Interpublic Announces Fourth Quarter and Full Year 2008 Results
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Revenue
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Fourth quarter 2008 revenue of
$1.90 billion , compared to$1.98 billion the same period a year ago. Full year 2008 revenue of$6.96 billion , compared to$6.55 billion in 2007. - Organic revenue decrease of 2.2% compared to the fourth quarter of 2007. For the full year 2008, organic revenue increase was 3.8% relative to 2007.
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Fourth quarter 2008 revenue of
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Operating Results
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Operating income in the fourth quarter of 2008 was
$330.6 million , compared to$271.8 million in 2007, an increase of 21.6%. For the full year 2008, operating income was$589.7 million , compared to income of$344.3 million in 2007, an increase of 71.3%. -
Operating margin was 17.4% and 8.5% for the three and twelve
months ended
December 31, 2008 , respectively, compared to 13.7% and 5.3% for the three and twelve months endedDecember 31, 2007 , respectively. -
Cash flow provided by operations was
$865.3 million for the full year 2008 compared to$298.1 million in 2007.
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Operating income in the fourth quarter of 2008 was
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Net Results
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Fourth quarter 2008 net income was
$217.0 million and net income applicable to common stockholders was$209.8 million , or$0.45 per basic and$0.39 per diluted share. This compares to net income a year ago of$178.4 million and net income applicable to common stockholders of$162.7 million , or$0.35 per basic and$0.31 per diluted share, respectively. Net results in the fourth quarter of 2008 and 2007 include the impact of the reversal of net tax valuation allowances of$38.8 million and$21.0 million , respectively, which are the direct result of improved profitability in certain markets outside of the U.S. -
Full year 2008 net income was
$295.0 million and net income applicable to common stockholders was$265.2 million , or$0.57 per basic and$0.52 per diluted share. This compares to net income of$167.6 million and net income applicable to common stockholders of$131.3 million , or$0.29 per basic and$0.26 per diluted share, respectively.
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Fourth quarter 2008 net income was
“Our 2008 results were very strong – we posted organic revenue growth that is at the top end of our industry and continued to demonstrate significant improvement in profitability. We are pleased with the progress we are seeing across all of our businesses,” said Michael I. Roth, Interpublic’s Chairman and CEO. “While meeting our 2008 financial objectives is gratifying, the latter part of the fourth quarter and the early part of 2009 have begun to show the negative effect that the broader economic situation is having on the marketing services sector. Our long-standing conservative approach to financial and balance sheet management has us well-positioned for these volatile times. Given that it’s unclear how pronounced or lasting the downturn will be, we must continue to remain focused on the basics: delivering value to our clients and ensuring that we continue to manage to our margins. These are the fundamentals that will allow us to come through this difficult period and ensure future growth.”
Operating Results
Revenue
Reported revenue of
Operating Expenses
During the fourth quarter of 2008, reported salaries and related
expenses were
During the fourth quarter of 2008, reported office and general expenses
were
Non-Operating and Tax
Net interest expense of
Other (expense) income was
The tax provision in the fourth quarter of 2008 was
The tax provision for the full year 2008 was
Balance Sheet
At
About Interpublic
Interpublic is one of the world's leading organizations of advertising
agencies and marketing services companies. Major global brands include
Draftfcb, FutureBrand,
Cautionary Statement
This release contains forward-looking statements. Statements in this release that are not historical facts, including statements about management’s beliefs and expectations, constitute forward-looking statements. These statements are based on current plans, estimates and projections, and are subject to change based on a number of factors, including those outlined under Item 1A, Risk Factors, in our most recent annual report on Form 10-K. Forward-looking statements speak only as of the date they are made, and we undertake no obligation to update publicly any of them in light of new information or future events.
Forward-looking statements involve inherent risks and uncertainties. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. Such factors include, but are not limited to, the following:
- potential effects of a weakening 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 2008 Form 10-K.
