of improved financial performance and higher temporary help to support business growth. The acquisition of
Acxiom, completed on October 1, 2018, did not have a significant impact on the ratios presented above.

Office and Other Direct Expenses

Years ended December 31,

2019 vs 2018

2018 vs 2017

2019

2018

2017

% Increase/
(Decrease)

% Increase/
(Decrease)

Change

Office and other direct expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$1,564.1

$1,355.1

$1,269.2

15.4%

6.8%

As a % of net revenue:
Office and other direct expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Occupancy expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
All other office and other direct expenses 1 . . . . . . . . . . . . . . . . . .

18.1%
6.3%
11.8%

16.9%
6.5%
10.4%

17.0%
6.8%
10.2%

1

Includes production expenses, travel and entertainment, professional fees, spending to support new business activity, telecommunications, office
supplies, bad debt expense, adjustments to contingent acquisition obligations, foreign currency losses (gains) and other expenses.

Office and other direct expenses increased by 15.4% compared to net revenue growth of 7.4% during the year ended
December 31, 2019 as compared to the prior-year period. The increase in office and other direct expenses was mainly due to
the inclusion of Acxiom, for the full year in 2019, which has a higher ratio of office and other direct expenses as a percentage
of its net revenue, primarily driven by client service costs and professional fees. Additionally, contributing to the increase
was a year-over-year change in contingent acquisition obligations, partially offset by leverage on occupancy expense.

Net revenue growth of 7.5% outpaced the increase in office and other direct expenses of 6.8% in 2018 as compared to
the prior-year period, primarily driven by leverage in occupancy expense, partially offset by an increase in client service
costs from Acxiom and year-over-year change in contingent acquisition obligations.

23

Management’s Discussion and Analysis of Financial Condition and Results of Operations – (continued)
(Amounts in Millions, Except Per Share Amounts)

Selling, General and Administrative Expenses

Selling, general and administrative expenses (“SG&A”) are primarily the unallocated expenses of our Corporate, as
detailed further in the segment discussion later in this MD&A, excluding depreciation and amortization. SG&A as a
percentage of net revenue decreased to 1.1% in 2019 from 2.1% in the prior-year period, primarily attributable to lower
professional fees, mainly driven by transaction costs related to the Acxiom acquisition in 2018 and an increase in allocated
service fees from Selling, General and Administrative expenses to Cost of Services, mainly as a result of the inclusion of
Acxiom. SG&A as a percentage of net revenue increased to 2.1% in 2018 from 1.6% in 2017, primarily as a result of
transaction costs related to the Acxiom acquisition and higher incentive expense.

Depreciation and Amortization

Depreciation and amortization as a percentage of net revenue was 3.2% in 2019, 2.5% in 2018 and 2.1% in 2017. The
increases in both 2019 and 2018 compared to prior-year periods were primarily due to the inclusion of Acxiom. For the years
ended December 31, 2019, 2018 and 2017, amortization of acquired intangibles was $86.0, $37.6 and $21.1, respectively.

Restructuring Charges

In the first quarter of 2019, the Company implemented a cost initiative (the “2019 Plan”) to better align our cost
structure with our revenue primarily related to specific client losses occurring in 2018, the components of which are listed
below. All restructuring actions were substantially completed by the end of the second quarter of 2019 and we don’t expect
any further restructuring adjustments to the 2019 Plan.

Severance and termination costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Lease restructuring costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2019

$22.0
11.9

Total restructuring charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$33.9

2018

$0.0
0.0

$0.0

2017

$ 0.0
(0.4)

$(0.4)

Years ended December 31,

The following table presents the 2019 Plan restructuring charges and employee headcount reduction for the twelve

months ended December 31, 2019.

Domestic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
International . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Consolidated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$26.3
7.6

$33.9

507
120

627

Restructuring Charges

Headcount Reduction
(Actual Number)

EXPENSES AND OTHER INCOME

Years ended December 31,

2019

2018

2017

Cash interest on debt obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-cash interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$(188.3) $(118.4) $(81.9)
(8.9)

(11.0)

(4.6)

Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Net interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other expense, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(199.3)
34.5

(164.8)
(42.9)

(123.0)
21.8

(101.2)
(69.6)

(90.8)
19.4

(71.4)
(26.2)

Total (expenses) and other income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$(207.7) $(170.8) $(97.6)

24

Management’s Discussion and Analysis of Financial Condition and Results of Operations – (continued)
(Amounts in Millions, Except Per Share Amounts)

Net Interest Expense

For 2019, net interest expense increased by $63.6 as compared to 2018, primarily attributable to increased cash interest
expense from the issuance of $2,500.0 of long-term debt in September and October of 2018 in order to finance the
acquisition of Acxiom, partially offset by an increase in interest
income, primarily due to higher cash balances in
international markets. For 2018, net interest expense increased by $29.8 as compared to 2017, primarily attributable to
increased cash interest expense from the issuance of long-term debt in 2018 as well as increased short-term borrowings and
higher interest rates throughout the year. This was partially offset by decreased non-cash interest expense from revaluations
of mandatorily redeemable noncontrolling interests.

Other Expense, Net

Results of operations include certain items that are not directly associated with our revenue-producing operations.

Years ended December 31,

2019

2018

2017

Net losses on sales of businesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$(43.4) $(61.9) $(24.1)
(2.1)

(7.7)

0.5

Total other expense, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$(42.9) $(69.6) $(26.2)

Net losses on sales of businesses – During 2019, the amounts recognized were related to sales of businesses and the
classification of certain assets and liabilities, consisting primarily of cash, as held for sale within our IAN and CMG
reportable segments. During 2018, the amounts recognized were related to sales of businesses and the classification of certain
assets and liabilities, consisting primarily of cash, as held for sale within our IAN and CMG reportable segments. During
2017, the amounts recognized were related to sales of businesses and the classification of certain assets and liabilities,
consisting primarily of cash, accounts receivable and accounts payable, as held for sale within our IAN reportable segment.
The businesses held for sale as of year end primarily represent unprofitable, non-strategic agencies which are expected to be
sold within the next twelve months.

Other – During 2019, the amounts recognized are primarily a result of changes in fair market value of equity
investments, partially offset by the sale of an equity investment. During 2018, the amounts recognized are primarily a result
of transaction-related costs from the Acxiom acquisition, partially offset by changes in fair market value of equity
investments.

INCOME TAXES

Years ended December 31,

2019

2018

2017

Income before income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Provision for income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Effective income tax rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$878.3
$204.8

$838.0
$199.2

$840.8
$271.3

23.3% 23.8% 32.3%

Effective Tax Rate

Our tax rates are affected by many factors, including our worldwide earnings from various countries, changes in
legislation and tax characteristics of our income. In 2019, our effective income tax rate of 23.3% was positively impacted by
the reversal of valuation allowances primarily in Continental Europe, by the settlement of state income tax audits and by
excess tax benefits on employee share-based payments.The effective tax rate was negatively impacted by losses in certain
foreign jurisdictions where we receive no tax benefit due to 100% valuation allowances, net losses on sales of businesses and
the classification of certain assets as held for sale, for which we received minimal tax benefit.

In 2018, our effective income tax rate of 23.8% was positively impacted by U.S. tax incentives, foreign tax credits from
a distribution of unremitted earnings, the net reversal of valuation allowance in Continental Europe and research and

25

Management’s Discussion and Analysis of Financial Condition and Results of Operations – (continued)
(Amounts in Millions, Except Per Share Amounts)

development credits. The effective income tax rate was negatively impacted by losses in certain foreign jurisdictions where
we received no tax benefit due to 100% valuation allowances, non-deductible losses on sales of businesses and assets held
for sale, by tax expense associated with the change to our assertion regarding the permanent reinvestment of undistributed
earnings attributable to certain foreign subsidiaries, and by tax expense related to the true-up of our December 31, 2017 tax
reform estimates as permitted by SEC Staff issued Accounting Bulletin No. 118 (“SAB 118”).

Public Law 115-97, commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”) was signed into law on
December 22, 2017. The Tax Act legislated many new tax provisions which impacted our operations. At December 31, 2017,
provisional amounts were recorded as permitted by SAB 118. The impact of the Tax Act as required by SAB 118, resulted in
a net tax expense of $13.4 in 2018, which was primarily attributable to our estimate of the tax imposed on the deemed
repatriation of unremitted foreign earnings.

The Company has historically asserted that its unremitted foreign earnings are permanently reinvested, and therefore did
not record income taxes on such amounts. In light of increased debt and associated servicing commitments in connection
with the Acxiom acquisition that was consummated on October 1, 2018, the Company re-evaluated its global cash needs and
as a result determined that approximately $435.0 of undistributed foreign earnings from certain international entities were no
longer subject to the permanent reinvestment assertion. We recorded a tax expense of $10.8 in 2018 representing our
estimate of the tax costs associated with this change to our assertion. We did not change our permanent reinvestment
assertion with respect to any other international entities as we used the related historical earnings and profits to fund
international operations and investments.

The Tax Act imposed a new tax on certain foreign earnings generated in 2018 and forward. These global intangible
low-taxed income (“GILTI”) tax rules are complex. U.S. GAAP allows us to choose an accounting policy which treats the
U.S. tax under GILTI provisions as either a current expense, as incurred, or as a component of the Company’s measurement
of deferred taxes. The Company elected to account for the GILTI tax as a current expense.

In 2017, our effective income tax rate of 32.3% was positively impacted by a net benefit of $36.0 as a result of the Tax
Act, as well as excess tax benefits on employee share-based payments, partially offset by losses in certain foreign
jurisdictions where we receive no tax benefit due to 100% valuation allowances.

See Note 9 in Item 8, Financial Statements and Supplementary Data for further information.

EARNINGS PER SHARE

Basic earnings per share available to IPG common stockholders for the years ended December 31, 2019, 2018 and 2017
were $1.70, $1.61 and $1.42 per share, respectively. Diluted earnings per share for the years ended December 31, 2019, 2018
and 2017 were $1.68, $1.59 and $1.40 per share, respectively.

Basic and diluted earnings per share for the year ended December 31, 2019 included negative impacts of $0.18 from the
amortization of acquired intangibles, negative impacts of $0.06 from first-quarter restructuring charges, negative impacts of
$0.12 from losses on sales of businesses and the classification of certain assets as held for sale, for which we received
minimal tax benefit, partially offset by positive impacts of $0.10 from various discrete tax items.

Basic and diluted earnings per share for

the year ended December 31, 2018 included negative impacts
of $0.16 and $0.15, respectively, from losses on sales of businesses and the classification of certain assets as held for sale
primarily in our international markets, negative impacts of $0.10 and $0.09, respectively, from transaction costs directly
related to the acquisition of Acxiom, and negative impacts of $0.09 and $0.08, respectively, from the amortization of
acquired intangibles, partially offset by positive impacts of $0.06 and $0.06, respectively, from various discrete tax items.

Basic and diluted earnings per share for the year ended December 31, 2017 included negative impacts of $0.05 from the
amortization of acquired intangibles, and negative impacts of $0.04 from losses on sales of businesses and the classification
of certain assets as held for sale, offset by net positive impacts of $0.09 as a result of the Tax Act.

26

Management’s Discussion and Analysis of Financial Condition and Results of Operations – (continued)
(Amounts in Millions, Except Per Share Amounts)

Segment Results of Operations

As discussed in Note 15 to the Consolidated Financial Statements, we have two reportable segments as of December 31,

2019: IAN and CMG. We also report results for the “Corporate and other” group.

IAN

Net Revenue

Components of Change

Change

Year ended
December 31, 2018 1

Foreign
Currency

Net
Acquisitions/
(Divestitures) Organic

Year ended
December 31, 2019

Organic Total

Consolidated . . . . . . . . . . . . . . . . . . .
Domestic . . . . . . . . . . . . . . . . . . . . . . .
International . . . . . . . . . . . . . . . . . . .

$6,767.5
4,000.4
2,767.1

$(124.5)
0.0
(124.5)

$465.5
471.6
(6.1)

$239.7
85.5
154.2

$7,348.2
4,557.5
2,790.7

3.5% 8.6%
2.1% 13.9%
5.6% 0.9%

1

Results for the year ended December 31, 2018 have been recast to conform to the current-period presentation.

The organic increase was attributable to a combination of net higher spending from existing clients and net client wins,
most notably in the healthcare, financial services, technology and telecom, and retail sectors, partially offset by a decrease in
the auto and transportation sector. The organic increase in our domestic market was primarily driven by growth at our
advertising and media businesses as well as our data management business. In our international markets, the organic increase
was primarily driven by strong performance at our media businesses throughout all geographic regions. In addition, the
organic increase was also driven by growth at our advertising businesses and our digital specialist agencies in Latin America.
Consolidated net acquisitions primarily includes net revenue during the first nine months ended September 30, 2019 from
Acxiom, which we acquired on October 1, 2018, partially offset by divestitures, mostly in our domestic market, Asia Pacific
and Continental Europe regions.

Components of Change

Change

Year ended
December 31, 2017

Foreign
Currency

Net
Acquisitions/
(Divestitures) 1 Organic

Year ended
December 31, 2018 1

Organic Total 1

Consolidated . . . . . . . . . . . . . . . .
Domestic . . . . . . . . . . . . . . . . . . .
International . . . . . . . . . . . . . . . .

$6,266.7
3,660.6
2,606.1

$6.9
0.0
6.9

$120.6
139.8
(19.2)

$373.3
200.0
173.3

$6,767.5
4,000.4
2,767.1

6.0% 8.0%
5.5% 9.3%
6.6% 6.2%

1

Results for the year ended December 31, 2018 have been recast to conform to the current-period presentation.

The organic increase was attributable to net client wins and net higher spending from existing clients, most notably in
the healthcare sector, partially offset by decreases in the food and beverage sector. The organic increase in our domestic
market was driven by growth across all of our major networks. The international organic increase was driven by growth
across all geographic regions and all disciplines, primarily at our media and advertising businesses and our digital specialist
agencies, including strong performance at our advertising businesses in the United Kingdom and at our media businesses in
the Continental Europe, Latin America and United Kingdom regions. Consolidated net acquisitions primarily includes net
revenue from Acxiom, which we acquired on October 1, 2018.

Segment EBITA

Segment EBITA 1, 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
EBITA margin on net revenue 1, 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$1,110.4

$1,042.1

$891.7

6.6%

16.9%

15.1%

15.4% 14.2%

1

2

Segment EBITA and EBITA margin on net revenue include $27.6 of restructuring charges in the year ended December 31, 2019. See “Restructuring
Charges” in MD&A and Note 11 of Item 8, Financial Statements and Supplementary Data for further information.

Results for the year ended December 31, 2018 have been recast to conform to the current-period presentation.

Years ended December 31,

Change

2019

2018

2017

2019 vs 2018

2018 vs 2017

27

Management’s Discussion and Analysis of Financial Condition and Results of Operations – (continued)
(Amounts in Millions, Except Per Share Amounts)

EBITA margin decreased during 2019 when compared to 2018, as the increase in operating expenses, excluding billable
expenses and amortization of acquired intangibles, outpaced the net revenue growth of 8.6%, the organic component of
which was discussed in detail above. The EBITA margin decrease of 0.3% included restructuring charges of $27.6, or 0.4%
as a percentage of net revenue, during 2019 to better align our cost structure with our revenue. The comparison was also
adversely impacted due to higher allocated service fees, from our Selling, General and Administrative expenses, to Cost of
Services, mainly as a result of the inclusion of Acxiom. Net revenue growth outpaced the increase in salaries and related
expenses as compared to the prior-year period, primarily driven by lower percentages of its net revenue in base salaries,
benefits and tax, temporary help expenses and incentive expense. The improved salaries and related expenses ratio was also
attributable to the inclusion of Acxiom, which has a lower ratio of salaries and related expenses as a percentage of its net
revenue as well as a result of carefully managing our employee costs. The increase in office and other direct expenses
outpaced the growth in net revenue as compared to the prior-year period, mainly due to the inclusion of Acxiom, which has a
higher ratio of office and other direct expense as a percentage of its net revenue, driven by client service costs and
professional fees. However, overall office and other direct expenses primarily benefited from leverage on occupancy
expense. Depreciation and amortization, excluding amortization of acquired intangibles, as a percentage of net revenue
increased to 2.3% in 2019 from 2.0% in the prior-year period, primarily due to the inclusion of Acxiom.

EBITA margin increased during 2018 when compared to 2017, as net revenue growth of 8.0%, the organic component
of which was discussed in detail above, outpaced the increase in operating expenses, excluding billable expenses and
amortization of acquired intangibles, primarily driven by leverage in base salaries, benefits and tax and occupancy expense,
partially offset by higher incentive expense as a result of improved financial performance and higher temporary help to
support business growth. Depreciation and amortization, excluding amortization of acquired intangibles, as a percentage of
net revenue increased to 2.0% in 2018 from 1.7% in the prior-year period, primarily due to the inclusion of Acxiom.

CMG

Net Revenue

Components of Change

Change

Year ended
December 31, 2018

Foreign
Currency

Net
Acquisitions/
(Divestitures) Organic

Year ended
December 31, 2019

Organic Total

Consolidated . . . . . . . . . . . . . . . . . . . .
Domestic . . . . . . . . . . . . . . . . . . . . . . . .
International . . . . . . . . . . . . . . . . . . . .

$1,264.1
824.6
439.5

$(18.6)
0.0
(18.6)

$ 2.3
(1.7)
4.0

$29.1
5.7
23.4

$1,276.9
828.6
448.3

2.3% 1.0%
0.7% 0.5%
5.3% 2.0%

The organic increase was primarily attributable to net client wins and net higher spending from existing clients, most
notably in the healthcare and technology and telecom sectors, partially offset by a decrease in the auto and transportation
sector. The organic increase in our domestic market was primarily due to growth at our sports marketing business, partially
offset by declines at our event businesses. The international organic increase was driven by growth across all geographic
regions and disciplines, primarily at our public relations agencies, most notably in the United Kingdom and Continental
Europe regions, and sports marketing business, most notably in the Asia Pacific region.

Components of Change

Change

Year ended
December 31, 2017

Foreign
Currency

Net
Acquisitions/
(Divestitures) Organic

Year ended
December 31, 2018

Organic Total

Consolidated . . . . . . . . . . . . . . . . . . . .
Domestic . . . . . . . . . . . . . . . . . . . . . . . .
International . . . . . . . . . . . . . . . . . . . .

$1,206.8
798.2
408.6

$9.0
0.0
9.0

$7.6
0.1
7.5

$40.7
26.3
14.4

$1,264.1
824.6
439.5

3.4% 4.7%
3.3% 3.3%
3.5% 7.6%

The organic increase was attributable to net client wins and net higher spending from existing clients, most notably in
the technology and telecom sector. The organic increases were driven by growth across all geographic regions, primarily at
our public relations agencies and sports marketing business, most notably in our domestic market.

28

Management’s Discussion and Analysis of Financial Condition and Results of Operations – (continued)
(Amounts in Millions, Except Per Share Amounts)

Segment EBITA

Years ended December 31,

Change

2019

2018

2017

2019 vs 2018

2018 vs 2017

Segment EBITA 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
EBITA margin 1
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$163.4

$180.3

$194.4

(9.4)%

(7.3)%

12.8% 14.3% 16.1%

1

Segment EBITA and EBITA margin on net revenue include $5.6 of restructuring charges in the year ended December 31, 2019. See “Restructuring
Charges” in MD&A and Note 11 of Item 8, Financial Statements and Supplementary Data for further information.

EBITA margin decreased during 2019 when compared to 2018, as the increase in operating expenses outpaced net
revenue growth of 1.0%, primarily driven by the restructuring charges of $5.6 in the first quarter of 2019, higher salaries and
related expenses to support business growth and an increase in year-over-year change in contingent acquisition obligations,
partially offset by lower incentive expense. Depreciation and amortization, excluding amortization of acquired intangibles, as
a percentage of net revenue remained flat as compared to the prior-year period.

EBITA margin decreased during 2018 when compared to 2017, due to the increase in operating expenses, excluding
billable expenses, primarily driven by the year-over-year change in contingent acquisition obligations. Depreciation and
amortization, excluding amortization of acquired intangibles, as a percentage of net revenue remained relatively flat as
compared to the prior-year period.

CORPORATE AND OTHER

Corporate and other is primarily comprised of selling, general and administrative expenses including corporate office
expenses as well as shared service center and certain other centrally managed expenses that are not fully allocated to
operating divisions; salaries, long-term incentives, annual bonuses and other miscellaneous benefits for corporate office
employees; professional fees related to internal control compliance, financial statement audits and legal, information
technology and other consulting services that are engaged and managed through the corporate office; and rental expense for
properties occupied by corporate office employees. A portion of centrally managed expenses is allocated to operating
divisions based on a formula that uses the planned revenues of each of the operating units. Amounts allocated also include
specific charges for information technology-related projects, which are allocated based on utilization.

Corporate and other expenses decreased by $74.2 to $101.8 during the year ended December 31, 2019 as compared to
2018, primarily attributable to lower professional fees, mainly driven by transaction costs of $35.0 related to the Acxiom
acquisition in 2018 and an increase in allocated service fees from Selling, General and Administrative expenses to Cost of
Services, mainly as a result of the inclusion of Acxiom. Corporate and other expenses in 2018 increased by $49.4 to $176.0
compared to 2017, primarily due to the transaction costs in 2018.

During the year ended December 31, 2019, corporate and other expense includes $0.7 of restructuring charges. See
“Restructuring Charges” in MD&A and Note 11 of Item 8, Financial Statements and Supplementary Data for further
information.

29

Management’s Discussion and Analysis of Financial Condition and Results of Operations – (continued)
(Amounts in Millions, Except Per Share Amounts)

LIQUIDITY AND CAPITAL RESOURCES

CASH FLOW OVERVIEW

The following tables summarize key financial data relating to our liquidity, capital resources and uses of capital.

Cash Flow Data

Net income, adjusted to reconcile to net cash provided by operating activities 1 . . . . . . . . . .
Net cash provided by (used in) working capital 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Changes in other non-current assets and liabilities 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Net cash provided by operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash used in investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash (used in) provided by financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Years ended December 31,

2019

2018

2017

$1,115.0
442.8
(28.6)

$1,529.2
(161.7)
(843.0)

$

$ 1,013.0
(431.1)
(16.8)

852.1
5.3
24.4

$

565.1
(2,491.5)
1,853.2

$

881.8
(196.2)
(1,004.9)

1

2

3

Reflects net income adjusted primarily for depreciation and amortization of fixed assets and intangible assets, amortization of restricted stock and other
non-cash compensation, net losses on sales of businesses and deferred income taxes.

Reflects changes in accounts receivable, accounts receivable billable to clients, other current assets, accounts payable and accrued liabilities.

Reflects changes in operating lease right-of-use assets and lease liabilities and other non-current assets and liabilities.

Operating Activities

Due to the seasonality of our business, we typically use cash from working capital in the first nine months of a year,
with the largest impact in the first quarter, and generate cash from working capital in the fourth quarter, driven by the
seasonally strong media spending by our clients. Quarterly and annual working capital results are impacted by the fluctuating
annual media spending budgets of our clients as well as their changing media spending patterns throughout each year across
various countries.

The timing of media buying on behalf of our clients across various countries affects our working capital and operating
cash flow and can be volatile. In most of our businesses, our agencies enter into commitments to pay production and media
costs on behalf of clients. To the extent possible, we pay production and media charges after we have received funds from
our clients. The amounts involved, which substantially exceed our revenues, primarily affect the level of accounts receivable,
accounts payable, accrued liabilities and contract liabilities. Our assets include both cash received and accounts receivable
from clients for these pass-through arrangements, while our liabilities include amounts owed on behalf of clients to media
and production suppliers. Our accrued liabilities are also affected by the timing of certain other payments. For example,
while annual cash incentive awards are accrued throughout the year, they are generally paid during the first quarter of the
subsequent year.

Net cash provided by operating activities during 2019 was $1,529.2, which was an increase of $964.1 as compared to
2018, and the comparison includes $442.8 generated from working capital in 2019, compared with $431.1 used in working
capital in 2018. Working capital in 2019 was primarily impacted by the variation in the timing of collections and payments
around the reporting period, of which the timing that was unfavorable in late 2018 compared to 2017 was a benefit in 2019,
as well as the spending levels and pattern of our clients as compared to 2018.

Net cash provided by operating activities during 2018 was $565.1, which was a decrease of $316.7 as compared to
2017, primarily as a result of an increase in working capital usage of $436.4. Working capital in 2018 was impacted by the
spending levels of our clients as compared to 2017. The working capital usage in both periods was primarily attributable to
our media businesses.

Investing Activities

Net cash used in investing activities during 2019 consisted primarily of payments for capital expenditures of $198.5,

related mostly to leasehold improvements and computer hardware and software.

30

Management’s Discussion and Analysis of Financial Condition and Results of Operations – (continued)
(Amounts in Millions, Except Per Share Amounts)

Net cash used in investing activities during 2018 consisted of payments for acquisitions of $2,309.8, related mostly to
the acquisition of Acxiom, and payments for capital expenditures of $177.1, related mostly to leasehold improvements and
computer hardware and software.

Financing Activities

Net cash used in financing activities during 2019 was driven by repayment of long-term debt of $403.3 and the payment

of dividends of $363.1.

Net cash provided by financing activities during 2018 was driven by net proceeds from long-term debt of $2,494.2
primarily to finance the acquisition of Acxiom, partially offset by the payment of dividends of $322.1, the repurchase of 5.1
shares of our common stock for an aggregate cost of $117.1, including fees, and the repayment of long-term debt of $104.8.

Foreign Exchange Rate Changes

The effect of foreign exchange rate changes on cash, cash equivalents and restricted cash included in the Consolidated

Statements of Cash Flows resulted in a net decrease of $6.0 in 2019.

The effect of foreign exchange rate changes on cash, cash equivalents and restricted cash included in the Consolidated
Statements of Cash Flows resulted in a net decrease of $47.3 in 2018. The decrease was primarily a result of the U.S. Dollar
being stronger than several foreign currencies, including the Australian Dollar, South African Rand, and Indian Rupee as of
December 31, 2018 compared to December 31, 2017.

LIQUIDITY OUTLOOK

We expect our cash flow from operations and existing cash and cash equivalents to be sufficient to meet our anticipated
operating requirements at a minimum for the next twelve months. We also have a commercial paper program, a committed
corporate credit facility and uncommitted lines of credit to support our operating needs. Borrowings under our commercial
paper program are supported by our committed credit agreement. We continue to maintain a disciplined approach to
managing liquidity, with flexibility over significant uses of cash, including our capital expenditures, cash used for new
acquisitions, our common stock repurchase program and our common stock dividends.

From time to time, we evaluate market conditions and financing alternatives for opportunities to raise additional funds
or otherwise improve our liquidity profile, enhance our financial flexibility and manage market risk. Our ability to access the
capital markets depends on a number of factors, which include those specific to us, such as our credit ratings, and those
related to the financial markets, such as the amount or terms of available credit. There can be no guarantee that we would be
able to access new sources of liquidity, or continue to access existing sources of liquidity, on commercially reasonable terms,
or at all.

Funding Requirements

Our most significant funding requirements include our operations, non-cancelable operating lease obligations, capital
expenditures, acquisitions, common stock dividends, taxes and debt service. Additionally, we may be required to make
payments to minority shareholders in certain subsidiaries if they exercise their options to sell us their equity interests.

Notable funding requirements include:

• Debt service – Our 3.50% Senior Notes in aggregate principal amount of $500.0 mature on October 1, 2020. We
expect to use available cash as well as commercial paper as needed to fund the principal repayment. As of
December 31, 2019, we had outstanding short-term borrowings of $52.4 from our uncommitted lines of credit used
primarily to fund short-term working capital needs. The remainder of our debt is primarily long-term, with
maturities scheduled from 2021 through 2048. On October 1, 2018, in order to fund the acquisition of Acxiom, we

31

Management’s Discussion and Analysis of Financial Condition and Results of Operations – (continued)
(Amounts in Millions, Except Per Share Amounts)

entered into financing arrangements with third-party lenders under a three-year term loan agreement (the “Term
Loan Agreement”). We fully paid off the outstanding balance under the Term Loan Agreement as of December 31,
2019, with payments of $100.0, $200.0 and $100.0, on June 13, 2019, September 9, 2019 and December 12, 2019,
respectively. See Note 4 in Item 8, Financial Statements and Supplementary Data for further information.

• Acquisitions – We paid cash of $0.6 for an acquisition completed in 2019. We also paid $25.1 in deferred
payments for prior-year acquisitions as well as ownership increases in our consolidated subsidiaries. In addition to
potential cash expenditures for new acquisitions, we expect to pay approximately $46.0 in 2020 related to prior-
year acquisitions. We may also be required to pay approximately $21.0 in 2020 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 – During 2019, we paid four quarterly cash dividends of $0.235 per share on our common stock, which
corresponded to aggregate dividend payments of $363.1. On February 12, 2020, we announced that our Board of
Directors (the “Board”) had declared a common stock cash dividend of $0.255 per share, payable on March 16,
2020 to holders of record as of the close of business on March 2, 2020. Assuming we pay a quarterly dividend of
$0.255 per share and there is no significant change in the number of outstanding shares as of December 31, 2019,
we would expect to pay approximately $395.0 over the next twelve months.

The following summarizes our estimated contractual cash obligations and commitments as of December 31, 2019 and

their effect on our liquidity and cash flow in future periods.

Years ended December 31,

2020

2021

2022

2023

2024

Thereafter

Total

Long-term debt 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest payments on long-term debt 1
. . . . . . . . . . . . . . .
Non-cancelable operating lease obligations 2 . . . . . . . . . .
Contingent acquisition payments 3 . . . . . . . . . . . . . . . . . .
Uncertain tax positions 4 . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 502.0
134.2
333.5
71.9
14.0

$ 501.4
116.4
300.7
68.3
169.8

$248.9
93.9
267.5
39.8
35.7

$498.3
73.6
209.7
10.6
81.6

$497.8
56.4
183.5
4.9
29.8

$1,025.5
728.6
716.1
0.2
14.4

$3,273.9
1,203.1
2,011.0
195.7
345.3

Total

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$1,055.6

$1,156.6

$685.8

$873.8

$772.4

$2,484.8

$7,029.0

1

2

Amounts represent maturity at book value and interest payments based on contractual obligations. We may at our option and at any time redeem all or
some of any outstanding series of our senior notes reflected in this table at the redemption prices set forth in the applicable supplemental indentures
under which such senior notes were issued. See Note 4 in Item 8, Financial Statements and Supplementary Data for further information.

Non-cancelable operating lease obligations are presented net of future receipts on contractual sublease arrangements. See Note 3 in Item 8, Financial
Statements and Supplementary Data for further information.

