INTERPUBLIC GROUP OF COMPANIES, INC. [IPG] Filings

10-Q 1 ipg-20220331.htm 10-Q ipg-20220331

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q


			☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2022


			☐			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)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.10 per share	IPG	The New York Stock Exchange

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 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 ý 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

☒

Accelerated Filer

☐

Non-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 ý

The number of shares of the registrant’s common stock outstanding as of April 18, 2022 was 393,664,189.

INDEX


		Page
PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)
	Consolidated Statements of Operations for the Three Months Ended March 31, 202 2 and 2021	3
	Consolidated Statements of Comprehensive Income for the Three Months Ended March 31, 2022 and 2021	4
	Consolidated Balance Sheets as of March 31, 20 2 2 and December 31, 202 1	5
	Consolidated Statements of Cash Flows for the Three Months Ended March 31, 202 2 and 202 1	6
	Consolidated Statements of Stockholders’ Equity for the Three Months Ended March 31, 20 2 2 and 202 1	7
	Notes to Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	41
Item 4.	Controls and Procedures	41
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	42
Item 1A.	Risk Factors	42
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	42

Item 6.	Exhibits	42
INDEX TO EXHIBITS		43
SIGNATURES		44

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 and our quarterly reports on Form 10-Q. 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:

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

•the impacts of the COVID-19 pandemic, including unanticipated developments like the emergence of new coronavirus variants or any shortfalls in vaccination efforts, and associated mitigation measures such as social distancing efforts and restrictions on businesses, social activities and travel on the economy, our clients and demand for our services, which may precipitate or exacerbate other risks and uncertainties;

•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 challenging 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 interest rates, inflation rates and currency exchange rates;

•developments from changes in the regulatory and legal environment for advertising and marketing services companies around the world, including laws and regulations related to data protection and consumer privacy;

•the impact on our operations of general or directed cybersecurity events; and

•failure to fully realize the anticipated benefits of our 2020 restructuring actions and other cost-savings initiatives.

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 and our quarterly reports on Form 10-Q.

Table of Contents

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 March 31,
	2022		2021
REVENUE:
Net revenue	$	2,227.2	$	2,027.7
Billable expenses	341.3		229.3
Total revenue	2,568.5		2,257.0

OPERATING EXPENSES:
Salaries and related expenses	1,564.4		1,393.1
Office and other direct expenses	323.4		292.9
Billable expenses	341.3		229.3
Cost of services	2,229.1		1,915.3
Selling, general and administrative expenses	19.3		28.2
Depreciation and amortization	67.8		69.2
Restructuring charges	6.6		1.3
Total operating expenses	2,322.8		2,014.0

OPERATING INCOME	245.7		243.0

EXPENSES AND OTHER INCOME:
Interest expense	(39.4)		(49.6)
Interest income	9.8		6.9
Other expense, net	(6.2)		(83.9)
Total (expenses) and other income	(35.8)		(126.6)

INCOME BEFORE INCOME TAXES	209.9		116.4
Provision for income taxes	49.1		23.8
INCOME OF CONSOLIDATED COMPANIES	160.8		92.6
Equity in net income (loss) of unconsolidated affiliates	0.1		(0.2)
NET INCOME	160.9		92.4
Net income attributable to non-controlling interests	(1.5)		(0.7)
NET INCOME AVAILABLE TO IPG COMMON STOCKHOLDERS	$	159.4	$	91.7

Earnings per share available to IPG common stockholders:
Basic	$	0.40	$	0.23
Diluted	$	0.40	$	0.23

Weighted-average number of common shares outstanding:
Basic	394.5		391.5
Diluted	398.4		396.0

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

Table of Contents

THE INTERPUBLIC GROUP OF COMPANIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Amounts in Millions)

(Unaudited)


	Three months ended March 31,
	2022		2021
NET INCOME	$	160.9	$	92.4

OTHER COMPREHENSIVE INCOME (LOSS)
Foreign currency translation:
Foreign currency translation adjustments	(3.6)		(41.0)
Reclassification adjustments recognized in net income	0.0		0.7
	(3.6)		(40.3)
Derivative instruments:
Changes in fair value of derivative instruments	5.9		21.3
Recognition of previously unrealized net (gain) loss in net income	(0.3)		5.2
Income tax effect	(1.4)		(4.2)
	4.2		22.3
Defined benefit pension and other postretirement plans:
Net actuarial losses for the period	(0.6)		0.0
Amortization of unrecognized losses, transition obligation and prior service cost included in net income	1.7		2.3