THE INTERPUBLIC GROUP OF COMPANIES, INC. AND SUBSIDIARIES | |||||||||||
CONSOLIDATED SUMMARY OF EARNINGS | |||||||||||
FOURTH QUARTER REPORT 2008 AND 2007 | |||||||||||
(Amounts in Millions except Per Share Data) | |||||||||||
(UNAUDITED) | |||||||||||
Three Months Ended December 31, | |||||||||||
2008 | 2007 | Fav. (Unfav.) % Variance | |||||||||
Revenue: | |||||||||||
United States | $ | 982.5 | $ | 1, 001.2 | (1.9 | )% | |||||
International | 919.3 | 981.3 | (6.3 | )% | |||||||
Total Revenue | 1,901.8 | 1,982.5 | (4.1 | )% | |||||||
Operating Expenses: | |||||||||||
Salaries and Related Expenses | 1,081.1 | 1,106.0 | 2.3 | % | |||||||
Office and General Expenses | 484.2 | 578.2 | 16.3 | % | |||||||
Restructuring and Other Reorganization-Related Charges | 5.9 | 26.5 | 77.7 | % | |||||||
Total Operating Expenses | 1,571.2 | 1,710.7 | 8.2 | % | |||||||
Operating Income | 330.6 | 271.8 | 21.6 | % | |||||||
Operating Income % | 17.4 | % | 13.7 | % | |||||||
Expenses and Other Income: | |||||||||||
Interest Expense | (48.0 | ) | (64.7 | ) | |||||||
Interest Income | 15.6 | 32.8 | |||||||||
Other Expense (Income) | (0.8 | ) | 6.8 | ||||||||
Total (Expenses) and Other Income | (33.2 | ) | (25.1 | ) | |||||||
Income before Income Taxes | 297.4 | 246.7 | |||||||||
Provision for Income Taxes | 65.7 | 60.2 | |||||||||
Income of Consolidated Companies | 231.7 | 186.5 | |||||||||
Income Applicable to Minority Interests, net of tax | (15.7 | ) | (11.0 | ) | |||||||
Equity in Net Income of Unconsolidated Affiliates, net of tax | 1.0 | 2.9 | |||||||||
Net Income | 217.0 | 178.4 | |||||||||
Dividends on Preferred Stock | 6.9 | 6.9 | |||||||||
Allocation to Participating Securities | 0.3 | 8.8 | |||||||||
Net Income Applicable to Common Stockholders | $ | 209.8 | $ | 162.7 | |||||||
Earnings Per Share of Common Stock | |||||||||||
Basic | $ | 0.45 | $ | 0.35 | |||||||
Diluted | 0.39 | 0.31 | |||||||||
Weighted Average Number of Common Shares Outstanding – | |||||||||||
Basic | 463.4 | 458.9 | |||||||||
Diluted | 562.7 | 545.3 |
THE INTERPUBLIC GROUP OF COMPANIES, INC. AND SUBSIDIARIES | |||||||||||
CONSOLIDATED SUMMARY OF EARNINGS | |||||||||||
ANNUAL REPORT 2008 AND 2007 | |||||||||||
(Amounts in Millions except Per Share Data) | |||||||||||
(UNAUDITED) | |||||||||||
Twelve Months Ended December 31, | |||||||||||
2008 | 2007 | Fav. (Unfav.) % Variance | |||||||||
Revenue: | |||||||||||
United States | $ | 3,786.3 | $ | 3,651.3 | 3.7 | % | |||||
International | 3,176.4 | 2,902.9 | 9.4 | % | |||||||
Total Revenue | 6,962.7 | 6,554.2 | 6.2 | % | |||||||
Operating Expenses: | |||||||||||
Salaries and Related Expenses | 4,342.6 | 4,139.2 | (4.9 | )% | |||||||
Office and General Expenses | 2,013.3 | 2,044.8 | 1.5 | % | |||||||
Restructuring and Other Reorganization-Related Charges | 17.1 | 25.9 | 34.0 | % | |||||||
Total Operating Expenses | 6,373.0 | 6,209.9 | (2.6 | )% | |||||||
Operating Income | 589.7 | 344.3 | 71.3 | % | |||||||
Operating Income % | 8.5 | % | 5.3 | % | |||||||
Expenses and Other Income: | |||||||||||
Interest Expense | (211.9 | ) | (236.7 | ) | |||||||
Interest Income | 90.6 | 119.6 | |||||||||
Other Income | 3.1 | 8.5 | |||||||||
Total (Expenses) and Other Income | (118.2 | ) | (108.6 | ) | |||||||
Income before Income Taxes | 471.5 | 235.7 | |||||||||
Provision for Income Taxes | 156.6 | 58.9 | |||||||||
Income of Consolidated Companies | 314.9 | 176.8 | |||||||||
Income Applicable to Minority Interests, net of tax | (23.0 | ) | (16.7 | ) | |||||||
Equity in Net Income of Unconsolidated Affiliates, net of tax | 3.1 | 7.5 | |||||||||
Net Income | 295.0 | 167.6 | |||||||||
Dividends on Preferred Stock | 27.6 | 27.6 | |||||||||
Allocation to Participating Securities | 2.2 | 8.7 | |||||||||
Net Income Applicable to Common Stockholders | $ | 265.2 | $ | 131.3 | |||||||
Earnings Per Share of Common Stock | |||||||||||
Basic | $ | 0.57 | $ | 0.29 | |||||||
Diluted | 0.52 | $ | 0.26 | ||||||||
Weighted Average Number of Common Shares Outstanding – | |||||||||||
Basic | 461.5 | 457.7 | |||||||||
Diluted | 518.3 | 503.1 |
Source: Interpublic
Interpublic
Philippe Krakowsky, 212-704-1328
or
Analysts,
Investors
Jerry Leshne, 212-704-1439