3 We have structured certain acquisitions with additional contingent purchase price obligations based on factors including future performance of the

acquired entity. See Note 6 and Note 16 in Item 8, Financial Statements and Supplementary Data for further information.

4

The amounts presented are estimates due to inherent uncertainty of tax settlements, including the ability to offset liabilities with tax loss carryforwards.

Share Repurchase Program

On July 2, 2018, in connection with the announcement of the Acxiom acquisition, we announced that share repurchases
will be suspended for a period of time in order to reduce the increased debt levels incurred in conjunction with the
acquisition. As of December 31, 2019, $338.4, excluding fees, remains available for repurchase under the share repurchase
programs. There is no expiration date associated with the share repurchase programs.

FINANCING AND SOURCES OF FUNDS

Substantially all of our operating cash flow is generated by our agencies. Our cash balances are held in numerous

jurisdictions throughout the world, primarily at the holding company level and at our largest subsidiaries.

32

Management’s Discussion and Analysis of Financial Condition and Results of Operations – (continued)
(Amounts in Millions, Except Per Share Amounts)

At December 31, 2019, we held $323.6 of cash, cash equivalents and marketable securities in foreign subsidiaries. The
Company has historically asserted that its unremitted foreign earnings are permanently reinvested, and therefore has not
recorded any deferred taxes on such amounts. During the third quarter ended September 30, 2018, the Company re-evaluated
its global cash needs and as a result determined that approximately $435.0 of undistributed foreign earnings from certain
international entities were no longer subject to the permanent reinvestment assertion, of which $155.4 remains undistributed
as of December 31, 2019. We have not changed our permanent reinvestment assertion with respect to any other international
entities as we intend to use the related historical earnings and profits to fund international operations and investments.

Credit Agreements

We maintain a committed corporate credit facility, originally dated as of July 18, 2008, which has been amended and
restated from time to time (the “Credit Agreement”). We use our Credit Agreement to increase our financial flexibility, to
provide letters of credit primarily to support obligations of our subsidiaries and to support our commercial paper program.
On November 1, 2019, we amended and restated (the “Amendment”) the Credit Agreement. Under the Amendment, among
other things, the maturity date of the Credit Agreement was extended to November 1, 2024 and the cost structure of the credit
agreement was changed. The Amendment also removed the interest coverage ratio financial covenant; however, the
Company remains subject to the leverage ratio financial covenant, among other customary covenants. At the election of the
Company, the leverage ratio financial covenant may be changed to not more than 4.00 to 1.00 for four consecutive fiscal
quarters, beginning with the fiscal quarter in which there is an occurrence of one or more acquisitions with an aggregate
purchase price of at least $200.0.

The Credit Agreement is a revolving facility under which amounts borrowed by us or any of our subsidiaries designated
under the Credit Agreement may be repaid and reborrowed, subject to an aggregate lending limit of $1,500.0, or the
equivalent in other currencies. The Company has the ability to increase the commitments under the Credit Agreement from
time to time by an additional amount of up to $250.0, provided the Company receives commitments for such increases and
satisfies certain other conditions. The aggregate available amount of letters of credit outstanding may decrease or increase,
subject to a sublimit of $50.0, or the equivalent in other currencies. Our obligations under the Credit Agreement are
unsecured. As of December 31, 2019, there were no borrowings under the Credit Agreement; however, we had $8.4 of letters
of credit under the Credit Agreement, which reduced our total availability to $1,491.6.

Under the Credit Agreement, we can elect to receive advances bearing interest based on either the Base Rate or the
Eurocurrency rate (each as defined in the Credit Agreement) plus an applicable margin that is determined based on our credit
ratings. As of December 31, 2019, the applicable margin was 0.125% for Base Rate advances and 1.125% for Eurocurrency
Rate borrowings. Letter of credit fees accrue on the average daily aggregate amount of letters of credit outstanding, at a rate
equal to the applicable margin for Eurocurrency rate advances, and fronting fees accrue on the aggregate amount of letters of
credit outstanding at an annual rate of 0.25%. We also pay a facility fee on each lender’s revolving commitment of 0.125%,
which is an annual rate determined based on our credit ratings.

The table below sets forth the financial covenant in effect as of December 31, 2019, which applies to the Credit

Agreement.

Financial Covenants 1

Four Quarters Ended
December 31, 2019

EBITDA Reconciliation 1

Four Quarters Ended
December 31, 2019

Leverage ratio (not greater than) . . . . . . . . .
Actual leverage ratio . . . . . . . . . . . . . . . . . .

3.75x
2.28x

Operating income . . . . . . . . . . . . . . . . . .
Add:
Depreciation and amortization . . . . . . . .

1,086.0

369.8

EBITDA . . . . . . . . . . . . . . . . . . . . . . . . .

$1,455.8

1

The leverage ratio is defined as debt as of the last day of such fiscal quarter to EBITDA (as defined in the Credit Agreement) for the four quarters then
ended. Pursuant to the July 2018 Amendment No. 1 to the Credit Agreement, the maximum leverage ratio decreased from 4.00x to 3.75x on the last day
of the fourth full fiscal quarter ending after the Acxiom closing date on October 1, 2018.

33

Management’s Discussion and Analysis of Financial Condition and Results of Operations – (continued)
(Amounts in Millions, Except Per Share Amounts)

As of December 31, 2019, we were in compliance with our covenants in the Credit Agreement. If we were unable to
comply with our covenants in the future, we would seek an amendment or waiver from the applicable lenders, but there is no
assurance that our lenders would grant an amendment or waiver. If we were unable to obtain the necessary amendment or
waiver, these facilities could be terminated and our lenders could accelerate payments of any outstanding principal. In
addition, under those circumstances we could be required to deposit funds with one of our lenders in an amount equal to any
outstanding letters of credit under the Credit Agreement.

We also have uncommitted lines of credit with various banks that permit borrowings at variable interest rates and that
are primarily used to fund working capital needs. We have guaranteed the repayment of some of these borrowings made by
certain subsidiaries. If we lose access to these credit lines, we would have to provide funding directly to some of our
operations. As of December 31, 2019, the Company had uncommitted lines of credit in an aggregate amount of $1,056.0,
under which we had outstanding borrowings of $52.4 classified as short-term borrowings on our Consolidated Balance Sheet.
The average amount outstanding during 2019 was $88.0, with a weighted-average interest rate of approximately 5.2%.

Commercial Paper

The Company is authorized to issue unsecured commercial paper up to a maximum aggregate amount outstanding at
any time of $1,500.0. Borrowings under the commercial paper program are supported by the Credit Agreement described
above. Proceeds of the commercial paper are used for working capital and general corporate purposes, including the
repayment of maturing indebtedness and other short-term liquidity needs. The maturities of the commercial paper vary but
may not exceed 397 days from the date of issue. As of December 31, 2019, there was no commercial paper outstanding. The
average amount outstanding under the program was $312.9 in 2019, with a weighted-average interest rate of 2.5% and a
weighted-average maturity of thirteen days.

Cash Pooling

We aggregate our domestic cash position on a daily basis. Outside the United States, we use cash pooling arrangements
with banks to help manage our liquidity requirements. In these pooling arrangements, several IPG agencies agree with a
single bank that the cash balances of any of the agencies with the bank will be subject to a full right of set-off against
amounts other agencies owe the bank, and the bank provides for overdrafts as long as the net balance for all agencies does
not exceed an agreed-upon level. Typically, each agency pays interest on outstanding overdrafts and receives interest on cash
balances. Our Consolidated Balance Sheets reflect cash, net of bank overdrafts, under all of our pooling arrangements, and as
of December 31, 2019 and 2018 the amounts netted were $2,274.9 and $2,065.8, respectively.

DEBT CREDIT RATINGS

Our debt credit ratings as of February 13, 2020 are listed below.

Moody’s Investors
Service

S&P Global
Ratings

Fitch Ratings

Short-term rating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term rating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Outlook . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

P-2
Baa2
Stable

A-2
BBB
Negative

F2
BBB+
Stable

A credit rating is not a recommendation to buy, sell or hold securities and may be subject to revision or withdrawal at
any time by the assigning credit rating agency. The rating of each credit rating agency should be evaluated independently of
any other rating. Credit ratings could have an impact on liquidity, either adverse or favorable, because, among other things,
they could affect funding costs in the capital markets or otherwise. For example, our Credit Agreement fees and borrowing
rates are based on a credit ratings grid, and our access to the commercial paper market is contingent on our maintenance of
sufficient short-term debt ratings.

34

Management’s Discussion and Analysis of Financial Condition and Results of Operations – (continued)
(Amounts in Millions, Except Per Share Amounts)

CRITICAL ACCOUNTING ESTIMATES

Our Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted
in the United States of America. Preparation of the Consolidated Financial Statements and related disclosures requires us to
make judgments, assumptions and estimates that affect the amounts reported and disclosed in the accompanying financial
statements and footnotes. Our significant accounting policies are discussed in Note 1 to the Consolidated Financial
Statements. We believe that of our significant accounting policies, the following critical accounting estimates involve
management’s most difficult, subjective or complex judgments. We consider these accounting estimates to be critical
because changes in the underlying assumptions or estimates have the potential to materially impact our Consolidated
Financial Statements. Management has discussed with our Audit Committee the development, selection, application and
disclosure of these critical accounting estimates. We regularly evaluate our judgments, assumptions and estimates based on
historical experience and various other factors that we believe to be relevant under the circumstances. Actual results may
differ from these estimates under different assumptions or conditions.

Revenue Recognition

Our revenues are primarily derived from the planning and execution of multi-channel advertising and communications,
marketing services, including public relations, meeting and event production, sports and entertainment marketing, corporate
and brand identity, strategic marketing consulting, and providing marketing data and technology services around the world.

Most of our client contracts are individually negotiated and, accordingly, the terms of client engagements and the basis
on which we earn fees and commissions vary significantly. Our contracts generally provide for termination by either party on
relatively short notice, usually 30 to 90 days, although our data management contracts typically have non-cancelable terms of
more than one year. Our payment terms vary by client, and the time between invoicing date and due date is typically not
significant. We generally have the legally enforceable right to payment for all services provided through the end of the
contract or termination date.

We recognize revenue when we determine our customer obtains control of promised goods or services, in an amount
that reflects the consideration which we expect to receive in exchange for those goods or services. To determine revenue
recognition, we perform the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance
obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance
obligations in the contract; and (v) recognize revenue as or when we satisfy the performance obligation. We only apply the
five-step model to contracts when it is probable that IPG will collect the consideration it is entitled to in exchange for the
goods or services it transfers to the customer. At contract inception, we assess the goods or services promised within each
contract and determine those that are distinct performance obligations. We then assess whether we act as an agent or a
principal for each identified performance obligation and include revenue within the transaction price for third-party costs
when we determine that we act as principal.

Net revenue, primarily consisting of fees, commissions and performance incentives, represents the amount of our gross
billings excluding billable expenses charged to a client. Generally, our compensation is based on a negotiated fixed price,
rate per hour, a retainer, commission or volume. The majority of our fees are recognized over time as services are performed,
either utilizing a function of hours incurred and rates per hour, as compared to periodically updated estimates to complete, or
ratably over the term of the contract. For certain less-frequent commission-based contracts which contain clauses allowing
our clients to terminate the arrangement at any time for no compensation, revenue is recognized at a point in time, typically
the date of broadcast or publication.

Contractual arrangements with clients may also include performance incentive provisions designed to link a portion of
our revenue to our performance relative to mutually agreed-upon qualitative and/or quantitative metrics. Performance
incentives are treated as variable consideration which is estimated at contract inception and included in revenue based on the
most likely amount earned out of a range of potential outcomes. Our estimates are based on a combination of historical award
experience, anticipated performance and our best judgment. These estimates are updated on a periodic basis and are not
expected to result in a reversal of a significant amount of the cumulative revenue recognized.

35

Management’s Discussion and Analysis of Financial Condition and Results of Operations – (continued)
(Amounts in Millions, Except Per Share Amounts)

The predominant component of billable expenses are third-party vendor costs incurred for performance obligations
where we have determined that we are acting as principal. These third-party expenses are generally billed back to our clients.
Billable expenses also includes incidental costs incurred in the performance of our services including airfare, mileage, hotel
stays, out-of-town meals and telecommunication charges. We record these billable expenses within total revenue with a
corresponding offset to operating expenses.

In international markets, we may receive rebates or credits from vendors based on transactions entered into on behalf of
clients. Rebates and credits are remitted back to our clients in accordance with our contractual requirements or may be
retained by us based on the terms of a particular client contract and local law. Amounts owed back to clients are recorded as
a liability and amounts retained by us are recorded as revenue when earned.

In certain international markets, our media contracts may allow clients to terminate our arrangement at any time for no
compensation to the extent that media has not yet run. For those contracts, we do not recognize revenue until the media runs
which is the point in time at which we have a legally enforceable right to compensation.

Performance Obligations

Our client contracts may include various goods and services that are capable of being distinct, are distinct within the
context of the contract and are therefore accounted for as separate performance obligations. We allocate revenue to each
performance obligation in the contract at inception based on its relative standalone selling price.

Our advertising businesses include a wide range of services that involve the creation of an advertising idea, concept,
campaign, or marketing strategy in order to promote the client’s brand (“creative services”), and to act as an agent to
facilitate the production of advertisements by third-party suppliers (“production services”). Our clients can contract us to
perform one or both of these services, as they can derive stand-alone benefit from each. Production services can include
formatting creative material for different media and communication mediums including digital, large-scale reproduction such
as printing and adaptation services, talent engagement and acquisition, television and radio production, and outdoor billboard
production. Our contracts that include both services are typically explicit in the description of which activities constitute the
creative advertising services and those that constitute the production services. Both the creative and production services are
sold separately, the client can derive utility from each service on its own, we do not provide a significant service of
integrating these activities into a bundle, the services do not significantly modify one another, and the services are not highly
interrelated or interdependent. As such, we typically identify two performance obligations in the assessment of our
advertising contracts.

Our media businesses include services to formulate strategic media plans (“media planning services”) and to act as an
agent to purchase media (e.g., television and radio spots, outdoor advertising, digital banners, etc.) from vendors on our
clients’ behalf (“media buying services”). Our contracts that include both services are typically explicit in the description of
which activities constitute the planning services and those that constitute the buying services. Both the planning and buying
services are sold separately, the client can derive utility from each service on its own, we do not provide a significant service
of integrating these activities into a bundle, the services do not significantly modify one another, and the services are not
highly interrelated or interdependent. As such, we typically identify two performance obligations in the assessment of our
media contracts.

Our events businesses include creative services related to the conception and planning of custom marketing events as
well as activation services which entail the carrying out of the event, including, but not limited to, set-up, design and
staffing. Additionally, our public relations businesses include a broad range of services, such as strategic planning, social
media strategy and the monitoring and development of communication strategies, among others. While our contracts in these
businesses may include some or all of these services, we typically identify only one performance obligation in the assessment
of our events and public relations contracts as we provide a significant service of integrating the individual services into a
combined service for which the customer has contracted.

36

Management’s Discussion and Analysis of Financial Condition and Results of Operations – (continued)
(Amounts in Millions, Except Per Share Amounts)

Our data and technology services businesses include data management, data and data strategy, identity resolution, and
measurement and analytics products and services. While our contracts in these businesses may include some or all of these
services, we typically identify each product and service as an individual performance obligation.

Principal vs. Agent

When a third-party is involved in the delivery of our services to the client, we assess whether or not we are acting as a
principal or an agent in the arrangement. The assessment is based on whether we control the specified services at any time
before they are transferred to the customer. We have determined that in our events and public relations businesses, we
generally act as a principal as our agencies provide a significant service of integrating goods or services provided by third
parties into the specified deliverable to our clients. In addition, we have determined that we are responsible for the
performance of the third-party suppliers, which are combined with our own services, before transferring those services to the
customer. We have also determined that we act as principal when providing creative services and media planning services, as
we perform a significant integration service in these transactions. For performance obligations in which we act as principal,
we record the gross amount billed to the customer within total revenue and the related incremental direct costs incurred as
billable expenses.

When a third-party is involved in the production of an advertising campaign and for media buying services, we have
determined that we act as the agent and are solely arranging for the third-party suppliers to provide services to the customer.
Specifically, we do not control the specified services before transferring those services to the customer, we are not primarily
responsible for the performance of the third-party services, nor can we redirect those services to fulfill any other contracts.
We do not have inventory risk or discretion in establishing pricing in our contracts with customers. For performance
obligations for which we act as the agent, we record our revenue as the net amount of our gross billings less amounts
remitted to third parties.

Income Taxes

The provision for income taxes includes U.S. federal, state, local and foreign taxes. Deferred tax assets and liabilities are
recognized for the estimated future tax consequences of temporary differences between the financial statement carrying
amounts and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to
apply to taxable income in the year in which the temporary differences are expected to be reversed. Changes to enacted tax
rates would result in either increases or decreases in the provision for income taxes in the period of change.

We are required to evaluate the realizability of our deferred tax assets, which is primarily dependent on future earnings.
A valuation allowance shall be recognized when, based on available evidence, it is “more likely than not” that all or a portion
of the deferred tax assets will not be realized. The factors used in assessing valuation allowances include all available
evidence, such as past operating results, estimates of future taxable income and the feasibility of tax planning strategies. In
circumstances where there is negative evidence, establishment of a valuation allowance must be considered. We believe that
cumulative losses in the most recent three-year period represent significant negative evidence when evaluating a decision to
establish a valuation allowance. Conversely, a pattern of sustained profitability represents significant positive evidence when
evaluating a decision to reverse a valuation allowance. Further, in those cases where a pattern of sustained profitability exists,
projected future taxable income may also represent positive evidence, to the extent that such projections are determined to be
reliable given the current economic environment. Accordingly, the increase and decrease of valuation allowances has had
and could have a significant negative or positive impact on our current and future earnings.

The authoritative guidance for uncertainty in income taxes prescribes a recognition threshold and measurement criteria
for the financial statement reporting of a tax position that an entity takes or expects to take in a tax return. Additionally,
guidance is provided for de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and
transition. The assessment of recognition and measurement requires critical estimates and the use of complex judgments. We
evaluate our tax positions using the “more likely than not” recognition threshold and then apply a measurement assessment to
those positions that meet the recognition threshold. We have established tax reserves that we believe to be adequate in

37

Management’s Discussion and Analysis of Financial Condition and Results of Operations – (continued)
(Amounts in Millions, Except Per Share Amounts)

relation to the potential for additional assessments in each of the jurisdictions in which we are subject to taxation. We
regularly assess the likelihood of additional tax assessments in those jurisdictions and adjust our reserves as additional
information or events require.

Goodwill and Other Intangible Assets

We account for our business combinations using the acquisition accounting method, which requires us to determine the
fair value of net assets acquired and the related goodwill and other intangible assets. Determining the fair value of assets
acquired and liabilities assumed requires management’s judgment and involves the use of significant estimates, including
projections of future cash inflows and outflows, discount rates, asset
lives and market multiples. Considering the
characteristics of advertising, specialized marketing and communication services companies, our acquisitions usually do not
have significant amounts of tangible assets, as the principal asset we typically acquire is creative talent. As a result, a
substantial portion of the purchase price is allocated to goodwill and other intangible assets.

We review goodwill and other intangible assets with indefinite lives not subject to amortization as of October 1st each
year and whenever events or significant changes in circumstances indicate that the carrying value may not be recoverable.
We evaluate the recoverability of goodwill at a reporting unit level. We have 12 reporting units that were subject to the 2019
annual impairment testing. Our annual impairment review as of October 1, 2019 did not result in an impairment charge at
any of our reporting units.

In performing our annual impairment review, we first assess qualitative factors to determine whether it is “more likely
than not” that the goodwill or indefinite-lived intangible assets are impaired. Qualitative factors to consider may include
macroeconomic conditions, industry and market considerations, cost factors that may have a negative effect on earnings,
financial performance, and other relevant entity-specific events such as changes in management, key personnel, strategy or
clients, as well as pending litigation. If, after assessing the totality of events or circumstances such as those described above,
an entity determines that it is “more likely than not” that the goodwill or indefinite-lived intangible asset is impaired, then the
entity is required to determine the fair value and perform the quantitative impairment test by comparing the fair value with
the carrying value. Otherwise, no additional testing is required.

For reporting units not included in the qualitative assessment, or for any reporting units identified in the qualitative
assessment as “more likely than not” that the fair value is less than its carrying value, a quantitative impairment test is
performed. For our annual impairment test, we compare the respective fair value of our reporting units’ equity to the carrying
value of their net assets. The sum of the fair values of all our reporting units is reconciled to our current market capitalization
plus an estimated control premium. Goodwill allocated to a reporting unit whose fair value is equal to or greater than its
carrying value is not impaired, and no further testing is required. Should the carrying amount for a reporting unit exceed its
fair value, then the quantitative impairment test is failed, and impaired goodwill is written down to its fair value with a
charge to expense in the period the impairment is identified.

For our 2019 and 2018 annual impairment tests, we performed a qualitative impairment assessment for seven and ten
reporting units and performed the quantitative impairment test for five and three reporting units, respectively. For the
qualitative analysis we took into consideration all the relevant events and circumstances, including financial performance,
macroeconomic conditions and entity-specific factors such as client wins and losses. Based on this assessment, we have
concluded that for each of our reporting units subject to the qualitative assessment, it is not “more likely than not” that its fair
value was less than its carrying value; therefore, no additional testing was required.

The 2019 and 2018 fair values of reporting units for which we performed quantitative impairment tests were estimated
using a combination of the income approach, which incorporates the use of the discounted cash flow method, and the market
approach, which incorporates the use of earnings and revenue multiples based on market data. We generally applied an equal
weighting to the income and market approaches for our analysis. For the income approach, we used projections, which
require the use of significant estimates and assumptions specific to the reporting unit as well as those based on general
economic conditions. Factors specific to each reporting unit include revenue growth, profit margins, terminal value growth
rates, capital expenditures projections, assumed tax rates, discount rates and other assumptions deemed reasonable by
management. For the market approach, we used judgment in identifying the relevant comparable-company market multiples.

38

Management’s Discussion and Analysis of Financial Condition and Results of Operations – (continued)
(Amounts in Millions, Except Per Share Amounts)

These estimates and assumptions may vary between each reporting unit depending on the facts and circumstances
specific to that reporting unit. The discount rate for each reporting unit is influenced by general market conditions as well as
factors specific to the reporting unit. For the 2019 test, the discount rate we used for our reporting units tested ranged
between 10.5% and 11.5%, and the terminal value growth rate was 3.0%. The terminal value growth rate represents the
expected long-term growth rate for our industry, which incorporates the type of services each reporting unit provides as well
as the global economy. For the 2019 test, the revenue growth rates for our reporting units used in our analysis were generally
between 3.0% and 9.0%. Factors influencing the revenue growth rates include the nature of the services the reporting unit
provides for its clients, the geographic locations in which the reporting unit conducts business and the maturity of the
reporting unit. We believe that the estimates and assumptions we made are reasonable, but they are susceptible to change
from period to period. Actual results of operations, cash flows and other factors will likely differ from the estimates used in
our valuation, and it is possible that differences and changes could be material. A deterioration in profitability, adverse
market conditions, significant client losses, changes in spending levels of our existing clients or a different economic outlook
than currently estimated by management could have a significant impact on the estimated fair value of our reporting units
and could result in an impairment charge in the future.

We also perform a sensitivity analysis to detail the impact that changes in assumptions may have on the outcome of the
first step of the impairment test. Our sensitivity analysis provides a range of fair value for each reporting unit, where the low
end of the range increases discount rates by 0.5%, and the high end of the range decreases discount rates by 0.5%. We use the
average of our fair values for purposes of our comparison between carrying value and fair value for the quantitative
impairment test.

The table below displays the midpoint of the fair value range for each reporting unit tested in the 2019 and 2018 annual

impairment tests, indicating that the fair value exceeded the carrying value for all reporting units by greater than 20%.

2019 Impairment Test

2018 Impairment Test

Reporting Unit

A
B
C
D
E

Goodwill

$ 533.5
$ 209.1
$ 182.1
$ 668.5
$1,216.8

Fair value exceeds
carrying value by:

Reporting Unit

Goodwill

Fair value exceeds
carrying value by:

> 20%
> 30%
> 25%
> 45%
> 205%

A
B
C

$462.1
$638.5
$182.1

> 40%
> 280%
> 20%

Based on the analysis described above, for the reporting units for which we performed the quantitative impairment test,
we concluded that our goodwill was not impaired as of October 1, 2019, because these reporting units passed the test as the
fair values of each of the reporting units were substantially in excess of their respective net book values.

We review intangible assets with definite lives subject to amortization whenever events or circumstances indicate that a
carrying amount of an asset may not be recoverable. Recoverability of these assets is determined by comparing the carrying
value of these assets to the estimated undiscounted future cash flows expected to be generated by these asset groups. These
asset groups are impaired when their carrying value exceeds their fair value. Impaired intangible assets with definite lives
subject to amortization are written down to their fair value with a charge to expense in the period the impairment is
identified. Intangible assets with definite lives are amortized on a straight-line basis with estimated useful lives generally
between 7 and 15 years. Events or circumstances that might require impairment testing include the loss of a significant client,
the identification of other impaired assets within a reporting unit, loss of key personnel, the disposition of a significant
portion of a reporting unit, significant decline in stock price or a significant adverse change in business climate or
regulations.

Pension and Postretirement Benefit Plans

We use various actuarial assumptions in determining our net pension and postretirement benefit costs and obligations.
Management is required to make significant judgments about a number of actuarial assumptions, including discount rates and
expected returns on plan assets, which are updated annually or more frequently with the occurrence of significant events.

39

Management’s Discussion and Analysis of Financial Condition and Results of Operations – (continued)
(Amounts in Millions, Except Per Share Amounts)

The discount rate is a significant assumption that impacts our net pension and postretirement benefit costs and
obligations. We determine our discount rates for our domestic pension and postretirement benefit plans and significant
foreign pension plans based on either a bond selection/settlement approach or bond yield curve approach. Using the bond
selection/settlement approach, we determine the discount rate by selecting a portfolio of corporate bonds appropriate to
provide for the projected benefit payments. Using the bond yield curve approach, we determine the discount rate by matching
the plans’ cash flows to spot rates developed from a yield curve. Both approaches utilize high-quality AA-rated corporate
bonds and the plans’ projected cash flows to develop a discounted value of the benefit payments, which is then used to
develop a single discount rate. In countries where markets for high-quality long-term AA corporate bonds are not well
developed, a portfolio of long-term government bonds is used as a basis to develop hypothetical corporate bond yields, which
serve as a basis to derive the discount rate.

The discount rate used to calculate net pension and postretirement benefit costs is determined at the beginning of each
year. For the year ended December 31, 2019, discount rates of 4.35% for the domestic pension plan and 4.30% for the
domestic postretirement benefit plan and a weighted-average discount rate of 2.61% for the significant foreign pension plans
were used to calculate 2019 net pension and postretirement benefit costs. A 25 basis-point increase in the discount rate would
have decreased the 2019 net pension and postretirement benefit cost by $0.1. A 25 basis-point decrease in the discount rate
would not have impacted our net pension and postretirement benefit cost.

The discount rate used to measure our benefit obligations is determined at the end of each year. As of December 31,
2019, we used discount rates of 3.35% for the domestic pension plan and 3.25% for the domestic postretirement benefit plan
and a weighted-average discount rate of 1.84% for our significant foreign pension plans to measure our benefit obligations. A
25 basis-point increase or decrease in the discount rate would have decreased or increased the December 31, 2019 benefit
obligation by approximately $25.0 and $26.0, respectively.

The expected rate of return on pension plan assets is another significant assumption that impacts our net pension cost
and is determined at the beginning of the year. Our expected rate of return considers asset class index returns over various
market and economic conditions, current and expected market conditions, risk premiums associated with asset classes and
long-term inflation rates. We determine both a short-term and long-term view and then select a long-term rate of return
assumption that matches the duration of our liabilities.

For 2019, the weighted-average expected rates of return of 7.00% and 4.76% were used in the calculation of net pension
costs for the domestic and significant foreign pension plans, respectively. For 2020, we plan to use expected rates of return of
6.00% and 4.70% for the domestic and significant foreign pension plans, respectively. Changes in the rates are typically due
to lower or higher expected future returns based on the mix of assets held. A lower expected rate of return would increase our
net pension cost. A 25 basis-point increase or decrease in the expected return on plan assets would have decreased or
increased the 2019 net pension cost by approximately $1.0.

RECENT ACCOUNTING STANDARDS

See Note 17 in Item 8, Financial Statements and Supplementary Data for further information on certain accounting
standards that have been adopted during 2019 or that have not yet been required to be implemented and may be applicable to
our future operations.

NON-GAAP FINANCIAL MEASURE

This MD&A includes both financial measures in accordance with U.S. GAAP, as well as a non-GAAP financial
measure. The non-GAAP financial measure represents Net Income Available to IPG Common Stockholder before Provision
for Income Taxes, Total (Expenses) and Other Income, Equity in Net Income (Loss) of Unconsolidated Affiliates, Net
Income Attributable to Noncontrolling Interests and Amortization of Acquired Intangibles which we refer to as “EBITA”.

EBITA should be viewed as supplemental to, and not as an alternative for Net Income Available to IPG Common
Stockholders calculated in accordance with U.S. GAAP (“net income”) or operating income calculated in accordance with

40

Management’s Discussion and Analysis of Financial Condition and Results of Operations – (continued)
(Amounts in Millions, Except Per Share Amounts)

U.S. GAAP (“operating income”). This section also includes reconciliation of this non-GAAP financial measure to the most
directly comparable U.S. GAAP financial measures, as presented below.

EBITA is used by our management as an additional measure of our Company’s performance for purposes of business
decision-making, including developing budgets, managing expenditures, and evaluating potential acquisitions or divestitures.
Period-to-period comparisons of EBITA help our management identify additional trends in our Company’s financial results
that may not be shown solely by period-to-period comparisons of net income or operating income. In addition, we may use
EBITA in the incentive compensation programs applicable to some of our employees in order to evaluate our Company’s
performance. Our management recognizes that EBITA has inherent limitations because of the excluded items, particularly
those items that are recurring in nature. Management also reviews operating income and net income as well as the specific
items that are excluded from EBITA, but included in net income or operating income, as well as trends in those items. The
amounts of those items are set forth, for the applicable periods, in the reconciliation of EBITA to net income that accompany
our disclosure documents containing non-GAAP financial measures, including the reconciliations contained in this MD&A.

