united STATES SECuRITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 8-K CuRRENT REPORT PuRSuANT TO SECTION 13 OR 15( d ) OF THE SECuRITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): October 17, 2017 OMNICOM GROuP INC. (Exact Name of Registrant as Specified in its Charter) New York (State or other jurisdiction of incorporation) 1-10551 (Commission File Number) 13-1514814 (IRS Employer Identification No.) 437 Madison Avenue, New York, NY (Address of principal executive offices) 10022 (Zip Code) Registrant s telephone number, including area code: (212) 415-3600 Not Applicable (Former name or former address, if changed since last report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions ( see General Instruction A.2. below): Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 ( 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 ( 240.12b-2 of this chapter). 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.
Item 2.02 Results of Operations and Financial Condition. On October 17, 2017, Omnicom Group Inc. ( Omnicom or the Company ) published an earnings release reporting its financial results for the three and nine months ended September 30, 2017. A copy of the earnings release is attached as Exhibit 99.1 hereto and is incorporated by reference herein. Following the publication of the earnings release, Omnicom hosted an earnings call in which its financial results were discussed. The investor presentation materials used for the call are attached as Exhibit 99.2 hereto and are incorporated by reference herein. On October 17, 2017, Omnicom posted the materials attached as Exhibits 99.1 and 99.2 on its web site (www.omnicomgroup.com). Certain statements in the exhibits to this Current Report on Form 8-K constitute forward-looking statements, including statements within the meaning of the Private Securities Litigation Reform Act of 1995. In addition, from time to time, the Company or its representatives have made, or may make, forward-looking statements, orally or in writing. These statements may discuss goals, intentions and expectations as to future plans, trends, events, results of operations or financial condition, or otherwise, based on current beliefs of the Company s management as well as assumptions made by, and information currently available to, the Company s management. Forward-looking statements may be accompanied by words such as aim, anticipate, believe, plan, could, should, would, estimate, expect, forecast, future, guidance, intend, may, will, possible, potential, predict, project or similar words, phrases or expressions. These forward-looking statements are subject to various risks and uncertainties, many of which are outside the Company s control. Therefore, you should not place undue reliance on such statements. Factors that could cause actual results to differ materially from those in the forward-looking statements include: international, national or local economic conditions that could adversely affect the Company or its clients; losses on media purchases and production costs incurred on behalf of clients; reductions in client spending, a slowdown in client payments and a deterioration in the credit markets; ability to attract new clients and retain existing clients in the manner anticipated; changes in client advertising, marketing and corporate communications requirements; failure to manage potential conflicts of interest between or among clients; unanticipated changes relating to competitive factors in the advertising, marketing and corporate communications industries; ability to hire and retain key personnel; currency exchange rate fluctuations; reliance on information technology systems; changes in legislation or governmental regulations affecting the Company or its clients; risks associated with assumptions the Company makes in connection with its critical accounting estimates and legal proceedings; and the Company s international operations, which are subject to the risks of currency repatriation restrictions, social or political conditions and regulatory environment. The foregoing list of factors is not exhaustive. You should carefully consider the foregoing factors and the other risks and uncertainties that may affect the Company s business, including those described under Risk Factors in Omnicom's Annual Report on Form 10-K for the year ended December 31, 2016 and other documents filed from time to time with the Securities and Exchange Commission. Except as required under applicable law, the Company does not assume any obligation to update these forward-looking statements. The foregoing information (including the exhibits hereto) is being furnished and shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as expressly set forth by specific reference in such filing. Item 9.01. Financial Statements and Exhibits. (d) Exhibits. Exhibit Number Description 99.1 Earnings release dated October 17, 2017. 99.2 Investor presentation materials dated October 17, 2017.
