UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

	x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
		For the quarterly period ended June 30, 2016

or

	o	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		13-1024020
(State or other jurisdiction of incorporation or organization)		(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)

(Former name, former address and former fiscal year, if changed since last report)

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 ý    No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files).

Yes ý    No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer		ý		Accelerated filer		¨
Non-accelerated filer		¨		Smaller reporting company		¨
(Do not check if a smaller reporting company)

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

Yes ¨    No ý

The number of shares of the registrant’s common stock outstanding as of July 15, 2016 was 400,707,649.

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INDEX
		Page
PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)
	Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2016 and 2015	2
	Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 30, 2016 and 2015	3
	Consolidated Balance Sheets as of June 30, 2016 and December 31, 2015	4
	Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2016 and 2015	5
	Consolidated Statements of Stockholders’ Equity for the Six Months Ended June 30, 2016 and 2015	6
	Notes to Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	32
Item 4.	Controls and Procedures	32
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	33
Item 1A.	Risk Factors	33
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	33
Item 6.	Exhibits	33
SIGNATURES		34
INDEX TO EXHIBITS		35

INFORMATION REGARDING FORWARD-LOOKING DISCLOSURE

This quarterly report on Form 10-Q 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 our most recent annual report on Form 10-K. Forward-looking statements speak only as of the date they are made, and we undertake no obligation to update publicly any of them in light of new information or future events.

Forward-looking statements involve inherent risks and uncertainties. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. Such factors include, but are not limited to, the following:

•	potential effects of a challenging economy, for example, on the demand for our advertising and marketing services, on our clients’ financial condition and on our business or financial condition;

•	our ability to attract new clients and retain existing clients;

•	our ability to retain and attract key employees;

•	risks associated with assumptions we make in connection with our critical accounting estimates, including changes in assumptions associated with any effects of a weakened economy;

•	potential adverse effects if we are required to recognize impairment charges or other adverse accounting-related developments;

•	risks associated with the effects of global, national and regional economic and political conditions, including counterparty risks and fluctuations in economic growth rates, interest rates and currency exchange rates; and

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

Investors should carefully consider these factors and the additional risk factors outlined in more detail under Item 1A, Risk Factors, in our most recent annual report on Form 10-K.

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PART I – FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)

THE INTERPUBLIC GROUP OF COMPANIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Amounts in Millions, Except Per Share Amounts)

(Unaudited)

	Three months ended June 30,								Six months ended June 30,
	2016				2015				2016				2015
REVENUE	$	1,917.9			$	1,876.1			$	3,659.9			$	3,552.1
OPERATING EXPENSES:
Salaries and related expenses	1,229.0				1,205.2				2,499.9				2,420.4
Office and general expenses	464.1				455.1				914.3				908.1
Total operating expenses	1,693.1				1,660.3				3,414.2				3,328.5
OPERATING INCOME	224.8				215.8				245.7				223.6
EXPENSES AND OTHER INCOME:
Interest expense	(24.5		)		(20.3		)		(47.1		)		(41.2		)
Interest income	5.6				5.0				11.4				12.2
Other (expense) income, net	(0.1		)		0.5				(17.2		)		0.8
Total (expenses) and other income	(19.0		)		(14.8		)		(52.9		)		(28.2		)
Income before income taxes	205.8				201.0				192.8				195.4
Provision for income taxes	43.7				77.7				28.1				76.3
Income of consolidated companies	162.1				123.3				164.7				119.1
Equity in net (loss) income of unconsolidated affiliates	(1.9		)		0.5				(1.8		)		0.5
NET INCOME	160.2				123.8				162.9				119.6
Net income attributable to noncontrolling interests	(3.3		)		(2.6		)		(0.6		)		(0.2		)
NET INCOME AVAILABLE TO IPG COMMON STOCKHOLDERS	$	156.9			$	121.2			$	162.3			$	119.4
Earnings per share available to IPG common stockholders:
Basic	$	0.39			$	0.30			$	0.41			$	0.29
Diluted	$	0.38			$	0.29			$	0.40			$	0.29
Weighted-average number of common shares outstanding:
Basic	400.1				410.5				400.4				410.8
Diluted	409.8				417.6				409.4				417.6
Dividends declared per common share	$	0.15			$	0.12			$	0.30			$	0.24

 

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

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THE INTERPUBLIC GROUP OF COMPANIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Amounts in Millions)

(Unaudited)

	Three months ended June 30,								Six months ended June 30,
	2016				2015				2016				2015
NET INCOME	$	160.2			$	123.8			$	162.9			$	119.6
OTHER COMPREHENSIVE (LOSS) INCOME
Foreign currency translation:
Foreign currency translation adjustments	(17.8		)		26.1				39.1				(109.0		)
Less: reclassification adjustments recognized in net income	7.5				(0.7		)		6.5				(1.2		)
	(10.3		)		25.4				45.6				(110.2		)
Available-for-sale securities:
Changes in fair value of available-for-sale securities	0.1				0.0				0.2				0.2
Less: recognition of previously unrealized gains included in net income	(1.2		)		0.0				(1.2		)		0.0
Income tax effect	0.0				0.2				0.0				(0.1		)
	(1.1		)		0.2				(1.0		)		0.1
Derivative instruments:
Recognition of previously unrealized losses included in net income	0.5				0.5				1.0				1.0
Income tax effect	(0.2		)		(0.2		)		(0.4		)		(0.4		)
	0.3				0.3				0.6				0.6
Defined benefit pension and other postretirement plans:
Net actuarial gains for the period	0.6				1.3				0.8				5.7
Less: amortization of unrecognized losses, transition obligation and prior service cost included in net income	(0.2		)		3.2				2.5				6.2
Less: settlement and curtailment losses included in net income	0.2				0.2				0.2				0.2
Other	(0.1		)		(0.3		)		0.0				(0.2		)
Income tax effect	0.2				(1.3		)		(0.5		)		(2.2		)
	0.7				3.1				3.0				9.7
Other comprehensive (loss) income, net of tax	(10.4		)		29.0				48.2				(99.8		)
TOTAL COMPREHENSIVE INCOME	149.8				152.8				211.1				19.8
Less: comprehensive income (loss) attributable to noncontrolling interests	2.7				2.7				0.5				(0.5		)
COMPREHENSIVE INCOME ATTRIBUTABLE TO IPG	$	147.1			$	150.1			$	210.6			$	20.3

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

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THE INTERPUBLIC GROUP OF COMPANIES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Amounts in Millions)

(Unaudited)

	June 30, 2016				December 31, 2015
ASSETS:
Cash and cash equivalents	$	672.6			$	1,502.9
Marketable securities	2.8				6.8
Accounts receivable, net of allowance of $53.6 and $54.2, respectively	3,945.0				4,361.0
Expenditures billable to clients	1,710.4				1,594.4
Other current assets	294.6				228.0
Total current assets	6,625.4				7,693.1
Property and equipment, net of accumulated depreciation of $966.2 and $961.9, respectively	569.7				567.2
Deferred income taxes	274.2				228.4
Goodwill	3,662.2				3,608.5
Other non-current assets	502.4				487.9
TOTAL ASSETS	$	11,633.9			$	12,585.1
LIABILITIES:
Accounts payable	$	5,857.7			$	6,672.0
Accrued liabilities	588.4				760.3
Short-term borrowings	211.7				150.1
Current portion of long-term debt	24.5				1.9
Total current liabilities	6,682.3				7,584.3
Long-term debt	1,583.6				1,610.3
Deferred compensation	408.6				464.2
Other non-current liabilities	685.0				672.6
TOTAL LIABILITIES	9,359.5				10,331.4
Redeemable noncontrolling interests (see Note 4)	246.3				251.9
STOCKHOLDERS’ EQUITY:
Common stock	40.7				40.4
Additional paid-in capital	1,460.4				1,404.1
Retained earnings	1,475.3				1,437.6
Accumulated other comprehensive loss, net of tax	(797.3		)		(845.6		)
	2,179.1				2,036.5
Less: Treasury stock	(183.5		)		(71.0		)
Total IPG stockholders’ equity	1,995.6				1,965.5
Noncontrolling interests	32.5				36.3
TOTAL STOCKHOLDERS’ EQUITY	2,028.1				2,001.8
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	11,633.9			$	12,585.1