We believe that the presentation of EBITA is useful to investors in their analysis of our results for reasons similar to the
reasons why our management finds it useful and because it helps facilitate investor understanding of decisions made by
management in light of the performance metrics used in making those decisions. In addition, as more fully described below,
we believe that providing EBITA, together with a reconciliation of this non-GAAP financial measure to net income, helps
investors make comparisons between our Company and other companies that may have different capital structures, different
effective income tax rates and tax attributes, different capitalized asset values and/or different forms of employee
compensation. However, EBITA is intended to provide a supplemental way of comparing our Company with other public
companies and is not intended as a substitute for comparisons based on net income or operating income. In making any
comparisons to other companies, investors need to be aware that companies may use different non-GAAP measures to
evaluate their financial performance. Investors should pay close attention to the specific definition being used and to the
reconciliation between such measures and the corresponding U.S. GAAP measures provided by each company under the
applicable rules of the U.S. Securities and Exchange Commission.

The following is an explanation of the items excluded by us from EBITA but included in net income:

•

•

Total (Expense) and Other Income, Provision for Income Taxes, Equity in Net Income (Income) of Unconsolidated
Affiliates and Net Income Attributable to Noncontrolling Interests. We exclude these items (i) because these items are
not directly attributable to the performance of our business operations and, accordingly,
their exclusion assists
management and investors in making period-to-period comparisons of operating performance and (ii) to assist
management and investors in making comparisons to companies with different capital structures. Investors should note
that these items will recur in future periods.

Amortization of Acquired Intangibles. Amortization of acquired intangibles is a non-cash expense relating to intangible
assets arising from acquisitions that are expensed on a straight-line basis over the estimated useful life of the related
assets. We exclude amortization of acquired intangibles because we believe that (i) the amount of such expenses in any
specific period may not directly correlate to the underlying performance of our business operations and (ii) such
expenses can vary significantly between periods as a result of new acquisitions and full amortization of previously
acquired intangible assets. Accordingly, we believe that this exclusion assists management and investors in making
period-to-period comparisons of operating performance. Investors should note that the use of acquired intangible assets
contributed to revenue in the periods presented and will contribute to future revenue generation and should also note
that such expense may recur in future periods.

41

Management’s Discussion and Analysis of Financial Condition and Results of Operations – (continued)
(Amounts in Millions, Except Per Share Amounts)

The following table presents the reconciliation of Net Income Available to IPG Common Stockholders to EBITA for the

years ended December 31, 2019, 2018 and 2017.

Net Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
EBITA Reconciliation:
Net Income Available to IPG Common Stockholders 1
Add Back:

. . . . . . . . . . . . . . . . . . . . . . . . . . . .

Years ended December 31,

2019

2018

2017

$8,625.1

$8,031.6

$7,473.5

$ 656.0

$ 618.9

$ 554.4

Provision for Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

204.8

199.2

271.3

Subtract:

Total (Expenses) and Other Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity in Net Income (Loss) of Unconsolidated Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net Income Attributable to Noncontrolling Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(207.7)
0.4
(17.9)

(170.8)
(1.1)
(18.8)

(97.6)
0.9
(16.0)

Operating Income 1
Add Back:

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,086.0

1,008.8

938.4

Amortization of Acquired Intangibles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

86.0

37.6

21.1

EBITA 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$1,172.0

$1,046.4

$ 959.5

EBITA Margin on Net Revenue 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

13.6%

13.0%

12.8%

1

Calculations include restructuring charges of $33.9 in 2019 and transaction costs of $35.0 related to the Acxiom acquisition in 2018.

42

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

(Amounts in millions)

In the normal course of business, we are exposed to market risks related to interest rates, foreign currency rates and
certain balance sheet items. From time to time, we use derivative instruments, pursuant to established guidelines and policies,
to manage some portion of these risks. Derivative instruments utilized in our hedging activities are viewed as risk
management tools and are not used for trading or speculative purposes.

Interest Rates

Our exposure to market risk for changes in interest rates relates primarily to the fair market value and cash flows of our
debt obligations. The majority of our debt (approximately 97% and 86% as of December 31, 2019 and 2018, respectively)
bears interest at fixed rates. We do have debt with variable interest rates, but a 10% increase or decrease in interest rates
would not be material to our interest expense or cash flows. The fair market value of our debt is sensitive to changes in
interest rates, and the impact of a 10% change in interest rates is summarized below.

As of December 31,

Increase/(Decrease)
in Fair Market Value

10% Increase
in Interest Rates

10% Decrease
in Interest Rates

2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$(61.3)
(91.3)

$65.2
82.5

We had $1,192.2 of cash, cash equivalents and marketable securities as of December 31, 2019 that we generally invest
in conservative, short-term bank deposits or securities. The interest income generated from these investments is subject to
both domestic and foreign interest rate movements. During 2019 and 2018, we had interest income of $34.5 and $21.8,
respectively. Based on our 2019 results, a 100 basis-point increase or decrease in interest rates would affect our interest
income by approximately $11.9, assuming that all cash, cash equivalents and marketable securities are impacted in the same
manner and balances remain constant from year-end 2019 levels.

Foreign Currency Rates

We are subject to translation and transaction risks related to changes in foreign currency exchange rates. Since we report
revenues and expenses in U.S. Dollars, changes in exchange rates may either positively or negatively affect our consolidated
revenues and expenses (as expressed in U.S. Dollars) from foreign operations. The foreign currencies that most adversely
impacted our results during the year ended December 31, 2019 were the British Pound Sterling and Euro. Based on 2019
exchange rates and operating results, if the U.S. Dollar were to strengthen or weaken by 10%, we currently estimate
operating income would decrease or increase approximately 4%, assuming that all currencies are impacted in the same
manner and our international revenue and expenses remain constant at 2019 levels.

The functional currency of our foreign operations is generally their respective local currency. Assets and liabilities are
translated at the exchange rates in effect at the balance sheet date, and revenues and expenses are translated at the average
exchange rates during the period presented. The resulting translation adjustments are recorded as a component of
accumulated other comprehensive loss, net of tax, in the stockholders’ equity section of our Consolidated Balance Sheets.
Our foreign subsidiaries generally collect revenues and pay expenses in their functional currency, mitigating transaction risk.
However, certain subsidiaries may enter into transactions in currencies other than their functional currency. Assets and
liabilities denominated in currencies other than the functional currency are susceptible to movements in foreign currency
until final settlement. Currency transaction gains or losses primarily arising from transactions in currencies other than the
functional currency are included in office and other direct expenses. We regularly review our foreign exchange exposures
that may have a material impact on our business and from time to time use derivative financial instruments, designated as fair
value hedges or net investment hedges, to hedge the effects of potential adverse fluctuations in foreign currency exchange
rates arising from these exposures. We do not enter into foreign exchange contracts or other derivatives for speculative
purposes.

We monitor the currencies of countries in which we operate in order to determine if the country should be considered a
highly inflationary environment. A currency is determined to be highly inflationary when there is cumulative inflation of

43

approximately 100% or more over a three-year period. If this occurs the functional currency of that country is changed to our
reporting currency, the U.S. Dollar, and foreign exchange gains or losses are recognized on all monetary transactions, assets
and liabilities denominated in currencies other than the U.S. Dollar until the currency is no longer considered highly
inflationary.

Credit and Market Risks

Balance sheet items that potentially subject us to concentrations of credit risk are primarily cash and cash equivalents,
short-term marketable securities, accounts receivable and accounts receivable billable to clients. We invest our cash
primarily in investment-grade, short-term securities and limit the amount of credit exposure to any one counterparty.
Concentrations of credit risk with respect to accounts receivable are mitigated by our large number of clients and their
dispersion across different industries and geographic areas. We perform ongoing credit evaluations on a large number of our
clients and maintain an allowance for doubtful accounts based upon the expected collectability of all accounts receivable.

Our pension plan assets are also exposed to market risk. The fair value of our pension plan assets may appreciate or

depreciate during the year, which can result in lower or higher pension expense and funding requirements in future periods.

44

Item 8.

Financial Statements and Supplementary Data

INDEX

Report of Independent Registered Public Accounting Firm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Consolidated Statements of Operations for the years ended December 31, 2019, 2018 and 2017 . . . . . . . . . . . . . . . . . . . . . . . .

Consolidated Statements of Comprehensive Income for the years ended December 31, 2019, 2018 and 2017 . . . . . . . . . . . . . .

Consolidated Balance Sheets as of December 31, 2019 and 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Consolidated Statements of Cash Flows for the years ended December 31, 2019, 2018 and 2017 . . . . . . . . . . . . . . . . . . . . . . .

Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2019, 2018 and 2017 . . . . . . . . . . . . . . . .

Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1. Summary of Significant Accounting Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2. Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3. Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4. Debt and Credit Arrangements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5. Earnings Per Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6. Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7. Supplementary Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8. Goodwill and Other Intangible Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9.
Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10. Accumulated Other Comprehensive Loss, Net of Tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
11. Restructuring Charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
12. Incentive Compensation Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
13. Fair Value Measurements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
14. Employee Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
15. Segment Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
16. Commitments and Contingencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
17. Recent Accounting Standards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
18. Results by Quarter (Unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
19. Subsequent Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Page

46

49

50

51

52

53

55

55
62
64
66
68
68
72
73
74
78
79
79
82
84
88
91
92
93
94

45

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of The Interpublic Group of Companies, Inc.

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets of The Interpublic Group of Companies, Inc. and its
subsidiaries (the “Company”) as of December 31, 2019 and 2018, and the related consolidated statements of operations,
comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended December 31,
2019, including the related notes (collectively referred to as the “consolidated financial statements”). We also have audited
the Company’s internal control over financial reporting as of December 31, 2019, based on criteria established in Internal
Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission
(COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the
financial position of the Company as of December 31, 2019 and 2018, and the results of its operations and its cash flows for
each of the three years in the period ended December 31, 2019 in conformity with accounting principles generally accepted
in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal
control over financial reporting as of December 31, 2019, based on criteria established in Internal Control - Integrated
Framework (2013) issued by the COSO.

Change in Accounting Principle

As discussed in Note 3 to the consolidated financial statements, the Company changed the manner in which it accounts

for leases in 2019.

Basis for Opinions

The Company’s management is responsible for these consolidated financial statements, for maintaining effective
internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial
reporting, included in Management’s Report on Internal Control over Financial Reporting appearing under Item 9A. Our
responsibility is to express opinions on the Company’s consolidated financial statements and on the Company’s internal
control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company
Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in
accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange
Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material
misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in
all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material
misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond
to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the
consolidated financial statements. Our audits also included evaluating the accounting principles used and significant
estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our
audit of internal control over financial reporting included obtaining an understanding of internal control over financial
reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness
of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered
necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with

46

generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and
procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that
receipts and expenditures of the company are being made only in accordance with authorizations of management and
directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated
financial statements that were communicated or required to be communicated to the audit committee and that (i) relate to
accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging,
subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the
consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below,
providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Quantitative Goodwill Impairment Assessment for Reporting Units A, B and C

As described in Notes 1 and 8 to the consolidated financial statements, the Company’s consolidated goodwill balance
was $4.9 billion as of December 31, 2019, and as disclosed by the Company, the goodwill associated with reporting units A,
B and C was $533.5 million, $209.1 million and $182.1 million, respectively. The fair value of reporting units for which
management performed quantitative impairment tests were estimated using a combination of the income approach, which
incorporates the use of the discounted cash flow method, and the market approach, which incorporates the use of earnings
and revenue multiples based on market data. As disclosed by management, an equal weighting was applied to the income and
market approaches for management’s analysis. For the income approach, management used projections, which require the
use of significant estimates and assumptions specific to the reporting unit as well as those based on general economic
conditions. Factors specific to each reporting unit include revenue growth, profit margins, terminal value growth rates,
capital expenditure projections, assumed tax rates, discount rates and other assumptions deemed reasonable by management.
For the market approach, management used judgment in identifying the relevant comparable company market multiples.

The principal considerations for our determination that performing procedures relating to the quantitative goodwill
impairment assessment for reporting units A, B and C is a critical audit matter are there was significant judgment required by
management when developing the fair value measurement of the reporting units, which in turn led to a high degree of auditor
judgment, subjectivity, and effort in performing procedures to evaluate management’s cash flow projections and significant
assumptions used by management in the discounted cash flow and market models, including revenue growth, profit margins,
terminal value growth rates, discount rates, and comparable company market multiples. In addition, the audit effort involved
the use of professionals with specialized skill and knowledge to assist in performing these procedures and evaluating the
audit evidence obtained.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our
overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls
relating to management’s quantitative annual goodwill impairment assessment, including controls over the valuation of the
Company’s reporting units. These procedures also included, among others, testing management’s process for developing the
fair value estimates, evaluating the appropriateness of the discounted cash flow and market models, testing the completeness,
accuracy and relevance of underlying data used in the models, and evaluating the significant assumptions used by
terminal value growth rates, discount rates, and comparable
management,
company market multiples. Evaluating management’s assumptions related to revenue growth, profit margins, and the
terminal value growth rates involved evaluating whether the assumptions used by management were reasonable considering
the current and past performance of the reporting units, the consistency with external market and industry data and whether

including revenue growth, profit margins,

47

these assumptions were consistent with evidence obtained in other areas of the audit. Professionals with specialized skill and
knowledge were used to assist in the evaluation of the Company’s discounted cash flow and market multiple models and
certain significant assumptions, including the discount rates and comparable company market multiples.

Unrecognized Tax Benefits

As described in Notes 1 and 9 to the consolidated financial statements, the Company has recorded liabilities for
unrecognized tax benefits of $345.3 million as of December 31, 2019. Various years of the Company’s income tax filings are
currently under examination by tax authorities in the U.S., in various countries, and in various states, such as New York, in
which the Company has significant business operations. As disclosed by management, the assessment of recognition and
measurement requires critical estimates and the use of complex judgments. Management evaluates the tax positions using the
“more likely than not” recognition threshold and then applies a measurement assessment to those positions that meet the
recognition threshold. Management establishes tax reserves considering the potential for additional assessments in each of
the jurisdictions in which the Company is subject to taxation. Management assesses the likelihood of additional tax
assessments in those jurisdictions and adjusts reserves as additional information or events require.

The principal considerations for our determination that performing procedures relating to unrecognized tax benefits is a
critical audit matter are there was significant judgment by management when determining unrecognized tax benefits as a
result of applying complex tax laws to the Company’s multi-national operations. This in turn led to significant auditor
judgment, effort, and subjectivity in performing procedures to evaluate the timely identification and accurate measurement of
unrecognized tax benefits. Also, the evaluation of audit evidence available to support the tax liabilities for unrecognized tax
benefits is complex and required auditor judgment as the nature of the evidence is often subjective.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our
overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls
relating to the identification and recognition of the liability for unrecognized tax benefits, and controls addressing
completeness of the unrecognized tax benefits, as well as controls over measurement of the liability. These procedures also
included, among others, (i) testing the information used in the calculation of the liability for unrecognized tax benefits,
including international, federal, and state filing positions, and the related final tax returns; (ii) testing the calculation of the
liability for unrecognized tax benefits by jurisdiction, including management’s assessment of the technical merits of tax
positions and estimates of the amount of tax benefit expected to be sustained; (iii) testing the completeness of management’s
assessment of both the identification of unrecognized tax benefits and possible outcomes of each unrecognized tax benefit;
and (iv) evaluating the status and results of income tax audits with the relevant tax authorities.

/s/ PricewaterhouseCoopers LLP
New York, New York
February 21, 2020

We have served as the Company’s auditor since 1952.

48

THE INTERPUBLIC GROUP OF COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in Millions, Except Per Share Amounts)

Years ended December 31,

2019

2018

2017

REVENUE:

Net revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Billable expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 8,625.1
1,596.2

$8,031.6
1,682.8

$7,473.5
1,574.1

Total revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

10,221.3

9,714.4

9,047.6

OPERATING EXPENSES:

Salaries and related expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Office and other direct expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Billable expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Cost of services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Selling, general and administrative expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restructuring charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5,568.8
1,564.1
1,596.2

8,729.1
93.8
278.5
33.9

5,298.3
1,355.1
1,682.8

8,336.2
166.5
202.9
0.0

4,990.7
1,269.2
1,574.1

7,834.0
118.5
157.1
(0.4)

Total operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

9,135.3

8,705.6

8,109.2

OPERATING INCOME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,086.0

1,008.8

938.4

(90.8)
19.4
(26.2)

(97.6)

840.8
271.3

569.5
0.9

570.4
(16.0)

EXPENSES AND OTHER INCOME:

Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other expense, net

(199.3)
34.5
(42.9)

(123.0)
21.8
(69.6)

Total (expenses) and other income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(207.7)

(170.8)

Income before income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Provision for income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Income of consolidated companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity in net income (loss) of unconsolidated affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

NET INCOME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income attributable to noncontrolling interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

NET INCOME AVAILABLE TO IPG COMMON STOCKHOLDERS . . . . . . . . . . . . .

Earnings per share available to IPG common stockholders:

Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

878.3
204.8

673.5
0.4

673.9
(17.9)

838.0
199.2

638.8
(1.1)

637.7
(18.8)

$

$
$

656.0

$ 618.9

$ 554.4

1.70
1.68

$
$

1.61
1.59

$
$

1.42
1.40

Weighted-average number of common shares outstanding:

Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

386.1
391.2

383.3
389.0

389.6
397.3

The accompanying notes are an integral part of these financial statements.

49

THE INTERPUBLIC GROUP OF COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Amounts in Millions)

NET INCOME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$673.9

$ 637.7

$570.4

Years ended December 31,

2019

2018

2017

OTHER COMPREHENSIVE INCOME (LOSS)

Foreign currency translation:

Foreign currency translation adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reclassification adjustments recognized in net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Available-for-sale securities:

Changes in fair value of available-for-sale securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Recognition of previously unrealized gains in net income . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Derivative instruments:

Recognition of previously unrealized losses in net income . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Defined benefit pension and other postretirement plans:

Net actuarial (losses) gains for the period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of unrecognized losses, transition obligation and prior service cost included in
net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: settlement and curtailment (gains) losses included in net income . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

11.3
6.7

18.0

(149.6)
15.7

133.7
1.1

(133.9)

134.8

0.0
0.0
0.0

0.0

2.3
(0.5)

1.8

0.0
0.0
0.0

0.0

2.2
(0.7)

1.5

0.0
(0.7)
0.1

(0.6)

2.1
(0.5)

1.6

(14.8)

12.6

(13.6)

6.7
0.0
(2.5)
1.2

(9.4)

7.5
(1.0)
(1.0)
(1.8)

16.3

6.9
6.8
2.7
(0.5)

2.3

Other comprehensive income (loss), net of tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

10.4

(116.1)

138.1

TOTAL COMPREHENSIVE INCOME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: comprehensive income attributable to noncontrolling interests . . . . . . . . . . . . . . . . . . . . . . . . . . . .

684.3
17.2

521.6
16.0

708.5
17.5

COMPREHENSIVE INCOME ATTRIBUTABLE TO IPG . . . . . . . . . . . . . . . . . . . . . . . . . . .

$667.1

$ 505.6

$691.0

The accompanying notes are an integral part of these financial statements.

50

THE INTERPUBLIC GROUP OF COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Amounts in Millions)

December 31, 2019 December 31, 2018

ASSETS:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts receivable, net of allowance of $40.2 and $42.5, respectively . . . . . . . . . . . . . . . . .
Accounts receivable, billable to clients . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Assets held for sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 1,192.2
5,209.2
1,934.1
22.8
412.4

Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

8,770.7

Property and equipment, net of accumulated depreciation and amortization of $1,116.4 and

$1,034.9, respectively . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating lease right-of-use assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other non-current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

778.1
252.1
4,894.4
1,014.3
1,574.4
467.9

$

673.4
5,126.6
1,900.6
5.7
476.6

8,182.9

790.9
247.0
4,875.9
1,094.7
0.0
428.9

TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$17,751.9

$15,620.3

LIABILITIES:
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Contract liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Short-term borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current portion of long-term debt
Current portion of operating leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Liabilities held for sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-current operating leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other non-current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 7,205.4
742.8
585.6
52.4
502.0
267.2
65.0

9,420.4
2,771.9
1,429.6
425.0
714.7

TOTAL LIABILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

14,761.6

Redeemable noncontrolling interests (see Note 6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

164.7

STOCKHOLDERS’ EQUITY:
Common stock, $0.10 par value, shares authorized: 800.0
shares issued: 2019 – 387.0; 2018 – 383.6
shares outstanding: 2019 – 387.0; 2018 – 383.6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated other comprehensive loss, net of tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total IPG stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Noncontrolling interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

TOTAL STOCKHOLDERS’ EQUITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

38.7
977.3
2,689.9
(930.0)

2,775.9
49.7

2,825.6

$ 6,698.1
806.9
533.9
73.7
0.1
0.0
11.2

8,123.9
3,660.2
0.0
422.7
812.8

13,019.6

167.9

38.3
895.9
2,400.1
(941.1)

2,393.2
39.6

2,432.8

TOTAL LIABILITIES AND EQUITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$17,751.9

$15,620.3

The accompanying notes are an integral part of these financial statements.

51

THE INTERPUBLIC GROUP OF COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in Millions)

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of fixed assets and intangible assets . . . . . . . . . . . . . . . . . . . .
Provision for uncollectible receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of restricted stock and other non-cash compensation . . . . . . . . . . . . . . . . . . . .
Net amortization of bond discounts and deferred financing costs . . . . . . . . . . . . . . . . . . . . . .
Deferred income tax provision (benefit) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net losses on sales of businesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Changes in assets and liabilities, net of acquisitions and divestitures, providing (using)

cash:

Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts receivable, billable to clients . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Contract liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Changes in operating lease right-of-use assets and lease liabilities . . . . . . . . . . . . . . . . . . . .
Other non-current assets and liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Net cash provided by operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,529.2

CASH FLOWS FROM INVESTING ACTIVITIES:

Capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquisitions, net of cash acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(198.5)
(0.6)
37.4

(177.1)
(2,309.8)
(4.6)

Net cash used in investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(161.7)

(2,491.5)

CASH FLOWS FROM FINANCING ACTIVITIES:

Exercise of stock options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Repurchases of common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Repayment of long-term debt
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Common stock dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tax payments for employee shares withheld . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Distributions to noncontrolling interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net (decrease) increase in short-term borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquisition-related payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4.3
0.0
0.0
(403.3)
(363.1)
(22.4)
(21.6)
(19.8)
(15.8)
(1.3)

15.5
2,494.2
(117.1)
(104.8)
(322.1)
(29.2)
(16.9)
(17.5)
(33.7)
(15.2)

Net cash (used in) provided by financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(843.0)

1,853.2

(1,004.9)

Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash . . . . . . . . .

(6.0)

Net increase (decrease) in cash, cash equivalents and restricted cash . . . . . . . . . . . . . . . . . . . . . . .
Cash, cash equivalents and restricted cash at beginning of period . . . . . . . . . . . . . . . . . . . . . . . . .

518.5
677.2

(47.3)

(120.5)
797.7

16.8

(302.5)
1,100.2

Cash, cash equivalents and restricted cash at end of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$1,195.7

$

677.2

$

797.7

The accompanying notes are an integral part of these financial statements.

52

Years ended December 31,

2019

2018

2017

$ 673.9

$

637.7

$

570.4

278.5
10.1
80.2
9.3
9.7
43.4
9.9

(111.2)
(38.7)
(27.2)
546.0
27.4
46.5
0.7
(29.3)

202.9
6.5
82.2
6.5
14.1
61.9
1.2

(603.8)
(209.5)
(67.2)
428.7
(24.2)
44.9
0.0
(16.8)

565.1

157.1
9.5
82.0
5.8
(9.5)
24.1
12.7

37.6
(165.5)
50.1
336.4
(241.3)
(12.0)
0.0
24.4

881.8

(155.9)
(30.6)
(9.7)

(196.2)

13.1
0.0
(300.1)
(324.6)
(280.3)
(38.8)
(20.4)
3.0
(53.7)
(3.1)

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54

Notes to Consolidated Financial Statements
(Amounts in Millions, Except Per Share Amounts)

Note 1: Summary of Significant Accounting Policies

Business Description

The Interpublic Group of Companies, Inc. and subsidiaries (the “Company,” “IPG,” “we,” “us” or “our”) is one of the
world’s premier global advertising and marketing services companies. Our agencies create customized marketing programs
for clients that range in scale from large global marketers to regional and local clients. Comprehensive global services are
critical to effectively serve our multinational and local clients in markets throughout the world, as they seek to build brands,
increase sales of their products and services and gain market share.

Principles of Consolidation

The Consolidated Financial Statements include the accounts of the Company and its consolidated subsidiaries, some of
which are not wholly owned. Investments in companies over which we do not have control, but have the ability to exercise
significant influence, are accounted for using the equity method of accounting. Investments in companies over which we
have neither control nor have the ability to exercise significant influence are recorded at cost, less any impairment, adjusted
for subsequent observable price changes. All intercompany accounts and transactions have been eliminated in consolidation.

We have consolidated certain entities meeting the definition of variable interest entities, and the inclusion of these

entities does not have a material impact on our Consolidated Financial Statements.

Basis of Presentation

Cost of services is comprised of the expenses of our revenue-producing operating segments including salaries and
related expenses, office and other direct expenses and billable expenses, as well as an allocation of the centrally managed
expenses from Corporate. Office and other direct expenses include rent expense, professional fees, certain expenses incurred
by our staff in servicing our clients and other costs directly attributable to client engagements.

Selling, general and administrative expenses are primarily the unallocated expenses from Corporate, as disclosed further

in Note 15, excluding depreciation and amortization.

Depreciation and amortization of the fixed assets and intangible assets of the Company is disclosed as a separate

operating expense.

Restructuring charges relate to the Company’s implementation of a cost initiative to better align our cost structure with

our revenue, as discussed further in Note 11.

Reclassifications

Certain reclassifications and immaterial revisions have been made to prior-period financial statements to conform to the
current-period presentation. Segment information for the prior period has been recast to conform to the current-period
presentation.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States
of America (“U.S. GAAP”) requires us to make judgments, assumptions and estimates that affect the amounts of assets and
liabilities, the disclosure of contingent assets and liabilities at the reporting date and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from these estimates and assumptions.

Revenue Recognition

Our revenues are primarily derived from the planning and execution of multi-channel advertising and communications,
marketing services, including public relations, meeting and event production, sports and entertainment marketing, corporate
and brand identity, strategic marketing consulting, and providing marketing data and technology services around the world.

55

Notes to Consolidated Financial Statements – (continued)
(Amounts in Millions, Except Per Share Amounts)

Most of our client contracts are individually negotiated and, accordingly, the terms of client engagements and the basis
on which we earn fees and commissions vary significantly. Our contracts generally provide for termination by either party on
relatively short notice, usually 30 to 90 days, although our data management contracts typically have non-cancelable terms of
more than one year. Our payment terms vary by client, and the time between invoicing date and due date is typically not
significant. We generally have the legally enforceable right to payment for all services provided through the end of the
contract or termination date.

We recognize revenue when we determine our customer obtains control of promised goods or services, in an amount
that reflects the consideration which we expect to receive in exchange for those goods or services. To determine revenue
recognition, we perform the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance
obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance
obligations in the contract; and (v) recognize revenue as or when we satisfy the performance obligation. We only apply the
five-step model to contracts when it is probable that IPG will collect the consideration it is entitled to in exchange for the
goods or services it transfers to the customer. At contract inception, we assess the goods or services promised within each
contract and determine those that are distinct performance obligations. We then assess whether we act as an agent or a
principal for each identified performance obligation and include revenue within the transaction price for third-party costs
when we determine that we act as principal. We typically do not capitalize costs to obtain a contract as these amounts would
generally be recognized over a period of one year or less.

Net revenue, primarily consisting of fees, commissions and performance incentives, represents the amount of our gross
billings excluding billable expenses charged to a client. Generally, our compensation is based on a negotiated fixed price,
rate per hour, a retainer, commission or volume. The majority of our fees are recognized over time as services are performed,
either utilizing a function of hours incurred and rates per hour, as compared to periodically updated estimates to complete, or
ratably over the term of the contract. For certain less-frequent commission-based contracts which contain clauses allowing
our clients to terminate the arrangement at any time for no compensation, revenue is recognized at a point in time, typically
the date of broadcast or publication. We report revenue net of taxes assessed by governmental authorities that are directly
imposed on our revenue-producing transactions.

Contractual arrangements with clients may also include performance incentive provisions designed to link a portion of
our revenue to our performance relative to mutually agreed-upon qualitative and/or quantitative metrics. Performance
incentives are treated as variable consideration which is estimated at contract inception and included in revenue based on the
most likely amount earned out of a range of potential outcomes. Our estimates are based on a combination of historical award
experience, anticipated performance and our best judgment. These estimates are updated on a periodic basis and are not
expected to result in a reversal of a significant amount of the cumulative revenue recognized.

The predominant component of billable expenses are third-party vendor costs incurred for performance obligations
where we have determined that we are acting as principal. These third-party expenses are generally billed back to our clients.
Billable expenses also includes incidental costs incurred in the performance of our services including airfare, mileage, hotel
stays, out-of-town meals and telecommunication charges. We record these billable expenses within total revenue with a
corresponding offset to operating expenses.

In international markets, we may receive rebates or credits from vendors based on transactions entered into on behalf of
clients. Rebates and credits are remitted back to our clients in accordance with our contractual requirements or may be
retained by us based on the terms of a particular client contract and local law. Amounts owed back to clients are recorded as
a liability and amounts retained by us are recorded as revenue when earned.

In certain international markets, our media contracts may allow clients to terminate our arrangement at any time for no
compensation to the extent that media has not yet run. For those contracts, we do not recognize revenue until the media runs
which is the point in time at which we have a legally enforceable right to compensation.

56

Notes to Consolidated Financial Statements – (continued)
(Amounts in Millions, Except Per Share Amounts)

Performance Obligations

Our client contracts may include various goods and services that are capable of being distinct, are distinct within the
context of the contract and are therefore accounted for as separate performance obligations. We allocate revenue to each
performance obligation in the contract at inception based on its relative standalone selling price.

Our advertising businesses include a wide range of services that involve the creation of an advertising idea, concept,
campaign, or marketing strategy in order to promote the client’s brand (“creative services”), and to act as an agent to
facilitate the production of advertisements by third-party suppliers (“production services”). Our clients can contract us to
perform one or both of these services, as they can derive stand-alone benefit from each. Production services can include
formatting creative material for different media and communication mediums including digital, large-scale reproduction such
as printing and adaptation services, talent engagement and acquisition, television and radio production, and outdoor billboard
production. Our contracts that include both services are typically explicit in the description of which activities constitute the
creative advertising services and those that constitute the production services. Both the creative and production services are
sold separately, the client can derive utility from each service on its own, we do not provide a significant service of
integrating these activities into a bundle, the services do not significantly modify one another, and the services are not highly
interrelated or interdependent. As such, we typically identify two performance obligations in the assessment of our
advertising contracts.