EXHIBIT INDEX Exhibit Number Description 99.1 Earnings release dated October 17, 2017. 99.2 Investor presentation materials dated October 17, 2017. 2
SIGNATuRES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. OMNICOM GROuP INC. Date: October 17, 2017 By: /s/ Andrew L. Castellaneta Name: Andrew L. Castellaneta Title: Senior Vice President, Chief Accounting Officer 3
Exhibit 99.1 Omnicom Group Reports Third Quarter and Year-to-Date 2017 Results NEW YORK, October 17, 2017 - Omnicom Group Inc. (NYSE: OMC) today announced that its diluted net income per common share for the third quarter of 2017 increased seven cents, or 6.6%, to $1.13 per share versus $1.06 per share for the third quarter of 2016. Omnicom s worldwide revenue in the third quarter of 2017 decreased 1.9% to $3,719.5 million from $3,791.1 million in the third quarter of 2016. The components of the change in revenue included an increase in revenue from the positive foreign exchange rate impact of 1.0%, a decrease in acquisition revenue, net of disposition revenue of 5.7% and an increase in revenue from organic growth of 2.8% when compared to the third quarter of 2016. Across our regional markets, organic growth in the third quarter of 2017 as compared to the third quarter of 2016 was 2.1% in North America, 3.8% in the United Kingdom, 7.8% in the Euro Markets and Other Europe, 1.4% in Asia Pacific, while Latin America decreased 5.4% and Middle East and Africa decreased 1.6%. Organic growth in the third quarter of 2017 as compared to the third quarter of 2016 in our four fundamental disciplines was as follows: advertising increased 4.7%, CRM increased 0.1%, public relations decreased 0.4% and specialty communications increased 5.1%. Operating profit in the third quarter of 2017 increased $11.1 million, or 2.4%, to $464.2 million from $453.1 million in the third quarter of 2016. Our operating margin for the third quarter of 2017 increased to 12.5% versus 12.0% for the third quarter of 2016. For the third quarter of 2017, our income tax rate was 31.6% compared to 32.7% for the same period in 2016. The year over year difference resulted from the adoption of FASB Accounting Standards Update 2016-09, Compensation - Stock Compensation: Improvements to Employee Share-Based Payment Accounting ("ASU 2016-09") on January 1, 2017. Income tax expense for the third quarter of 2017 included a benefit
Omnicom Group Inc. of $4.8 million arising from a cash tax deduction on restricted stock awards that vested and stock option awards that were exercised in the third quarter of 2017 in excess of the book tax deduction on the amortization of these awards over the vesting period. In prior periods only the book tax deduction was reflected in income tax expense. ASU 2016-09 is required to be adopted prospectively, and prior periods have not been restated. Net income - Omnicom Group Inc. for the third quarter of 2017 increased $9.8 million, or 3.9%, to $263.6 million from $253.8 million in the third quarter of 2016, including the effects of the adoption of ASU 2016-09. Year-to-date Diluted net income per common share for the nine months ended September 30, 2017 increased twenty-four cents, or 7.3%, to $3.55 per share compared to $3.31 per share for the nine months ended September 30, 2016. Worldwide revenue for the nine months ended September 30, 2017 decreased 0.7% to $11,097.1 million from $11,175.1 million in the same period of 2016. The components of the change in revenue included a decrease in revenue from the negative foreign exchange rate impact of 0.5%, a decrease in acquisition revenue, net of disposition revenue of 3.7% and an increase in revenue from organic growth of 3.5% when compared to the same period of 2016. Across our regional markets, organic growth for the nine months ended September 30, 2017 as compared to the same period of 2016 was 1.1% in North America, 7.1% in the United Kingdom, 7.9% in the Euro Markets and Other Europe, 5.7% in Asia Pacific, 1.0% in Latin America and 17.8% in the Middle East and Africa. Organic growth for the nine months ended September 30, 2017 compared to the same period in 2016 in our four fundamental disciplines was as follows: advertising increased 5.0%, CRM increased 1.9%, public relations increased 0.3% and specialty communications increased 3.5%. Operating profit for the nine months ended September 30, 2017 increased $32.6 million, or 2.3%, to $1,439.6 million compared to $1,407.0 million for the same Page 2