Other	(0.1)		(0.1)
Income tax effect	0.6		(0.4)
	1.6		1.8
Other comprehensive income (loss), net of tax	2.2		(16.2)
TOTAL COMPREHENSIVE INCOME	163.1		76.2
Less: comprehensive income attributable to non-controlling interests	1.8		0.6
COMPREHENSIVE INCOME ATTRIBUTABLE TO IPG	$	161.3	$	75.6

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

Table of Contents

THE INTERPUBLIC GROUP OF COMPANIES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Amounts in Millions)

(Unaudited)


	March 31, 2022		December 31, 2021
ASSETS:
Cash and cash equivalents	$	2,402.3	$	3,270.0
Accounts receivable, net of allowance of $66.6 and $68.5, respectively	4,179.9		5,177.7
Accounts receivable, billable to clients	2,155.3		2,347.2
Assets held for sale	30.4		8.2
Other current assets	502.1		428.7
Total current assets	9,270.0		11,231.8
Property and equipment, net of accumulated depreciation and amortization of $1,228.6 and $1,201.6, respectively	654.9		675.8
Deferred income taxes	308.8		301.4
Goodwill	4,899.3		4,908.7
Other intangible assets	825.3		847.5
Operating lease right-of-use assets	1,506.5		1,544.4
Other non-current assets	416.1		399.6
TOTAL ASSETS	$	17,880.9	$	19,909.2

LIABILITIES:
Accounts payable	$	7,245.3	$	8,960.0
Accrued liabilities	590.9		918.1
Contract liabilities	760.0		688.5
Short-term borrowings	59.1		47.5
Current portion of long-term debt	0.6		0.7
Current portion of operating leases	270.3		265.8
Liabilities held for sale	28.0		9.4
Total current liabilities	8,954.2		10,890.0
Long-term debt	2,908.1		2,908.6
Non-current operating leases	1,528.9		1,576.0
Deferred compensation	288.0		329.1
Other non-current liabilities	645.0		600.7
TOTAL LIABILITIES	14,324.2		16,304.4

Redeemable non-controlling interests (see Note 5)	7.9		15.6

STOCKHOLDERS’ EQUITY:
Common stock	39.7		39.3
Additional paid-in capital	1,206.0		1,226.6
Retained earnings	3,196.7		3,154.3
Accumulated other comprehensive loss, net of tax	(892.3)		(894.2)


	3,550.1		3,526.0
Less: Treasury stock	(63.1)		—
Total IPG stockholders’ equity	3,487.0		3,526.0
Non-controlling interests	61.8		63.2
TOTAL STOCKHOLDERS’ EQUITY	3,548.8		3,589.2
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	17,880.9	$	19,909.2

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

Table of Contents

THE INTERPUBLIC GROUP OF COMPANIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in Millions)

(Unaudited)


	Three months ended March 31,
	2022		2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	160.9	$	92.4
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	67.8		69.2
Deferred income tax	19.9		18.2
Amortization of restricted stock and other non-cash compensation	12.5		20.3
Net losses on sales of businesses	6.4		12.5
Net amortization of bond discounts and deferred financing costs	0.7		2.7
Loss on early extinguishment of debt	—		74.0
Provision for uncollectible receivables	(0.4)		(2.2)

Other	12.7		4.6
Changes in assets and liabilities, net of acquisitions and divestitures, provided (using) cash:
Accounts receivable	978.0		1,158.6
Accounts receivable, billable to clients	184.7		(40.8)
Other current assets	(82.1)		(68.8)
Accounts payable	(1,685.9)		(1,347.0)
Accrued liabilities	(334.5)		(233.6)
Contract liabilities	74.4		34.7
Other non-current assets and liabilities	(48.7)		(44.6)
Net cash used in operating activities	(633.6)		(249.8)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures	(30.7)		(28.3)