Our media businesses include services to formulate strategic media plans (“media planning services”) and to act as an
agent to purchase media (e.g. television and radio spots, outdoor advertising, digital banners, etc.) from vendors on their
behalf (“media buying services”). Our contracts that include both services are typically explicit in the description of which
activities constitute the planning services and those that constitute the buying services. Both the planning and buying services
are sold separately, the client can derive utility from each service on its own, we do not provide a significant service of
integrating these activities into a bundle, the services do not significantly modify one another, and the services are not highly
interrelated or interdependent. As such, we typically identify two performance obligations in the assessment of our media
contracts.

Our events businesses include creative services related to the conception and planning of custom marketing events as
well as activation services which entail the carrying out of the event, including, but not limited to, set-up, design and
staffing. Additionally, our public relations businesses include a broad range of services, such as strategic planning, social
media strategy and the monitoring and development of communication strategies, among others. While our contracts in these
businesses may include some or all of these services, we typically identify only one performance obligation in the assessment
of our events and public relations contracts as we provide a significant service of integrating the individual services into a
combined service for which the customer has contracted.

Our data and technology services businesses include data management, data and data strategy, identity resolution, and
measurement and analytics products and services. While our contracts in these businesses may include some or all of these
services, we typically identify each product and service as an individual performance obligation.

We have elected not to disclose information about remaining performance obligations that have original expected
durations of one year or less. The majority of our contracts are for periods of one year or less with the exception of our data
management contracts.

Principal vs. Agent

When a third-party is involved in the delivery of our services to the client, we assess whether or not we are acting as a
principal or an agent in the arrangement. The assessment is based on whether we control the specified services at any time
before they are transferred to the customer. We have determined that in our events and public relations businesses, we
generally act as a principal as our agencies provide a significant service of integrating goods or services provided by third
parties into the specified deliverable to our clients. In addition, we have determined that we are responsible for the

57

Notes to Consolidated Financial Statements – (continued)
(Amounts in Millions, Except Per Share Amounts)

performance of the third-party suppliers, which are combined with our own services, before transferring those services to the
customer. In addition, we have determined that we act as principal when providing creative services and media planning
services, as we perform a significant integration service in these transactions. For performance obligations in which we act as
principal, we record the gross amount billed to the customer within total revenue and the related incremental direct costs
incurred as billable expenses.

When a third-party is involved in the production of an advertising campaign and for media buying services, we have
determined that we act as the agent and are solely arranging for the third-party to provide services to the customer.
Specifically, we do not control the specified services before transferring those services to the customer, we are not primarily
responsible for the performance of the third-party services, nor can we redirect those services to fulfill any other contracts.
We do not have inventory risk or discretion in establishing pricing in our contracts with customers. For performance
obligations for which we act as the agent, we record our revenue as the net amount of our gross billings less amounts
remitted to third parties.

Cash and Cash Equivalents

Cash equivalents are highly liquid investments, which include certificates of deposit, government securities, commercial
paper and time deposits with original maturities of three months or less at the time of purchase and are stated at estimated fair
value, which approximates cost. Cash is maintained at multiple high-credit-quality financial institutions.

Allowance for Doubtful Accounts

The allowance for doubtful accounts is estimated based on the aging of accounts receivable, reviews of client credit
reports, industry trends and economic indicators, as well as reviews of recent payment history for specific customers. The
estimate is based largely on a formula-driven calculation but is supplemented with economic indicators and knowledge of
potential write-offs of specific client accounts.

Accounts Receivable, Billable to Clients

Accounts receivable, billable to clients are primarily comprised of production and media costs that have been incurred
but have not yet been billed to clients, as well as fees that have been earned which have not yet been billed to clients.
Unbilled amounts are presented in expenditures billable to clients regardless of whether they relate to our fees or production
and media costs. A provision is made for unrecoverable costs as deemed appropriate.

Accounts Payable

Accounts payable includes all operating payables, including those related to all media and production costs. These

payables are due within one year.

Investments

Equity investments with readily determinable fair values, other than those accounted for using the equity method of
accounting, will be measured at fair value. We regularly review our investments to determine whether a significant event or
change in circumstances has occurred that may impact the fair value of each investment, with changes to fair value recorded
in earnings. We evaluate fair value based on specific information (valuation methodologies, estimates of appraisals, financial
statements, etc.) in addition to quoted market price, if available. We consider all known quantitative and qualitative factors in
determining if a decline in value of an investment has occurred.

Derivatives

We are exposed to market risk related to interest rates, foreign currency rates and certain balance sheet items. From time
to time we enter into derivative instruments for risk management purposes, and not for speculative purposes. All derivative

58

Notes to Consolidated Financial Statements – (continued)
(Amounts in Millions, Except Per Share Amounts)

instruments are recorded at fair value on our balance sheet. Changes in fair value are immediately included in earnings if the
derivatives are not designated as a hedge instrument or if the derivatives do not qualify as effective hedges. For derivatives
designated as hedge instruments, we evaluate for hedge accounting both at inception and throughout the hedge period. If a
derivative is designated as a fair value hedge, then changes in the fair value of the derivative are offset against the changes in
the fair value of the underlying hedged item. If a derivative is designated as a cash flow hedge, then the changes in the fair
value of the derivative are recognized as a component of accumulated other comprehensive income and subsequently
reclassified to earnings in our Consolidated Statement of Operations in the same period as the underlying hedged transaction
affects earnings. If a derivative is a net investment hedge, then the changes in the fair value of the derivative are recognized
in other comprehensive income in the same period as the change in fair value of the underlying hedged foreign investment.

Property and Equipment

Furniture, equipment, leasehold improvements and buildings are stated at cost, net of accumulated depreciation.
Furniture and equipment are depreciated generally using the straight-line method over the estimated useful lives of the
related assets, which range from 3 to 7 years for furniture and equipment, 10 to 35 years for buildings and the shorter of the
useful life or the remaining lease term for leasehold improvements. Land is stated at cost and is not depreciated.

We capitalize certain internal and external costs incurred to acquire or create internal use software, principally related to
our enterprise resource planning (“ERP”) systems. Our ERP systems are stated at cost, net of accumulated amortization, and
are amortized using the straight-line method over 10 years. All other internal use computer software are stated at cost, net of
accumulated amortization and are amortized using the straight-line method over the estimated useful lives of the related
assets, which range from 3 to 7 years.

Leases

Effective January 1, 2019, we adopted Accounting Standards Codification Topic 842, Leases (“ASC 842”), using the
modified retrospective transition method. As such, we recognized a right-of-use asset and a corresponding lease liability on
our Consolidated Balance Sheet for virtually all of our leases with a term of more than twelve months. Prior-year financial
statements were not recast under the new standard. As an accounting policy, we have elected not to apply the recognition
requirements to short-term leases, not to separate non-lease components from lease components, and have elected the
package of transition provisions available for existing contracts, which allowed us to carry forward our historical assessments
of (i) whether contracts are or contain leases, (ii) lease classification and (iii) initial direct costs. The adoption of ASC 842
resulted in operating lease right-of-use assets of $1,421.1 and operating lease liabilities of $1,544.4 as of January 1, 2019.

We do not have a material amount of finance leases and the majority of our operating leases, for which we serve as the
lessee, consist primarily of real-estate property for our offices around the world. Both the asset and liability are measured at
the present value of the future lease payments, with the asset being subject to adjustments such as initial direct costs, prepaid
lease payments, and lease incentives. Many of our leases provide for renewal and/or termination options, as well as
escalation clauses, which are also factored into our lease payments when appropriate. Our leases have remaining lease terms
of 1 year to 20 years. The discount rate used to measure the lease asset and liability is determined at the beginning of the
lease term using the rate implicit in the lease, if readily determinable, or using the Company’s collateralized credit-adjusted
borrowing rate.

Goodwill and Other Intangible Assets

We account for our business combinations using the acquisition accounting method, which requires us to determine the
fair value of net assets acquired and the related goodwill and other intangible assets. Determining the fair value of assets
acquired and liabilities assumed requires management’s judgment and involves the use of significant estimates, including
lives and market multiples. Considering the
projections of future cash inflows and outflows, discount rates, asset
characteristics of advertising, specialized marketing and communication services companies, our acquisitions usually do not
have significant amounts of tangible assets, as the principal asset we typically acquire is creative talent. As a result, a
substantial portion of the purchase price is allocated to goodwill and other intangible assets.

59

Notes to Consolidated Financial Statements – (continued)
(Amounts in Millions, Except Per Share Amounts)

We review goodwill as of October 1st each year and whenever events or significant changes in circumstances indicate
that the carrying value may not be recoverable. We evaluate the recoverability of goodwill at a reporting unit level. We have
12 reporting units that were subject to the 2019 annual impairment testing. Our annual impairment review as of October 1,
2019 did not result in an impairment charge for any of our reporting units.

Intangible assets with indefinite useful lives are not amortized but are evaluated for impairment annually or more
frequently if events or changes in circumstances indicate that impairment may exist. The Company first assesses qualitative
factors to determine whether it is necessary to perform a quantitative impairment test for indefinite-lived intangible assets.
Impairment exists if the fair value of the indefinite-lived intangible asset is less than the carrying value. Our annual
impairment review as of October 1, 2019 did not result in an impairment charge for any of our intangible assets with
indefinite useful lives.

For reporting units not included in the qualitative assessment, or for any reporting units identified in the qualitative
assessment as “more likely than not” that the fair value is less than its carrying value, the quantitative impairment test is
performed. For our annual impairment test, we compare the respective fair value of our reporting units’ equity to the carrying
value of their net assets. The sum of the fair values of all our reporting units is also reconciled to our current market
capitalization plus an estimated control premium. Goodwill allocated to a reporting unit whose fair value is equal to or
greater than its carrying value is not impaired, and no further testing is required. Should the carrying amount for a reporting
unit exceed its fair value, then the quantitative impairment test is failed and impaired goodwill is written down to its fair
value with a charge to expense in the period the impairment is identified.

The fair value of each reporting unit for 2019 and 2018 was estimated using a combination of the income approach,
which incorporates the use of the discounted cash flow method, and the market approach, which incorporates the use of
earnings and revenue multiples based on market data.

We review intangible assets with definite lives subject to amortization whenever events or circumstances indicate that a
carrying amount of an asset may not be recoverable. Recoverability of these assets is determined by comparing the carrying
value of these assets to the estimated undiscounted future cash flows expected to be generated by these asset groups. These
asset groups are impaired when their carrying value exceeds their fair value. Impaired intangible assets with definite lives
subject to amortization are written down to their fair value with a charge to expense in the period the impairment is
identified. Intangible assets with definite lives are amortized on a straight-line basis with estimated useful lives generally
between 7 and 15 years. Events or circumstances that might require impairment testing include the loss of a significant client,
the identification of other impaired assets within a reporting unit, loss of key personnel, the disposition of a significant
portion of a reporting unit, significant decline in stock price or a significant adverse change in business climate or
regulations.

Foreign Currencies

The functional currency of our foreign operations is generally their respective local currency. Assets and liabilities are
translated at the exchange rates in effect at the balance sheet date, and revenues and expenses are translated at the average
exchange rates during the period presented. The resulting translation adjustments are recorded as a component of
accumulated other comprehensive loss in the stockholders’ equity section of our Consolidated Balance Sheets. Currency
transaction gains or losses primarily arising from transactions in currencies other than the functional currency are included in
office and general expenses. Foreign currency transactions resulted in a pre-tax loss of $5.3 for the year ended December 31,
2019 and pre-tax gains of $5.6 and $1.9 in for the years ended December 31, 2018 and 2017, respectively.

We monitor the currencies of countries in which we operate in order to determine if the country should be considered a
highly inflationary environment. A currency is determined to be highly inflationary when there is cumulative inflation of
approximately 100% or more over a three-year period. If this occurs the functional currency of that country is changed to our
reporting currency, the U.S. Dollar, and foreign exchange gains or losses are recognized on all monetary transactions, assets
and liabilities in currencies other than the U.S. Dollar until the currency is no longer considered highly inflationary.

60

Notes to Consolidated Financial Statements – (continued)
(Amounts in Millions, Except Per Share Amounts)

Income Taxes

The provision for income taxes includes U.S. federal, state, local and foreign taxes. Income taxes are accounted for
under the liability method. Deferred tax assets and liabilities are recognized for the estimated future tax consequences of
temporary differences between the financial statement carrying amounts and their respective tax bases. Deferred tax assets
and liabilities are measured using enacted tax rates expected to apply to taxable income in the year in which the temporary
differences are expected to be reversed. We evaluate the realizability of our deferred tax assets and establish a valuation
allowance when it is “more likely than not” that all or a portion of the deferred tax assets will not be realized. We evaluate
our tax positions using the “more likely than not” recognition threshold and then apply a measurement assessment to those
positions that meet the recognition threshold. The factors used in assessing valuation allowances include all available
evidence, such as past operating results, estimates of future taxable income and the feasibility of tax planning strategies. We
have established tax reserves that we believe to be adequate in relation to the potential for additional assessments in each of
the jurisdictions in which we are subject to taxation. We regularly assess the likelihood of additional tax assessments in those
jurisdictions and adjust our reserves as additional information or events require.

Redeemable Noncontrolling Interests

Many of our acquisitions include provisions under which the noncontrolling equity owners can require us to purchase
additional interests in a subsidiary at their discretion. Payments for these redeemable noncontrolling interests may be
contingent on projected operating performance and satisfying other conditions specified in the related agreements. These
payments are also subject to revision in accordance with the terms of the agreements. We record these redeemable
noncontrolling interests in “mezzanine equity” in our Consolidated Balance Sheets. Each reporting period, redeemable
noncontrolling interests are reported at their estimated redemption value, but not less than their initial fair value. Any
adjustment to the redemption value above initial value prior to exercise will also impact retained earnings or additional
paid-in capital (“APIC”), but will not impact net income. Adjustments as a result of currency translation will affect the
redeemable noncontrolling interest balance, but do not impact retained earnings or additional paid-in capital.

Earnings Per Share (“EPS”)

Basic EPS available to IPG common stockholders equals net income available to IPG common stockholders divided by
the weighted-average number of common shares outstanding for the applicable period. Diluted EPS equals net income
available to IPG common stockholders divided by the weighted-average number of common shares outstanding, plus any
additional common shares that would have been outstanding if potentially dilutive shares had been issued.

Diluted EPS reflect the potential dilution that would occur if certain potentially dilutive securities were exercised. The
potential issuance of common stock is assumed to occur at the beginning of the year (or at the time of issuance of the
potentially dilutive instrument, if later) and the incremental shares are included using the treasury stock method. The
proceeds utilized in applying the treasury stock method consist of the amount, if any, to be paid upon exercise and, as it
relates to stock-based compensation, the amount of compensation cost attributed to future service not yet recognized. These
proceeds are then assumed to be used to purchase common stock at the average market price of our stock during the period.
The incremental shares (difference between the shares assumed to be issued and the shares assumed to be purchased), to the
extent they would have been dilutive, are included in the denominator of the diluted EPS calculation.

We may be required to calculate basic EPS using the two-class method as a result of our redeemable noncontrolling
interests. To the extent that the redemption value increases and exceeds the then-current fair value of a redeemable
noncontrolling interest, net income available to IPG common stockholders (used to calculate EPS) could be negatively
impacted by that increase, subject to certain limitations. The partial or full recovery of any reductions to net income available
to IPG common stockholders (used to calculate EPS) is limited to any cumulative prior-period reductions. For the years
ended December 31, 2019, 2018 and 2017, there was no impact to EPS for adjustments related to our redeemable
noncontrolling interests.

61

Notes to Consolidated Financial Statements – (continued)
(Amounts in Millions, Except Per Share Amounts)

Pension and Postretirement Benefits

We have pension and postretirement benefit plans covering certain domestic and international employees. We use
various actuarial methods and assumptions in determining our net pension and postretirement benefit costs and obligations,
including the discount rate used to determine the present value of future benefits, expected long-term rate of return on plan
assets and healthcare cost trend rates. The overfunded or underfunded status of our pension and postretirement benefit plans
is recorded on our Consolidated Balance Sheet.

Stock-Based Compensation

Compensation costs related to share-based transactions, including employee stock options, are recognized in the
Consolidated Financial Statements based on fair value. Stock-based compensation expense is generally recognized ratably
over the requisite service period based on the estimated grant-date fair value, net of estimated forfeitures.

Treasury Stock

We account for repurchased common stock under the cost method and include such treasury stock as a component of
our Consolidated Statements of Stockholders’ Equity. Upon retirement, we reduce common stock for the par value of the
shares being retired and the excess of the cost of the shares over par value as a reduction to APIC, to the extent there is APIC
in the same class of stock, and any remaining amount to retained earnings. These retired shares remain authorized but
unissued.

During 2019, there was no significant treasury stock activity due to the suspension of the share repurchase program, as
disclosed further in Note 7. In October 2018, we retired 8.1 shares of our treasury stock, which resulted in a reduction in
common stock of $0.8, treasury stock of $176.1 and APIC of $175.3. In October and November 2017, we retired 13.4 shares
of our treasury stock, which resulted in a reduction in common stock of $1.3, treasury stock of $304.4 and APIC of $303.1.

Note 2: Revenue

Disaggregation of Revenue

The following is a description of the principal activities, by reportable segment, from which we generate revenue. For

more detailed information about reportable segments, see Note 15.

Integrated Agency Networks

The Integrated Agency Networks (“IAN”) segment of IPG principally generates revenue from providing advertising and
media services as well as a comprehensive array of global communications, marketing services and data management.
Within IAN’s advertising business, we typically identify two performance obligations for creative and production services.
Depending on the arrangement, we typically act as the principal for our creative services and as the agent for our production
services. Within our media business, we also identify two performance obligations for media planning and media buying
services. We typically act as the principal for our media planning services and as the agent for media buying services.
Generally, our branding arrangements consist of two performance obligations, and we act as the principal for both
performance obligations.

Constituency Management Group

The Constituency Management Group (“CMG”) segment generates revenue from providing events and public relations
services as well as sports and entertainment marketing, corporate and brand identity, and strategic marketing consulting. In
CMG’s events and public relations arrangements, we typically identify one performance obligation, for which we act as the
principal in most arrangements. Generally, our branding arrangements consist of two performance obligations, and we act as
the principal for both performance obligations.

62

Notes to Consolidated Financial Statements – (continued)
(Amounts in Millions, Except Per Share Amounts)

Principal Geographic Markets

Our agencies are located in over 100 countries, including every significant world market. Our geographic revenue

breakdown is listed below.

Total revenue:
United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
International:

Years ended December 31,

2019

2018

2017

$ 6,368.7

$ 5,851.0

$ 5,417.3

United Kingdom . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Continental Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Asia Pacific . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Latin America . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

871.8
842.9
1,102.3
431.6
604.0

881.4
840.2
1,170.8
389.0
582.0

775.7
780.6
1,106.4
386.6
581.0

Total International

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3,852.6

3,863.4

3,630.3

Total Consolidated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 10,221.3

$ 9,714.4

$ 9,047.6

Net revenue:
United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
International:

Years ended December 31,

2019

2018

2017

$ 5,386.1

$ 4,825.0

$ 4,458.8

United Kingdom . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Continental Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Asia Pacific . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Latin America . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

727.0
742.4
858.3
389.9
521.4

711.7
737.5
896.8
350.1
510.5

613.1
687.8
866.9
350.8
496.1

Total International . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3,239.0

3,206.6

3,014.7

Total Consolidated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 8,625.1

$ 8,031.6

$ 7,473.5

IAN

Years ended December 31,

2019

2018

2017

Total revenue:
United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
International

$ 4,912.5
3,113.9

$ 4,447.0
3,109.1

$ 4,062.3
2,947.3

Total IAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 8,026.4

$ 7,556.1

$ 7,009.6

Net revenue:
United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
International

$ 4,557.5
2,790.7

$ 4,000.4
2,767.1

$ 3,660.6
2,606.1

Total IAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 7,348.2

$ 6,767.5

$ 6,266.7

63

Notes to Consolidated Financial Statements – (continued)
(Amounts in Millions, Except Per Share Amounts)

CMG

Years ended December 31,

2019

2018

2017

Total revenue:
United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
International

$ 1,456.2
738.7

$ 1,404.0
754.3

$ 1,355.0
683.0

Total CMG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 2,194.9

$ 2,158.3

$ 2,038.0

Net revenue:
United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
International

$

$

828.6
448.3

$

824.6
439.5

798.2
408.6

Total CMG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 1,276.9

$ 1,264.1

$ 1,206.8

Contract Balances

The following table provides information about receivables, contract assets and contract liabilities from contracts with

customers.

Accounts receivable, net of allowance of $40.2 and $42.5,

respectively . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts receivable, billable to clients . . . . . . . . . . . . . . . . . . . . . . . . .
Contract assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Contract liabilities (deferred revenue) . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 5,209.2
1,934.1
63.0
585.6

$ 5,126.6
1,900.6
67.9
533.9

December 31,
2019

December 31,
2018

Contract assets are primarily comprised of contract incentives that are generally satisfied annually under the terms of
our contracts and are transferred to accounts receivable when the right to payment becomes unconditional. Contract liabilities
relate to advance consideration received from customers under the terms of our contracts primarily related to reimbursements
of third-party expenses, whether we act as principal or agent, and to a lesser extent, periodic retainer fees, both of which are
generally recognized shortly after billing.

The majority of our contracts are for periods of one year or less with the exception of our data management contracts.
For those contracts with a term of more than one year, we had approximately $704.0 of unsatisfied performance obligations
as of December 31, 2019, which will be recognized as services are performed over the remaining contractual terms through
2026.

Note 3: Leases

Effective January 1, 2019, we adopted Accounting Standards Codification Topic 842, Leases, using the modified
retrospective transition method. As such, we have recognized a right-of-use asset and a corresponding lease liability on our
Consolidated Balance Sheet for virtually all of our leases with a term of more than twelve months. Prior-year financial
statements were not recast under the new standard and, therefore, those amounts are not presented below. As an accounting
policy, we have elected not to apply the recognition requirements to short-term leases, not to separate non-lease components
from lease components, and have elected the package of transition provisions available for existing contracts, which allowed
us to carry forward our historical assessments of (i) whether contracts are or contain leases, (ii) lease classification and
(iii) initial direct costs.

We do not have a material amount of finance leases and the majority of our operating leases, for which we serve as the
lessee, consist primarily of real-estate property for our offices around the world. Both the asset and liability are measured at

64

Notes to Consolidated Financial Statements – (continued)
(Amounts in Millions, Except Per Share Amounts)

the present value of the future lease payments, with the asset being subject to adjustments such as initial direct costs, prepaid
lease payments, and lease incentives. Many of our leases provide for renewal and/or termination options, as well as
escalation clauses, which are also factored into our lease payments when appropriate. Our leases have remaining lease terms
of 1 year to 20 years. The discount rate used to measure the lease asset and liability is determined at the beginning of the
lease term using the rate implicit in the lease, if readily determinable, or using the Company’s collateralized credit-adjusted
borrowing rate.

The following table presents information on our operating leases for the full year of 2019.

Operating lease cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Short-term lease cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sublease income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total lease cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

$

325.2
13.8
(12.9)

326.1

Twelve months ended
December 31, 2019

Cash paid for amounts included in the measurement of lease

liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Right-of-use assets obtained in exchange for lease

liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Twelve months ended
December 31, 2019

$

$

334.1

422.8

As of December 31,
2019

Weighted-average remaining lease term . . . . . . . . . . . . . . . . . .
Weighted-average discount rate . . . . . . . . . . . . . . . . . . . . . . . . .

Eight years

4.26%

Our future payments of our operating leases as of December 31, 2019 are listed in the table below.

Period

2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total future lease payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: imputed interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Present value of future lease payments . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: current portion of operating leases . . . . . . . . . . . . . . . . . . . . . . . . . .

Net Rent

$ 333.5
300.7
267.5
209.7
183.5
716.1

2,011.0
314.2

1,696.8
267.2

Non-current operating leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$1,429.6

Our future payments of our operating leases as of December 31, 2018 are listed in the table below.

Period

Rent
Obligations

Sublease Rental
Income

2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 352.0
324.3
282.3
242.5
184.0
714.6

Total future lease payments . . . . . . . .

$2,099.7

$ (7.7)
(5.2)
(2.2)
(1.3)
(0.6)
(0.5)

$(17.5)

65

Net Rent

$ 344.3
319.1
280.1
241.2
183.4
714.1

$2,082.2

Notes to Consolidated Financial Statements – (continued)
(Amounts in Millions, Except Per Share Amounts)

As of December 31, 2019, we had additional operating leases that had not yet commenced with future lease payments of

approximately $238.0 that will commence within the year 2020 and lease terms of 4 to 15 years.

Note 4: Debt and Credit Arrangements

Long-Term Debt

A summary of the carrying amounts and fair values of our long-term debt is listed below.

3.50% Senior Notes due 2020 (less unamortized discount and issuance costs
of $0.4 and $1.1, respectively) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.75% Senior Notes due 2021 (less unamortized discount and issuance costs
of $0.2 and $1.9, respectively) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4.00% Senior Notes due 2022 (less unamortized discount and issuance costs
of $0.7 and $0.6, respectively) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.75% Senior Notes due 2023 (less unamortized discount and issuance costs
of $0.5 and $1.3, respectively) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4.20% Senior Notes due 2024 (less unamortized discount and issuance costs
of $0.4 and $1.8, respectively) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4.65% Senior Notes due 2028 (less unamortized discount and issuance costs
of $1.5 and $3.9, respectively) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5.40% Senior Notes due 2048 (less unamortized discount and issuance costs
of $2.7 and $5.4, respectively) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Term Loan due 2021 - LIBOR plus 1.25% . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other notes payable and capitalized leases . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: current portion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Long-term debt, excluding current portion . . . . . . . . . . . . . . . . . . . . . . . . . . .

1

See Note 13 for information on the fair value measurement of our long-term debt.

December 31,

2019

2018

Effective
Interest Rate

Book
Value

Fair
Value 1

Book
Value

Fair
Value 1

3.89%

$ 498.5

$505.4

$ 496.6

$499.9

3.98%

497.9

513.5

496.8

503.2

4.13%

248.7

258.8

248.2

250.3

4.32%

498.2

522.8

497.7

491.4

4.24%

497.8

538.1

497.3

492.6

4.78%

494.6

564.3

494.0

494.1

5.48%

491.9
—
46.3

617.1
—
45.5

491.7
400.0
38.0

474.1
400.0
38.0

3,273.9
502.0

$2,771.9

3,660.3
0.1

$3,660.2

Annual maturities are scheduled as follows based on the book value as of December 31, 2019.

2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 502.0
501.4
248.9
498.3
497.8
1,025.5

Total long-term debt

. . . . . . . . . . . . . . . . . . . . . . . . .

$3,273.9

Our 3.50% Senior Notes in aggregate principal amount of $500.0 mature on October 1, 2020. We expect to use
available cash as well as additional commercial paper as needed. For those debt securities that have a premium or discount at
the time of issuance, we amortize the amount through interest expense based on the maturity date or the first date the holders
may require us to repurchase the debt securities, if applicable. A premium would result in a decrease in interest expense, and
a discount would result in an increase in interest expense in future periods. Additionally, we have debt issuance costs related
to certain financing transactions which are also amortized through interest expense. As of December 31, 2019 and 2018, we
had total unamortized debt issuance costs of $21.6 and $26.0, respectively.

66

Notes to Consolidated Financial Statements – (continued)
(Amounts in Millions, Except Per Share Amounts)

Our debt securities include covenants that, among other things, limit our liens and the liens of certain of our

consolidated subsidiaries, but do not require us to maintain any financial ratios or specified levels of net worth or liquidity.

Debt Transactions

Term Loan Agreement

On October 1, 2018, in order to fund the acquisition of Acxiom, we entered into financing arrangements with third-party
lenders under a three-year term loan agreement (the “Term Loan Agreement”). We fully paid off the outstanding balance
under the Term Loan Agreement as of December 31, 2019, with payments of $100.0, $200.0 and $100.0, on June 13, 2019,
September 9, 2019 and December 12, 2019, respectively.

Credit Agreements

We maintain a committed corporate credit facility, originally dated as of July 18, 2008, which has been amended and
restated from time to time (the “Credit Agreement”). We use our Credit Agreement to increase our financial flexibility, to
provide letters of credit primarily to support obligations of our subsidiaries and to support our commercial paper program.
On November 1, 2019, we entered into an amendment and restatement (the “Amendment”) of the Credit Agreement. Under
the Amendment, among other things, the maturity date of the Credit Agreement was extended to November 1, 2024, and the
cost structure of the Credit Agreement was changed. The Amendment also removed the interest coverage ratio financial
covenant; however, the Company remains subject to the leverage ratio financial covenant, among other customary covenants.
At the election of the Company, the leverage ratio financial covenant may be changed to not more than 4.00 to 1.00 for four
consecutive fiscal quarters, beginning with the fiscal quarter in which there is an occurrence of one or more acquisitions with
an aggregate purchase price of at least $200.0.

The Credit Agreement is a revolving facility under which amounts borrowed by us or any of our subsidiaries designated
under the Credit Agreement may be repaid and reborrowed, subject to an aggregate lending limit of $1,500.0, or the
equivalent in other currencies. The Company has the ability to increase the commitments under the Credit Agreement from
time to time by an additional amount of up to $250.0, provided the Company receives commitments for such increases and
satisfies certain other conditions. The aggregate available amount of letters of credit outstanding may decrease or increase,
subject to a sublimit on letters of credit of $50.0, or the equivalent in other currencies. Our obligations under the Credit
Agreement are unsecured. As of December 31, 2019 and 2018, there were no borrowings under the Credit Agreement;
however, we had $8.4 and $8.5 of letters of credit under the Credit Agreement, which reduced our total availability to
$1,491.6 and $1,491.5, respectively.

Under the Credit Agreement, we can elect to receive advances bearing interest based on either the Base Rate or the
Eurocurrency rate (each as defined in the Credit Agreement) plus an applicable margin that is determined based on our credit
ratings. As of December 31, 2019, the applicable margin was 0.125% for Base Rate advances and 1.125% for Eurocurrency
Rate borrowings. Letter of credit fees accrue on the average daily aggregate amount of letters of credit outstanding, at a rate
equal to the applicable margin for Eurocurrency rate advances, and fronting fees accrue on the aggregate amount of letters of
credit outstanding at an annual rate of 0.25%. We also pay a facility fee on each lender’s revolving commitment of 0.125%,
which is an annual rate determined based on our credit ratings.

In addition to other and customary covenants, we are required to maintain the financial covenant listed below as of the
end of each fiscal quarter for the period of four fiscal quarters then ended pursuant to our Credit Agreement. We were in
compliance with our covenant in the Credit Agreement as of December 31, 2019.

Leverage ratio (not greater than): 1 . . . . . . . . . .