Omnicom Group Inc. period in 2016. Our operating margin for the nine months ended September 30, 2017 increased to 13.0% versus 12.6% for the same period in 2016. For the nine months ended September 30, 2017, our income tax rate was 31.1% compared to 32.6% for the same period in 2016. The year over year difference resulted from the adoption of ASU 2016-09 on January 1, 2017. Income tax expense for the nine months ended September 30, 2017 included a benefit of $19.5 million arising from a cash tax deduction on restricted stock awards that vested and stock option awards that were exercised in the first nine months of 2017 in excess of the book tax deduction on the amortization of these awards over the vesting period. In prior periods only the book tax deduction was reflected in income tax expense. ASU 2016-09 is required to be adopted prospectively, and prior periods have not been restated. Net income - Omnicom Group Inc. for the nine months ended September 30, 2017 increased $35.7 million, or 4.5%, to $834.0 million from $798.3 million in the same period in 2016. Non-GAAP Financial Measures We use certain non-gaap financial measures in describing our performance. We use EBITA (defined as earnings before interest, taxes and amortization of intangibles) and EBITA margin (defined as EBITA divided by revenue) as additional operating performance measures, which exclude the non-cash amortization expense of intangible assets (primarily consisting of amortization arising from acquisitions). Accordingly, we believe they are useful measures for investors to evaluate the performance of our businesses. The financial tables at the end of this document reconcile the GAAP financial measure of net income to EBITA for the periods presented. For the third quarter of 2017, EBITA increased $10.0 million, or 2.1%, to $492.1 million from $482.1 million in the third quarter of 2016. Our EBITA margin increased to 13.2% for the third quarter of 2017 versus 12.7% in the third quarter of 2016. For the nine months ended September 30, 2017, EBITA increased 2.3%, or $33.7 million, to $1,526.4 million from $1,492.7 million for the same period in 2016. Our EBITA margin for the nine months ended September 30, 2017 increased to 13.8% versus 13.4% for the same period in 2016. Page 3
Omnicom Group Inc. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information presented in compliance with U.S. GAAP. Non-GAAP financial measures reported by us may not be comparable to similarly titled amounts reported by other companies. Definitions - Components of Revenue Change We use certain terms in describing the components of the change in revenue above. Foreign exchange rate impact: calculated by translating the current period s local currency revenue using the prior period average exchange rates to derive current period constant currency revenue. The foreign exchange rate impact is the difference between the current period revenue in U.S. Dollars and the current period constant currency revenue. Acquisition revenue, net of disposition revenue: Acquisition revenue is calculated as if the acquisition occurred twelve months prior to the acquisition date by aggregating the comparable prior period revenue of acquisitions through the acquisition date. As a result, acquisition revenue excludes the positive or negative difference between our current period revenue subsequent to the acquisition date and the comparable