Net proceeds from investments	2.6		28.8
Other investing activities	(0.7)		(0.3)
Net cash (used in) provided by investing activities	(28.8)		0.2
CASH FLOWS FROM FINANCING ACTIVITIES:
Common stock dividends	(118.3)		(109.1)
Repurchases of common stock	(63.1)		—
Tax payments for employee shares withheld	(38.3)		(22.4)
Distributions to non-controlling interests	(3.1)		(3.3)
Acquisition-related payments	(1.1)		(3.4)
Proceeds from long-term debt	—		998.1
Early extinguishment of long-term debt	—		(1,066.8)
Exercise of stock options	—		8.0
Net increase (decrease) in short-term borrowings	13.9		(2.9)
Other financing activities	(0.1)		(10.9)
Net cash used in financing activities	(210.1)		(212.7)
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash	5.0		(30.4)
Net decrease in cash, cash equivalents and restricted cash	(867.5)		(492.7)
Cash, cash equivalents and restricted cash at beginning of period	3,272.2		2,511.5
Cash, cash equivalents and restricted cash at end of period	$	2,404.7	$	2,018.8

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

Table of Contents

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		Non-controlling Interests		Total Stockholders’ Equity
	Shares	Amount
Balance at December 31, 2021	394.3	$	39.3	$	1,226.6	$	3,154.3	$	(894.2)	$	0.0	$	3,526.0	$	63.2	$	3,589.2
Net income						159.4						159.4		1.5		160.9
Other comprehensive loss								1.9				1.9		0.3		2.2
Reclassifications related to redeemable non-controlling interests				(1.2)								(1.2)		(0.1)		(1.3)
Distributions to non-controlling interests														(3.1)		(3.1)
Change in redemption value of redeemable non-controlling interests						(1.4)						(1.4)				(1.4)
Repurchase of common stock										(63.1)		(63.1)				(63.1)
Common stock dividends ($0.290 per share)						(115.6)						(115.6)				(115.6)
Stock-based compensation	2.8	0.5		17.5								18.0				18.0
Shares withheld for taxes	(1.0)	(0.1)		(36.9)								(37.0)				(37.0)
Balance at March 31, 2022	396.1	$	39.7	$	1,206.0	$	3,196.7	$	(892.3)	$	(63.1)	$	3,487.0	$	61.8	$	3,548.8


	Common Stock			Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss, Net of Tax		Total IPG Stockholders’ Equity		Non-controlling Interests		Total Stockholders’ Equity
	Shares	Amount
Balance at December 31, 2020	390.9	$	39.0	$	1,099.3	$	2,636.9	$	(880.2)	$	2,895.0	$	48.9	$	2,943.9
Net income						91.7				91.7		0.7		92.4
Other comprehensive loss								(16.1)		(16.1)		(0.1)		(16.2)
Reclassifications related to redeemable non-controlling interests												1.0		1.0
Distributions to non-controlling interests												(3.3)		(3.3)
Change in redemption value of redeemable non-controlling interests						1.0				1.0				1.0

Common stock dividends ($0.270 per share)						(106.5)				(106.5)				(106.5)
Stock-based compensation	2.6	0.3		23.4						23.7				23.7
Exercise of stock options	0.6	0.1		8.2						8.3				8.3
Shares withheld for taxes	(0.9)	(0.1)		(23.0)						(23.1)				(23.1)
Other												0.4		0.4
Balance at March 31, 2021	393.2	$	39.3	$	1,107.9	$	2,623.1	$	(896.3)	$	2,874.0	$	47.6	$	2,921.6

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

Table of Contents

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 effects of the coronavirus ("COVID-19") pandemic have impacted and will likely continue to impact our results of operations, cash flows and financial position. The Company’s Consolidated Financial Statements presented herein reflect the latest estimates and assumptions made by management that affect the reported amounts of assets and liabilities and related disclosures as of the date of the consolidated financial statements and reported amounts of revenue and expenses during the reporting periods presented. The Company believes it has used reasonable estimates and assumptions to assess the fair values of goodwill, long-lived assets and indefinite-lived intangible assets; assessment of the annual effective tax rate; valuation of deferred income taxes and allowance for expected credit losses on future uncollectible accounts receivable.

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 Annual Report on Form 10-K for the year ended December 31, 2021 (the “2021 Annual Report”).

Effective January 1, 2022, the Company completed a managerial and operational review, which resulted in organizational realignments to our financial reporting segment structure. As a result, the Company determined we conduct our business across three reportable segments described in Note 11. The three reportable segments are: Media, Data & Engagement Solutions ("MD&E"), Integrated Advertising & Creativity Led Solutions ("IA&C"), and Specialized Communications & Experiential Solutions ("SC&E"). In conjunction with the new reporting structure, the Company has recast certain prior period amounts, wherever applicable, to reflect our revised organizational alignment. This change does not impact the unaudited consolidated statements of operations and comprehensive income, consolidated balance sheets, consolidated statement of cash flows and consolidated statements of stockholders' equity for any of the previously reported periods.