3.75x

Financial Covenants 1

1

The leverage ratio is defined as debt as of the last day of such fiscal quarter to EBITDA, as defined in the Credit Agreement, for the four quarters then
ended. Pursuant to July 2018 Amendment No. 1 to the Credit Agreement, the maximum leverage ratio decreased from 4.00x to 3.75x on the last day of
the fourth full fiscal quarter ending after the Acxiom closing date on October 1, 2018.

67

Notes to Consolidated Financial Statements – (continued)
(Amounts in Millions, Except Per Share Amounts)

We also have uncommitted lines of credit with various banks that permit borrowings at variable interest rates and that
are primarily used to fund working capital needs. We have guaranteed the repayment of some of these borrowings made by
certain subsidiaries. If we lose access to these credit lines, we would have to provide funding directly to some of our
operations. As of December 31, 2019 and 2018, the Company had uncommitted lines of credit in an aggregate amount
of $1,056.0 and $1,173.1, under which we had outstanding borrowings of $52.4 and $73.7 classified as short-term
borrowings on our Consolidated Balance Sheets, respectively. The average amounts outstanding during 2019 and 2018
were $88.0 and $96.4, respectively, with weighted-average interest rates of approximately 5.2% and 4.5%, respectively.

Commercial Paper

The Company is authorized to issue unsecured commercial paper up to a maximum aggregate amount outstanding at
any time of $1,500.0. Borrowings under the commercial paper program are supported by the Credit Agreement described
above. Commercial paper proceeds are used for working capital and general corporate purposes, including the repayment of
maturing indebtedness and other short-term liquidity needs. Commercial paper maturities vary but may not exceed 397 days
from the date of issue. As of December 31, 2019 and 2018, there was no commercial paper outstanding. The average
amounts outstanding under the program in 2019 and 2018 were $312.9 and $648.7 with weighted-average interest rates of
approximately 2.5% and 2.4% and weighted-average maturities of thirteen and twenty-two days, respectively.

Cash Pooling

We aggregate our domestic cash position on a daily basis. Outside the United States, we use cash pooling arrangements
with banks to help manage our liquidity requirements. In these pooling arrangements, several IPG agencies agree with a
single bank that the cash balances of any of the agencies with the bank will be subject to a full right of set-off against
amounts other agencies owe the bank, and the bank provides for overdrafts as long as the net balance for all agencies does
not exceed an agreed-upon level. Typically, each agency pays interest on outstanding overdrafts and receives interest on cash
balances. Our Consolidated Balance Sheets reflect cash, net of bank overdrafts, under all of our pooling arrangements, and as
of December 31, 2019 and 2018 the amounts netted were $2,274.9 and $2,065.8, respectively.

Note 5: Earnings Per Share

The following sets forth basic and diluted earnings per common share available to IPG common stockholders.

Net income available to IPG common stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$656.0

$618.9

$554.4

Weighted-average number of common shares outstanding – basic . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dilutive effect of stock options and restricted shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Weighted-average number of common shares outstanding – diluted . . . . . . . . . . . . . . . . . . . . .

386.1
5.1

391.2

383.3
5.7

389.0

389.6
7.7

397.3

Earnings per share available to IPG common stockholders:

Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 1.70
$ 1.68

$ 1.61
$ 1.59

$ 1.42
$ 1.40

Years ended December 31,

2019

2018

2017

Note 6: Acquisitions

Acxiom Acquisition

On October 1, 2018, pursuant to the terms of the Membership Interest Purchase Agreement dated as of July 2, 2018, the
Company completed the acquisition of Acxiom Holdings, Inc.’s Marketing Solutions business (“Acxiom”) through the
acquisition of 100% of the equity interests of Acxiom for $2,327.9, subject to customary closing adjustments. The purpose of
the acquisition is to combine the Company’s media, creative, marketing services and analytics capabilities, global scale and
consumer insights, with Acxiom’s expertise in identity, data, integrations and data stewardship.

68

Notes to Consolidated Financial Statements – (continued)
(Amounts in Millions, Except Per Share Amounts)

The Company funded the acquisition of Acxiom from a term loan agreement with third-party lenders for $500.0 and

unsecured senior notes issued for a total of $2,000.0 in aggregate principal amount.

The following table summarizes the fair values of the assets acquired and liabilities assumed at the closing date:

Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts receivable, billable to clients
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property and equipment, net
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Goodwill
Intangible assets, net
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other non-current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Contract liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other non-current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

October 1, 2018

$

13.3
112.9
8.3
28.2
159.7
(0.6)
1,110.8
995.0
8.3
(37.1)
(46.9)
(23.2)
(0.8)

Net assets acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$2,327.9

The fair values of the identifiable intangible assets acquired at the closing date are as follows:

Weighted Average
Amortization Period
(Years)

Fair Value

Customer lists . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Know-how and technology . . . . . . . . . . . . . . . . . . .
Trade names . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$600.0
235.0
160.0

15.0
9.0
15.0 to indefinite

Total intangible assets . . . . . . . . . . . . . . . . . . .

$995.0

The fair value of the customer lists was determined by applying the multi-period excess earnings method, a variation of
the income approach. The fair values of the know-how and technology and the trade names were determined using the relief
from royalty method of the income approach. Goodwill generated by the Acxiom acquisition, the majority of which is tax
deductible, primarily relates to intangible assets that do not qualify for separate recognition, including assembled workforce
and synergies. The purchase accounting for the transaction was finalized during the third quarter of 2019, including the
assignment of goodwill related to the transaction-associated synergies. There were no material adjustments to the preliminary
amounts recorded.

The operating results of Acxiom for the period from October 1, 2018 to December 31, 2018, including net revenue of
$181.7 and net income available to IPG common stockholders of $20.4, are included in our Consolidated Statements of
Operations for the year ended December 31, 2018.

The Company incurred a total of $35.0 in “Selling, general and administrative expenses,” $3.7 in “Interest
expense,” $0.4 in “Interest income” and $10.3 in “Other expense, net,” for transaction-related costs in connection with the
acquisition.

The following table presents the combined results of the Company and Acxiom for the years ended December 31, 2018
and 2017 on an unaudited pro forma basis, as if the acquisition had occurred on January 1, 2017. The unaudited pro forma
financial information is presented for informational purposes only and is not indicative of the results of operations that would
have been achieved if that acquisition had taken place at the beginning of January 1, 2017. It also does not reflect changes in

69

Notes to Consolidated Financial Statements – (continued)
(Amounts in Millions, Except Per Share Amounts)

cost structure or operations resulting from restructuring activities, changes in the business, or future events that may occur
after the completion of the acquisition. The pro forma combined results of operations shown below include after-tax
nonrecurring transaction-related charges of $27.6 in 2017, and the business combination accounting effects resulting from the
acquisition.

Pro forma revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pro forma net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$10,230.4
642.2

$9,736.1
519.2

(Unaudited)

December 31,

2018

2017

Other Acquisitions

We continue to evaluate strategic opportunities to expand our industry expertise, strengthen our position in high-growth
and key strategic geographical markets and industry sectors, advance technological capabilities and improve operational
efficiency through both acquisitions and increased ownership interests in current investments. Our acquisitions typically
provide for an initial payment at the time of closing and additional contingent purchase price payments based on the future
performance of the acquired entity. We have entered into agreements that may require us to purchase additional equity
interests in certain consolidated and unconsolidated subsidiaries. The amounts at which we record these transactions in our
financial statements are based on estimates of the future financial performance of the acquired entity, the timing of the
exercise of these rights, changes in foreign currency exchange rates and other factors.

During 2019, we completed one acquisition, a content communications agency based in the U.K. This acquisition was
included in the IAN reportable segment. During 2019, we recorded approximately $7.6 of goodwill and other intangible
assets related to our acquisitions.

During 2018, we completed five acquisitions, two of which were included in the IAN reportable segment, and three of
which were included in the CMG reportable segment. These acquisitions include a data and technology company based in the
U.S., as discussed in detail above, a full-service digital agency based in Brazil, an entertainment marketing and brand
licensing agency in the fashion and lifestyle sector based in the U.K., a content-focused social creative agency based in the
U.K. and a content production firm based in Israel. During 2018, we recorded approximately $2,131.0 of goodwill and other
intangible assets related to our acquisitions.

During 2017, we completed ten acquisitions, eight of which were included in the IAN reportable segment, and two of
which were included in the CMG reportable segment. The most significant acquisitions included a product and service
design consultancy based in the U.S., an integrated healthcare marketing communications agency based in the U.S., a content
creation and digital agency with offices in the U.S. and the U.K., a mobile consultancy and application development agency
based in the U.K., a full-service public relations and digital agency based in China, a search engine optimization and digital
content marketing agency based in the U.K., and a mobile focused digital agency based in the U.K. During 2017, we
recorded approximately $62.0 of goodwill and other intangible assets related to our acquisitions.

The results of operations of our acquired companies were included in our consolidated results from the closing date of

each acquisition. We did not make any payments in stock related to our acquisitions in 2019, 2018 or 2017.

70

Notes to Consolidated Financial Statements – (continued)
(Amounts in Millions, Except Per Share Amounts)

Details of cash paid for current and prior years’ acquisitions are listed below.

Cost of investment: current-year acquisitions 1 . . . . . . . . . . . . . . . . . . . .
Cost of investment: prior-year acquisitions . . . . . . . . . . . . . . . . . . . . . . .
Less: net cash acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total cost of investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating payments 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Years ended December 31,

2019

2018

2017

$ 0.6
15.8
—

16.4
9.3

$2,323.4
33.9
(13.8)

$ 36.8
54.6
(7.1)

2,343.5
19.4

84.3
47.1

Total cash paid for acquisitions 3 . . . . . . . . . . . . . . . . . . . . . . . . . . .

$25.7

$2,362.9

$131.4

1

2

3

The cost of investment: current-year acquisitions line significantly increased in the year ended December 31, 2018, primarily as a result of payments
related to the acquisition of Acxiom.

Represents cash payments for amounts that have been recognized in operating expenses since the date of acquisition either relating to adjustments to
estimates in excess of the initial value of contingent payments recorded or were contingent upon the future employment of the former owners of the
acquired companies. Amounts are reflected in the operating section of the Consolidated Statements of Cash Flows.

Of the total cash paid for acquisitions, $0.6, $2,309.8 and $30.6 for the years ended December 31, 2019, 2018 and 2017, respectively, are classified
under the investing section of the Consolidated Statements of Cash Flows as acquisitions, net of cash acquired. These amounts relate to initial payments
for new transactions. Of the total cash paid for acquisitions, $15.8, $33.7 and $53.7 for the years ended December 31, 2019, 2018 and 2017,
respectively, are classified under the financing section of the Consolidated Statements of Cash Flows as acquisition-related payments. These amounts
relate to deferred payments and increases in our ownership interest for prior acquisitions.

For companies acquired, we estimate the fair values of the assets and liabilities based on 100% of the business for
consolidation. The purchase price in excess of the estimated fair value of the tangible net assets acquired is allocated to
identifiable intangible assets and then to goodwill. Due to the characteristics of advertising, specialized marketing and
communication services companies, our acquisitions typically do not have significant amounts of tangible assets since the
principal assets we acquire are client relationships and talent. As a result, a substantial portion of the purchase price is
primarily allocated to customer lists, trade names and goodwill.

For acquisitions we record deferred payment and redeemable noncontrolling interest amounts on our Consolidated
Balance Sheets based on their acquisition-date fair value. Deferred payments are recorded on a discounted basis and adjusted
quarterly, if necessary, through operating income or net interest expense, depending on the nature of the arrangement, for
both changes in estimate and accretion between the acquisition date and the final payment date. See Note 16 for further
information on contingent acquisition obligations. Redeemable noncontrolling interests are adjusted quarterly, if necessary,
to their estimated redemption value, but not less than their initial fair value. Any adjustments to the redemption value impact
retained earnings or additional paid in capital, except for foreign currency translation adjustments. The following table
presents changes in our redeemable noncontrolling interests.

Balance at beginning of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Change in related noncontrolling interests balance . . . . . . . . . . . . . . . . .
. .
Changes in redemption value of redeemable noncontrolling interests:
Additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Redemptions and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Redemption value adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Years ended December 31,

2019

2018

2017

$167.9
(2.8)

$252.1
(10.7)

$252.8
(2.8)

24.3
(24.9)
0.2

0.0
(33.7)
(39.8)

7.7
(18.5)
12.9

Balance at end of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$164.7

$167.9

$252.1

For all acquisitions, if a portion of the deferred payments and purchases of additional interests after the effective date of
purchase are contingent upon employment terms, then that amount is accounted for separately from the business combination
and recognized as compensation expense over the required earn-out period. Payments deemed as compensation are excluded
from the fair value purchase price allocation to tangible net assets and intangible assets acquired.

71

Notes to Consolidated Financial Statements – (continued)
(Amounts in Millions, Except Per Share Amounts)

Note 7: Supplementary Data

Valuation and Qualifying Accounts – Allowance for Uncollectible Accounts Receivable

Balance at beginning of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Charges to costs and expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjustments:

Years ended December 31,

2019

2018

2017

$ 42.5
10.1

$42.7
6.5

$ 55.7
9.5

Acquisitions/(dispositions)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Uncollectible accounts written off . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign currency translation adjustments . . . . . . . . . . . . . . . . . . . . .

(0.3)
(11.9)
(0.2)

2.2
(7.1)
(1.8)

(1.0)
(25.5)
4.0

Balance at end of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 40.2

$42.5

$ 42.7

Property and Equipment

December 31,

2019

2018

Furniture and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Leasehold improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Internal-use computer software . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Land and buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

694.3
634.9
422.0
143.3

$

681.7
629.0
368.5
146.6

Gross property and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: accumulated depreciation and amortization . . . . . . . . . . . . . . . . . . . . . .

1,894.5
(1,116.4)

1,825.8
(1,034.9)

Total property and equipment, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

778.1

$

790.9

Total depreciation and amortization expense, which excludes the amortization of acquired intangibles, for property and

equipment for the years ended December 31, 2019, 2018 and 2017 was $192.5, $165.3 and $136.0, respectively.

Accrued Liabilities

The following table presents the components of accrued liabilities.

Salaries, benefits and related expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquisition obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Office and related expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restructuring charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other

Total accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

December 31,

2019

$494.1
45.7
26.9
38.8
1.6
135.7

$742.8

2018

$494.9
65.7
52.2
43.6
0.0
150.5

$806.9

Other Expense, Net

Results of operations include certain items that are not directly associated with our revenue-producing operations.

Net losses on sales of businesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$(43.4) $(61.9) $(24.1)
(2.1)
(7.7)

0.5

Total other expense, net

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$(42.9) $(69.6) $(26.2)

Years ended December 31,

2019

2018

2017

72

Notes to Consolidated Financial Statements – (continued)
(Amounts in Millions, Except Per Share Amounts)

Net losses on sales of businesses – During 2019, the amounts recognized were related to sales of businesses and the
classification of certain assets and liabilities, consisting primarily of cash, as held for sale within our IAN and CMG
reportable segments. During 2018, the amounts recognized were related to sales of businesses and the classification of certain
assets and liabilities, consisting primarily of cash, as held for sale within our IAN and CMG reportable segments. During
2017, the amounts recognized were related to sales of businesses and the classification of certain assets and liabilities,
consisting primarily of cash, accounts receivable and accounts payable, as held for sale within our IAN reportable segment.
The businesses held for sale as of year end primarily represent unprofitable, non-strategic agencies which are expected to be
sold within the next twelve months.

Other – During 2019, the amounts recognized are primarily a result of changes in fair market value of equity
investments, partially offset by the sale of an equity investment. During 2018, the amounts recognized are primarily a result
of transaction-related costs from the Acxiom acquisition, partially offset by changes in fair market value of equity
investments.

Share Repurchase Program

On July 2, 2018, in connection with the announcement of the Acxiom acquisition, we announced that share repurchases
will be suspended for a period of time in order to reduce the increased debt levels incurred in conjunction with the
acquisition. As of December 31, 2019, $338.4, excluding fees, remains available for repurchase under the share repurchase
programs authorized in previous years, which has no expiration date.

Supplemental Cash Flow Information

Cash paid for interest
Cash paid for income taxes, net of refunds 1

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . .

$192.7
150.2

$ 88.7
207.9

$ 82.3
228.4

1

Refunds of $92.6, $24.3 and $31.9 were received for the years ended December 31, 2019, 2018 and 2017, respectively.

Years ended December 31,

2019

2018

2017

Note 8: Goodwill and Other Intangible Assets

Goodwill

Goodwill is the excess purchase price remaining from an acquisition after an allocation of purchase price has been made
to identifiable assets acquired and liabilities assumed based on estimated fair values. The changes in the carrying value of
goodwill for our segments, IAN and CMG, for the years ended December 31, 2019 and 2018 are listed below.

IAN 1

CMG

Total 2

Balance as of December 31, 2017 . . . . . . . . . . . . . . . . . . . . . . .
Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign currency and other . . . . . . . . . . . . . . . . . . . . . . . .

$3,161.8
1,112.0
(64.5)

$658.6
20.0
(12.0)

$3,820.4
1,132.0
(76.5)

Balance as of December 31, 2018 . . . . . . . . . . . . . . . . . . . . . . .

$4,209.3

$666.6

$4,875.9

Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign currency and other . . . . . . . . . . . . . . . . . . . . . . . .

2.1
14.4

0.7
1.3

2.8
15.7

Balance as of December 31, 2019 . . . . . . . . . . . . . . . . . . . . . . .

$4,225.8

$668.6

$4,894.4

1

2

During 2018, the increase in goodwill is primarily due to the acquisition of Acxiom. See Note 6 for further information on the Acxiom acquisition.

For all periods presented, no goodwill impairment charge has been recorded.

See Note 1 for information regarding our annual impairment methodology.

73

Notes to Consolidated Financial Statements – (continued)
(Amounts in Millions, Except Per Share Amounts)

Other Intangible Assets

Other intangible assets primarily consist of customer lists and know-how and technology, which have definite lives and
are subject to amortization on a straight-line basis with estimated useful lives generally between 7 and 15 years, as well as
trade names which have both indefinite and definite lives which are subject to amortization on a straight-line basis with
estimated useful lives of 15 years. Amortization expense for other intangible assets for the years ended December 31, 2019,
2018 and 2017 was $86.0, $37.6 and $21.1, respectively. There were no material impairment charges on other intangibles for
the years ended December 31, 2019, 2018 and 2017. During 2019 and 2018, we recorded approximately $5.0 and $999.0 of
other intangible assets related to our acquisitions in the respective year. The increase in 2018 is primarily due to the
acquisition of Acxiom.

The following table provides a summary of other intangible assets, which are included in our Consolidated Balance

Sheets.

December 31,

2019

2018

Gross Amount

Accumulated
Amortization Net Amount Gross Amount

Accumulated
Amortization Net Amount

Customer lists . . . . . . . . . . . . . . . . . . . . . . . .
Know-how and technology . . . . . . . . . . . . .
Trade names . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other

$ 861.4
235.0
226.2
14.3

$(244.6)
(32.9)
(41.3)
(3.8)

$ 616.8
202.1
184.9
10.5

Total . . . . . . . . . . . . . . . . . . . . . . . . . . .

$1,336.9

$(322.6)

$1,014.3

$ 857.2
235.0
226.2
14.3

$1,332.7

$(190.9)
(6.5)
(36.8)
(3.8)

$ 666.3
228.5
189.4
10.5

$(238.0)

$1,094.7

The estimated annual amortization expense for other intangible assets for the next five years as of December 31, 2019 is

listed below.

Estimated amortization expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$88.4

$86.9

$82.9

$78.6

$76.8

2020

2021

2022

2023

2024

Note 9: Income Taxes

The components of income before income taxes are listed below.

Domestic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$557.4
320.9

$474.0
364.0

$514.8
326.0

Total

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$878.3

$838.0

$840.8

Years ended December 31,

2019

2018

2017

74

Notes to Consolidated Financial Statements – (continued)
(Amounts in Millions, Except Per Share Amounts)

The provision for income taxes is listed below.

U.S. federal income taxes (including foreign withholding taxes):

Current
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

State and local income taxes:

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current
Deferred . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Foreign income taxes:

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current
Deferred . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Years ended December 31,

2019

2018

2017

$ 92.2
9.5

101.7

$ 38.1
29.9

$154.1
(37.6)

68.0

116.5

10.7
8.7

19.4

92.2
(8.5)

83.7

25.1
3.4

28.5

121.9
(19.2)

102.7

18.8
19.7

38.5

107.9
8.4

116.3

Total

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$204.8

$199.2

$271.3

A reconciliation of the effective income tax rate as reflected in our Consolidated Statements of Operations to the U.S.

federal statutory income tax rate is listed below.

U.S. federal statutory income tax rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax provision at U.S. federal statutory rate . . . . . . . . . . . . . . . . . . . . . . .
State and local income taxes, net of U.S. federal income tax benefit . . . . . . . . .
Impact of foreign operations, including withholding taxes . . . . . . . . . . . . . . . .
U.S. tax incentives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Change in net valuation allowance 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Divestitures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
U.S. federal tax credits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stock compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Increase in unrecognized tax benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net impact of the Tax Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Years ended December 31,

2019

2018

2017

21.0%

21.0%

35.0%

$184.5
14.0
34.2
(21.4)
(26.3)
9.6
0.4
(3.3)
14.1
0.0
(1.0)

$176.0
23.8
50.7
(17.5)
(16.9)
11.7
(48.1)
(6.8)
8.4
13.4
4.5

$294.3
23.5
(6.7)
(1.3)
1.4
1.1
(0.4)
(15.3)
7.0
(36.0)
3.7

Provision for income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$204.8

$199.2

$271.3

Effective income tax rate on operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

23.3%

23.8%

32.3%

1

Reflects changes in valuation allowances that impacted the effective income tax rate for each year presented.

In 2019, our effective income tax rate of 23.3% was positively impacted by the reversal of valuation allowances
primarily in Continental Europe, by the settlement of state income tax audits and by excess tax benefits on employee share-
based payments. The effective tax rate was negatively impacted by losses in certain foreign jurisdictions where we receive no
tax benefit due to 100% valuation allowances, net losses on sales of businesses and the classification of certain assets as held
for sale, for which we received minimal tax benefit.

In 2018, our effective income tax rate of 23.8% was positively impacted by U.S. tax incentives, foreign tax credits from
a distribution of unremitted earnings, the net reversal of valuation allowance in Continental Europe and research and
development credits. The effective income tax rate was negatively impacted by losses in certain foreign jurisdictions where

75

Notes to Consolidated Financial Statements – (continued)
(Amounts in Millions, Except Per Share Amounts)

we received no tax benefit due to 100% valuation allowances, non-deductible losses on sales of businesses and assets held
for sale, by tax expense associated with the change to our assertion regarding the permanent reinvestment of undistributed
earnings attributable to certain foreign subsidiaries, and by tax expense related to the true-up of our December 31, 2017 tax
reform estimates as permitted by SEC Staff issued Accounting Bulletin No. 118 (“SAB 118”).

Public Law 115-97, commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”) was signed into law on
December 22, 2017. The Tax Act legislated many new tax provisions which have impacted our operations. At December 31,
2017, provisional amounts were recorded as permitted by SAB 118. The impact of the Tax Act as required by SAB 118,
resulted in a tax expense of $13.4 in 2018, which was primarily attributable to our estimate of the tax imposed on the deemed
repatriation of unremitted foreign earnings.

The Tax Act imposed a new tax on certain foreign earnings generated in 2018 and forward. These global intangible
low-taxed income (“GILTI”) tax rules are complex. U.S. GAAP allowed us to choose an accounting policy which treats the
U.S. tax under GILTI provisions as either a current expense, as incurred, or as a component of the Company’s measurement
of deferred taxes. The Company elected to account for the GILTI tax as a current expense.

In 2017, our effective income tax rate of 32.3% was positively impacted by a net benefit of $36.0 as a result of the Tax
Act as well as excess tax benefits on employee share-based payments, partially offset by losses in certain foreign
jurisdictions where we receive no tax benefit due to 100% valuation allowances.

The components of deferred tax assets and liabilities are listed below.

Postretirement/post-employment benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pension costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Basis differences in fixed assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accruals and reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Allowance for doubtful accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Basis differences in intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investments in equity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating lease right-of-use assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating lease liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tax loss/tax credit carry forwards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unremitted foreign earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total deferred tax assets, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Valuation allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

December 31,

2019

2018

$ 16.7
99.5
23.7
(75.3)
—
45.5
19.4
6.5
(321.0)
0.3
(335.2)
361.4
297.1
(6.7)
(21.7)
(1.3)
44.5

153.4
(164.2)

$ 17.9
99.8
22.2
(71.7)
27.3
48.8
21.0
7.4
(302.7)
1.2
—
—
345.6
(6.3)
(26.8)
(9.5)
38.2

212.4
(211.0)

Net deferred tax (liabilities) assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ (10.8)

$

1.4

We evaluate the realizability of our deferred tax assets on a quarterly basis. The realization of our deferred tax assets is
primarily dependent on future earnings. The amount of the deferred tax assets considered realizable could be reduced or
increased in the near future if estimates of future taxable income are lower or greater than anticipated. A valuation allowance
is established when it is “more likely than not” that all or a portion of deferred tax assets will not be realized. In
circumstances where there is negative evidence, establishment of a valuation allowance is considered. The factors used in
assessing valuation allowances include all available evidence, such as past operating results, estimates of future taxable

76

Notes to Consolidated Financial Statements – (continued)
(Amounts in Millions, Except Per Share Amounts)

income and the feasibility of tax planning strategies. We believe that cumulative losses in the most recent three-year period
represent significant negative evidence, and as a result, we determined that certain of our deferred tax assets required the
establishment of a valuation allowance. The deferred tax assets for which an allowance was recognized relate primarily to
state and foreign tax loss carryforwards.

The change in the valuation allowance is listed below.

Balance at beginning of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reversed to costs and expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(Reversed) charged to gross tax assets and other accounts 1 . . . . . . . . . . . . . . . . . . . .
Foreign currency translation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$211.0
(24.9)
(19.8)
(2.1)

$243.0
(28.0)
5.1
(9.1)

$255.6
(4.6)
(27.3)
19.3

Balance at end of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$164.2

$211.0

$243.0

Years ended December 31,

2019

2018

2017

1

Primarily represents changes to the valuation allowance related to the change of a corresponding deferred tax asset.

In 2019, 2018, and 2017, amounts reversed to costs and expenses primarily related to decreases in valuation allowances

in Continental Europe for existing deferred tax assets.

As of December 31, 2019, there were $1,044.1 of loss carryforwards. These loss carryforwards were all non-U.S. tax
loss carryforwards, of which $939.0 have unlimited carryforward periods and $105.1 have expiration periods from 2020 to
2040. As of December 31, 2019, the Company also had $25.6 in deferred tax assets for state net operating loss carryforwards
and tax credit carryforwards, which will expire between 2020 and 2040.

As of December 31, 2019 and 2018, we had $1,199.7 and $1,079.1, respectively, of undistributed earnings attributable
to foreign subsidiaries. The Company has historically asserted that
its unremitted foreign earnings are permanently
reinvested, and therefore has not recorded any deferred taxes on such amounts. It is not practicable to determine the deferred
tax on these undistributed earnings because such liability, if any, is dependent on circumstances that exist if and when a
remittance occurs, including the source location and amount of the distribution and foreign withholding taxes. During the
third quarter ended September 30, 2018, as a result of our increased debt and associated servicing commitments in
connection with the Acxiom acquisition that was consummated on October 1, 2018, the Company re-evaluated its global
cash needs and as a result determined that approximately $435.0 of undistributed foreign earnings from certain international
entities were no longer subject to the permanent reinvestment assertion. We recorded a tax expense of $10.8 in 2018
representing our estimate of the tax costs associated with this change to our assertion. We have not changed our permanent
reinvestment assertion with respect to any other international entities as we intend to use the related historical earnings and
profits to fund international operations and investments.

The table below summarizes the activity related to our unrecognized tax benefits.

Balance at beginning of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Increases as a result of tax positions taken during a prior year . . . . . . . . . . . . . . . . . .
Decreases as a result of tax positions taken during a prior year . . . . . . . . . . . . . . . . .
Settlements with taxing authorities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Lapse of statutes of limitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Increases as a result of tax positions taken during the current year . . . . . . . . . . . . . . .

Years ended December 31,

2019

2018

2017

$335.4
22.7
(25.8)
(8.1)
(0.6)
21.7

$271.9
65.9
(10.8)
(6.5)
(1.7)
16.6

$246.7
6.3
(8.1)
(0.8)
(3.3)
31.1

Balance at end of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$345.3

$335.4

$271.9

Included in the total amount of unrecognized tax benefits of $345.3 as of December 31, 2019, is $296.4 of tax benefits
that, if recognized, would impact the effective income tax rate. The total amount of accrued interest and penalties as of

77

Notes to Consolidated Financial Statements – (continued)
(Amounts in Millions, Except Per Share Amounts)

December 31, 2019 and 2018 is $39.6 and $42.4, respectively, of which a benefit of $2.8 and a detriment of $14.5 is included
in our 2019 and 2018 Consolidated Statements of Operations, respectively. In accordance with our accounting policy, interest
and penalties accrued on unrecognized tax benefits are classified as income taxes in our Consolidated Statements of
Operations.

We have various tax years under examination by tax authorities in the U.S., in various countries, and in various states,
such as New York, in which we have significant business operations. It is not yet known whether these examinations will, in
the aggregate, result in our paying additional taxes. We believe our tax reserves are adequate in relation to the potential for
additional assessments in each of the jurisdictions in which we are subject to taxation. We regularly assess the likelihood of
additional tax assessments in those jurisdictions and, if necessary, adjust our reserves as additional information or events
require.

With respect to all tax years open to examination by U.S. federal, various state and local, and non-U.S. tax authorities,
we currently anticipate that total unrecognized tax benefits will decrease by an amount between $10.0 and $20.0 in the next
twelve months, a portion of which will affect our effective income tax rate, primarily as a result of the settlement of tax
examinations and the lapsing of statutes of limitations. This net decrease is related to various items of income and expense,
primarily transfer pricing adjustments.

We are effectively settled with respect to U.S. federal income tax audits through 2012, with the exception of 2009. With
limited exceptions, we are no longer subject to state and local income tax audits for years prior to 2013 or non-U.S. income
tax audits for years prior to 2009.

Note 10: Accumulated Other Comprehensive Loss, Net of Tax

The following table presents the changes in accumulated other comprehensive loss, net of tax, by component.