prior period revenue and the positive or negative growth after the acquisition date is attributed to organic growth. Disposition revenue is calculated as if the disposition occurred twelve months prior to the disposition date by aggregating the comparable prior period revenue of disposals through the disposition date. The acquisition revenue and disposition revenue amounts are netted in the presentation above. Organic growth: calculated by subtracting the foreign exchange rate impact component and the acquisition revenue, net of disposition revenue component from total revenue growth. About Omnicom Group Inc. Omnicom Group Inc. (NYSE: OMC) (www.omnicomgroup.com) is a leading global marketing and corporate communications company. Omnicom s branded networks and numerous specialty firms provide advertising, strategic media planning and buying, digital and interactive marketing, direct and promotional marketing, public relations and other specialty communications services to over 5,000 clients in more than 100 countries. Follow us on Twitter for the latest news. Page 4
Omnicom Group Inc. For a live webcast or a replay of our third quarter earnings conference call, go to http://investor.omnicomgroup.com/investor-relations/news-events-and-filings. Contacts Investor Relations: Media: Shub Mukherjee, 212-415-3011 Joanne Trout, 212-415-3669 shub.mukherjee@omnicomgroup.com joanne.trout@omnicomgroup.com Page 5
Omnicom Group Inc. Consolidated Statements of Income Three Months Ended September 30 (Unaudited) (Dollars in Millions, Except Per Share Data) 2017 2016 Revenue $ 3,719.5 $ 3,791.1 Operating Expenses: Salary and service costs 2,770.5 2,851.6 Occupancy and other costs 316.7 309.2 Costs of services 3,087.2 3,160.8 Selling, general and administrative expenses 99.5 104.1 Depreciation and amortization 68.6 73.1 3,255.3 3,338.0 Operating Profit 464.2 453.1 Interest Expense 59.0 52.9 Interest Income 12.6 10.9 Income Before Income Taxes 417.8 411.1 Income Tax Expense (a) 132.0 134.3 Income From Equity Method Investments 1.1 1.4 Net Income 286.9 278.2 Net Income Attributed To Noncontrolling Interests 23.3 24.4 Net Income - Omnicom Group Inc. 263.6 253.8 Less: Net income allocated to participating securities 0.3 1.2 Net income available for common shares $ 263.3 $ 252.6 Net income per common share - Omnicom Group Inc. Basic $ 1.14 $ 1.06 Diluted $ 1.13 $ 1.06 Weighted average shares (in millions) Basic 231.2 237.4 Diluted 232.7 238.7 Dividend declared per common share $ 0.55 $ 0.55 (a) On January 1, 2017, we adopted FASB ASU 2016-09, "Improvements to Employee Share-Based Payment Accounting" (ASU 2016-09), which requires all additional tax benefits or deficiencies related to share-based compensation to be recognized in the results of operations on the restricted stock vesting date or on the exercise date for stock options. ASU 2016-09 is required to be adopted on a prospective basis and retroactive restatement is not permitted. As a result, income tax expense for the three months ended September 30, 2017 reflects a reduction of $4.8 million arising from a larger cash tax deduction as compared to the book tax deduction resulting from the vesting of restricted stock and stock options that were exercised in the third quarter of 2017. The larger tax deduction is primarily due to the increase in the intrinsic value of these awards that resulted from an increase in the price of our common stock since the grant date of the awards. Page 6