Cost of services is comprised of the expenses of our revenue-producing reportable segments, MD&E, IA&C, and SC&E, including salaries and related expenses, office and other direct expenses and billable expenses, and includes an allocation of the centrally managed expenses from our "Corporate and Other" group. 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 and Other, excluding depreciation and amortization.

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

Restructuring charges in 2022 consist of adjustments to the Company's restructuring actions taken during 2020 to lower our operating expenses structurally and permanently relative to revenue and to accelerate the transformation of our business, as discussed further in Note 7. Restructuring charges mainly include severance and termination costs and lease impairment costs.

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.

Table of Contents

Notes to Consolidated Financial Statements – (continued)

(Amounts in Millions, Except Per Share Amounts)

(Unaudited)

Note 2: Revenue

Disaggregation of Revenue

We have three reportable segments as of March 31, 2022: MD&E, IA&C and SC&E, as further discussed in Note 11. MD&E principally generates revenue from providing global media and communications services, digital services and products, advertising and marketing technology, e‐commerce services, data management and analytics, strategic consulting, and digital brand experience. IA&C principally generates revenue from providing advertising, corporate and brand identity services, and strategic consulting. SC&E generates revenue from providing best-in-class global public relations and communications services, events, sports and entertainment marketing, and strategic consulting.

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


	Three months ended March 31,
Total revenue:	2022		2021
United States	$	1,650.4	$	1,425.8
International:
United Kingdom	232.1		203.5
Continental Europe	204.7		195.6
Asia Pacific	215.3		210.9
Latin America	94.4		83.6
Other	171.6		137.6
Total International	918.1		831.2
Total Consolidated	$	2,568.5	$	2,257.0


	Three months ended March 31,
Net revenue:	2022		2021
United States	$	1,470.1	$	1,309.8
International:
United Kingdom	182.4		184.0
Continental Europe	179.3		175.8
Asia Pacific	174.6		169.1
Latin America	87.7		75.4
Other	133.1		113.6
Total International	757.1		717.9
Total Consolidated	$	2,227.2	$	2,027.7

Table of Contents

Notes to Consolidated Financial Statements – (continued)

(Amounts in Millions, Except Per Share Amounts)

(Unaudited)


MD&E	Three months ended March 31,
Total revenue:	2022		2021
United States	$	599.2	$	534.6
International	356.6		336.9
Total MD&E	$	955.8	$	871.5

Net revenue:
United States	$	587.8	$	527.7
International	344.3		322.1
Total MD&E	$	932.1	$	849.8


IA&C	Three months ended March 31,
Total revenue:	2022		2021
United States	$	673.9	$	599.9
International	380.3		354.0
Total IA&C	$	1,054.2	$	953.9

Net revenue:
United States	$	646.4	$	574.4
International	312.4		301.3
Total IA&C	$	958.8	$	875.7


SC&E	Three months ended March 31,
Total revenue:	2022		2021
United States	$	377.3	$	291.3
International	181.2		140.3
Total SC&E	$	558.5	$	431.6

Net revenue:
United States	$	235.9	$	207.7
International	100.4		94.5
Total SC&E	$	336.3	$	302.2

Contract Balances

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


	March 31, 2022		December 31, 2021
Accounts receivable, net of allowance of $66.6 and $68.5, respectively	$	4,179.9	$	5,177.7
Accounts receivable, billable to clients	2,155.3		2,347.2
Contract assets	54.4		62.3
Contract liabilities (deferred revenue)	760.0		688.5

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

Table of Contents

Notes to Consolidated Financial Statements – (continued)

(Amounts in Millions, Except Per Share Amounts)

(Unaudited)

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 $556.2 of unsatisfied performance obligations as of March 31, 2022, which will be recognized as services are performed over the remaining contractual terms through 2027.