 

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

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THE INTERPUBLIC GROUP OF COMPANIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in Millions)

(Unaudited)

	Six months ended June 30,
	2016				2015
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	162.9			$	119.6
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization of fixed assets and intangible assets	77.8				78.2
Provision for uncollectible receivables	7.6				6.7
Amortization of restricted stock and other non-cash compensation	39.9				33.2
Net amortization of bond discounts and deferred financing costs	2.8				2.8
Deferred income tax (benefit) provision	(4.2		)		0.2
Losses on sales of businesses	20.0				0.3
Other	28.0				11.5
Changes in assets and liabilities, net of acquisitions and dispositions, providing (using) cash:
Accounts receivable	428.2				284.1
Expenditures billable to clients	(110.8		)		(53.2		)
Other current assets	(33.2		)		(17.7		)
Accounts payable	(850.5		)		(758.8		)
Accrued liabilities	(251.8		)		(198.3		)
Other non-current assets and liabilities	(71.3		)		(28.7		)
Net cash used in operating activities	(554.6		)		(520.1		)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures	(63.0		)		(49.8		)
Acquisitions, net of cash acquired	(34.3		)		0.0
Other investing activities	(5.7		)		(0.1		)
Net cash used in investing activities	(103.0		)		(49.9		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Common stock dividends	(120.1		)		(98.5		)
Repurchase of common stock	(112.5		)		(102.0		)
Acquisition-related payments	(29.2		)		(27.8		)
Tax payments for employee shares withheld	(22.5		)		(16.5		)
Distributions to noncontrolling interests	(7.2		)		(8.2		)
Net increase in short term bank borrowings	56.6				54.9
Exercise of stock options	9.8				10.6
Excess tax benefit on share-based compensation	0.0				9.0
Other financing activities	(0.2		)		1.5
Net cash used in financing activities	(225.3		)		(177.0		)
Effect of foreign exchange rate changes on cash and cash equivalents	52.6				(64.7		)
Net decrease in cash and cash equivalents	(830.3		)		(811.7		)
Cash and cash equivalents at beginning of period	1,502.9				1,660.6
Cash and cash equivalents at end of period	$	672.6			$	848.9

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

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THE INTERPUBLIC GROUP OF COMPANIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Amounts in Millions)

(Unaudited)

 

	Common Stock							Additional Paid-In Capital				Retained Earnings				Accumulated  Other Comprehensive Loss, Net of Tax				Treasury Stock				Total IPG Stockholders’ Equity				Noncontrolling Interests				Total Stockholders’ Equity
	Shares			Amount
Balance at December 31, 2015	406.3			$	40.4			$	1,404.1			$	1,437.6			$	(845.6	)		$	(71.0	)		$	1,965.5			$	36.3			$	2,001.8
Net income												162.3												162.3				0.6				162.9
Other comprehensive income (loss)																48.3								48.3				(0.1		)		48.2
Reclassifications related to redeemable     noncontrolling interests																												2.5				2.5
Distributions to noncontrolling interests																												(7.2		)		(7.2		)
Change in redemption value of redeemable     noncontrolling interests												(3.9		)										(3.9		)						(3.9		)
Repurchase of common stock																				(112.5		)		(112.5		)						(112.5		)
Common stock dividends												(120.1		)										(120.1		)						(120.1		)
Stock-based compensation	3.7			0.3				67.4																67.7								67.7
Exercise of stock options	1.1			0.1				9.7																9.8								9.8
Shares withheld for taxes	(1.0	)		(0.1		)		(22.6		)														(22.7		)						(22.7		)
Other								1.8				(0.6		)										1.2				0.4				1.6
Balance at June 30, 2016	410.1			$	40.7			$	1,460.4			$	1,475.3			$	(797.3	)		$	(183.5	)		$	1,995.6			$	32.5			$	2,028.1

 

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

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THE INTERPUBLIC GROUP OF COMPANIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY – (CONTINUED)

(Amounts in Millions)

(Unaudited)

 

	Common Stock							Additional Paid-In Capital				Retained Earnings				Accumulated  Other Comprehensive Loss, Net of Tax				Treasury Stock				Total IPG Stockholders’ Equity				Noncontrolling Interests				Total Stockholders’ Equity
	Shares			Amount
Balance at December 31, 2014	414.6			$	41.2			$	1,547.5			$	1,183.3			$	(636.7	)		$	(19.0	)		$	2,116.3			$	34.9			$	2,151.2
Net income												119.4												119.4				0.2				119.6
Other comprehensive loss																(99.1		)						(99.1		)		(0.7		)		(99.8		)
Reclassifications related to redeemable     noncontrolling interests																												3.2				3.2
Distributions to noncontrolling interests																												(8.2		)		(8.2		)
Change in redemption value of redeemable     noncontrolling interests												(2.0		)										(2.0		)						(2.0		)
Repurchase of common stock																				(102.0		)		(102.0		)						(102.0		)
Common stock dividends												(98.5		)										(98.5		)						(98.5		)
Stock-based compensation	2.4			0.3				47.4																47.7								47.7
Exercise of stock options	1.0			0.1				10.6																10.7								10.7
Shares withheld for taxes	(0.8	)		(0.1		)		(17.2		)														(17.3		)						(17.3		)
Excess tax benefit from stock-based compensation								9.0																9.0								9.0
Other								0.1				(0.4		)										(0.3		)		(0.2		)		(0.5		)
Balance at June 30, 2015	417.2			$	41.5			$	1,597.4			$	1,201.8			$	(735.8	)		$	(121.0	)		$	1,983.9			$	29.2			$	2,013.1

 

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

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Notes to Consolidated Financial Statements

(Amounts in Millions, Except Per Share Amounts)

(Unaudited)

Note 1:  Basis of Presentation

The unaudited Consolidated Financial Statements have been prepared by The Interpublic Group of Companies, Inc. and its subsidiaries (the "Company," "IPG," "we," "us" or "our") in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") and pursuant to the rules and regulations of the Securities and Exchange Commission (the "SEC") for reporting interim financial information on Form 10-Q. Accordingly, they do not include certain information and disclosures required for complete financial statements. The preparation of financial statements in conformity with U.S. GAAP requires us to make judgments, assumptions and estimates that affect the amounts reported and disclosed. Actual results could differ from these estimates and assumptions. The consolidated results for interim periods are not necessarily indicative of results for the full year and should be read in conjunction with our 2015 Annual Report on Form 10-K.

In the opinion of management, these unaudited Consolidated Financial Statements include all adjustments, consisting only of normal and recurring adjustments necessary for a fair statement of the information for each period contained therein. Certain reclassifications have been made to prior-period financial statements to conform to the current-period presentation.

Note 2:  Debt and Credit Arrangements

Long-Term Debt

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

	Effective Interest Rate		June 30, 2016								December 31, 2015
			Book Value				Fair Value 1				Book Value				Fair Value 1
2.25% Senior Notes due 2017 (less unamortized discount and issuance costs of $0.2 and $0.6, respectively)	2.30%		$	299.2			$	301.9			$	298.8			$	299.3
4.00% Senior Notes due 2022 (less unamortized discount and issuance costs of $1.8 and $1.4, respectively)	4.13%		246.8				265.9				246.4				250.9
3.75% Senior Notes due 2023 (less unamortized discount and issuance costs of $1.0 and $2.7, respectively)	4.32%		496.3				521.0				496.0				484.8
4.20% Senior Notes due 2024 (less unamortized discount and issuance costs of $0.8 and $3.2, respectively)	4.24%		496.0				538.2				495.8				496.4
Other notes payable and capitalized leases			69.8				69.8				75.2				75.2
Total long-term debt			1,608.1								1,612.2
Less: current portion			24.5								1.9
Long-term debt, excluding current portion			$	1,583.6							$	1,610.3

1	See Note 11 for information on the fair value measurement of our long-term debt.

Credit Agreements

We maintain a committed corporate credit facility (the "Credit Agreement") and uncommitted lines of credit to increase our financial flexibility. The Credit Agreement is a revolving facility, expiring in October 2020, 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 $1,000.0, 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 $200.0 or the equivalent in other currencies. Our obligations under the Credit Agreement are unsecured.