Omnicom Group Inc. Consolidated Statements of Income Nine Months Ended September 30 (Unaudited) (Dollars in Millions, Except Per Share Data) 2017 2016 Revenue $ 11,097.1 $ 11,175.1 Operating Expenses: Salary and service costs 8,200.8 8,298.9 Occupancy and other costs 915.7 925.8 Costs of services 9,116.5 9,224.7 Selling, general and administrative expenses 328.6 323.1 Depreciation and amortization 212.4 220.3 9,657.5 9,768.1 Operating Profit 1,439.6 1,407.0 Interest Expense 169.2 157.6 Interest Income 38.0 30.6 Income Before Income Taxes 1,308.4 1,280.0 Income Tax Expense (a) 406.7 417.7 Income From Equity Method Investments 2.7 4.0 Net Income 904.4 866.3 Net Income Attributed To Noncontrolling Interests 70.4 68.0 Net Income - Omnicom Group Inc. 834.0 798.3 Less: Net income allocated to participating securities 1.4 4.8 Net income available for common shares $ 832.6 $ 793.5 Net income per common share - Omnicom Group Inc. Basic $ 3.58 $ 3.33 Diluted $ 3.55 $ 3.31 Weighted average shares (in millions) Basic 232.6 238.4 Diluted 234.4 239.6 Dividend declared per common share $ 1.65 $ 1.60 (a) On January 1, 2017, we adopted FASB ASU 2016-09, "Improvements to Employee Share-Based Payment Accounting" (ASU 2016-09), which requires all additional tax benefits or deficiencies related to share-based compensation to be recognized in the results of operations on the restricted stock vesting date or on the exercise date for stock options. ASU 2016-09 is required to be adopted on a prospective basis and retroactive restatement is not permitted. As a result, income tax expense for the nine months ended September 30, 2017 reflects a reduction of $19.5 million arising from a larger cash tax deduction as compared to the book tax deduction resulting from the vesting of restricted stock and stock options that were exercised in the first nine months of 2017. The larger tax deduction is primarily due to the increase in the intrinsic value of these awards that resulted from an increase in the price of our common stock since the grant date of the awards. Page 7
Omnicom Group Inc. Reconciliation of Non-GAAP Financial Measures Three Months Ended September 30 (Unaudited) (Dollars in Millions) 2017 2016 Net Income - Omnicom Group Inc. $ 263.6 $ 253.8 Net Income Attributed To Noncontrolling Interests 23.3 24.4 Net Income 286.9 278.2 Income From Equity Method Investments 1.1 1.4 Income Tax Expense 132.0 134.3 Income Before Income Taxes 417.8 411.1 Interest Income 12.6 10.9 Interest Expense 59.0 52.9 Operating Profit 464.2 453.1 Add back: Amortization of intangible assets 27.9 29.0 Earnings before interest, taxes and amortization of intangible assets ("EBITA") $ 492.1 $ 482.1 Revenue $ 3,719.5 $ 3,791.1 EBITA $ 492.1 $ 482.1 EBITA Margin - % 13.2 % 12.7 % The above table reconciles the U.S. GAAP financial measure of Net Income - Omnicom Group Inc. to EBITA (defined as earnings before interest, taxes and amortization of intangibles) and EBITA Margin (defined as EBITA divided by revenue) for the periods presented. We use EBITA and EBITA margin as additional operating performance measures, which exclude the non-cash amortization expense of intangible assets (primarily consisting of amortization arising from acquisitions). Accordingly, we believe they are useful measures for investors to evaluate the performance of our businesses. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information presented in compliance with U.S. GAAP. Non-GAAP financial measures reported by us may not be comparable to similarly titled amounts reported by other companies. Page 8
Omnicom Group Inc. Reconciliation of Non-GAAP Financial Measures Nine Months Ended September 30 (Unaudited) (Dollars in Millions) 2017 2016 Net Income - Omnicom Group Inc. $ 834.0 $ 798.3 Net Income Attributed To Noncontrolling Interests 70.4 68.0 Net Income 904.4 866.3 Income From Equity Method Investments 2.7 4.0 Income Tax Expense 406.7 417.7 Income Before Income Taxes 1,308.4 1,280.0 Interest Income 38.0 30.6 Interest Expense 169.2 157.6 Operating Profit 1,439.6 1,407.0 Add back: Amortization of intangible assets 86.8 85.7 Earnings before interest, taxes and amortization of intangible assets ("EBITA") $ 1,526.4 $ 1,492.7 Revenue $ 11,097.1 $ 11,175.1 EBITA $ 1,526.4 $ 1,492.7 EBITA Margin - % 13.8 % 13.4 % The above table reconciles the U.S. GAAP financial measure of Net Income - Omnicom Group Inc. to EBITA (defined as earnings before interest, taxes and amortization of intangibles) and EBITA Margin (defined as EBITA divided by revenue) for the periods presented. We use EBITA and EBITA margin as additional operating performance measures, which exclude the non-cash amortization expense of intangible assets (primarily consisting of amortization arising from acquisitions). Accordingly, we believe they are useful measures for investors to evaluate the performance of our businesses. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information presented in compliance with U.S. GAAP. Non-GAAP financial measures reported by us may not be comparable to similarly titled amounts reported by other companies. Page 9
Third Quarter 2017 Results October17,2017 Investor Presentation Exhibit 99.2
2017 vs. 2016 P&L Summary Third Quarter Revenue $ 3,719.5 $ 3,791.1 (a) OperatingExpenses 3,255.3 3,338.0 Operating Profit 464.2 453.1 NetInterestExpense46.4 42.0 (b) (b) IncomeTaxExpense 132.0 134.3 (b) (b) TaxRate% 31.6%32.7% IncomefromEquityMethodInvestments1.1 1.4 NetIncomeAttributedToNoncontrollingInterests23.3 24.4 Net Income - Omnicom Group Inc. $ 263.6 $ 253.8 Third Quarter 2017 2016 (a) Additional information on our operating expenses can be found on page 23. (b) On January 1, 2017, we adopted FASB Accounting Standards Update 2016-09, Compensation Stock Compensation: Improvements to Employee Share-Based Payment Accounting (ASU 2016-09), which requires all additional tax benefits or deficiencies related to share-based compensation to be recognized in results of operations on the restricted stock vesting date or on the exercise date for stock options. ASU 2016-09 is required to be adopted on a prospective basis and retroactive restatement is not permitted. As a result, income tax expense for the three months ended September 30, 2017 reflects a reduction of $4.8 million arising from a larger cash tax deduction as compared to the book tax deduction resulting from the vesting of restricted stock and stock options that were exercised in the three months ended September 30, 2017. The reduction of our income tax expense impacted our tax rate, reducing our effective tax rate by 1.1% to 31.6% for the three months ended September 30, 2017. The larger tax deduction is primarily due to the increase in the intrinsic value of these awards that resulted from an increase in the price of our common stock since the grant date of the awards. October 17, 2017 1
2017 vs. 2016 Earnings per Share Diluted Third Quarter Net Income - Omnicom Group Inc. $ 263.6 $ 253.8 NetIncomeallocatedtoparticipatingsecurities(0.3) (1.2) (a) NetIncomeavailableforcommonshares $ 263.3 $ 252.6 DilutedShares(millions)232.7 238.7 Earnings per Share - Diluted $ 1.13 $ 1.06 DividendsDeclaredperCommonShare$ 0.55 $ 0.55 Third Quarter 2017 2016 (a) On January 1, 2017, we adopted ASU 2016-09, as described on page 1. The impact of the adoption of ASU 2016-09 increased net income available for common shares for the three months ended September 30, 2017 by $4.8 million. October 17, 2017 2
2017 vs. 2016 P&L Summary Year to Date Revenue $ 11,097.1 $ 11,175.1 (a) OperatingExpenses 9,657.5 9,768.1 Operating Profit 1,439.6 1,407.0 NetInterestExpense131.2 127.0 (b) (b) IncomeTaxExpense 406.7 417.7 (b) (b) TaxRate% 31.1%32.6% IncomefromEquityMethodInvestments2.7 4.0 NetIncomeAttributedToNoncontrollingInterests70.4 68.0 Net Income - Omnicom Group Inc. $ 834.0 $ 798.3 Year to Date 2017 2016 (a) Additional information on our operating expenses can be found on page 23. (b) On January 1, 2017, we adopted ASU 2016-09 as described on page 1. As a result, income tax expense for the nine months ended September 30, 2017 reflects a reduction of $19.5 million arising from a larger cash tax deduction as compared to the book tax deduction resulting from the vesting of restricted stock and stock options that were exercised in the first nine months of 2017 The reduction of our income tax expense impacted our tax rate, reducing our effective tax rate by 1.5% to 31.1% for the nine months ended September 30, 2017. The larger tax deduction is primarily due to the increase in the intrinsic value of these awards that resulted from an increase in the price of our common stock since the grant date of the awards. October 17, 2017 3