Note 3: Debt and Credit Arrangements

Long-Term Debt

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


	Effective Interest Rate	March 31, 2022		December 31, 2021

4.200% Senior Notes due 2024 (less unamortized discount and issuance costs of $0.1 and $0.4, respectively)	4.240%	$	249.5	$	249.4
4.650% Senior Notes due 2028 (less unamortized discount and issuance costs of $1.2 and $2.9, respectively)	4.780%	495.9		495.8
4.750% Senior Notes due 2030 (less unamortized discount and issuance costs of $3.2 and $4.9, respectively)	4.920%	641.9		641.7
2.400% Senior Notes due 2031 (less unamortized discount and issuance costs of $0.7 and $4.2, respectively)	2.512%	495.1		495.0
3.375% Senior Notes due 2041 (less unamortized discount and issuance costs of $1.0 and $5.5, respectively)	3.448%	493.5		493.4
5.400% Senior Notes due 2048 (less unamortized discount and issuance costs of $2.7 and $4.9, respectively)	5.480%	492.4		492.3
Other notes payable and capitalized leases		40.4		41.7
Total long-term debt		2,908.7		2,909.3
Less: current portion		0.6		0.7
Long-term debt, excluding current portion		$	2,908.1	$	2,908.6

As of March 31, 2022 and December 31, 2021, the estimated fair value of the Company's long-term debt was $3,009.1 and $3,337.4, respectively. Refer to Note 12 for details.

Credit Agreement

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, 2021, we amended and restated the Credit Agreement. As amended, among other things, the maturity date of the Credit Agreement was extended to November 1, 2026 and the cost structure of the Credit Agreement was changed. The Credit Agreement continues to include a required leverage ratio of not more than 3.50 to 1.00, among other customary covenants, including limitations on our liens and the liens of our consolidated subsidiaries and limitations on the incurrence of subsidiary debt. At the election of the Company, the leverage ratio may be changed to not more than 4.00 to 1.00 for four consecutive 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.

Table of Contents

Notes to Consolidated Financial Statements – (continued)

(Amounts in Millions, Except Per Share Amounts)

(Unaudited)

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. The Credit Agreement includes covenants that, among other things, (i) limit our liens and the liens of our consolidated subsidiaries, and (ii) limit subsidiary debt. The Credit Agreement also contains a financial covenant that requires us to maintain a certain leverage ratio on a consolidated basis as of the end of each fiscal quarter. As of March 31, 2022, there were no borrowings under the Credit Agreement; however, we had $10.6 of letters of credit under the Credit Agreement, which reduced our total availability to $1,489.4. We were in compliance with all of our covenants in the Credit Agreement as of March 31, 2022.

Uncommitted Lines of Credit

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 March 31, 2022, the Company had uncommitted lines of credit in an aggregate amount of $861.4, under which we had outstanding borrowings of $59.1 classified as short-term borrowings on our Consolidated Balance Sheet. The average amount outstanding during the first quarter of 2022 was $51.4 with a weighted-average interest rate of approximately 4.7%.

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 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. During the first quarter of 2022, there was no commercial paper activity and, as of March 31, 2022, there was no commercial paper outstanding.

Table of Contents

Notes to Consolidated Financial Statements – (continued)

(Amounts in Millions, Except Per Share Amounts)

(Unaudited)

Note 4: Earnings Per Share

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


	Three Months Ended March 31,
	2022		2021
Net income available to IPG common stockholders	$	159.4	$	91.7

Weighted-average number of common shares outstanding - basic	394.5		391.5
Dilutive effect of stock options and restricted shares	3.9		4.5
Weighted-average number of common shares outstanding - diluted	398.4		396.0

Earnings per share available to IPG common stockholders:
Basic	$	0.40	$	0.23
Diluted	$	0.40	$	0.23

Note 5: Supplementary Data

Accrued Liabilities

The following table presents the components of accrued liabilities.


	March 31, 2022		December 31, 2021
Salaries, benefits and related expenses	$	386.1	$	685.4
Income taxes payable	41.6		42.8
Interest	39.3		39.0
Office and related expenses	28.2		30.5
Acquisition obligations	7.4		15.4
Restructuring charges	4.5		8.1
Other	83.8		96.9
Total accrued liabilities	$	590.9	$	918.1

Other Expense, Net

Results of operations for the three months ended March 31, 2022 and 2021 include certain items that are not directly associated with our revenue-producing operations.