We were in compliance with all of our covenants in the Credit Agreement as of June 30, 2016.

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Notes to Consolidated Financial Statements – (continued)

(Amounts in Millions, Except Per Share Amounts)

(Unaudited)

Note 3:  Earnings Per Share

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

	Three months ended June 30,								Six months ended June 30,
	2016				2015				2016				2015
Net income available to IPG common stockholders	$	156.9			$	121.2			$	162.3			$	119.4
Weighted-average number of common shares outstanding - basic	400.1				410.5				400.4				410.8
Add: Effect of dilutive securities
Restricted stock, stock options and other equity awards	9.7				7.1				9.0				6.8
Weighted-average number of common shares outstanding - diluted	409.8				417.6				409.4				417.6
Earnings per share available to IPG common stockholders:
Basic	$	0.39			$	0.30			$	0.41			$	0.29
Diluted	$	0.38			$	0.29			$	0.40			$	0.29

As part of the adoption of Financial Accounting Standards Board (the “FASB”) Accounting Standards Update 2016-09, our excess tax benefit is no longer included in our calculation of diluted shares under the treasury stock method, resulting in an increase of 1.8 and 1.5 shares in the effect of dilutive securities for the three and six months ended June 30, 2016, respectively.

Note 4:  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 our technological capabilities and improve our 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, foreign currency exchange rates and other factors.

During the first half of 2016, we completed four acquisitions, including 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., and a mobile consultancy and application development agency based in the U.K. Of our four acquisitions, one was included in the Integrated Agency Networks ("IAN") operating segment, and three were included in the Constituency Management Group ("CMG") operating segment. During the first half of 2016, we recorded approximately $75.7 of goodwill and intangible assets related to our acquisitions, primarily in CMG.

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Notes to Consolidated Financial Statements – (continued)

(Amounts in Millions, Except Per Share Amounts)

(Unaudited)

The results of operations of our acquired companies were included in our consolidated results from the closing date of each acquisition. Details of cash paid for current and prior years' acquisitions are listed below.

	Six months ended June 30,
	2016				2015
Cost of investment: current-year acquisitions	$	36.5			$	0.0
Cost of investment: prior-year acquisitions	29.7				27.8
Less: net cash acquired	(2.7		)		0.0
Total cost of investment	63.5				27.8
Operating expense 1	17.4				17.6
Total cash paid for acquisitions 2	$	80.9			$	45.4

1	Represents cash payments made that were either in excess of the initial value of contingent payments or contingent upon the future employment of the former owners of the acquired companies and are recorded in the operating section of the unaudited Consolidated Statements of Cash Flows.

2

$34.3 for the six months ended June 30, 2016 is classified under the investing section of the unaudited Consolidated Statements of Cash Flows, as acquisitions, net of cash acquired. This amount relates to initial payments for new transactions. $29.2 of cash paid for six months ended June 30, 2016 is classified under the financing section of the unaudited Consolidated Statements of Cash Flows as acquisition-related payments. This amount relates to deferred payments and increases in our ownership interest for prior acquisitions.

Many of our acquisitions also include provisions under which the noncontrolling equity owners may require us to purchase additional interests in a subsidiary at their discretion. Redeemable noncontrolling interests are adjusted quarterly to their estimated redemption value, but not less than their initial fair value. Any adjustments to the redemption value impact retained earnings, except for foreign currency translation adjustments. The following table presents changes in our redeemable noncontrolling interests.

	Six months ended June 30,
	2016				2015
Balance at beginning of period	$	251.9			$	257.4
Change in related noncontrolling interests balance	(2.6		)		(8.3		)
Changes in redemption value of redeemable noncontrolling interests:
Redemptions and other	(9.7		)		(22.5		)
Redemption value adjustments	6.7				3.5
Balance at end of period	$	246.3			$	230.1

Note 5:  Supplementary Data

Accrued Liabilities

The following table presents the components of accrued liabilities.

	June 30, 2016				December 31, 2015
Salaries, benefits and related expenses	$	333.6			$	502.4
Acquisition obligations	68.8				50.1
Office and related expenses	43.6				51.0
Interest	16.7				17.3
Other	125.7				139.5
Total accrued liabilities	$	588.4			$	760.3

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Notes to Consolidated Financial Statements – (continued)

(Amounts in Millions, Except Per Share Amounts)

(Unaudited)

Other (Expense) Income, Net

Results of operations for the three and six months ended June 30, 2016 and 2015 include certain items that are not directly associated with our revenue-producing operations.

	Three months ended June 30,								Six months ended June 30,
	2016				2015				2016				2015
Losses on sales of businesses and investments	$	(2.2	)		$	(0.1	)		$	(18.5	)		$	(0.2	)
Other income, net	2.1				0.6				1.3				1.0
Total other (expense) income, net	$	(0.1	)		$	0.5			$	(17.2	)		$	0.8

Losses on Sales of Businesses and Investments – During the three and six months ended June 30, 2016, the amounts recognized are related to sales of businesses within our IAN segment.

Assets held for sale of $5.3 and liabilities held for sale of $5.3 are included in Other current assets and Accrued liabilities, respectively, on our Consolidated Balance Sheet as of June 30, 2016. These assets and liabilities held for sale, which primarily consist of accounts receivable and accounts payable, respectively, are related to sales of businesses expected to be completed within the next twelve months.

Share Repurchase Program

In February 2016, our Board of Directors (the "Board") authorized a new share repurchase program to repurchase from time to time up to $300.0, excluding fees, of our common stock, which was in addition to the remaining amount available to be repurchased from the $300.0 authorization made by the Board in February 2015.

We may effect such repurchases through open market purchases, trading plans established in accordance with SEC rules, derivative transactions or other means. We expect to continue to repurchase our common stock in future periods, although the timing and amount of the repurchases will depend on market conditions and other funding requirements.

The following table presents our share repurchase activity under our share repurchase programs for the six months ended June 30, 2016 and 2015.

	Six months ended June 30,
	2016				2015
Number of shares repurchased	5.0				4.9
Aggregate cost, including fees	$	112.5			$	102.0
Average price per share, including fees	$	22.47			$	20.87

As of June 30, 2016, $346.2 remains available for repurchase under the share repurchase programs. The share repurchase programs have no expiration date.

Note 6:  Income Taxes

For the three months ended June 30, 2016, our effective income tax rate of 21.2% was positively impacted mainly by the settlement of 2011 and 2012 income tax audits which included the recognition of certain previously unrecognized tax benefits of $23.4. For the six months ended June 30, 2016, our effective income tax rate of 14.6% was also positively impacted by the reversal of valuation allowances of $12.2 as a consequence of the disposition of certain businesses in Continental Europe, $10.2 related to the adoption of the FASB Accounting Standards Update 2016-09, Stock Compensation, and the recognition of previously unrecognized tax benefits as a result of a lapse in statute of limitations. The positive impacts to our tax rates were partially offset by losses in certain foreign jurisdictions where we receive no tax benefit due to 100% valuation allowances and by losses on sales of businesses for which we did not receive a full tax benefit.

We have various tax years under examination by tax authorities 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.

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Notes to Consolidated Financial Statements – (continued)

(Amounts in Millions, Except Per Share Amounts)

(Unaudited)

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.

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 2007 or non-U.S. income tax audits for years prior to 2006.

Note 7:  Incentive Compensation Plans

We issue stock-based compensation and cash awards to our employees under a plan established by the Compensation and Leadership Talent Committee of the Board of Directors (the “Compensation Committee”) and approved by our shareholders.

We issued the following stock-based awards under the 2014 Performance Incentive Plan (the "2014 PIP") during the six months ended June 30, 2016.