Foreign Currency
Translation
Adjustments

Derivative
Instruments

Defined Benefit
Pension and Other
Postretirement Plans

Balance as of December 31, 2017 . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other comprehensive (loss) income before reclassifications . . . . . . .
Amount reclassified from accumulated other comprehensive loss,

$(585.3)
(146.8)

net of tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

15.7

Balance as of December 31, 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . .

$(716.4)

Other comprehensive income (loss) before reclassifications . . . . . . .
Amount reclassified from accumulated other comprehensive loss,

net of tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

12.0

6.7

$(6.8)
0.0

1.5

$(5.3)

0.0

1.8

$(235.7)
11.4

Total

$(827.8)
(135.4)

4.9

22.1

$(219.4)

$(941.1)

(14.7)

5.3

(2.7)

13.8

Balance as of December 31, 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . .

$(697.7)

$(3.5)

$(228.8)

$(930.0)

Amounts reclassified from accumulated other comprehensive loss, net of tax, for the years ended December 31, 2019,

2018 and 2017 are as follows:

Years ended
December 31,

2019

2018

2017

Affected Line Item in the
Consolidated Statements of
Operations

Foreign currency translation adjustments 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gains on available-for-sale securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Losses on derivative instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of defined benefit pension and postretirement plans items . . . . .
Tax effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 6.7
0.0
2.3
6.7
(1.9)

$15.7
0.0
2.2
6.5
(2.3)

$ 1.1 Other expense, net
(0.7) Other expense, net
2.1 Interest expense
13.7 Other expense, net
(2.1) Provision for income taxes

Total amount reclassified from accumulated other comprehensive loss, net of
tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$13.8

$22.1

$14.1

78

Notes to Consolidated Financial Statements – (continued)
(Amounts in Millions, Except Per Share Amounts)

1

These foreign currency translation adjustments are primarily a result of the sales of businesses.

Note 11: Restructuring Charges

In the first quarter of 2019, the Company implemented a cost initiative (the “2019 Plan”) to better align our cost
structure with our revenue primarily related to specific client losses occurring in 2018, the components of which are listed
below.

Severance and termination costs . . . . . . . . . . . . . . . . . . . .
Lease restructuring costs . . . . . . . . . . . . . . . . . . . . . . . . . .

2019

$22.0
11.9

Total restructuring charges . . . . . . . . . . . . . . . . . . . . .

$33.9

2018

$0.0
0.0

$0.0

2017

$ 0.0
(0.4)

$(0.4)

Years ended December 31,

Net restructuring charges were comprised of $27.6 at IAN and $5.6 at CMG for the year ended December 31, 2019. All
restructuring actions were identified and initiated by the end of the first quarter of 2019, with all actions substantially
completed by the end of the second quarter of 2019 and we don’t expect any further restructuring adjustments.

During the year ended December 31, 2019, severance and termination costs related to a planned reduction in workforces
of 627 employees. The employee groups affected include executive, regional and account management as well as
administrative, creative and media production personnel. Cash payments of $20.4 were made during the year ended
December 31, 2019, with the remaining liability of $1.6 expected to be paid by the end of the first quarter of 2020.

Lease impairment costs relate to the office spaces that were vacated as part of the 2019 Plan, which includes impairment
on the right-of-use asset of operating leases, furniture, and leasehold improvements. Given the remaining lease terms
involved, the lease obligation will be paid out over a period of several years, net of sublease income.

Note 12: Incentive Compensation Plans

2019 & 2014 Performance Incentive Plan

We issue stock-based compensation and cash awards to our employees under various plans established by the
Compensation and Leadership Talent Committee of the Board of Directors (the “Compensation Committee”) and approved
by our shareholders. In May 2019, our shareholders approved the 2019 Performance Incentive Plan (the “2019 PIP”),
replacing the 2014 Performance Incentive Plan (the “2014 PIP”) and previous incentive plans. The number of shares of
common stock initially available for grants of all equity awards under the 2019 PIP is 27.0. Pursuant to the terms of the 2019
PIP, the number of shares that may be awarded to any one participant for any stock based awards is limited to 2.0. The
vesting period of awards granted is generally commensurate with the requisite service period. We generally issue new shares
to satisfy the exercise of stock options or the distribution of other stock-based awards.

Additionally, under the 2019 PIP, we have the ability to issue performance cash awards. The performance cash awards
are granted to certain employees who otherwise would have been eligible to receive performance-based stock awards. These
awards have a service period vesting condition and a performance vesting condition. The amount of the performance cash
award received by an employee with a performance vesting condition can range from 0% to 300% of the target amount of the
original grant value, except for Executive Officers of IPG, with a range of 0% to 200%. Performance cash awards generally
vest in three years. The Compensation Committee may grant performance cash awards to any eligible employee; however, no
employee can receive more than $10.0 during a performance period.

79

Notes to Consolidated Financial Statements – (continued)
(Amounts in Millions, Except Per Share Amounts)

The amounts of stock-based compensation expense as reflected in salaries and related expenses in our Consolidated

Statements of Operations, and the related tax benefit, are listed below.

Stock-settled awards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash-settled awards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Performance-based awards . . . . . . . . . . . . . . . . . . . . . . . . .
Employee stock purchase plan . . . . . . . . . . . . . . . . . . . . . .
Other 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Stock-based compensation expense . . . . . . . . . . . . . .
Tax benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Years ended December 31,

2019

2018

2017

$33.5
0.8
46.7
1.1
0.6

$82.7
$20.0

$24.7
0.6
57.5
0.9
0.9

$84.6
$20.4

$20.5
1.0
61.5
1.0
0.5

$84.5
$30.4

1

Represents charges recorded for severance expense related to stock-based compensation awards.

Stock Options

Stock options are granted with the exercise price equal to the fair market value of our common stock on the grant date.
We use the Black-Scholes option-pricing model to estimate the fair value of options granted, which requires the input of
subjective assumptions including the option’s expected term and the price volatility of the underlying stock. They are
generally first exercisable between two and four years from the grant date and expire ten years after the grant date (or earlier
in the case of certain terminations of employment). There were no stock options granted during the years ended
December 31, 2019, 2018 and 2017. As of December 31, 2019, all stock options granted were fully vested and exercisable.

The following table summarizes our stock option activity during 2019.

Stock options outstanding as of January 1, 2019 . . . . . . . . . . . . . . . . . . . . . .
Exercised . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Stock options outstanding as of December 31, 2019 . . . . . . . . . . . . . . . . . . .

Weighted-
Average
Exercise Price
(per option)

Weighted-
Average
Remaining
Contractual Term
(in years)

Aggregate
Intrinsic
Value

$10.66
$ 7.38

$12.26

2.7

$12.9

Options

1.8
(0.6)

1.2

There were 0.6, 1.9 and 1.1 stock options exercised in 2019, 2018 and 2017, respectively. The total intrinsic value of
stock options exercised during 2019, 2018 and 2017 was $9.1, $27.9 and $15.1, respectively. The cash received from the
stock options exercised in 2019, 2018 and 2017 was $8.3, $29.0 and $20.0, which included taxes withheld of $4.0, $13.3, and
$6.8, respectively.

Stock-Based Compensation

We grant other stock-based compensation awards such as stock-settled awards, cash-settled awards and performance-
based awards (settled in cash or shares) to certain key employees. The number of shares or units received by an employee for
performance-based awards depends on Company performance against specific performance targets and could range from 0%
to 300% of the target amount of shares originally granted, except for Executive Officers of IPG, with a range of 0% to 200%.
Incentive awards are subject to certain restrictions and vesting requirements as determined by the Compensation Committee.
The fair value of the shares on the grant date is amortized over the vesting period, which is generally three years. Upon
completion of the vesting period for cash-settled awards, the grantee is entitled to receive a payment in cash based on the fair
market value of the corresponding number of shares of common stock. No monetary consideration is paid by a recipient for
any incentive award. The fair value of cash-settled awards is adjusted each quarter based on our share price. The holders of
stock-settled awards have absolute ownership interest in the underlying shares of common stock prior to vesting, which
includes the right to vote and receive dividends. Dividends declared on common stock are accrued during the vesting period

80

Notes to Consolidated Financial Statements – (continued)
(Amounts in Millions, Except Per Share Amounts)

and paid when the award vests. The holders of performance-based awards have no ownership interest in the underlying
shares of common stock until the awards vest and the shares of common stock are issued.

Stock-based compensation awards expected to be settled in cash have been classified as liabilities in our Consolidated

Balance Sheets as of December 31, 2019 and 2018.

Years ended December 31,

2019

2018

2017

Stock-Settled Awards:

Awards granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . .
Weighted-average grant-date fair value (per award)
Total fair value of vested awards distributed . . . . . . . . . . . . . . . . . .

2.5
$22.78
$ 15.2

2.1
$23.60
$ 24.2

0.8
$24.18
$ 22.6

Cash-Settled Awards:

Awards granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . .
Weighted-average grant-date fair value (per award)
Total fair value of vested awards distributed . . . . . . . . . . . . . . . . . .

0.0
$22.83
0.9
$

0.1
$23.62
0.8
$

0.0
$23.33
0.9
$

Performance-Based Awards:

Awards granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . .
Weighted-average grant-date fair value (per award)
Total fair value of vested awards distributed . . . . . . . . . . . . . . . . . .

2.1
$20.16
$ 64.9

2.9
$21.13
$ 87.2

4.8
$20.06
$112.4

In conjunction with common stock dividends declared in 2019 and 2018, we accrued dividends of $4.2 and $2.4,
respectively, on non-vested stock-settled awards and paid dividends of $1.2 and $1.5 for stock-settled awards that vested
during 2019 and 2018, respectively.

A summary of the activity of our non-vested stock-settled awards, cash-settled awards and performance-based awards

during 2019 is presented below (performance-based awards are shown at 100% of the shares originally granted).

Stock-Settled Awards

Cash-Settled Awards

Performance-
Based Awards

Non-vested as of January 1, 2019 . . . . . . . . . . . . . . . . . . . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Awards

3.1
2.5
(0.7)
(0.2)

Non-vested as of December 31, 2019 . . . . . . . . . . . . . . . . . . . . .
Total unrecognized compensation expense remaining . . . . . . . .
Weighted-average years expected to be recognized over . . . . . .

4.7
$56.0
1.6

Weighted-
Average
Grant-Date
Fair Value
(per award) Awards

Weighted-
Average
Grant-Date
Fair Value
(per award) Awards

Weighted-
Average
Grant-Date
Fair Value
(per award)

$23.51
22.78
22.78
23.42

$23.21

0.1
0.0
0.0
0.0

0.1
$1.2
1.5

$23.47
22.83
23.53
22.84

$23.20

$21.10
20.16
19.93
21.01

$21.36

7.0
2.1
(2.9)
(0.6)

5.6
$45.7
1.7

In conjunction with our annual grant of long-term incentive compensation awards, we reviewed our estimates and

assumptions in 2019, which resulted in a forfeiture rate slightly less than prior years.

2009 Restricted Cash Plan

In March 2009, the Compensation Committee approved the Interpublic Restricted Cash Plan (the “Cash Plan”). Under
the Cash Plan, the Board, the Compensation Committee or the Plan Administrator may grant cash awards to certain
employees eligible to receive cash-settled awards. Cash awards, when granted, have a service-period vesting condition and
generally vest in three years.

81

Notes to Consolidated Financial Statements – (continued)
(Amounts in Millions, Except Per Share Amounts)

Cash Awards

During the years ended December 31, 2019, 2018 and 2017, the Compensation Committee granted cash awards under
the Cash Plan with a total target value of $22.3, $20.9 and $2.8, respectively. For those same years, we recognized $15.6,
$7.0 and $2.5, respectively, in salaries and related expenses in our Consolidated Statements of Operations.

During the years ended December 31, 2019, 2018 and 2017, the Compensation Committee granted performance awards
to be settled in cash under the 2019 PIP with a total target value of $40.7, $39.9, and $38.4, respectively. For those same
years, we recognized $39.9, $37.6 and $35.3, respectively, in salaries and related expenses in our Consolidated Statements of
Operations.

We amortize the present value of the amount expected to vest for cash awards and performance cash awards over the
vesting period using the straight-line method, less an assumed forfeiture rate. Cash awards do not fall within the scope of the
authoritative guidance for stock compensation as they are not paid in equity and the value of the award is not correlated with
our stock price. Due to the cash nature of the payouts and the vesting period, we account for these awards in accordance with
authoritative guidance for deferred compensation arrangements.

Employee Stock Purchase Plans

In May 2016, our shareholders approved The Interpublic Group of Companies Employee Stock Purchase Plan (2016)
(the “ESPP”), replacing the prior employee stock purchase plan under which, prior to its expiration on December 31, 2015,
3.0 shares were issued. Under the ESPP, eligible employees may purchase our common stock through payroll deductions not
exceeding 10% of their eligible compensation or 900 (actual number) shares each offering period, consistent with the prior
employee stock purchase plan. The price an employee pays for a share of common stock under the ESPP is 90% of the lesser
of the average market price of a share on the first business day of the offering period or the average market price of a share
on the last business day of the offering period of three months. An aggregate of approximately 10.0 shares are reserved for
issuance under the ESPP, of which 1.1 shares have been issued since the inception of the ESPP through December 31, 2019.

Note 13: Fair Value Measurements

Authoritative guidance for fair value measurements establishes a fair value hierarchy which requires us to maximize the
use of observable inputs and minimize the use of unobservable inputs when measuring fair value. There are three levels of
inputs that may be used to measure fair value:

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.

Financial Instruments that are Measured at Fair Value on a Recurring Basis

We primarily apply the market approach to determine the fair value of financial instruments that are measured at fair
value on a recurring basis. There were no changes to our valuation techniques used to determine the fair value of financial
instruments during 2019 as compared to the prior year.

82

Notes to Consolidated Financial Statements – (continued)
(Amounts in Millions, Except Per Share Amounts)

The following tables present information about our financial instruments measured at fair value on a recurring basis as
of December 31, 2019 and 2018, and indicates the fair value hierarchy of the valuation techniques utilized to determine such
fair value.

Assets
Cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Liabilities
Contingent acquisition obligations 1

. . . . . . . . . . . . . . . . . . . . . .

Assets
Cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Liabilities
Contingent acquisition obligations 1

. . . . . . . . . . . . . . . . . . . . . .

December 31, 2019

Level 1

Level 2

Level 3

Total

Balance Sheet Classification

$786.0

$0.0

$

0.0

$786.0 Cash and cash equivalents

$

0.0

$0.0

$114.1

$114.1

Accrued liabilities and
Other non-current liabilities

December 31, 2018

Level 1

Level 2

Level 3

Total

Balance Sheet Classification

$132.1

$0.0

$

0.0

$132.1 Cash and cash equivalents

$

0.0

$0.0

$148.4

$148.4

Accrued liabilities and
Other non-current liabilities

1

Contingent acquisition obligations includes deferred acquisition payments and unconditional obligations to purchase additional noncontrolling equity
shares of consolidated subsidiaries. Fair value measurement of the obligations is based upon actual and projected operating performance targets as
specified in the related agreements. The decrease in this balance of $34.3 from December 31, 2018 to December 31, 2019 is primarily due to payments
and a reclassification from an arrangement during the second quarter of 2019. The amounts payable within the next twelve months are classified in
accrued liabilities; any amounts payable thereafter are classified in other non-current liabilities.

Financial Instruments that are not Measured at Fair Value on a Recurring Basis

The following table presents information about our financial instruments that are not measured at fair value on a
recurring basis as of December 31, 2019, and indicates the fair value hierarchy of the valuation techniques utilized to
determine such fair value.

Total long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

0.0

$3,520.0

$

45.5

$3,565.5

December 31, 2019

Level 1

Level 2

Level 3

Total

Our long-term debt is comprised of senior notes and other notes payable. The fair value of our senior notes, which are
traded over-the-counter, is based on quoted prices in markets that are not active. Therefore, these senior notes are classified
as Level 2 within the fair value hierarchy. Our other notes payable are not actively traded, and their fair value is not solely
derived from readily observable inputs. The fair value of our other notes payable is determined based on a discounted cash
flow model and other proprietary valuation methods, and therefore is classified as Level 3 within the fair value hierarchy. See
Note 4 for further information on our long-term debt.

Non-financial Instruments that are Measured at Fair Value on a Nonrecurring Basis

Certain non-financial assets and liabilities are measured at fair value on a nonrecurring basis, primarily goodwill,
intangible assets, and property and equipment. Accordingly, these assets are not measured and adjusted to fair value on an
ongoing basis but are subject to periodic evaluations for potential impairment.

83

Notes to Consolidated Financial Statements – (continued)
(Amounts in Millions, Except Per Share Amounts)

Note 14: Employee Benefits

Pension and Postretirement Benefit Plans

We have a defined benefit pension plan covering certain U.S. employees (the “Domestic Pension Plan”) that consists of
approximately 3,200 participants and is closed to new participants. We also have numerous funded and unfunded plans
outside the U.S. The Interpublic Limited Pension Plan in the U.K. (the “U.K. Pension Plan”) is a defined benefit plan and is
our most material foreign pension plan in terms of the benefit obligation and plan assets. Some of our domestic and foreign
subsidiaries provide postretirement health benefits and life insurance to eligible employees and, in certain cases, their
dependents. The domestic postretirement benefit plan is our most material postretirement benefit plan in terms of the benefit
obligation. This plan consists of approximately 1,500 participants, is closed to new participants and is unfunded.

Differences between the aggregate income statement and balance sheet amounts listed in the tables below and the totals
reported in our Consolidated Statements of Operations, Consolidated Statements of Comprehensive Income and
Consolidated Balance Sheets relate to non-material foreign pension and postretirement benefit plans.

Pension and Postretirement Benefit Obligation

The change in the benefit obligation, the change in plan assets, the funded status and amounts recognized for the

Domestic Pension Plan, the significant foreign pension plans and the domestic postretirement benefit plan are listed below.

Domestic
Pension Plan

Foreign
Pension Plans

Domestic
Postretirement
Benefit Plan

2019

2018

2019

2018

2019

2018

Benefit Obligation
Projected benefit obligation as of January 1 . . . . . . . . . . . . . . . . . . . . . . . . .
Service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Benefits paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Plan participant contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Actuarial losses (gains) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Settlements and curtailments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign currency effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$115.4
0.0
4.8
(9.2)
0.0
5.9
0.0
0.0
0.0

$125.4
0.0
4.5
(9.5)
0.0
(5.0)
0.0
0.0
0.0

$ 496.0
4.8
12.4
(27.8)
0.0
42.7
(0.7)
13.8
0.0

$ 582.3
5.4
13.1
(27.4)
0.1
(47.6)
(5.8)
(26.4)
2.3

$ 27.7
0.0
1.2
(5.4)
2.0
1.7
0.0
0.0
0.0

$ 31.8
0.0
1.1
(5.9)
1.8
(1.1)
0.0
0.0
0.0

Projected benefit obligation as of December 31 . . . . . . . . . . . . . . . . . . . . . .

$116.9

$115.4

$ 541.2

$ 496.0

$ 27.2

$ 27.7

Fair Value of Plan Assets
Fair value of plan assets as of January 1 . . . . . . . . . . . . . . . . . . . . . . . . . . .
Actual return on plan assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Employer contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Plan participant contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Benefits paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Settlements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign currency effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 89.8
16.1
2.4
0.0
(9.2)
0.0
0.0
0.0

$ 98.8
(8.1)
8.6
0.0
(9.5)
0.0
0.0
0.0

$ 363.9
42.0
18.0
0.0
(27.8)
0.0
13.4
0.0

$ 404.2
(8.0)
19.1
0.1
(27.4)
(4.6)
(21.1)
1.6

$ 0.0
0.0
3.4
2.0
(5.4)
0.0
0.0
0.0

$ 0.0
0.0
4.1
1.8
(5.9)
0.0
0.0
0.0

Fair value of plan assets as of December 31 . . . . . . . . . . . . . . . . . . . . . . . .

$ 99.1

$ 89.8

$ 409.5

$ 363.9

$ 0.0

$ 0.0

Funded status of the plans at December 31 . . . . . . . . . . . . . . . . . . . . . . .

$ (17.8) $ (25.6) $(131.7) $(132.1) $(27.2) $(27.7)

84

Notes to Consolidated Financial Statements – (continued)
(Amounts in Millions, Except Per Share Amounts)

December 31,

Domestic
Pension Plan

Foreign
Pension Plans

Domestic
Postretirement
Benefit Plan

2019

2018

2019

2018

2019

2018

Amounts recognized in Consolidated Balance Sheets
Non-current asset . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-current liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

0.0
0.0
(17.8)

$

0.0
0.0
(25.6)

$ 10.1
(5.8)
(136.0)

$

8.6
(6.2)
(134.5)

$ 0.0
(2.7)
(24.5)

$ 0.0
(2.9)
(24.8)

Net liability recognized . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ (17.8)

$ (25.6) $(131.7) $(132.1) $(27.2)

$(27.7)

Accumulated benefit obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$116.9

$115.4

$ 538.6

$ 493.2

Amounts recognized in Accumulated Other Comprehensive

Loss, net

Net actuarial loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prior service cost (credit) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 54.2
0.0

$ 60.4
0.0

$ 183.2
1.1

$ 165.6
1.2

$ 4.7
(0.1)

$ 3.1
(0.3)

Total amount recognized . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 54.2

$ 60.4

$ 184.3

$ 166.8

$ 4.6

$ 2.8

Actuarial losses of $5.9 for the Domestic Pension Plan are attributed to a decrease in the discount rate from 4.35% as of
December 31, 2018 to 3.35% as of December 31, 2019, offset by changes in the mortality assumption and demographic
experience. Actuarial losses of $42.7 for the foreign pension plans are attributed to a decrease in the weighted-average
discount rate from 2.61% as of December 31, 2018 to 1.84% as of December 31, 2019 offset by changes in demographic
experience.

December 31,

Domestic
Pension Plan

Foreign
Pension Plans

2019

2018

2019

2018

Pension plans with an accumulated benefit obligation and projected benefit obligation in

excess of plan assets

Aggregate projected benefit obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Aggregate accumulated benefit obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Aggregate fair value of plan assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$116.9
116.9
99.1

$115.4
115.4
89.8

$534.6
533.5
392.7

$491.2
489.9
350.5

Net Periodic Cost

The components of net periodic benefit cost and key assumptions are listed below.

Domestic Pension Plan

Foreign Pension Plans

Domestic Postretirement
Benefit Plan

Years ended December 31,

2019

2018

2017

2019

2018

2017

2019

2018

2017

Service cost
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest cost
Expected return on plan assets . . . . . . . . . . . . . . . .
Settlement and curtailment (gains) losses . . . . . . .
Amortization of:

$ 0.0
4.8
(5.9)
0.0

$ 0.0
4.5
(6.6)
0.0

$ 0.0
5.1
(6.2)
0.0

$ 4.8
12.4
(17.4)
0.0

$ 5.4
13.1
(18.8)
(1.0)

$ 4.9
13.5
(17.7)
6.8

$ 0.0
1.2
0.0
0.0

$ 0.0
1.1
0.0
0.0

$ 0.0
1.3
0.0
0.0

Prior service cost (credit) . . . . . . . . . . . . . . . .
Net actuarial losses . . . . . . . . . . . . . . . . . . . . .

0.0
1.9

0.0
1.6

0.0
1.5

0.1
4.8

0.1
5.9

0.1
5.5

(0.2)
0.1

(0.2)
0.1

(0.2)
0.0

Net periodic cost

. . . . . . . . . . . . . . . . . .

$ 0.8

$(0.5)

$ 0.4

$ 4.7

$ 4.7

$ 13.1

$ 1.1

$ 1.0

$ 1.1

85

Notes to Consolidated Financial Statements – (continued)
(Amounts in Millions, Except Per Share Amounts)

Assumptions

Years ended December 31,

2019

2018

2017

2019

2018

2017

2019

2018

2017

Domestic Pension Plan

Foreign Pension Plans

Domestic Postretirement
Benefit Plan

Net periodic cost
Discount rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rate of compensation increase . . . . . . . . . . . . . . . . .
Expected return on plan assets . . . . . . . . . . . . . . . . .
Interest crediting rates . . . . . . . . . . . . . . . . . . . . . . .
Benefit obligation
Discount rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rate of compensation increase . . . . . . . . . . . . . . . . .
Interest crediting rates . . . . . . . . . . . . . . . . . . . . . . .
Health care cost trend rate assumed for next year
Initial rate (weighted-average) . . . . . . . . . . . . . . . . .
Year ultimate rate is reached . . . . . . . . . . . . . . . . . .
Ultimate rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4.35% 3.70% 4.20% 2.61% 2.36% 2.52% 4.30% 3.65% 4.05%
N/A
2.58% 2.37% 2.36% N/A
7.00% 7.00% 7.00% 4.76% 4.70% 4.66% N/A
5.10% 5.10% 5.10% 1.44% 1.31% 1.29% N/A

N/A
N/A
N/A

N/A
N/A
N/A

N/A

N/A

3.35% 4.35% 3.70% 1.84% 2.61% 2.36% 3.25% 4.30% 3.65%
N/A
2.51% 2.58% 2.37% N/A
5.10% 5.10% 5.10% 1.37% 1.44% 1.31% N/A

N/A
N/A

N/A
N/A

N/A

N/A

7.00% 6.25% 6.50%
2028
5.00% 5.00% 5.00%

2024

2024

Discount Rates – At December 31, 2019, 2018 and 2017, we determined our discount rates for our domestic pension
plan, foreign pension plans and domestic postretirement benefit plan based on either a bond selection/settlement approach or
bond yield curve approach. Using the bond selection/settlement approach, we determine the discount rate by selecting a
portfolio of corporate bonds appropriate to provide for the projected benefit payments. Using the bond yield curve approach,
we determine the discount rate by matching the plans’ cash flows to spot rates developed from a yield curve. Both
approaches utilize high-quality AA-rated corporate bonds and the plans’ projected cash flows to develop a discounted value
of the benefit payments, which is then used to develop a single discount rate. In countries where markets for high-quality
long-term AA corporate bonds are not well developed, a portfolio of long-term government bonds is used as a basis to
develop hypothetical corporate bond yields, which serve as a basis to derive the discount rate.

Expected Return on Assets – Our expected rate of return is determined at the beginning of each year and considers asset
class index returns over various market and economic conditions, current and expected market conditions, risk premiums
associated with asset classes and long-term inflation rates. We determine both a short-term and long-term view and then
select a long-term rate of return assumption that matches the duration of our liabilities.

Fair Value of Pension Plan Assets

The following table presents the fair value of our domestic and foreign pension plan assets as of December 31, 2019 and
2018, and indicates the fair value hierarchy of the valuation techniques utilized to determine such fair value. See Note 13 for
a description of the fair value hierarchy.

December 31, 2019

December 31, 2018

Plan assets subject to fair value hierarchy

Level 1 Level 2 Level 3

Total

Level 1 Level 2 Level 3

Total

Registered investment companies . . . . . . . . . . . . . . . . . . . .
Limited partnerships . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fixed income securities . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Insurance contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$18.0
0.0
19.6
0.0
27.8

Total plan assets, subject to leveling . . . . . . . . . . . . . .

$65.4

$0.0
0.0
0.0
5.5
0.0

$5.5

$ 0.0
25.6
0.0
0.0
0.0

$ 18.0
25.6
19.6
5.5
27.8

$13.0
0.0
23.1
0.0
20.0

$25.6

$ 96.5

$56.1

$0.0
0.0
0.0
5.8
0.0

$5.8

$ 0.0
25.6
0.0
0.0
0.0

$ 13.0
25.6
23.1
5.8
20.0

$25.6

$ 87.5

Plan assets measured at net asset value
Other investments measured at net asset value 1 . . . . . . . . .

Total plan assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

412.1

$508.6

366.2

$453.7

1

Certain investments that are measured at fair value using the net asset value per share (or its equivalent) as a practical expedient have not been classified
in the fair value hierarchy but are included to reconcile to the amounts presented in the fair value of plan assets table above.

86

Notes to Consolidated Financial Statements – (continued)
(Amounts in Millions, Except Per Share Amounts)

Registered investment companies, which are publicly traded, are primarily valued using recently reported sales
prices. Limited partnerships are invested primarily in equity and fixed income securities. Fixed income securities include
government and investment-grade corporate bonds. Insurance contracts are valued based on the cash surrender value of the
contract. Other investments primarily include cash and cash equivalents, equity securities and derivatives. Other investments
measured at net asset value include common/collective trusts, hedge funds and other commingled assets that are invested
primarily in equity and fixed income securities. These investments are not publicly traded and are valued based on the net
asset value of shares held by the plan at year end, which reflects the fair value of the underlying investments.

The following table presents additional information about our significant foreign pension plan assets for which we

utilize Level 3 inputs to determine fair value.

Plan assets subject to fair value hierarchy, Level 3

Balance at beginning of period . . . . . . . . . . . . . . . . . . . . .
Actual return on plan assets . . . . . . . . . . . . . . . . . . .

Balance at end of period . . . . . . . . . . . . . . . . . . . . . . . . . .

Years ended December 31,

2019

$25.6
0.0

$25.6

2018

$29.5
(3.9)

$25.6

Asset Allocation

The primary investment goal for our plans’ assets is to maximize total asset returns while ensuring the plans’ assets are
available to fund the plans’ liabilities as they become due. The plans’ assets in aggregate and at the individual portfolio level
are invested so that total portfolio risk exposure and risk-adjusted returns best achieve this objective. The aggregate amount
of our own stock held as investment for our domestic and foreign pension funds is considered negligible relative to the total
fund assets. As of December 31, 2019, the weighted-average target and actual asset allocations relating to our domestic and
foreign pension plans’ assets are listed below.

December 31,

Asset Class

2020 Target Allocation

2019

2018

Alternative investments 1 . . . . . . . . . . . . . .
Equity securities . . . . . . . . . . . . . . . . . . . . .
Fixed income securities . . . . . . . . . . . . . . .
Liability driven investments 2 . . . . . . . . . .
Real estate . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other

25%
25%
20%
14%
9%
7%

25%
25%
19%
14%
9%
8%

26%
22%
21%
16%
6%
9%

Total . . . . . . . . . . . . . . . . . . . . . . . . . .

100%

100% 100%

1

2

Alternative investments have the flexibility to dynamically invest across a broad range of asset classes including bonds, equity, cash, property and
commodities.

Liability driven investment strategies use government bonds as well as derivative instruments to hedge a portion of the impact of interest rates and
inflation movements on the long-term liabilities.

Cash Flows

During 2019, we contributed $2.4 and $18.0 of cash to our domestic and foreign pension plans, respectively. For 2020,

we expect to contribute approximately $3.0 and $18.0 of cash to our domestic and foreign pension plans, respectively.

87

Notes to Consolidated Financial Statements – (continued)
(Amounts in Millions, Except Per Share Amounts)

The estimated future benefit payments expected to be paid are presented below.