	Three months ended March 31,
	2022		2021
Net losses on sales of businesses	$	(6.4)	$	(12.5)
Loss on early extinguishment of debt	—		(74.0)
Other	0.2		2.6
Other expense, net	$	(6.2)	$	(83.9)

Net losses on sales of businesses – During the three months ended March 31, 2022 and 2021, the amounts recognized were related to sales of businesses and the classification of certain assets and liabilities, consisting primarily of accounts receivable and accounts payable, respectively, as held for sale within our MD&E, IA&C, and SC&E reportable segments. The businesses sold and held for sale primarily represent unprofitable, non-strategic agencies which are expected to be sold within the next twelve months.

Table of Contents

Notes to Consolidated Financial Statements – (continued)

(Amounts in Millions, Except Per Share Amounts)

(Unaudited)

Loss on early extinguishment of debt – During the three months ended March 31, 2021, we recorded a loss of $74.0 related to the early extinguishment of all $250.0 aggregate principal amount of our 4.000% unsecured senior notes due 2022, all $500.0 aggregate principal amount of our 3.750% unsecured senior notes due 2023, and $250.0 of the $500.0 aggregate principal amount of our 4.200% unsecured senior notes due 2024.

Share Repurchase Program

In February 2022, our Board of Directors (the "Board") reauthorized a program to repurchase, from time to time, up to $400.0 of our common stock.

We may effect such repurchases through open market purchases, trading plans established in accordance with U.S. Securities and Exchange Commission ("SEC") rules, derivative transactions or other means. The timing and amount of repurchases in future periods will depend on market conditions and other funding requirements.

The following table presents our share repurchase activity under our share repurchase programs for the three months ended March 31, 2022 and 2021.


	Three months ended March 31,
	2022		2021
Number of shares repurchased	1.8		—
Aggregate cost, including fees	$	63.1	$	—
Average price per share, including fees	$	35.21	$	—

As of March 31, 2022, $337.0, excluding fees, remains available for repurchase under the share repurchase program reauthorized in 2022, which has no expiration date.

Redeemable Non-controlling Interests

Many of our acquisitions include provisions under which the non-controlling equity owners may require us to purchase additional interests in a subsidiary at their discretion. Redeemable non-controlling 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 non-controlling interests.


	Three months ended March 31,
	2022		2021
Balance at beginning of period	$	15.6	$	93.1
Change in related non-controlling interests balance	(1.0)		0.2
Changes in redemption value of redeemable non-controlling interests:

Additions	1.1		0.0
Redemptions	(9.1)		(5.7)
Redemption value adjustments	1.3		(2.4)
Balance at end of period	$	7.9	$	85.2

Goodwill

As discussed in Note 11, the Company transitioned to the new segment reporting structure effective January 1, 2022 which resulted in certain changes to our operating segments and reporting units. We have allocated goodwill to our reporting units using a relative fair value approach. In addition, we completed an assessment of any potential goodwill impairment for all reporting units immediately prior and subsequent to the reallocation and determined that no impairment existed.

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 following table sets forth details of changes in goodwill by reportable segment of the Company:

Table of Contents

Notes to Consolidated Financial Statements – (continued)

(Amounts in Millions, Except Per Share Amounts)

(Unaudited)


	IAN		DXTRA		MD&E		IA&C		SC&E		Total
Balance at January 1, 2021	$	4,264.5	$	681.0	$	—	$	—	$	—	$	4,945.5
Dispositions	(0.2)		0.0		—		—		—		(0.2)
Foreign Currency and Other	(32.7)		(3.9)		—		—		—		(36.6)
Balance at December 31, 2021	$	4,231.6	$	677.1	$	—	$	—	$	—	$	4,908.7
Goodwill Reallocation 1	(4,231.6)		(677.1)		2,293.0		1,920.2		695.5		—
Balance at January 1, 2022	—		—		2,293.0		1,920.2		695.5		4,908.7
Foreign Currency and Other	—		—		(2.3)		(6.1)		(1.0)		(9.4)
Balance at March 31, 2022	$	—	$	—	$	2,290.7	$	1,914.1	$	694.5	$	4,899.3

1 Represents the reallocation of goodwill as a result of the reorganization as described in Note 11.

Note 6: Income Taxes

For the three months ended March 31, 2022, our income tax expense was positively impacted by excess tax benefits on employee share-based payments, the majority of which is typically recognized in the first quarter due to the timing of the vesting of awards, partially offset by net losses on sales of businesses and the classification of certain assets as held for sale for which we received minimal tax benefit.

We have various tax years under examination by tax authorities in various countries, and in various states, 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 $35.0 and $45.0 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 2016. 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 2010.