	Awards			Weighted-average grant-date fair value (per award)
Stock-settled awards	1.0			$	21.73
Performance-based awards	3.2			$	19.56
Total stock-based compensation awards	4.2

During the six months ended June 30, 2016, the Compensation Committee granted performance cash awards and restricted cash awards under the 2014 PIP with a total target value of $40.7 and $4.6, respectively. Cash awards are expensed over the vesting period, which is typically three years.

Note 8:  Accumulated Other Comprehensive Loss, Net of Tax

The following tables present the changes in accumulated other comprehensive loss, net of tax, by component.

	Foreign Currency Translation Adjustments				Available-for-Sale Securities				Derivative Instruments				Defined Benefit Pension and Other Postretirement Plans				Total
Balance as of December 31, 2015	$	(665.6	)		$	1.3			$	(9.6	)		$	(171.7	)		$	(845.6	)
Other comprehensive income before reclassifications	39.2				0.2				0.0				0.8				40.2
Amount reclassified from accumulated other comprehensive loss, net of tax	6.5				(1.2		)		0.6				2.2				8.1
Balance as of June 30, 2016	$	(619.9	)		$	0.3			$	(9.0	)		$	(168.7	)		$	(797.3	)

	Foreign Currency Translation Adjustments				Available-for-Sale Securities				Derivative Instruments				Defined Benefit Pension and Other Postretirement Plans				Total
Balance as of December 31, 2014	$	(436.3	)		$	0.8			$	(10.9	)		$	(190.3	)		$	(636.7	)
Other comprehensive (loss) income before reclassifications	(108.3		)		0.2				0.0				5.5				(102.6		)
Amount reclassified from accumulated other comprehensive loss, net of tax	(1.2		)		(0.1		)		0.6				4.2				3.5
Balance as of June 30, 2015	$	(545.8	)		$	0.9			$	(10.3	)		$	(180.6	)		$	(735.8	)

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Notes to Consolidated Financial Statements – (continued)

(Amounts in Millions, Except Per Share Amounts)

(Unaudited)

Amounts reclassified from accumulated other comprehensive loss, net of tax, for the three and six months ended June 30, 2016 and 2015 are as follows:

	Three months ended June 30,								Six months ended June 30,								Affected Line Item in the Consolidated Statements of Operations
	2016				2015				2016				2015
Foreign currency translation adjustments 1	$	7.5			$	(0.7	)		$	6.5			$	(1.2	)		Other (expense) income, net
Gains on available-for-sale securities	(1.2		)		0.0				(1.2		)		0.0				Other (expense) income, net
Losses on derivative instruments	0.5				0.5				1.0				1.0				Interest expense
Amortization of defined benefit pension and postretirement plan items 2	0.0				3.4				2.7				6.4
Tax effect	0.0				(1.3		)		(0.9		)		(2.7		)		Provision for income taxes
Total amount reclassified from accumulated other comprehensive loss, net of tax	$	6.8			$	1.9			$	8.1			$	3.5

1	These foreign currency translation adjustments are primarily a result of write-offs from the sales of businesses.

2	These accumulated other comprehensive loss components are included in the computation of net periodic cost. See Note 9 for further information.

Note 9:  Employee Benefits

We have a defined benefit pension plan that covers certain U.S. employees (the “Domestic Pension Plan”). We also have numerous funded and unfunded plans outside the U.S. The Interpublic Limited Pension Plan in the U.K. 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. Certain immaterial foreign pension and postretirement benefit plans have been excluded from the table below.

The components of net periodic cost 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
Three months ended June 30,	2016				2015				2016				2015				2016				2015
Service cost	$	0.0			$	0.0			$	2.2			$	2.4			$	0.0			$	0.0
Interest cost	1.5				1.5				4.7				4.7				0.3				0.3
Expected return on plan assets	(1.7		)		(1.9		)		(5.3		)		(5.2		)		0.0				0.0
Settlements and curtailments	0.0				0.0				0.2				0.2				0.0				0.0
Amortization of:
Prior service cost	0.0				0.0				0.0				0.1				0.1				0.0
Unrecognized actuarial losses	(1.2		)		2.1				0.9				1.0				0.0				0.0
Net periodic cost	$	(1.4	)		$	1.7			$	2.7			$	3.2			$	0.4			$	0.3

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Notes to Consolidated Financial Statements – (continued)

(Amounts in Millions, Except Per Share Amounts)

(Unaudited)

	Domestic Pension Plan								Foreign Pension Plans								Domestic Postretirement Benefit Plan
Six months ended June 30,	2016				2015				2016				2015				2016				2015
Service cost	$	0.0			$	0.0			$	4.9			$	4.9			$	0.0			$	0.0
Interest cost	3.0				3.0				9.2				9.4				0.7				0.7
Expected return on plan assets	(3.4		)		(3.8		)		(10.6		)		(10.3		)		0.0				0.0
Settlements and curtailments	0.0				0.0				0.2				0.2				0.0				0.0
Amortization of:
Prior service cost	0.0				0.0				0.0				0.1				0.0				0.0
Unrecognized actuarial losses	0.7				4.1				1.8				2.0				0.0				0.0
Net periodic cost	$	0.3			$	3.3			$	5.5			$	6.3			$	0.7			$	0.7

During the six months ended June 30, 2016, we contributed $13.5 of cash to our foreign pension plans. For the remainder of 2016, we expect to contribute approximately $13.0 of cash to our foreign pension plans. We do not expect to make any contributions to our Domestic Pension Plan in 2016.

Note 10:  Segment Information

As of June 30, 2016, we have two reportable segments: IAN and CMG. IAN is comprised of McCann Worldgroup, Foote, Cone & Belding ("FCB"), MullenLowe Group, IPG Mediabrands, 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. The profitability measure employed by our chief operating decision maker for allocating resources to operating divisions and assessing operating division performance is segment operating income (loss). Segment information is presented consistently with the basis described in our 2015 Annual Report on Form 10-K; however, segment operating income (loss) for the three and six months ended June 30, 2016 and 2015 includes a minimal impact of restructuring and other reorganization-related charges.

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Notes to Consolidated Financial Statements – (continued)

(Amounts in Millions, Except Per Share Amounts)

(Unaudited)

Summarized financial information concerning our reportable segments is shown in the following table.

	Three months ended June 30,								Six months ended June 30,
	2016				2015				2016				2015
Revenue:
IAN	$	1,548.5			$	1,522.1			$	2,950.1			$	2,867.2
CMG	369.4				354.0				709.8				684.9
Total	$	1,917.9			$	1,876.1			$	3,659.9			$	3,552.1
Segment operating income (loss):
IAN	$	195.7			$	204.9			$	235.4			$	236.3
CMG	50.0				41.4				70.4				61.3
Corporate and other	(20.9		)		(30.5		)		(60.1		)		(74.0		)
Total	224.8				215.8				245.7				223.6
Interest expense	(24.5		)		(20.3		)		(47.1		)		(41.2		)
Interest income	5.6				5.0				11.4				12.2
Other (expense) income, net	(0.1		)		0.5				(17.2		)		0.8
Income before income taxes	$	205.8			$	201.0			$	192.8			$	195.4
Depreciation and amortization of property and equipment and intangible assets:
IAN	$	29.2			$	30.1			$	56.8			$	59.5
CMG	4.9				4.5				9.7				9.1
Corporate and other	5.7				4.9				11.3				9.6
Total	$	39.8			$	39.5			$	77.8			$	78.2
Capital expenditures:
IAN	$	26.9			$	20.4			$	47.2			$	32.5
CMG	2.2				2.3				3.7				3.4
Corporate and other	6.9				6.9				12.1				13.9
Total	$	36.0			$	29.6			$	63.0			$	49.8
	June 30, 2016				December 31, 2015
Total assets:
IAN	$	10,330.5			$	10,738.2
CMG	1,391.2				1,338.6
Corporate and other	(87.8		)		508.3
Total	$	11,633.9			$	12,585.1

 

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Notes to Consolidated Financial Statements – (continued)

(Amounts in Millions, Except Per Share Amounts)

(Unaudited)

Note 11:  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 the six months ended June 30, 2016. The following tables present information about our financial instruments measured at fair value on a recurring basis as of June 30, 2016 and December 31, 2015, and indicate the fair value hierarchy of the valuation techniques utilized to determine such fair value.