2017 vs. 2016 Earnings per Share Diluted Year to Date Net Income - Omnicom Group Inc. $ 834.0 $ 798.3 NetIncomeallocatedtoparticipatingsecurities(1.4) (4.8) (a) NetIncomeavailableforcommonshares $ 832.6 $ 793.5 DilutedShares(millions)234.4 239.6 Earnings per Share - Diluted $ 3.55 $ 3.31 DividendsDeclaredperCommonShare$ 1.65 $ 1.60 Year to Date 2017 2016 (a) On January 1, 2017, we adopted ASU 2016-09, as described on page 1. The impact of the adoption of ASU 2016-09 increased net income available for common shares for the nine months ended September 30, 2017 by $19.5 million. October 17, 2017 4
2017 Total Revenue Change Third Quarter Year to Date $ % $ % PriorPeriodRevenue$ 3,791.1 $ 11,175.1 (a) Foreignexchangerateimpact 38.9 1.0% (59.2) -0.5% Acquisitionrevenue,netofdisposition (c) Organicgrowth 105.9 2.8% 394.0 3.5% CurrentPeriodRevenue$ 3,719.5-1.9% $ 11,097.1-0.7% (b) (216.4) -5.7% (412.8) -3.7% revenue (a) Foreign exchange rate impact: calculated by translating the current period s local currency revenue using the prior period average exchange rates to derive current period constant currency revenue. The foreign exchange rate impact is the difference between the current period revenue in U.S. Dollars and the current period constant currency revenue. (b) Acquisition revenue, net of disposition revenue: Acquisition revenue is calculated as if the acquisition occurred twelve months prior to the acquisition date by aggregating the comparable prior period revenue of acquisitions through the acquisition date. As a result, acquisition revenue excludes the positive or negative difference between our current period revenue subsequent to the acquisition date and the comparable prior period revenue and the positive or negative growth after the acquisition date is attributed to organic growth. Disposition revenue is calculated as if the disposition occurred twelve months prior to the disposition date by aggregating the comparable prior period revenue of disposals through the disposition date. The acquisition revenue and disposition revenue amounts are netted in the presentation above. (c) Organic growth: calculated by subtracting the foreign exchange rate impact component and the acquisition revenue, net of disposition revenue component from total revenue growth. October 17, 2017 5
2017 Revenue by Region Third Quarter Year to Date AsiaAsiaPacificPacific11.1%10.7% 9.6%9.2% October 17, 2017 6 LatinAfricaLatinAfricaAmericaMideastAmericaMideast3.2%1.8%3.1%2.0% EuroEuroMarkets&Markets&OtherOther NorthNorthEuropeEuropeAmericaAmerica17.7%17.1%56.6%57.9%UKUK
2017 Revenue by Region Third Quarter Year to Date $ 2,107.5-6.5% 2.1% $ 6,422.5-4.2% 1.1% NorthAmericaNorthAmerica 357.6 2.8% 3.8% 1,017.2-3.0% 7.1% UKUK 660.1 11.7% 7.8% 1,900.6 7.2% 7.9% Euro&OtherEuropeEuro&OtherEurope 411.2-1.8% 1.4% 1,191.5 1.5% 5.7% AsiaPacificAsiaPacific 117.7 4.6% -5.4% 345.5 20.6% 1.0% LatinAmericaLatinAmerica 65.4-2.7% -1.6% 219.8 18.1% 17.8% AfricaMidEastAfricaMidEast $ 3,719.5-1.9% 2.8% $ 11,097.1-0.7% 3.5% TotalTotal (a) (a) % Organic % Organic $ Mix % Growth Growth $ Mix % Growth Growth (a) Organic Growth reflects the year-over-year increase or decrease in revenue from the prior period, excluding the foreign exchange rate impact and acquisition revenue, net of disposition revenue, as defined on page 5. October 17, 2017 7