Years

Domestic
Pension Plan

Foreign
Pension Plans

Domestic
Postretirement
Benefit Plan

2020 . . . . . . . . . . . . . . . . . . . . . . . .
2021 . . . . . . . . . . . . . . . . . . . . . . . .
2022 . . . . . . . . . . . . . . . . . . . . . . . .
2023 . . . . . . . . . . . . . . . . . . . . . . . .
2024 . . . . . . . . . . . . . . . . . . . . . . . .
2025 – 2029 . . . . . . . . . . . . . . . . . .

$14.6
8.0
8.1
7.6
7.5
34.6

$ 21.7
19.8
21.0
21.9
22.7
116.7

$2.7
2.6
2.4
2.2
2.1
8.8

The estimated future payments for our domestic postretirement benefit plan are net of any estimated U.S. federal
subsidies expected to be received under the Medicare Prescription Drug, Improvement and Modernization Act of 2003,
which total no more than $0.3 in any individual year.

Savings Plans

We sponsor defined contribution plans (the “Savings Plans”) that cover substantially all domestic employees. The
Savings Plans permit participants to make contributions on a pre-tax and/or after-tax basis and allow participants to choose
among various investment alternatives. We match a portion of participant contributions based upon their years of service.
Amounts expensed for the Savings Plans for 2019, 2018 and 2017 were $61.2, $52.6 and $47.2, respectively. Expenses
include a discretionary Company contribution of $8.1, $6.7 and $3.6 offset by participant forfeitures of $5.6, $5.8 and $4.6 in
2019, 2018 and 2017, respectively. In addition, we maintain defined contribution plans in various foreign countries and
contributed $54.5, $51.3 and $47.4 to these plans in 2019, 2018 and 2017, respectively.

Deferred Compensation and Benefit Arrangements

We have deferred compensation and benefit arrangements which (i) permit certain of our key officers and employees to
defer a portion of their salary or incentive compensation or (ii) require us to contribute an amount to the participant’s
account. These arrangements may provide participants with the amounts deferred plus interest upon attaining certain
conditions, such as completing a certain number of years of service, attaining a certain age or upon retirement or
termination. As of December 31, 2019 and 2018, the deferred compensation and deferred benefit liability balance was $197.5
and $196.2, respectively. Amounts expensed for deferred compensation and benefit arrangements in 2019, 2018 and 2017
were $19.4, $10.0 and $18.5, respectively.

We have purchased life insurance policies on participants’ lives to assist in the funding of the related deferred
compensation and deferred benefit liabilities. As of December 31, 2019 and 2018, the cash surrender value of these policies
was $178.2 and $177.3, respectively.

Long-Term Disability Plan

We have a long-term disability plan which provides income replacement benefits to eligible participants who are unable
to perform their job duties or any job related to his or her education, training or experience. As all income replacement
benefits are fully insured, no related obligation is required as of December 31, 2019 and 2018. In addition to income
replacement benefits, plan participants may remain covered for certain health and life insurance benefits up to normal
retirement age, and accordingly, we have recorded an obligation of $5.5 and $5.9 as of December 31, 2019 and 2018,
respectively.

Note 15: Segment Information

As of December 31, 2019, we have two reportable segments: IAN and CMG. IAN is comprised of McCann
Worldgroup, Foote, Cone & Belding (“FCB”), MullenLowe Group, Media, Data and Technology which includes IPG
Mediabrands and Acxiom, our digital specialist agencies and our domestic integrated agencies. CMG is comprised of a
number of our specialist marketing services offerings. We also report results for the “Corporate and other” group.

88

Notes to Consolidated Financial Statements – (continued)
(Amounts in Millions, Except Per Share Amounts)

Within IAN, our agencies provide a comprehensive array of global communications and marketing services, each
offering a range of solutions for our clients. Our digital specialist agencies, including R/GA and Huge, provide digital
capabilities and serve as key digital partners. In addition, our domestic integrated agencies, including Hill Holliday, Deutsch,
Carmichael Lynch and Tierney, provide a full range of advertising, marketing communications services and/or marketing
services and partner with our global operating divisions as needed. Media, Data and Technology offerings provide strategic
media planning and buying services as well as data management and leading marketing technology services. IAN’s operating
divisions share similar economic characteristics and are similar in other areas, specifically related to the nature of their
services, the manner in which the services are provided and the similarity of their respective customers.

CMG, which includes Weber Shandwick, DeVries, Golin, FutureBrand, Jack Morton and Octagon Worldwide, provides
including public relations, meeting and event production, sports and entertainment
clients with diversified services,
marketing, corporate and brand identity, and strategic marketing consulting. CMG shares some similarities with service lines
offered by IAN; however, on an aggregate basis, CMG has a higher proportion of arrangements for which they act as
principal.

Beginning in the first quarter of 2019, Acxiom’s results are presented in IAN and the profitability measure employed by
our chief operating decision maker for allocating resources to operating divisions and assessing operating division
performance is segment EBITA. All segments follow the same accounting policies as those described in Note 1.

Corporate and other is primarily comprised of selling, general and administrative expenses. Selling, general and
administrative expenses includes corporate office expenses as well as shared service center and certain other centrally
managed expenses that are not fully allocated to operating divisions; salaries, long-term incentives, annual bonuses and other
miscellaneous benefits for corporate office employees; professional fees related to internal control compliance, financial
statement audits and legal, information technology and other consulting services that are engaged and managed through the
corporate office; and rental expense for properties occupied by corporate office employees. A portion of centrally managed
expenses is allocated to operating divisions based on a formula that uses the planned revenues of each of the operating units.
Amounts allocated also include specific charges for information technology-related projects, which are allocated based on
utilization.

89

Notes to Consolidated Financial Statements – (continued)
(Amounts in Millions, Except Per Share Amounts)

Summarized financial information concerning our reportable segments is shown in the following tables.

Years ended December 31,

2019

2018

2017

Total Revenue:
IAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
CMG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 8,026.4
2,194.9

$7,556.1
2,158.3

$7,009.6
2,038.0

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$10,221.3

$9,714.4

$9,047.6

Net revenue:
IAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
CMG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 7,348.2
1,276.9

$6,767.5
1,264.1

$6,266.7
1,206.8

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 8,625.1

$8,031.6

$7,473.5

Segment EBITA:
IAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
CMG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Corporate and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 1,110.4
163.4
(101.8)

$1,042.1
180.3
(176.0)

$ 891.7
194.4
(126.6)

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 1,172.0

$1,046.4

$ 959.5

Amortization of acquired intangibles:
IAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
CMG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Corporate and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Depreciation and amortization 1:
IAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
CMG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Corporate and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Capital expenditures:
IAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
CMG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Corporate and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

$

$

$

$

81.6
4.4
0.0

86.0

166.0
19.2
7.3

192.5

161.8
13.3
23.4

$

$

32.3
5.3
0.0

37.6

$ 136.8
19.0
9.5

$

$

16.6
4.5
0.0

21.1

$ 108.9
19.0
8.1

$ 165.3

$ 136.0

$ 143.9
13.0
20.2

$ 112.0
17.7
26.2

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

198.5

$ 177.1

$ 155.9

1

Excludes amortization of acquired intangibles.

Total assets:
IAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
CMG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Corporate and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$15,170.3
1,710.4
871.2

$13,867.9
1,516.7
235.7

Total

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$17,751.9

$15,620.3

December 31,

2019

2018

90

Notes to Consolidated Financial Statements – (continued)
(Amounts in Millions, Except Per Share Amounts)

The following table presents the reconciliation of segment EBITA to Income before income taxes.

IAN EBITA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
CMG EBITA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Corporate and other EBITA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: consolidated amortization of acquired intangibles . . . . . . . . . . . . . . .

Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total (expenses) and other income . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Years ended December 31,

2019

2018

2017

$1,110.4
163.4
(101.8)
86.0

1,086.0
(207.7)

$1,042.1
180.3
(176.0)
37.6

1,008.8
(170.8)

$ 891.7
194.4
(126.6)
21.1

938.4
(97.6)

Income before income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 878.3

$ 838.0

$ 840.8

Long-lived assets, including operating lease right-of-use assets and excluding intangible assets, are presented by major

geographic area in the following table.

Domestic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
International:

United Kingdom . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Continental Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Asia Pacific . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Latin America . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total International

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Long-Lived Assets

December 31,

2019

2018

$2,080.4

$ 892.9

167.6
149.7
240.9
74.8
130.4

763.4

57.9
57.9
121.7
43.6
45.7

326.8

Total Consolidated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$2,843.8

$1,219.7

Property and equipment are allocated based upon physical location. Other assets and investments are allocated based on

the location of the related operations.

Note 16: Commitments and Contingencies

Guarantees

We have guaranteed certain obligations of our subsidiaries relating principally to operating leases and uncommitted
lines of credit of certain subsidiaries. As of December 31, 2019 and 2018, the amount of parent company guarantees on lease
obligations was $739.1 and $824.5, respectively,
the amount of parent company guarantees primarily relating to
uncommitted lines of credit was $293.8 and $349.1, respectively, and the amount of parent company guarantees related to
daylight overdrafts, primarily utilized to manage intra-day overdrafts due to timing of transactions under cash pooling
arrangements without resulting in incremental borrowings, was $207.7 and $207.8, respectively. In the event of non-payment
by the applicable subsidiary of the obligations covered by a guarantee, we would be obligated to pay the amounts covered by
that guarantee. As of December 31, 2019, there were no material assets pledged as security for such parent company
guarantees.

91

Notes to Consolidated Financial Statements – (continued)
(Amounts in Millions, Except Per Share Amounts)

Contingent Acquisition Obligations

The following table details the estimated future contingent acquisition obligations payable in cash as of December 31,

2019.

Deferred acquisition payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Redeemable noncontrolling interests and call options with

2020

2021

2022

2023

2024 Thereafter

Total

$45.7

$30.4

$ 7.4

$ 4.4

$2.4

$0.0

$ 90.3

affiliates 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

26.2

37.9

32.4

6.2

2.5

Total contingent acquisition payments . . . . . . . . . . . . . . . . . . . . .

$71.9

$68.3

$39.8

$10.6

$4.9

0.2

$0.2

105.4

$195.7

1 We have entered into certain acquisitions that contain both redeemable noncontrolling interests and call options with similar terms and conditions. The
estimated amounts listed would be paid in the event of exercise at the earliest exercise date. We have certain redeemable noncontrolling interests that
are exercisable at the discretion of the noncontrolling equity owners as of December 31, 2019. These estimated payments of $21.5 are included within
the total payments expected to be made in 2020, and will continue to be carried forward into 2021 or beyond until exercised or expired. Redeemable
noncontrolling interests are included in the table at current exercise price payable in cash, not at applicable redemption value, in accordance with the
authoritative guidance for classification and measurement of redeemable securities.

The majority of these payments are contingent upon achieving projected operating performance targets and satisfying
other conditions specified in the related agreements and are subject to revision in accordance with the terms of the respective
agreements. See Note 6 for further information relating to the payment structure of our acquisitions.

Legal Matters

We are involved in various legal proceedings, and subject to investigations, inspections, audits, inquiries and similar
actions by governmental authorities arising in the normal course of business. The types of allegations that arise in connection
with such legal proceedings vary in nature, but can include claims related to contract, employment, tax and intellectual
property matters. We evaluate all cases each reporting period and record liabilities for losses from legal proceedings when we
determine that it is probable that the outcome in a legal proceeding will be unfavorable and the amount, or potential range, of
loss can be reasonably estimated. In certain cases, we cannot reasonably estimate the potential loss because, for example, the
litigation is in its early stages. While any outcome related to litigation or such governmental proceedings in which we are
involved cannot be predicted with certainty, management believes that the outcome of these matters, individually and in the
aggregate, will not have a material adverse effect on our financial condition, results of operations or cash flows.

Note 17: Recent Accounting Standards

Accounting pronouncements not listed below were assessed and determined to be not applicable or are expected to have

minimal impact on our Consolidated Financial Statements.

Leases

In February 2016, the Financial Accounting Standards Board (“FASB”) issued amended guidance on lease accounting.
We adopted the standard using the modified retrospective approach with an effective date of January 1, 2019. Prior-year
financial statements were not recast under the new standard. The adoption resulted in the presentation of a right-of-use asset
and lease liability on our Consolidated Balance Sheet and corresponding impacts on our Consolidated Statement of Cash
Flows, but did not have a significant impact on our Consolidated Statements of Operations. See Note 3 for further discussion
on our adoption of the new leases standard.

Current Expected Credit Losses

In June 2016, the FASB issued amended guidance on the accounting for credit losses on certain types of financial
instruments, including trade receivables. The new model uses a forward-looking expected loss method, as opposed to the

92

Notes to Consolidated Financial Statements – (continued)
(Amounts in Millions, Except Per Share Amounts)

incurred loss method in current U.S. GAAP, which will generally result in earlier recognition of allowances for losses. This
amended guidance is effective beginning January 1, 2020. We do not expect the adoption to have a material impact on our
Consolidated Financial Statements.

Fair Value Measurement Disclosures

In August 2018, the FASB issued amended disclosure requirements for fair value measurements by removing,
modifying and adding certain disclosures. This amended guidance is effective beginning January 1, 2020. We do not expect
the adoption to have a material impact on our Consolidated Financial Statements.

Income Taxes

In December 2019, the FASB issued amended guidance to simplify the accounting for income taxes by removing certain
exceptions and amending certain sections of existing guidance under ASC 740. This amended guidance is effective
January 1, 2021 with early adoption permitted as early as January 1, 2020. We are currently assessing the impact the
adoption of the amended guidance will have on our Consolidated Financial Statements.

Note 18: Results by Quarter (Unaudited)

Revenue:

Three Months
Ended
March 31,

Three Months
Ended
June 30,

Three Months
Ended
September 30,

Three Months
Ended
December 31,

2019

2018

2019

2018

2019

2018

2019

2018

Net revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,004.8 $1,774.0 $2,125.9 $1,948.2 $2,061.4 $1,895.7 $2,433.0 $2,413.7
442.3
395.1
Billable expenses . . . . . . . . . . . . . . . . . . . . . . .

443.6

356.4

394.3

376.7

468.8

401.8

Total Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2,361.2

2,169.1

2,520.2

2,391.8

2,438.1

2,297.5

2,901.8

2,856.0

Operating Expenses:

Salaries and related expenses . . . . . . . . . . . . . .
Office and other direct expenses . . . . . . . . . . .
Billable expenses . . . . . . . . . . . . . . . . . . . . . . .

1,421.1
389.2
356.4

1,330.3
323.8
395.1

1,381.2
387.3
394.3

1,292.9
333.3
443.6

1,334.4
367.9
376.7

1,251.4
317.0
401.8

1,432.1
419.7
468.8

1,423.7
381.0
442.3

Cost of services . . . . . . . . . . . . . . . . . . . . . . . .
Selling, general and administrative

expenses 1 . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation and amortization . . . . . . . . . . . . .
Restructuring Charges 2 . . . . . . . . . . . . . . . . . .

2,166.7

2,049.2

2,162.8

2,069.8

2,079.0

1,970.2

2,320.6

2,247.0

41.4
71.1
31.8

35.1
46.0
0.0

18.1
73.0
2.1

28.8
44.0
0.0

9.8
69.0
0.0

21.6
44.0
0.0

24.5
65.4
0.0

81.0
68.9
0.0

Total operating expenses . . . . . . . . . . . . . . . . . . . . .

2,311.0

2,130.3

2,256.0

2,142.6

2,157.8

2,035.8

2,410.5

2,396.9

Operating income . . . . . . . . . . . . . . . . . . . . . . . .
Other (expense) income, net 3 . . . . . . . . . . . . . . . . .
Total (expenses) and other income . . . . . . . . . . . . .
Provision for income taxes 4 . . . . . . . . . . . . . . . . . . .
Net (loss) income . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net (loss) income available to IPG common

50.2
(6.9)
(48.9)
10.5
(9.5)

38.8
(24.4)
(40.3)
12.7
(16.1)

264.2
(3.8)
(47.7)
43.6
172.8

249.2
(16.3)
(37.7)
63.6
147.8

280.3
(7.4)
(47.6)
64.6
168.4

261.7
(15.3)
(37.6)
60.7
163.5

491.3
(24.8)
(63.5)
86.1
342.2

459.1
(13.6)
(55.2)
62.2
342.5

stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $

(8.0) $ (14.1) $ 169.5 $ 145.8 $ 165.6 $ 161.0 $ 328.9 $ 326.2

(Loss) earnings per share available to IPG common

stockholders:

Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (0.02) $ (0.04) $
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (0.02) $ (0.04) $

0.85
0.84
Dividends declared per common share . . . . . . . . . . $ 0.235 $ 0.210 $ 0.235 $ 0.210 $ 0.235 $ 0.210 $ 0.235 $ 0.210

0.44 $
0.43 $

0.42 $
0.41 $

0.85 $
0.84 $

0.38 $
0.37 $

0.43 $
0.42 $

1

The three months ended June 30, September 30 and December 31, 2018 included transaction costs of $1.4, $11.0, and $22.6, respectively, related to the
acquisition of Acxiom. See “Acquisitions” Note 6 for further information.

93

Notes to Consolidated Financial Statements – (continued)
(Amounts in Millions, Except Per Share Amounts)

2

3

4

The three months ended March 31, 2019 and June 30, 2019 included restructuring charges of $31.8 and $2.1, respectively. See “Restructuring Charges”
Note 11 for further information.

The three months ended March 31, June 30, September 30 and December 31, 2019 included pre-tax net losses of $8.6, $3.2, $7.7, and $23.9,
respectively, on sales of businesses. The three months ended March 31, June 30, September 30 and December 31, 2018 included pre-tax net losses of
$24.4, $19.8, $5.8, and $11.9, respectively, on sales of businesses.

The three months ended June 30 and December 31, 2019 included a tax benefit of $13.9 related to the settlement of certain tax positions and $25.3
related to valuation allowance reversals, respectively. The three months ended December 31, 2018 included a tax benefit of $23.4 related to various
discrete tax items.

Note 19: Subsequent Events

We announced on February 12, 2020 that our Board had declared a common stock cash dividend of $0.255 per share,

payable on March 16, 2020 to holders of record as of the close of business on March 2, 2020.

Item 9.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A. Controls and Procedures

Evaluation of disclosure controls and procedures

In connection with the preparation of this Annual Report on Form 10-K for the year ended December 31, 2019, we have
carried out an evaluation under the supervision of, and with the participation of, our management, including the Chief
Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and
procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended
(the “Exchange Act”)). Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded
(1) that the disclosure controls and procedures were effective as of December 31, 2019 to provide reasonable assurance that
information required to be disclosed in reports that we file or submit under the Exchange Act is recorded, processed,
summarized and reported within the time periods specified in SEC rules and forms and (2) that the disclosure controls and
procedures were effective as of December 31, 2019 to provide reasonable assurance that information required to be disclosed
in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including
the principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required
disclosure.

There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the
possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective
disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives.

Management’s report on internal control over financial reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such
term is defined in Exchange Act Rule 13a-15(f). Management (with the participation of our Chief Executive Officer and
Chief Financial Officer) conducted an evaluation of the effectiveness of internal control over financial reporting based on the
framework in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the
Treadway Commission (COSO). Based on this evaluation, management concluded that IPG’s internal control over financial
reporting was effective as of December 31, 2019. PricewaterhouseCoopers LLP, an independent registered public accounting
firm, has audited the effectiveness of IPG’s internal control over financial reporting as of December 31, 2019, as stated in
their report which appears in this Annual Report on Form 10-K.

Changes in internal control over financial reporting

There has been no change in internal control over financial reporting in the quarter ended December 31, 2019 that has

materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

94

Notes to Consolidated Financial Statements – (continued)
(Amounts in Millions, Except Per Share Amounts)

Item 9B. Other Information

None.

95

PART III

Item 10.

Directors, Executive Officers and Corporate Governance

The information required by this Item is incorporated by reference to the “Election of Directors” section, the “Director
Selection Process” section, the “Code of Conduct” section, the “Committees of the Board of Directors” section, the “Audit
Committee” section and the “Section 16(a) Beneficial Ownership Reporting Compliance” section of the Proxy Statement for
the Annual Meeting of Stockholders to be held on May 21, 2020 (the “Proxy Statement”), except for the description of our
Executive Officers, which appears in Part I of this Report on Form 10-K under the heading “Executive Officers of IPG.”

New York Stock Exchange Certification

In 2019, our Chief Executive Officer provided the Annual CEO Certification to the New York Stock Exchange, as

required under Section 303A.12(a) of the New York Stock Exchange Listed Company Manual.

Item 11.

Executive Compensation

The information required by this Item is incorporated by reference to the “Executive Compensation” section, the
the “Compensation Discussion and Analysis” section and the

“Non-Management Director Compensation” section,
“Compensation and Leadership Talent Committee Report” section of the Proxy Statement.

Item 12.

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

The information required by this Item is incorporated by reference to the “Outstanding Shares and Ownership of
Common Stock” section of the Proxy Statement, except for information regarding the shares of common stock to be issued or
which may be issued under our equity compensation plans as of December 31, 2019, which is provided in the following
table.

Plan Category

Equity Compensation Plans Approved by Security
Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Number of Shares of
Common Stock to be Issued
Upon Exercise of Outstanding
Options, Warrants and Rights
(a) 1, 2, 3, 4

Weighted-
Average Exercise
Price of
Outstanding
Stock Options
(b)

Number of Securities Remaining
Available for Future Issuance
Under Equity Compensation Plans
(Excluding Securities Reflected in
Column (a)) (c) 5

11,542,945

$12.26

36,045,173

1

2

3

4

5

Included a total of 1,186,217 outstanding stock options granted under the 2009 Performance Incentive Plan (the “2009 Plan”). These options are the
only instruments taken into account in computing the weighted-average exercise price in column (b) of this table.

Included a total of 5,553,098 shares of Common Stock representing the target number of shares issuable under the 2014 Performance Incentive Plan (the
“2014 Plan”) following the completion of the 2017-2019 performance period, the 2018-2020 performance period, and the 2019-2021 performance
period, respectively.

Included a total of 4,717,130 shares of Common Stock issuable pursuant to restricted share unit awards granted under the 2014 Plan, which are settled
in shares of Common Stock.

Included a total of 86,500 shares of Common Stock issuable pursuant to restricted share units awards granted under the 2009 Non-Management
Directors’ Stock Incentive Plan, which are settled in shares of Common Stock.

Included (i) 27,153,156 shares of Common Stock available for issuance under the shares of Common Stock available for issuance under the 2019
Performance Incentive Plan and (ii) 8,892,017 shares of Common Stock available for issuance under the Employee Stock Purchase Plan (2016).

Item 13.

Certain Relationships and Related Transactions, and Director Independence

The information required by this Item is incorporated by reference to the “Transactions with Related Persons” section

and the “Director Independence” section of the Proxy Statement.

Item 14.

Principal Accountant Fees and Services

The information required by this Item is incorporated by reference to the “Appointment of Registered Public

Accounting Firm” section of the Proxy Statement.

96

Item 15.

Exhibits, Financial Statement Schedules

PART IV

(a) Listed below are all financial statements, financial statement schedules and exhibits filed as part of this Report on

Form 10-K.

1. Financial Statements:

Report of Independent Registered Public Accounting Firm

Consolidated Statements of Operations for the years ended December 31, 2019, 2018 and 2017

Consolidated Statements of Comprehensive Income for the years ended December 31, 2019, 2018 and 2017

Consolidated Balance Sheets as of December 31, 2019 and 2018

Consolidated Statements of Cash Flows for the years ended December 31, 2019, 2018 and 2017

Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2019, 2018 and 2017

Notes to Consolidated Financial Statements

2. Financial Statement Schedules:

All financial statement schedules are omitted because they are either not applicable or the required information is

otherwise provided.

3. Exhibits:

All exhibits, including management contracts and compensatory plans or arrangements, required pursuant to
Item 601 of Regulation S-K to be filed as part of this report or incorporated herein by reference to other documents, are
listed in the Exhibit Index of this Report on Form 10-K. The agreements and other documents filed as exhibits to this
report are not intended to provide factual information or other disclosure other than with respect to the terms of the
agreements or other documents themselves, and you should not rely on them for that purpose. In particular, any
representations and warranties made by us in these agreements or other documents were made solely within the specific
context of the relevant agreement or document and may not describe the actual state of affairs as of the date they were
made or at any other time.

Item 16. Form 10-K Summary

None.

97

Exhibit No.

Description

EXHIBIT INDEX

2(i)

3(i)

3(ii)

4(iii)(A)

4(iii)(B)

4(iii)(C)

4(iii)(D)

4(iii)(E)

4(iii)(F)

4(iii)(G)

4(iii)(H)

4(vi)

10(i)(A)

Membership Interest Purchase Agreement, dated as of July 2, 2018, by and among Acxiom Corporation, the
Registrant, LiveRamp, Inc., and Acxiom Holdings, Inc., is incorporated by reference to Exhibit 2.1 of the
Registrant’s Current Report on Form 8-K, filed with the SEC on July 6, 2018.

Restated Certificate of Incorporation of the Registrant dated as of October 24, 2013, is incorporated by
reference to Exhibit 3(i)(2) to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended
September 30, 2013.

Amended and Restated By-Laws of the Registrant dated as of October 26, 2016, is incorporated by
reference to Exhibit 3(ii) to the Registrant’s Current Report on Form 8-K filed with the SEC on October 27,
2016.

Senior Debt Indenture dated as of March 2, 2012 (the “2012 Indenture”), between the Registrant and U.S.
Bank National Association, as Trustee, is incorporated by reference to Exhibit 4.1 to the Registrant’s
Current Report on Form 8-K filed with the SEC on March 2, 2012.

First Supplemental Indenture, dated as of March 2, 2012, to the 2012 Indenture, with respect to the
4.00% Senior Notes due 2022 is incorporated by reference to Exhibit 4.2 to the Registrant’s Current Report
on Form 8-K filed with the SEC on March 2, 2012.

Third Supplemental Indenture, dated as of November 8, 2012, to the 2012 Indenture, with respect to the
3.75% Senior Notes due 2023 is incorporated by reference to Exhibit 4.3 to the Registrant’s Current Report
on Form 8-K filed with the SEC on November 8, 2012.

Fourth Supplemental Indenture, dated as of April 3, 2014, to the 2012 Indenture, with respect to the 4.20%
Senior Notes due 2024 is incorporated by reference to Exhibit 4.2 to the Registrant’s Current Report on
Form 8-K filed with the SEC on April 3, 2014.

Fifth Supplemental Indenture, dated as of September 21, 2018, to the 2012 Indenture, with respect to the
3.500% Senior Notes due 2020 is incorporated by reference to Exhibit 4.2 to the Registrant’s Current Report
on Form 8-K filed with the SEC on September 21, 2018.

Sixth Supplemental Indenture, dated as of September 21, 2018, to the 2012 Indenture, with respect to the
3.750% Senior Notes due 2021 is incorporated by reference to Exhibit 4.3 to the Registrant’s Current Report
on Form 8-K filed with the SEC on September 21, 2018.

Seventh Supplemental Indenture, dated as of September 21, 2018, to the 2012 Indenture, with respect to the
4.650% Senior Notes due 2028 is incorporated by reference to Exhibit 4.4 to the Registrant’s Current Report
on Form 8-K filed with the SEC on September 21, 2018.

Eighth Supplemental Indenture, dated as of September 21, 2018, to the 2012 Indenture, with respect to the
5.400% Senior Notes due 2048 is incorporated by reference to Exhibit 4.5 to the Registrant’s Current Report
on Form 8-K filed with the SEC on September 21, 2018.

Description of Registered Securities

Amended and Restated Credit Agreement, dated as of November 1, 2019, among The Interpublic Group of
Companies, Inc., the lenders named therein and Citibank, N.A., as administrative agent. is incorporated by
reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on
November 5, 2019.

(i) Michael I. Roth

10(iii)(A)(1)

10(iii)(A)(2)

Employment Agreement, made as of July 13, 2004, by and between the Registrant and Michael I. Roth, is
incorporated by reference to Exhibit 10(iii)(A)(9) to the Registrant’s Quarterly Report on Form 10-Q for the
quarter ended June 30, 2004.*

Supplemental Employment Agreement, dated as of January 19, 2005, between the Registrant and Michael I.
Roth, is incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed with
the SEC on January 21, 2005.*

98

Exhibit No.

Description

10(iii)(A)(3)

10(iii)(A)(4)

10(iii)(A)(5)

10(iii)(A)(6)

10(iii)(A)(7)

10(iii)(A)(8)

10(iii)(A)(9)

Supplemental Employment Agreement, dated as of February 14, 2005, between the Registrant and Michael
I. Roth, is incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed
with the SEC on February 17, 2005.*

Amendment, made as of September 12, 2007, to an Employment Agreement, made as of July 13, 2004,
between the Registrant and Michael I. Roth, is incorporated by reference to Exhibit 10(iii)(A)(7) to the
Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2007. *

Amendment, dated May 1, 2008, to an Employment Agreement, made as of July 13, 2004, between the
Registrant and Michael I. Roth, is incorporated by reference to Exhibit 10(iii)(A)(1) to the Registrant’s
Quarterly Report on Form 10-Q for the quarter ended June 30, 2008.*

The Interpublic Senior Executive Retirement Income Plan Participation Agreement, dated March 31, 2008,
between the Registrant and Michael I. Roth, is incorporated by reference to Exhibit 10(iii)(A)(1) to the
Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2008.*

Executive Change of Control Agreement, effective as of May 27, 2010, by and between the Registrant and
Michael I. Roth, is incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form
8-K filed with the SEC on May 27, 2010.*

Extension of Existing Executive Change of Control Agreement by and between the Registrant and Michael
I. Roth, dated August 29, 2013 is incorporated by reference to Exhibit 10.1 to the Registrant’s Current
Report on Form 8-K filed with the SEC on August 30, 2013.*

Extension of Existing Executive Change of Control Agreement by and between the Registrant and Michael
I. Roth, dated October 26, 2016 is incorporated by reference to Exhibit 10(iii)(a)(1) to the Registrant’s
Quarterly Report on Form 10-Q for the quarter ended September 30, 2016.*

10(iii)(A)(10)

Extension of Existing Executive Change of Control Agreement by and between the Registrant and Michael
I. Roth, dated July 24, 2019 is incorporated by reference to Exhibit 10(iii)(a)(2) to the Registrant’s Quarterly
Report on Form 10-Q for the quarter ended June 30, 2019.*

(ii) Andrew Bonzani

10(iii)(A)(11)

10(iii)(A)(12)

10(iii)(A)(13)

10(iii)(A)(14)

10(iii)(A)(15)

Employment Agreement, effective as of December 22, 2011, by and between the Registrant and Andrew
Bonzani, is incorporated by reference to Exhibit(iii)(A)(8) to the Registrant’s Annual Report on Form 10-K
for the year ended December 31, 2012.*

Executive Change of Control Agreement, effective as of December 22, 2011, by and between the Registrant
and Andrew Bonzani, is incorporated by reference to Exhibit(iii)(A)(9) to the Registrant’s Annual Report on
Form 10-K for the year ended December 31, 2012.*

Extension of Existing Executive Change of Control Agreement by and between the Registrant and Andrew
Bonzani, dated August 29, 2013 is incorporated by reference to Exhibit 10.3 to the Registrant’s Current
Report on Form 8-K filed with the SEC on August 30, 2013.*

Extension of Existing Executive Change of Control Agreement by and between the Registrant and Andrew
Bonzani, dated October 26, 2016 is incorporated by reference to Exhibit 10(iii)(a)(3) to the Registrant’s
Quarterly Report on Form 10-Q for the quarter ended September 30, 2016.*

Extension of Existing Executive Change of Control Agreement by and between the Registrant and Andrew
Bonzani, dated July 24, 2019 is incorporated by reference to Exhibit 10(iii)(a)(3) to the Registrant’s
Quarterly Report on Form 10-Q for the quarter ended June 30, 2019.*

(iii) Christopher Carroll

10(iii)(A)(16)

10(iii)(A)(17)

Employment Agreement, made as of April 1, 2006, by and between the Registrant and Christopher Carroll,
is incorporated by reference to Exhibit 10(iii)(A)(8) to the Registrant’s Annual Report on Form 10-K for the
year ended December 31, 2011.*

Amendment, dated as of October 29, 2007, to an Employment Agreement, made as of April 1, 2006,
between the Registrant and Christopher Carroll, is incorporated by reference to Exhibit 10(iii)(A)(9) to the
Registrant’s Annual Report on Form 10-K for the year ended December 31, 2011.*

99

Exhibit No.