	June 30, 2016																Balance Sheet Classification
	Level 1				Level 2				Level 3				Total
Assets
Cash equivalents	$	156.1			$	0.0			$	0.0			$	156.1			Cash and cash equivalents
Short-term marketable securities	2.8				0.0				0.0				2.8				Marketable securities
Long-term investments	0.5				0.0				0.0				0.5				Other non-current assets
Total	$	159.4			$	0.0			$	0.0			$	159.4
As a percentage of total assets	1.4		%		0.0		%		0.0		%		1.4		%
Liabilities
Mandatorily redeemable noncontrolling interests 1	$	0.0			$	0.0			$	57.8			$	57.8
	December 31, 2015																Balance Sheet Classification
	Level 1				Level 2				Level 3				Total
Assets
Cash equivalents	$	875.7			$	0.0			$	0.0			$	875.7			Cash and cash equivalents
Short-term marketable securities	6.8				0.0				0.0				6.8				Marketable securities
Long-term investments	0.4				0.0				0.0				0.4				Other non-current assets
Total	$	882.9			$	0.0			$	0.0			$	882.9
As a percentage of total assets	7.0		%		0.0		%		0.0		%		7.0		%
Liabilities
Mandatorily redeemable noncontrolling interests 1	$	0.0			$	0.0			$	45.0			$	45.0

1

Relates to unconditional obligations to purchase additional noncontrolling equity shares of consolidated subsidiaries. Fair value measurement of the obligation was based upon the amount payable as if the forward contracts were settled. The amount redeemable within the next twelve months is classified in accrued liabilities; any interests redeemable thereafter are classified in other non-current liabilities.

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Notes to Consolidated Financial Statements – (continued)

(Amounts in Millions, Except Per Share Amounts)

(Unaudited)

The following table presents additional information about financial instruments measured at fair value on a recurring basis and for which we utilized Level 3 inputs to determine fair value for the six months ended June 30, 2016 and 2015.

	Three months ended June 30,								Six months ended June 30,
Liabilities	2016				2015				2016				2015
Mandatorily redeemable noncontrolling interests -    Balance at beginning of period	$	56.9			$	46.8			$	45.0			$	32.8
Level 3 additions	0.8				6.8				11.2				21.8
Level 3 reductions	(1.1		)		(10.0		)		(1.2		)		(11.4		)
Realized losses included in net income	2.2				0.5				4.0				0.9
Foreign currency translation	(1.0		)		0.8				(1.2		)		0.8
Mandatorily redeemable noncontrolling interests -    Balance at end of period	$	57.8			$	44.9			$	57.8			$	44.9

Realized losses included in net income for mandatorily redeemable noncontrolling interests are reported as a component of interest expense in the unaudited Consolidated Statements of Operations.

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 June 30, 2016 and December 31, 2015, and indicates the fair value hierarchy of the valuation techniques utilized to determine such fair value.

	June 30, 2016																December 31, 2015
	Level 1				Level 2				Level 3				Total				Level 1				Level 2				Level 3				Total
Total long-term debt	$	0.0			$	1,627.0			$	69.8			$	1,696.8			$	0.0			$	1,531.4			$	75.2			$	1,606.6

Our long-term debt is comprised of senior notes and other notes payable. The fair value of our senior notes traded over-the-counter is based on quoted prices for such securities, but for which fair value can also be derived from inputs that are readily observable. 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. Thus, the fair value of our other notes payable is determined based on proprietary valuation methods and therefore are classified as Level 3 within the fair value hierarchy. See Note 2 for further information on our long-term debt.

Non-financial Assets and Liabilities that are Measured at Fair Value on a Recurring Basis

Certain non-financial assets and liabilities are measured at fair value on a recurring basis, primarily accrued restructuring charges.

Non-financial Assets and Liabilities 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.

Note 12:  Commitments and Contingencies

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 may 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.

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Notes to Consolidated Financial Statements – (continued)

(Amounts in Millions, Except Per Share Amounts)

(Unaudited)

As previously disclosed, on April 10, 2015, a federal judge in Brazil authorized the search of the records of an agency's offices in São Paulo and Brasilia, in connection with an ongoing investigation by Brazilian authorities involving payments potentially connected to local government contracts. The Company had previously investigated the matter and taken a number of remedial and disciplinary actions. The Company is in the process of concluding a settlement related to these matters with government agencies and has previously provided for such settlement in its Consolidated Financial Statements.

Guarantees

As discussed in our 2015 Annual Report on Form 10-K, we have guaranteed certain obligations of our subsidiaries relating principally to operating leases and credit facilities of certain subsidiaries. The amount of parent company guarantees on lease obligations was $843.7 and $619.4 as of June 30, 2016 and December 31, 2015, respectively, and the amount of parent company guarantees primarily relating to credit facilities was $349.4 and $336.5 as of June 30, 2016 and December 31, 2015, respectively.

Note 13:  Recent Accounting Standards

Financial Instrument 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 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, with early adoption permitted as early as January 1, 2019. We are currently assessing the impact the adoption of the amended guidance will have on our Consolidated Financial Statements.

Stock Compensation

In March 2016, the FASB issued amended guidance on the accounting for employee share-based payments which requires all excess tax benefits and tax deficiencies to be recognized on the income statement instead of as additional paid-in capital, with prospective application required. The guidance also changes the classification of such tax benefits or tax deficiencies on the Consolidated Statement of Cash Flows from a financing activity to an operating activity, with prospective application required. Additionally, the guidance changes the classification of employee taxes paid when an employer withholds shares for tax-withholding purposes on the Consolidated Statement of Cash Flows from an operating activity, previously included in the changes in Accounts Payable, to a financing activity, with retrospective application required. We have early adopted this amended guidance as of the quarter ended March 31, 2016. See Notes 3 and 6 to the Consolidated Financial Statements for additional information related to the adoption of this amended guidance.

Leases

In February 2016, the FASB issued amended guidance on lease accounting which requires an entity to recognize a right-of-use asset and a corresponding lease liability on its balance sheet for virtually all of its leases with a term of more than 12 months, including those classified as operating leases. Both the asset and liability will initially be measured at the present value of the future minimum lease payments, with the asset being subject to adjustments such as initial direct costs. Consistent with current U.S. GAAP, the presentation of expenses and cash flows will depend primarily on the classification of the lease as either a finance or an operating lease. The new standard also requires additional quantitative and qualitative disclosures regarding the amount, timing and uncertainty of cash flows arising from leases in order to provide additional information about the nature of an organization’s leasing activities. This amended guidance, which will be effective beginning January 1, 2019, requires modified retrospective application, with early adoption permitted. As a result of the adoption of this amended guidance, we expect to have a significant impact on our Consolidated Balance Sheets but not on our Consolidated Statements of Operations.

Fair Value Measurements

In January 2016, the FASB issued amended guidance which updates the fair value presentation requirements for certain financial instruments. Equity investments with readily determinable fair values, other than those accounted for using the equity method of accounting, will be measured at fair value with changes recorded through current earnings rather than other comprehensive income. This amended guidance will be effective for us beginning January 1, 2018, and is required to be adopted prospectively with a cumulative-effect adjustment recorded on our Consolidated Balance Sheets, if applicable. We do not expect the adoption of this amended guidance to have a significant impact on our Consolidated Financial Statements.

Revenue Recognition

In May 2014, the FASB issued amended guidance on revenue recognition which requires an entity to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The new standard affects the timing of recognizing revenue in connection with

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Notes to Consolidated Financial Statements – (continued)

(Amounts in Millions, Except Per Share Amounts)

(Unaudited)

variable consideration. In July 2015, the FASB affirmed its proposal to delay the effective date of the new revenue standard by one year to January 1, 2018, with early adoption to be permitted as of the original effective date of January 1, 2017. We are currently assessing the impact the adoption of the amended guidance will have on our Consolidated Financial Statements.