Table of Contents

Notes to Consolidated Financial Statements – (continued)

(Amounts in Millions, Except Per Share Amounts)

(Unaudited)

Note 7: Restructuring Charges

Beginning in the second quarter of 2020, the Company took restructuring actions to lower its operating expenses structurally and permanently relative to revenue and to accelerate the transformation of our business (the “2020 Restructuring Plan”). These actions continued through the fourth quarter of 2020, and most were based on our recent experience and learning in the COVID-19 pandemic and a resulting review of our operations to address certain operating expenses such as occupancy expense and salaries and related expenses.

Lease impairment costs, which relate to the office spaces that were vacated as part of the 2020 Restructuring Plan, included impairments of operating lease right-of-use assets and associated leasehold improvements, furniture and asset retirement obligations in addition to losses and gains related to early lease terminations. Lease impairments were calculated based on estimated fair values using market participant assumptions including forecasted net discounted cash flows related to the operating lease right-of-use assets.

All restructuring actions were identified and initiated in 2020, with all actions completed by the end of the fourth quarter of 2020. The amounts for the three months ended March 31, 2022 are adjustments to the actions taken in 2020.

The components of the restructuring charges related to the 2020 Restructuring Plan are listed below.


	Three months ended March 31,
	2022		2021
Severance and termination costs	$	0.3	$	1.5
Lease impairment costs	5.3		(0.4)
Other restructuring costs	1.0		0.2
Total restructuring charges	$	6.6	$	1.3

Net restructuring charges were comprised of $6.1 at IA&C and $0.4 at SC&E for the three months ended March 31, 2022, which include non-cash lease impairment costs of $5.1 at IA&C and $0.2 at SC&E.

Net restructuring charges were comprised of $0.4 at IA&C and $0.9 at SC&E for the three months ended March 31, 2021.

A summary of the restructuring activities taken in the first three months of 2022 related to the 2020 Restructuring Plan is as follows:


	2020 Restructuring Plan
	Liability at December 31, 2021		Restructuring Expense		Non-Cash Items		Cash Payments		Liability at March 31, 2022
Severance and termination costs	$	9.4	$	0.3	$	0.0	$	4.8	$	4.9
Lease impairment costs	0.0		5.3		5.3		0.0		0.0
Other restructuring costs	0.0		1.0		1.0		0.0		0.0
Total	$	9.4	$	6.6	$	6.3	$	4.8	$	4.9

Note 8: Incentive Compensation Plans

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 stockholders. We issued the following stock-based awards under the 2019 Performance Incentive Plan (the "2019 PIP") during the three months ended March 31, 2022.


	Awards	Weighted-average grant-date fair value (per award)
Restricted stock (units)	1.2	$	36.67
Performance-based stock (shares)	1.5	$	30.05

Total stock-based compensation awards	2.7

During the three months ended March 31, 2022, the Compensation Committee granted performance cash awards under the 2019 PIP and restricted cash awards under the 2020 Restricted Cash Plan with a total annual target value of $45.1 and $11.9,

Table of Contents

Notes to Consolidated Financial Statements – (continued)

(Amounts in Millions, Except Per Share Amounts)

(Unaudited)

respectively. Cash awards are expensed over the vesting period, which is typically three years for performance cash awards and two years or three years for restricted cash awards.

Note 9: 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		Derivative Instruments		Defined Benefit Pension and Other Postretirement Plans		Total
Balance as of December 31, 2021	$	(723.2)	$	22.9	$	(193.9)	$	(894.2)
Other comprehensive (loss) income before reclassifications	(3.9)		4.4		0.3		0.8
Amount reclassified from accumulated other comprehensive loss, net of tax	0.0		(0.2)		1.3		1.1
Balance as of March 31, 2022	$	(727.1)	$	27.1	$	(192.3)	$	(892.3)


	Foreign Currency Translation Adjustments		Derivative Instruments		Defined Benefit Pension and Other Postretirement Plans		Total
Balance as of December 31, 2020	$	(637.6)	$	6.8	$	(249.4)	$	(880.2)
Other comprehensive (loss) income before reclassifications	(40.9)		18.4		0.0		(22.5)
Amount reclassified from accumulated other comprehensive loss, net of tax	0.7		3.9		1.8		6.4
Balance as of March 31, 2021	$	(677.8)	$	29.1	$	(247.6)	$	(896.3)