Description

10(iii)(A)(18)

10(iii)(A)(19)

10(iii)(A)(20)

10(iii)(A)(21)

Executive Change of Control Agreement, effective as of May 27, 2010, by and between the Registrant and
Christopher Carroll, is incorporated by reference to Exhibit 10(iii)(A)(10) to the Registrant’s Annual Report
on Form 10-K for the year ended December 31, 2011.*

Extension of Existing Executive Change of Control Agreement by and between the Registrant and
Christopher Carroll, dated August 29, 2013 is incorporated by reference to Exhibit 10.4 to the Registrant’s
Current Report on Form 8-K filed with the SEC on August 30, 2013.*

Extension of Existing Executive Change of Control Agreement by and between the Registrant and
Christopher Carroll, dated October 26, 2016 is incorporated by reference to Exhibit 10(iii)(a)(4) to the
Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2016.*

Extension of Existing Executive Change of Control Agreement by and between the Registrant and
Christopher Carroll, dated July 24, 2019 is incorporated by reference to Exhibit 10(iii)(a)(4) to the
Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2019.*

(iv) Ellen Johnson

10(iii)(A)(22)

10(iii)(A)(23)

10(iii)(A)(24)

10(iii)(A)(25)

10(iii)(A)(26)

10(iii)(A)(27)

10(iii)(A)(28)

Employment Agreement between the Registrant and Ellen Johnson dated as of April 1, 2004, is incorporated
by reference to Exhibit 10(iii)(A)(1) to the Registrant’s Quarterly Report on Form 10-Q for the quarter
ended March 31, 2019.*.

Supplemental Employment Agreement between the Registrant and Ellen Johnson dated September 22,
2004, is incorporated by reference to Exhibit 10(iii)(A)(2) to the Registrant’s Quarterly Report on Form
10-Q for the quarter ended March 31, 2019.*.

Amendment to Employment Agreement between the Registrant and Ellen Johnson dated as of March 4,
2008, is incorporated by reference to Exhibit 10(iii)(A)(3) to the Registrant’s Quarterly Report on Form
10-Q for the quarter ended March 31, 2019.*.

Executive Change of Control Agreement between the Registrant and Ellen Johnson dated as of May 27,
2010, is incorporated by reference to Exhibit 10(iii)(A)(4) to the Registrant’s Quarterly Report on Form
10-Q for the quarter ended March 31, 2019.*.

Extension of Existing Executive Change of Control Agreement between the Registrant and Ellen Johnson
dated August 29, 2013, is incorporated by reference to Exhibit 10(iii)(A)(5) to the Registrant’s Quarterly
Report on Form 10-Q for the quarter ended March 31, 2019.*.

Extension of Existing Executive Change of Control Agreement between the Registrant and Ellen Johnson
dated October 26, 2016, is incorporated by reference to Exhibit 10(iii)(A)(6) to the Registrant’s Quarterly
Report on Form 10-Q for the quarter ended March 31, 2019.*.

Extension of Existing Executive Change of Control Agreement between the Registrant and Ellen Johnson
dated July 24, 2019 is incorporated by reference to Exhibit 10(iii)(a)(6) to the Registrant’s Quarterly Report
on Form 10-Q for the quarter ended June 30, 2019.*.

(iv) Philippe Krakowsky

10(iii)(A)(29)

10(iii)(A)(30)

10(iii)(A)(31)

10(iii)(A)(32)

Executive Special Benefits Agreement, dated as of February 1, 2002, and signed as of August 21, 2002,
between the Registrant and Philippe Krakowsky, is incorporated by reference to Exhibit 10(iii)(A)(v) to the
Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2002.*

Employment Agreement, made as of January 1, 2006 and executed on March 20, 2006, by and between the
Registrant and Philippe Krakowsky, is incorporated by reference to Exhibit 10.1 to the Registrant’s Current
Report on Form 8-K filed with the SEC on March 24, 2006.*

Amendment, made as of September 12, 2007, to an Employment Agreement, made as of January 1, 2006,
between the Registrant and Philippe Krakowsky, is incorporated by reference to Exhibit 10(iii)(A)(13) to the
Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2007.*

Amendment, dated September 12, 2007, to an Executive Special Benefit Agreement, dated February 1,
2002, between the Registrant and Philippe Krakowsky, is incorporated by reference to Exhibit 10(iii)(A)(15)
to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2007.*

100

Exhibit No.

Description

10(iii)(A)(33)

10(iii)(A)(34)

10(iii)(A)(35)

10(iii)(A)(36)

10(iii)(A)(37)

Amendment, dated May 1, 2008, to an Employment Agreement, made as of January 1, 2006, between the
Registrant and Philippe Krakowsky, is incorporated by reference to Exhibit 10(iii)(A)(3) to the Registrant’s
Quarterly Report on Form 10-Q for the quarter ended June 30, 2008.*

Executive Change of Control Agreement, effective as of May 27, 2010, by and between the Registrant and
Philippe Krakowsky, is incorporated by reference to Exhibit 10.3 to the Registrant’s Current Report on
Form 8-K filed with the SEC on May 27, 2010.*

Extension of Existing Executive Change of Control Agreement by and between the Registrant and Philippe
Krakowsky, dated August 29, 2013 is incorporated by reference to Exhibit 10.5 to the Registrant’s Current
Report on Form 8-K filed with the SEC on August 30, 2013.*

Extension of Existing Executive Change of Control Agreement by and between the Registrant and Philippe
Krakowsky, dated October 26, 2016 is incorporated by reference to Exhibit 10(iii)(a)(5) to the Registrant’s
Quarterly Report on Form 10-Q for the quarter ended September 30, 2016.*

Extension of Existing Executive Change of Control Agreement by and between the Registrant and Philippe
Krakowsky, dated July 24, 2019 is incorporated by reference to Exhibit 10(iii)(a)(5) to the Registrant’s
Quarterly Report on Form 10-Q for the quarter ended June 30, 2019.*

(v) Frank Mergenthaler

10(iii)(A)(38)

10(iii)(A)(39)

10(iii)(A)(40)

10(iii)(A)(41)

10(iii)(A)(42)

10(iii)(A)(43)

10(iii)(A)(44)

Employment Agreement, made as of July 13, 2005, between the Registrant and Frank Mergenthaler is
incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the SEC
on July 19, 2005.*

Amendment, made as of September 12, 2007, to an Employment Agreement, made as of July 13, 2005,
between the Registrant and Frank Mergenthaler, is incorporated by reference to Exhibit 10(iii)(A)(9) to the
Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2007.*

Amendment, dated May 1, 2008, to an Employment Agreement, made as of July 13, 2005, between the
Registrant and Frank Mergenthaler, is incorporated by reference to Exhibit 10(iii)(A)(2) to the Registrant’s
Quarterly Report on Form 10-Q for the quarter ended June 30, 2008.*

Executive Change of Control Agreement, effective as of May 27, 2010, by and between the Registrant and
Frank Mergenthaler, is incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form
8-K filed with the SEC on May 27, 2010.*

Extension of Existing Executive Change of Control Agreement by and between the Registrant and Frank
Mergenthaler, dated August 29, 2013 is incorporated by reference to Exhibit 10.2 to the Registrant’s Current
Report on Form 8-K filed with the SEC on August 30, 2013.*

Extension of Existing Executive Change of Control Agreement by and between the Registrant and Frank
Mergenthaler, dated October 26, 2016 is incorporated by reference to Exhibit 10(iii)(a)(2) to the
Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2016.*

Transition Agreement, dated as of June 11, 2019, by and between the Registrant and Frank Mergenthaler, is
incorporated by reference to the Registrant’s Current Report on Form 8-K filed with the SEC on June 12,
2019*

Compensation Plans and Arrangements:

10(iii)(A)(45)

10(iii)(A)(46)

10(iii)(A)(47)

The Interpublic 2009 Performance Incentive Plan (the “2009 PIP”) is incorporated by reference to
Appendix A to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on June 2,
2009.*

2009 PIP Non-Statutory Stock Option Award Agreement (updated 2010) is incorporated by reference to
Exhibit 10(iii)(A)(89) to the Registrant’s Annual Report on Form 10-K for the year ended December 31,
2010.*

2009 PIP Non-Statutory Stock Option Award Agreement (updated 2013) is incorporated by reference to
Exhibit 10(iii)(A)(68) to the Registrant’s Annual Report on Form 10-K for the year ended December 31,
2012.*

101

Exhibit No.

Description

10(iii)(A)(48)

10(iii)(A)(49)

10(iii)(A)(50)

10(iii)(A)(51)

10(iii)(A)(52)

10(iii)(A)(53)

10(iii)(A)(54)

10(iii)(A)(55)

10(iii)(A)(56)

10(iii)(A)(57)

10(iii)(A)(58)

10(iii)(A)(59)

10(iii)(A)(60)

The 2009 Non-Management Directors’ Stock Incentive Plan (the “2009 NMD Plan”) is incorporated by
reference to Exhibit 10(iii)(A)(9) to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended
June 30, 2009.*

Amendment to the 2009 NMD Plan is incorporated by reference to Exhibit 10(iii)(A)(2) to the Registrant’s
Quarterly Report on Form 10-Q for the quarter ended September 30, 2012.*

2009 NMD Plan Restricted Stock Award Agreement (updated 2013) is incorporated by reference to
Exhibit 10(iii)(A)(3) to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30,
2012.*

Supplement to the 2006 PIP and 2009 PIP is incorporated by reference to Exhibit 10(iii)(A)(88) to the
Registrant’s Annual Report on Form 10-K for the year ended December 31, 2009.*

The Interpublic Group 2014 Performance Incentive Plan (the “2014 PIP”) is incorporated by reference to
Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on May 28, 2014.*

2014 PIP Restricted Stock Award Agreement is incorporated by reference to Exhibit 10(iii)(A)(60) to the
Registrant’s Annual Report on Form 10-K for the year ended December 31, 2014.*

2014 PIP Restricted Stock Unit Award Agreement (updated 2018), is incorporated by reference to Exhibit
10(iii)(A)(46) to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2017.*

2014 PIP Restricted Stock Unit Award Agreement (updated 2019) is incorporated by reference to Exhibit
10(iii)(A)(47) to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2018.*

2014 PIP Performance Share Award Agreement is incorporated by reference to Exhibit 10(iii)(A)(61) to the
Registrant’s Annual Report on Form 10-K for the year ended December 31, 2014.*

2014 PIP Performance Share Award Agreement (updated 2018) is incorporated by reference to
Exhibit 10(iii)(A)(48) to the Registrant’s Annual Report on Form 10-K for the year ended December 31,
2017.*

2014 PIP Performance Share Award Agreement (updated 2019) is incorporated by reference to Exhibit
10(iii)(A)(50) to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2018.*

2014 PIP Performance Cash Award Agreement is incorporated by reference to Exhibit 10(iii)(A)(62) to the
Registrant’s Annual Report on Form 10-K for the year ended December 31, 2014.*

2014 PIP Performance Cash Award Agreement (updated 2018) is incorporated by reference to
Exhibit 10(iii)(A)(50) to the Registrant’s Annual Report on Form 10-K for the year ended December 31,
2017.*

10(iii)(A)(61)

2014 PIP Performance Cash Award Agreement (updated 2019) is incorporated by reference to Exhibit
10(iii)(A)(53) to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2018.*

10(iii)(A)(62)

The Interpublic Group 2019 Performance Incentive Plan (the “2019 PIP”). *

10(iii)(A)(63)

2019 PIP Restricted Stock Award Agreement.*

10(iii)(A)(64)

2019 PIP Restricted Stock Unit Award Agreement.*

10(iii)(A)(65)

2019 PIP Restricted Stock Unit Award Agreement (version2).*

10(iii)(A)(66)

2019 PIP Performance Share Award Agreement.*

10(iii)(A)(67)

2019 PIP Performance Share Award Agreement (version 2).*

10(iii)(A)(68)

2019 PIP Performance Cash Award Agreement.*

10(iii)(A)(69)

2019 PIP Performance Cash Award Agreement (version 2).*

10(iii)(A)(70)

The Restricted Cash Plan, as Amended and Restated as of May 18, 2009 is incorporated by reference to
Exhibit 10(iii)(A)(13) to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30,
2009. *

10(iii)(A)(71)

Restricted Cash Award Agreement.*

102

Exhibit No.

Description

10(iii)(A)(72)

10(iii)(A)(73)

10(iii)(A)(74)

10(iii)(A)(75)

10(iii)(A)(76)

10(iii)(A)(77)

10(iii)(A)(78)

10(iii)(A)(79)

10(iii)(A)(80)

10(iii)(A)(81)

10(iii)(A)(82)

10(iii)(A)(83)

10(iii)(A)(84)

21

23

24

31.1

31.2

32

The Interpublic Senior Executive Incentive Plan is incorporated by reference to Exhibit 10(iii)(a)(7) to the
Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2019.*

The Employee Stock Purchase Plan (2016) of the Registrant is incorporated by reference to Exhibit 4.4 to
the Registrant’s Registration Statement on Form S-8 filed with the SEC on December 21, 2015.*

The Interpublic Group Executive Performance (162(m) Plan) is incorporated by reference to Exhibit 10.2 to
the Registrant’s Current Report on Form 8-K filed with the SEC on May 28, 2014.*

The Interpublic Executive Severance Plan, amended and restated, effective August 16, 2017, is incorporated
by reference to Exhibit 10(iii)(A)(1) to the Registrant’s Quarterly Report on Form 10-Q for the quarter
ended September 30, 2017.*

The Interpublic Senior Executive Retirement Income Plan, Amended and Restated (the “Restated SERIP”),
effective January 1, 2007, is incorporated by reference to Exhibit 10(iii)(A)(1) to the Registrant’s Quarterly
Report on Form 10-Q for the quarter ended September 30, 2007.*

Restated SERIP - Form of Restated Participation Agreement is incorporated by reference to
Exhibit 10(iii)(A)(2) to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30,
2007.*

Restated SERIP - Form of Participation Agreement (Form For New Participants) is incorporated by
reference to Exhibit 10(iii)(A)(3) to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended
September 30, 2007.*

The Interpublic Senior Executive Retirement Income Plan, amended and restated, effective August 1, 2014,
and form of Participation Agreement for New Participants is incorporated by reference to Exhibit
10(iii)(A)(2) to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2014.*

The Interpublic Capital Accumulation Plan, Amended and Restated (the “Restated CAP”), effective
January 1, 2007, is incorporated by reference to Exhibit 10(iii)(A)(4) to the Registrant’s Quarterly Report on
Form 10-Q for the quarter ended September 30, 2007.*

Restated CAP - Form of Restated Participation Agreement is incorporated by reference to
Exhibit 10(iii)(A)(5) to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30,
2007.*

Restated CAP - Form of Participation Agreement (Form For New Participants), is incorporated by reference
to Exhibit 10(iii)(A)(6) to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended
September 30, 2007.*

The Interpublic Capital Accumulation Plan, amended and restated, effective August 1, 2014, and form of
Participation Agreement for New Participants is incorporated by reference to Exhibit 10(iii)(A)(1) to the
Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2014.*

Description of Changes to the Compensation for Non-Management Directors, is incorporated by reference
to Exhibit 10(iii)(A)(69) to the Registrant’s Annual Report on Form 10-K for the fiscal year ended
December 31, 2015.*

Subsidiaries of the Registrant.

Consent of PricewaterhouseCoopers LLP.

Power of Attorney to sign Form 10-K and resolution of Board of Directors re Power of Attorney.

Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act
of 1934, as amended.

Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of
1934, as amended.

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.

103

Exhibit No.

Description

101

104

Interactive Data File, for the period ended December 31, 2019. The instance document does not appear in
the interactive data file because its XBRL tags are embedded within the inline XBRL document.

Cover Page Interactive Data File. The cover page XBRL tags are embedded within the inline XBRL
document and are included in Exhibit 101.

* Management contracts and compensation plans and arrangements.

104

Pursuant to the requirements of Section 13 of the Securities Exchange Act of 1934, the Registrant has duly caused this

report to be signed on its behalf by the undersigned, thereunto duly authorized.

SIGNATURES

THE INTERPUBLIC GROUP OF COMPANIES, INC.

(Registrant)

By /s/ Michael I. Roth

Michael I. Roth
Chairman of the Board and Chief Executive Officer

Date: February 21, 2020

Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the

following persons on behalf of the Registrant and in the capacities and on the dates indicated.

Name

/s/ Michael I. Roth

Michael I. Roth

/s/ Ellen Johnson

Ellen Johnson

/s/ Christopher F. Carroll

Christopher F. Carroll

/s/ Jocelyn Carter-Miller

Jocelyn Carter-Miller

/s/ H. John Greeniaus

H. John Greeniaus

/s/ Mary J. Steele Guilfoile

Mary J. Steele Guilfoile

/s/ Dawn Hudson

Dawn Hudson

/s/ William T. Kerr

William T. Kerr

/s/ Henry S. Miller

Henry S. Miller

/s/ Jonathan F. Miller

Jonathan F. Miller

Title

Date

Chairman of the Board and
Chief Executive Officer
(Principal Executive Officer)

Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)

Senior Vice President,
Controller and Chief Accounting Officer
(Principal Accounting Officer)

Director

Director

Director

Director

Director

Director

Director

105

February 21, 2020

February 21, 2020

February 21, 2020

February 21, 2020

February 21, 2020

February 21, 2020

February 21, 2020

February 21, 2020

February 21, 2020

February 21, 2020

Name

Title

Date

/s/ Patrick Q. Moore

Patrick Q. Moore

/s/ Linda S. Sanford

Linda Sanford

/s/ David M. Thomas

David M. Thomas

/s/ E. Lee Wyatt Jr .

E. Lee Wyatt Jr.

Director

Director

Director

Director

February 21, 2020

February 21, 2020

February 21, 2020

February 21, 2020

106

EXHIBIT 31.1

I, Michael I. Roth, certify that:

CERTIFICATION

1.

I have reviewed this Annual Report on Form 10-K of The Interpublic Group of Companies, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present
in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the
periods presented in this report;

4.

The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as
defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in
which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to
be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered
by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during
the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that
has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial
reporting; and

5.

The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control
over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or
persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial
reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and
report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in

the registrant’s internal control over financial reporting.

Date: February 21, 2020

/s/ Michael I. Roth

Michael I. Roth
Chairman and Chief Executive Officer

EXHIBIT 31.2

I, Ellen Johnson, certify that:

CERTIFICATION

1.

I have reviewed this Annual Report on Form 10-K of The Interpublic Group of Companies, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present
in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the
periods presented in this report;

4.

The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as
defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in
which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to
be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered
by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during
the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that
has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial
reporting; and

5.

The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control
over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or
persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial
reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and
report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in

the registrant’s internal control over financial reporting.

Date: February 21, 2020

/s/ Ellen Johnson
Ellen Johnson
Executive Vice President and Chief Financial Officer

EXHIBIT 32

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 of Title
18, United States Code), each of the undersigned officers of The Interpublic Group of Companies, Inc. (the “Company”),
does hereby certify, to such officer’s knowledge, that:

The Annual Report on Form 10-K for the year ended December 31, 2019 of the Company fully complies with the
requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and the information contained in the Annual
Report on Form 10-K fairly presents, in all material respects, the financial condition and results of operations of the
Company.

Dated: February 21, 2020

Dated: February 21, 2020

/s/ Michael I. Roth
Michael I. Roth
Chairman and Chief Executive Officer

/s/ Ellen Johnson
Ellen Johnson
Executive Vice President and Chief Financial Officer

[THIS PAGE INTENTIONALLY LEFT BLANK]

COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN AMONG THE INTERPUBLIC GROUP OF
COMPANIES, THE S&P 500 AND PEER GROUP INDEX

The graph below compares the cumulative total return on our common stock during the last five fiscal years with the
Standard & Poor’s 500 Composite Index and a peer group of publicly held corporate communications and marketing holding
companies. The peer group consists of Omnicom Group Inc., Publicis Groupe S.A. and WPP plc. The graph shows the value
at the end of each year of each $100 invested in our common stock, the S&P 500 Index and the peer group. The graph
assumes the reinvestment of dividends.

S
R
A
L
L
O
D

200

180

160

140

120

100

80

60

40

20

0

Interpublic
S&P 500 Index
 Peer Group

2014
100.00
100.00
100.00

2015
114.65
101.38
104.85

2016
118.31
113.51
110.50

2017
105.26
138.29
99.21

2018
111.66
132.23
81.42

2019
130.57
173.86
82.54

ASSUMES $100 INVESTED ON DEC. 31, 2014
ASSUMES DIVIDEND REINVESTED
FISCAL YEAR ENDING DEC. 31, 2019

THE INTERPUBLIC GROUP OF COMPANIES, INC. AND SUBSIDIARIES
RECONCILIATION OF ADJUSTED RESULTS
(Amounts in Millions except Per Share Data)
(UNAUDITED)

Twelve Months Ended December 31, 2019

As
Reported

Amortization
of Acquired
Intangibles

Q1 2019
Restructuring
Charges

Net Losses
on Sales of
Businesses 1

Net Impact
of Various
Discrete Tax
Items 2

Net Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Billable Expenses . . . . . . . . . . . . . . . . . . . . . . . .

$ 8,625.1
1,596.2

Total Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . .

10,221.3

Cost of Services . . . . . . . . . . . . . . . . . . . . . . . . .
Selling, General and Administrative

Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation and Amortization . . . . . . . . . . . . .
Restructuring Charges . . . . . . . . . . . . . . . . . . . .

Total Operating Expense . . . . . . . . . . . . . . . . . . . . . .

Operating Income . . . . . . . . . . . . . . . . . . . . . . . .

Margin on Net Revenue % . . . . . . . . . . . . . . . . . . . . .
Interest Expense, Net . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . .
Other Expense, Net

Total (Expenses) and Other Income . . . . . . . . .
Income Before Income Taxes . . . . . . . . . . . . . . . . . .
Provision for Income Taxes . . . . . . . . . . . . . . . .
Effective Tax Rate . . . . . . . . . . . . . . . . . . . . . . .
Equity in Net Income of Unconsolidated

8,729.1

93.8
278.5
33.9

9,135.3

1,086.0

12.6%
(164.8)
(42.9)

(207.7)
878.3
204.8
23.3%

Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . .

0.4

Net Income Attributable to Noncontrolling

Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(17.9)

Net Income Available to IPG Common

$ 86.0

86.0

(86.0)

$ 31.8

31.8

(31.8)

(86.0)
16.9

(31.8)
7.6

$(46.3)

(46.3)
(46.3)
0.4

$39.2

Adjusted
Results

$ 8,625.1
1,596.2

10,221.3

8,729.1

93.8
192.5
2.1

9,017.5

1,203.8

14.0%
(164.8)
3.4

(161.4)
1,042.4
268.9
25.8%

0.4

(17.9)

Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

656.0

$(69.1)

$(24.2)

$(45.9)

$39.2

$

756.0

Weighted-Average Number of Common

Shares Outstanding—Basic . . . . . . . . . . . . . .

386.1

Dilutive effect of stock options and restricted

shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5.1

Weighted-Average Number of Common

Shares Outstanding—Diluted . . . . . . . . . . . . .

391.2

Earnings Per Share Available to IPG Common

Stockholders 3:

386.1

5.1

391.2

Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$
$

1.70
1.68

$(0.18)
$(0.18)

$(0.06)
$(0.06)

$(0.12)
$(0.12)

$0.10
$0.10

$
$

1.96
1.93

1

2

Includes losses on complete dispositions of businesses and the classification of certain assets as held for sale.
Includes $13.9 million related to the settlement of certain tax positions in the second quarter of 2019 and $25.3 million
related to tax valuation allowance reversals in the fourth quarter of 2019.

3 Earnings per share may not add due to rounding.

Note: Management believes the resulting comparisons provide useful supplemental data that, while not a substitute for
GAAP measures, allow for greater transparency in the review of our financial and operational performance.

2

THE INTERPUBLIC GROUP OF COMPANIES, INC. AND SUBSIDIARIES
RECONCILIATION OF ADJUSTED RESULTS
(Amounts in Millions)
(UNAUDITED)

Three Months Ended
December 31,

Twelve Months Ended
December 31,

2019

2018

2019

2018

Net Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$2,433.0

$2,413.7

$8,625.1

$8,031.6

Non-GAAP Reconciliation:
Net Income Available to IPG Common Stockholders . . . . . . . . . . . . . . . . . . . . .

$ 328.9

$ 326.2

$ 656.0

$ 618.9

Add Back:

Provision for Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

86.1

62.2

204.8

199.2

Subtract:

Total (Expenses) and Other Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity in Net Income (Loss) of Unconsolidated Affiliates . . . . . . . . . . . . . . . . . . .
Net Income Attributable to Noncontrolling Interests . . . . . . . . . . . . . . . . . . . . . . . .

(63.5)
0.5
(13.3)

(55.2)
0.8
(16.3)

(207.7)
0.4
(17.9)

(170.8)
(1.1)
(18.8)

Operating Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

491.3

459.1

1,086.0

1,008.8

Add Back:

Amortization of Acquired Intangibles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

EBITA

EBITA Margin on Net Revenue % . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Q1 2019 Restructuring Charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acxiom Transaction Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

21.4

512.7

21.1%
—
—

22.0

86.0

37.6

481.1

1,172.0

1,046.4

19.9%
—
22.6

13.6%
31.8
—

13.0%
—
35.0

Adjusted EBITA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 512.7

$ 503.7

$1,203.8

$1,081.4

Adjusted EBITA Margin on Net Revenue % . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

21.1%

20.9%

14.0%

13.5%

Note: Management believes the resulting comparisons provide useful supplemental data that, while not a substitute for
GAAP measures, allow for greater transparency in the review of our financial and operational performance.

3

THE INTERPUBLIC GROUP OF COMPANIES, INC. AND SUBSIDIARIES
RECONCILIATION OF ADJUSTED RESULTS
(Amounts in Millions except Per Share Data)
(UNAUDITED)

Twelve Months Ended December 31, 2018

As
Reported

Acxiom
Transaction
Costs

Amortization
of Acquired
Intangibles

Net Losses
on Sales of
Businesses 1

Net Impact
of Various
Discrete Tax
Items 2

Net Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Billable Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . .

$8,031.6
1,682.8

Total Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

9,714.4

Cost of Services . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Selling, General and Administrative Expenses . . . .
Depreciation and Amortization . . . . . . . . . . . . . . . .
Restructuring Charges . . . . . . . . . . . . . . . . . . . . . . .

8,336.2
166.5
202.9
0.0

$ 35.0

Total Operating Expense . . . . . . . . . . . . . . . . . . . . . . . . .

8,705.6

35.0

Operating Income . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,008.8

$(35.0)

Margin on Net Revenue % . . . . . . . . . . . . . . . . . . . . . . . .
Interest Expense, Net . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . .
Other Expense, Net

Total (Expenses) and Other Income . . . . . . . . . . . . .
Income Before Income Taxes . . . . . . . . . . . . . . . . . . . . .
Provision for Income Taxes . . . . . . . . . . . . . . . . . . .
Effective Tax Rate . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity in Net Loss of Unconsolidated Affiliates . . .
Net Income Attributable to Noncontrolling

12.6%
(101.2)
(69.6)

(170.8)
838.0
199.2
23.8%
(1.1)

(3.3)
(10.3)

(13.6)
(48.6)
12.1

Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(18.8)

Net Income Available to IPG Common

$ 37.6

37.6

(37.6)

(37.6)
4.8

$(61.9)

(61.9)
(61.9)
2.2

$23.4

Adjusted
Results

$8,031.6
1,682.8

9,714.4

8,336.2
131.5
165.3
0.0

8,633.0

1,081.4

13.5%
(97.9)
2.6

(95.3)
986.1
241.7
24.5%
(1.1)

(18.8)

Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 618.9

$(36.5)

$(32.8)

$(59.7)

$23.4

$ 724.5

Weighted-Average Number of Common Shares

Outstanding—Basic . . . . . . . . . . . . . . . . . . . . . . . .
Dilutive effect of stock options and restricted shares . . .

383.3
5.7

Weighted-Average Number of Common Shares

Outstanding—Diluted . . . . . . . . . . . . . . . . . . . . . .

389.0

Earnings Per Share Available to IPG Common

Stockholders 3:

383.3
5.7

389.0

Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$
$

1.61
1.59

$(0.10)
$(0.09)

$(0.09)
$(0.08)

$(0.16)
$(0.15)

$0.06
$0.06

$
$

1.89
1.86

1

2

Includes losses on complete dispositions of businesses and the classification of certain assets as held for sale.
Includes a tax benefit of $16.9 from net adjustments to the valuation allowance and a benefit of $6.5 in the fourth quarter
related to the estimated costs associated with our change in assertion (APB 23) that we will no longer permanently reinvest
undistributed earnings attributable to certain foreign subsidiaries.

3 Earnings per share may not add due to rounding.

Note: Management believes the resulting comparisons provide useful supplemental data that, while not a substitute for
GAAP measures, allow for greater transparency in the review of our financial and operational performance.

4