Consolidation

In February 2015, the FASB issued amended guidance to the consolidation standard which updates the analysis that a reporting entity must perform to determine whether it should consolidate certain types of legal entities. The amendment modifies the evaluation of whether limited partnerships and similar legal entities are variable interest entities (“VIEs”) or voting interest entities and affects the consolidation analysis of reporting entities that are involved with VIEs, particularly those that have fee arrangements and related party relationships, among other provisions. This amended guidance was effective January 1, 2016. The adoption of this amended guidance did not have a significant impact on our Consolidated Financial Statements.

Going Concern

In August 2014, the FASB issued amended guidance which defines management's responsibility to evaluate whether there are conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern and to provide related disclosures. Currently, this evaluation has only been an auditor requirement. Specifically, the amendments (1) provide a definition of the term “substantial doubt,” (2) require an evaluation every reporting period, (3) provide principles for considering the mitigating effect of management’s plans, (4) require certain disclosures when substantial doubt is alleviated as a result of the consideration of management’s plans, (5) require an express statement and other disclosures when substantial doubt is not alleviated, and (6) require an assessment for a period of one year after the date that financial statements are issued. This amended guidance is effective for our annual period ending December 31, 2016, and for annual periods and interim periods thereafter. We do not expect the adoption of this amended guidance to have a significant impact on our Consolidated Financial Statements.

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

(Amounts in Millions, Except Per Share Amounts)

(Unaudited)

Item 2.	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 ("IPG," "we," "us" or "our"). MD&A should be read in conjunction with our unaudited Consolidated Financial Statements and the accompanying notes included in this report and our 2015 Annual Report on Form 10-K, as well as our other reports and filings with the Securities and Exchange Commission ("SEC"). Our Annual Report includes additional information about our significant accounting policies and practices as well as details about our most significant risks and uncertainties associated with our financial and operating results. 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.

RESULTS OF OPERATIONS provides an analysis of the consolidated and segment results of operations for the periods presented.

LIQUIDITY AND CAPITAL RESOURCES provides an overview of our cash flows, funding requirements, financing and sources of funds, and debt credit ratings.

CRITICAL ACCOUNTING ESTIMATES provides an update to the discussion in our 2015 Annual Report on Form 10-K of our accounting policies that require critical judgment, assumptions and estimates.

RECENT ACCOUNTING STANDARDS, by reference to Note 13 to the unaudited Consolidated Financial Statements, provides a discussion of certain accounting standards that have been recently adopted or that have not yet been required to be implemented and may be applicable to our future operations.

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 and specialized communications disciplines. 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 and strategic 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 mergers and strategic alliances as well as through the development of 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 revenue growth and operating margin expansion, 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 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.

The following tables present a summary of financial performance for the three and six months ended June 30, 2016, as compared with the same periods in 2015.

	Three months ended June 30, 2016						Six months ended June 30, 2016
% Increase/(Decrease)	Total			Organic			Total			Organic
Revenue	2.2	%		3.7	%		3.0	%		5.1	%
Salaries and related expenses	2.0	%		3.5	%		3.3	%		5.6	%
Office and general expenses	2.0	%		4.1	%		0.7	%		3.4	%

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Table of Contents

Management’s Discussion and Analysis of Financial Condition and Results of Operations - (continued)

(Amounts in Millions, Except Per Share Amounts)

(Unaudited)

	Three months ended June 30,								Six months ended June 30,
	2016				2015				2016				2015
Operating margin	11.7		%		11.5		%		6.7		%		6.3		%
Expenses as % of revenue:
Salaries and related expenses	64.1		%		64.2		%		68.3		%		68.1		%
Office and general expenses	24.2		%		24.3		%		25.0		%		25.6		%
Net income available to IPG common stockholders	$	156.9			$	121.2			$	162.3			$	119.4
Earnings per share available to IPG common stockholders:
Basic	$	0.39			$	0.30			$	0.41			$	0.29
Diluted	$	0.38			$	0.29			$	0.40			$	0.29

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. The performance metrics that we use to evaluate our results include the organic change in revenue, salaries and related expenses, and office and general expenses, and the components of operating expenses expressed as a percentage of total consolidated revenue. Additionally, in certain of our discussions we analyze revenue by geographic region and also by business sector, in which we focus on our top 100 clients, which typically constitute approximately 55% to 60% of our annual consolidated revenues.

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 impacted our results during the first half of 2016 included the Argentine Peso, Brazilian Real and British Pound Sterling.

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. For the second quarter and first half of 2016, the net effect of acquisitions and divestitures increased revenue and operating expenses compared to the prior-year periods. See Note 4 to the Consolidated Financial Statements for additional information on our acquisitions.

RESULTS OF OPERATIONS

Consolidated Results of Operations – Three and Six Months Ended June 30, 2016 Compared to Three and Six Months Ended June 30, 2015

REVENUE

Our 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 revenue is typically lowest in the first quarter and highest in the fourth quarter, reflecting the seasonal spending of our clients, incentives earned at year end on various contracts and project work completed that is typically recognized during the fourth quarter. In the events marketing business, revenues can fluctuate due to the timing of completed projects, as revenue is typically recognized when the project is complete. When we act as principal for these projects, we record the gross amount billed to the client as revenue, and the related costs are incurred as pass-through costs in office and general expenses.

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Management’s Discussion and Analysis of Financial Condition and Results of Operations - (continued)

(Amounts in Millions, Except Per Share Amounts)

(Unaudited)

					Components of Change																Change
	Three months ended June 30, 2015				Foreign Currency				Net Acquisitions/ (Divestitures)				Organic				Three months ended June 30, 2016				Organic			Total
Consolidated	$	1,876.1			$	(33.0	)		$	6.1			$	68.7			$	1,917.9			3.7	%		2.2	%
Domestic	1,112.1				0.0				6.1				50.9				1,169.1				4.6	%		5.1	%
International	764.0				(33.0		)		0.0				17.8				748.8				2.3	%		(2.0	)%
United Kingdom	156.7				(8.9		)		6.0				1.9				155.7				1.2	%		(0.6	)%
Continental Europe	177.4				2.4				(7.8		)		0.9				172.9				0.5	%		(2.5	)%
Asia Pacific	231.7				(6.9		)		0.2				(7.3		)		217.7				(3.2	)%		(6.0	)%
Latin America	90.5				(14.7		)		(3.4		)		14.4				86.8				15.9	%		(4.1	)%
Other	107.7				(4.9		)		5.0				7.9				115.7				7.3	%		7.4	%

During the second quarter of 2016, our revenue increased by $41.8, or 2.2%, compared to the second quarter of 2015, comprised of an organic revenue increase of $68.7, or 3.7%, and the effect of net acquisitions of $6.1, partially offset by an adverse foreign currency rate impact of $33.0. Our organic revenue increase was throughout nearly all geographic regions and most client sectors, primarily attributable to a combination of net higher spending from existing clients and net client wins, most notably in the technology and telecom and food and beverage sectors. The organic revenue increase in our domestic market was driven by growth across nearly all disciplines, most notably at our digital specialist agencies and public relations businesses. In our international markets, the organic revenue increase was driven by our advertising businesses and digital specialist agencies, primarily in the Latin America region, led by Brazil and Argentina, and our Other region, driven by growth in Canada and the Middle East. The organic revenue decrease in the Asia Pacific region was primarily within our events businesses as a result of certain projects where we acted as principal that did not recur during the second quarter of 2016, the impact of which is also reflected as a comparable reduction in office and general expenses.

					Components of Change																Change
	Six months ended June 30, 2015				Foreign Currency				Net Acquisitions/ (Divestitures)				Organic				Six months ended June 30, 2016				Organic			Total
Consolidated	$	3,552.1			$	(84.9	)		$	11.6			$	181.1			$	3,659.9			5.1	%		3.0	%
Domestic	2,115.9				0.0				9.8				134.6				2,260.3				6.4	%		6.8	%
International	1,436.2				(84.9		)		1.8				46.5				1,399.6				3.2	%		(2.5	)%
United Kingdom	321.6				(18.2		)		10.3				7.6				321.3				2.4	%		(0.1	)%
Continental Europe	332.5				(3.8		)		(11.7		)		3.5				320.5				1.1	%		(3.6	)%
Asia Pacific	419.5				(17.8		)		0.4				(2.3		)		399.8				(0.5	)%		(4.7	)%
Latin America	168.0				(33.4		)		(5.9		)		23.4				152.1				13.9	%		(9.5	)%
Other	194.6				(11.7		)		8.7				14.3				205.9				7.3	%		5.8	%

During the first half of 2016, our revenue increased by $107.8, or 3.0%, compared to the first half of 2015, comprised of an organic revenue increase of $181.1, or 5.1%, and the effect of net acquisitions of $11.6, partially offset by an adverse foreign currency rate impact of $84.9. The organic increase was primarily driven by factors similar to those noted above for the second quarter of 2016 as well as growth in our advertising businesses within the domestic market.

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

OPERATING EXPENSES

	Three months ended June 30,								Six months ended June 30,
	2016				2015				2016				2015
Salaries and related expenses	$	1,229.0			$	1,205.2			$	2,499.9			$	2,420.4
Office and general expenses	464.1				455.1				914.3				908.1
Total operating expenses	$	1,693.1			$	1,660.3			$	3,414.2			$	3,328.5
Operating income	$	224.8			$	215.8			$	245.7			$	223.6

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Management’s Discussion and Analysis of Financial Condition and Results of Operations - (continued)

(Amounts in Millions, Except Per Share Amounts)

(Unaudited)

In the second quarter of 2016, total operating expenses increased 2.0%, compared to our revenue change of 2.2%, from the second quarter of 2015, resulting in operating margin expansion to 11.7% from 11.5%. In the first half of 2016, total operating expenses increased 2.6%, compared to our revenue change of 3.0%, from the first half of 2015, resulting in operating margin expansion to 6.7% from 6.3%.

Salaries and Related Expenses

					Components of Change																Change
	2015				Foreign Currency				Net Acquisitions/ (Divestitures)				Organic				2016				Organic			Total
Three months ended June 30,	$	1,205.2			$	(19.8	)		$	1.3			$	42.3			$	1,229.0			3.5	%		2.0	%
Six months ended June 30,	2,420.4				(57.9		)		2.8				134.6				2,499.9				5.6	%		3.3	%

Salaries and related expenses in the second quarter of 2016 increased by $23.8 compared to the second quarter of 2015, comprised of an organic increase of $42.3 and the effect of net acquisitions of $1.3, partially offset by a favorable foreign currency rate impact of $19.8. The organic increase was primarily attributable to an increase in base salaries, benefits and tax as a result of increases in our workforce at businesses and in regions where we had revenue growth or new business wins over the last twelve months. Our staff cost ratio, defined as salaries and related expenses as a percentage of total consolidated revenue, decreased in the second quarter of 2016 to 64.1% from 64.2% when compared to the prior-year period.

Salaries and related expenses in the first half of 2016 increased by $79.5 compared to the first half of 2015, comprised of an organic increase of $134.6 and the effect of net acquisitions of $2.8, partially offset by a favorable foreign currency rate impact of $57.9. The organic increase was primarily driven by factors similar to those noted above for the second quarter of 2016 as well as increased severance expense. Our staff cost ratio increased in the first half of 2016 to 68.3% from 68.1% when compared to the prior-year period.

The following table details our staff cost ratio.

	Three months ended June 30,						Six months ended June 30,
	2016			2015			2016			2015
Salaries and related expenses	64.1	%		64.2	%		68.3	%		68.1	%
Base salaries, benefits and tax	54.1	%		53.2	%		56.7	%		56.6	%
Incentive expense	3.0	%		3.7	%		3.8	%		3.8	%
Severance expense	1.0	%		0.9	%		1.2	%		1.0	%
Temporary help	3.8	%		3.8	%		3.9	%		3.8	%
All other salaries and related expenses	2.2	%		2.6	%		2.7	%		2.9	%

Office and General Expenses

					Components of Change																Change
	2015				Foreign Currency				Net Acquisitions/ (Divestitures)				Organic				2016				Organic			Total
Three months ended June 30,	$	455.1			$	(9.6	)		$	0.1			$	18.5			$	464.1			4.1	%		2.0	%
Six months ended June 30,	908.1				(25.2		)		0.5				30.9				914.3				3.4	%		0.7	%

Office and general expenses in the second quarter of 2016 increased by $9.0 compared to the second quarter of 2015, primarily due to an organic increase of $18.5 and the effect of net acquisitions of $0.1, partially offset by a favorable foreign currency rate impact of $9.6. The organic increase was attributable to higher occupancy costs as compared to the prior year, partially offset by lower charges for contingencies and lower production expenses related to pass-through costs, which are also reflected in revenue, for certain projects where we acted as principal that decreased in size or did not recur during the second quarter of 2016. Our office and general expense ratio, defined as office and general expenses as a percentage of total consolidated revenue, decreased in the second quarter of 2016 to 24.2% from 24.3% when compared to the prior-year period.

Office and general expenses in the first half of 2016 increased by $6.2 compared to the first half of 2015, primarily due to an organic increase of $30.9 and the effect of net acquisitions of $0.5, partially offset by a favorable foreign currency rate impact of

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Management’s Discussion and Analysis of Financial Condition and Results of Operations - (continued)

(Amounts in Millions, Except Per Share Amounts)

(Unaudited)

$25.2. The organic increase was primarily driven by factors similar to those noted above for the second quarter of 2016 as well as increases in adjustments to contingent acquisition obligations as compared to the prior year. Our office and general expense ratio decreased in the first half of 2016 to 25.0% from 25.6% when compared to the prior-year period.

The following table details our office and general expense ratio.

	Three months ended June 30,						Six months ended June 30,
	2016			2015			2016			2015
Office and general expenses	24.2	%		24.3	%		25.0	%		25.6	%
Professional fees	1.5	%		1.5	%		1.6	%		1.6	%
Occupancy expense (excluding depreciation and amortization)	6.6	%		5.9	%		6.9	%		6.5	%
Travel & entertainment, office supplies and telecommunications	3.4	%		3.5	%		3.4	%		3.6	%
All other office and general expenses 1	12.7	%		13.4	%		13.1	%		13.9	%

1	Includes production expenses and, to a lesser extent, depreciation and amortization, bad debt expense, adjustments to contingent acquisition obligations, foreign currency losses (gains), spending to support new business activity, net restructuring and other reorganization-related charges (reversals), long-lived asset impairments and other expenses.

EXPENSES AND OTHER INCOME

	Three months ended June 30,								Six months ended June 30,
	2016				2015				2016				2015
Cash interest on debt obligations	$	(21.0	)		$	(18.4	)		$	(40.3	)		$	(37.5	)
Non-cash interest	(3.5		)		(1.9		)		(6.8		)		(3.7		)
Interest expense	(24.5		)		(20.3		)		(47.1		)		(41.2		)
Interest income	5.6				5.0				11.4				12.2
Net interest expense	(18.9		)		(15.3		)		(35.7		)		(29.0		)
Other (expense) income, net	(0.1		)		0.5				(17.2		)		0.8
Total (expenses) and other income	$	(19.0	)		$	(14.8	)		$	(52.9	)		$	(28.2	)

Net Interest Expense

For the three and six months ended June 30, 2016, net interest expense increased by $3.6 and $6.7 as compared to the respective prior-year periods, primarily due to increased cash interest expense from higher short-term borrowings as well as increased non-cash interest expense due to revaluations of mandatorily redeemable noncontrolling interests.

Other (Expense) Income, Net

Results of operations for the three months ended June 30, 2016 and 2015 include certain items that are not directly associated with our revenue-producing operations.

	Three months ended June 30,								Six months ended June 30,
	2016				2015				2016				2015
Losses on sales of businesses and investments	(2.2		)		(0.1		)		(18.5		)		(0.2		)
Other income, net	2.1				0.6				1.3				1.0
Total other (expense) income, net	$	(0.1	)		$	0.5			$	(17.2	)		$	0.8

Losses on Sales of Businesses and Investments – During the three and six months ended June 30, 2016, the amounts recognized are related to sales of businesses within our Integrated Agency Networks (“IAN”) segment.

Assets held for sale of $5.3 and liabilities held for sale of $5.3 are included in Other current assets and Accrued liabilities, respectively, on our Consolidated Balance Sheet as of June 30, 2016. These assets and liabilities held for sale, which primarily consist of accounts receivable and accounts payable, respectively, are related to sales of businesses expected to be completed within the next twelve months.

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Management’s Discussion and Analysis of Financial Condition and Results of Operations - (continued)

(Amounts in Millions, Except Per Share Amounts)

(Unaudited)

INCOME TAXES

	Three months ended June 30,								Six months ended June 30,
	2016				2015				2016				2015
Income before income taxes	$	205.8			$	201.0			$	192.8			$	195.4
Provision for income taxes	$	43.7			$	77.7			$	28.1			$	76.3
Effective income tax rate	21.2		%		38.7		%		14.6		%		39.0		%

Our tax rates are affected by many factors, including our worldwide earnings from various countries, changes in legislation and tax characteristics of our income. For the three months ended June 30, 2016, our effective income tax rate of 21.2% was positively impacted by the settlement of 2011 and 2012 income tax audits which included the recognition of certain previously unrecognized tax benefits of $23.4. For the six months ended June 30, 2016, our effective income tax rate of 14.6% was also positively impacted by the reversal of valuation allowances of $12.2 as a consequence of the disposition of certain businesses in Continental Europe, $10.2 related to the adoption of the Financial Accounting Standards Board (the "FASB") Accounting Standards Update 2016-09, Stock Compensation, and the recognition of previously unrecognized tax benefits as a result of a lapse in statute of limitations. The positive impacts to our tax rates were partially offset by losses in certain foreign jurisdictions where we receive no tax benefit due to 100% valuation allowances and by losses on sales of businesses for which we did not receive a full tax benefit.

For the three and six months ended June 30, 2015, our effective income tax rates of 38.7% and 39.0%, respectively, were negatively impacted primarily by losses in certain foreign jurisdictions where we receive no tax benefit due to 100% valuation allowances. For the six months ended June 30, 2015, our effective income tax rate of 39.0% was positively impacted by the recognition of previously unrecognized tax benefits as a result of the settlement of a 2010 income tax audit.

EARNINGS PER SHARE

Basic earnings per share available to IPG common stockholders for the three and six months ended June 30, 2016, were $0.39 and $0.41, respectively, compared to $0.30 and $0.29 for the three and six months ended June 30, 2015, respectively. Diluted earnings per share were $0.38 and $0.40 for the three and six months ended June 30, 2016, respectively, compared to $0.29 for the three and six months ended June 30, 2015.

For the three and six months ended June 30, 2016, net income available to IPG common stockholders included the recognition of certain previously unrecognized tax benefits totaling $23.4, resulting in a positive impact of $0.06 on basic and diluted earnings per share.

For the six months ended June 30, 2016, net income available to IPG common stockholders also included losses of $19.6, net of tax, on sales of businesses in our international markets, a benefit of $12.2 related to the reversals of valuation allowances as a consequence of the sales of businesses and a benefit of $10.2 related to the early adoption of FASB Accounting Standards Update 2016-09, Stock Compensation, resulting in impacts of ($0.05), $0.03 and $0.03, respectively, to basic and diluted earnings per share.

Segment Results of Operations – Three and Six Months Ended June 30, 2016 Compared to Three and Six Months Ended June 30, 2015

As discussed in Note 10 to the unaudited Consolidated Financial Statements, we have two reportable segments as of June 30, 2016: IAN and Constituency Management Group ("CMG"). We also report results for the "Corporate and other" group.

IAN

REVENUE

					Components of Change																Change
	Three months ended June 30, 2015				Foreign Currency				Net Acquisitions/ (Divestitures)				Organic				Three months ended June 30, 2016				Organic			Total
Consolidated	$	1,522.1			$	(28.8	)		$	(3.5	)		$	58.7			$	1,548.5			3.9	%		1.7	%
Domestic	873.3				0.0				0.0				43.4				916.7				5.0	%		5.0	%
International	648.8				(28.8		)		(3.5		)		15.3				631.8				2.4	%		(2.6	)%

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Management’s Discussion and Analysis of Financial Condition and Results of Operations - (continued)

(Amounts in Millions, Except Per Share Amounts)

(Unaudited)

During the second quarter of 2016, IAN revenue increased by $26.4 compared to the second quarter of 2015, comprised of an organic revenue increase of $58.7, partially offset by an adverse foreign currency rate impact of $28.8 and the effect of net divestitures of $3.5. The organic revenue increase was primarily attributable to a combination of net higher spending from existing clients and net client wins in nearly all sectors, most notably in the technology and telecom and food and beverage sectors. The organic revenue increase in our domestic market was driven by growth across all disciplines, most notably at our digital specialist agencies. The international organic revenue increase was driven by growth across all disciplines, most notably at our advertising businesses and digital specialist agencies, primarily in the Latin America region, led by Brazil and Argentina, and our Other region, driven by growth in Canada and the Middle East.

					Components of Change																Change
	Six months ended June 30, 2015				Foreign Currency				Net Acquisitions/ (Divestitures)				Organic				Six months ended June 30, 2016				Organic			Total
Consolidated	$	2,867.2			$	(73.0	)		$	(4.7	)		$	160.6			$	2,950.1			5.6	%		2.9	%
Domestic	1,664.2				0.0				0.0				117.9				1,782.1				7.1	%		7.1	%
International	1,203.0				(73.0		)		(4.7		)		42.7				1,168.0				3.5	%		(2.9	)%

During the first half of 2016, IAN revenue increased by $82.9 compared to the first half of 2015, comprised of an organic revenue increase of $160.6, partially offset by an adverse foreign currency rate impact of $73.0 and the effect of net divestitures of $4.7. The organic revenue increases in our domestic and international markets were primarily driven by factors similar to those noted above for the second quarter of 2016 as well as growth in our advertising businesses within the domestic market.

SEGMENT OPERATING INCOME

	Three months ended June 30,											Six months ended June 30,
	2016				2015				Change			2016				2015				Change
Segment operating income	$	195.7			$	204.9			(4.5	)%		$	235.4			$	236.3			(0.4	)%
Operating margin	12.6		%		13.5		%					8.0		%		8.2		%

 

Operating income decreased during the second quarter of 2016 when compared to the second quarter of 2015, comprised of an increase in revenue of $26.4, offset by an increase in salaries and related expenses of $23.1 and an increase in office and general expenses of $12.5. The increase in salaries and related expenses was primarily due to an increase in base salaries, benefits and taxes, primarily attributable to increases in our workforce at businesses and in regions where we had revenue growth or new business wins over the last twelve months. The increase in office and general expenses was attributable to higher occupancy costs as compared to the prior year, partially offset by lower charges for contingencies.

Operating income decreased during the first half of 2016 when compared to the first half of 2015, comprised of an increase in revenue of $82.9, offset by an increase in salaries and related expenses of $68.9 and an increase in office and general expenses of $14.9. The increase in salaries and related expenses was primarily due to an increase in base salaries, benefits and taxes, primarily attributable to increases in our workforce at businesses and in regions where we had revenue growth or new business wins over the last twelve months, as well as higher long-term performance-based incentive awards expense and increased severance expense. The increase in office and general expenses was attributable to higher occupancy costs and increases in adjustments to contingent acquisition obligations, as compared to the prior year, partially offset by lower charges for contingencies.

CMG

REVENUE

					Components of Change																Change
	Three months ended June 30, 2015				Foreign Currency				Net Acquisitions/ (Divestitures)				Organic				Three months ended June 30, 2016				Organic			Total
Consolidated	$	354.0			$	(4.2	)		$	9.6			$	10.0			$	369.4			2.8	%		4.4	%
Domestic	238.8				0.0				6.1				7.5				252.4				3.1	%		5.7	%
International	115.2				(4.2		)		3.5				2.5				117.0				2.2	%