2017 Revenue by Discipline Third Quarter Year to Date 9.3% 9.2% 30.9%30.2% Specialty Specialty7.5% 7.6%PR PR AdvertisingAdvertising52.3%53.0%CRMCRM % Organic % Organic $ Mix % Growth Growth (a) $ Mix % Growth Growth (a) Advertising$ 1,946.1-1.4% 4.7% Advertising$ 5,884.7 0.7% 5.0% CRM1,149.4-4.5% 0.1% CRM3,352.4-4.3% 1.9% PR345.9-0.5% -0.4% PR1,013.8-0.2% 0.3% Specialty278.1 4.2% 5.1% Specialty846.2 3.9% 3.5% Total$ 3,719.5-1.9% 2.8% Total$ 11,097.1-0.7% 3.5% (a) Organic Growth reflects the year-over-year increase or decrease in revenue from the prior period, excluding the foreign exchange rate impact and acquisition revenue, net of disposition revenue, as defined on page 5. October 17, 2017 8
Revenue by Industry Year to Date 2017 Year to Date 2016 T&EAutoT&EAuto 5%5% 9%9% 6%6% OtherOther22%23% October 17, 2017 9 6%10%7%8%TelcomTelcom ConsumerConsumerProductsProductsTechTech10%9% FinancialFinancialServicesServicesRetail7%Retail7% Food&Food&Pharma&Pharma&BeverageBeverageHealthHealth13%14%12%12%
Cash Flow Performance Nine Months Ended September 30 2017 2016 Net Income $ 904.4 $ 866.3 DepreciationandAmortizationExpense212.4 220.3 Share-BasedCompensationExpense60.6 69.8 OtherItemstoReconciletoNetCashUsedinOperating (b) (6.1) (22.0) Activities,net (a) (b) Free Cash Flow $ 1,171.3 $ 1,134.4 Additional information regarding our cash flows can be found in our condensed cash flow statement on page 19. (a) The Free Cash Flow amounts presented above are non-gaap liquidity measures. See page 26 for the definition of this measure and page 22 for the reconciliation of the non-gaap financial measures, which reconciles Free Cash Flow to the Net Cash Used in Operating Activities for the periods presented above. (b) On January 1, 2017 we adopted ASU 2016-09. ASU 2016-09 also provided that cash flows related to additional tax benefits or deficiencies related to share-based compensation be classified in operating activities on a retrospective basis. Accordingly, for the nine months ended September 30, 2016, free cash flow increased $19.1 million to conform the prior year s free cash flow to the current presentation. However, as a result of the adoption of ASU 2016-09, there was no effect on net free cash flow (as detailed on page 11) for the nine months ended September 30, 2016 related to the reclassification. October 17, 2017 10
Cash Flow Performance Nine Months Ended September 30 2017 2016 (a) Free Cash Flow $ 1,171.3 $ 1,134.4 (b) Primary Uses of Cash: DividendspaidtoCommonShareholders387.9 374.2 DividendspaidtoNoncontrollingInterestShareholders87.1 71.1 CapitalExpenditures108.3 100.5 AcquisitionofBusinessesandAffiliates,AcquisitionofAdditionalNoncontrollingInterests,ContingentPurchasePricePayments,netof87.1 438.3 ProceedsfromInvestments StockRepurchases,netofProceedsfromStockPlans513.7 441.6 (b) (a) Primary Uses of Cash 1,184.1 1,425.7 (b) Net Free Cash Flow (a) $ (12.8) $ (291.3) Additional information regarding our cash flows can be found in our condensed cash flow statement on page 19. (a) The Free Cash Flow, Primary Uses of Cash and Net Free Cash Flow amounts presented above are non-gaap liquidity measures. See page 26 or the definition of these measures and page 22 for the reconciliation of non-gaap financial measures, which reconciles Free Cash Flow to the Net Cash Used in Operating Activities and Net Free Cash Flow to the Net Decrease in Cash and Cash Equivalents for the periods presented above. (b) On January 1, 2017 we adopted ASU 2016-09. ASU 2016-09 also provides that cash flows related to additional tax benefits or deficiencies related to share-based compensation be classified in operating activities on a retrospective basis. In the prior year the additional benefits or deficiencies were classified in financing activities (grouped with stock repurchases and proceeds from stock plans). As a result of the adoption of ASU 2016-09, for the nine months ended September 30, 2016 free cash flow increased by $19.1 million to conform to the current presentation, with a corresponding increase in primary uses of cash. However, as a result of the adoption of ASU 2016-09, there was no effect on net free cash flow for the nine months ended September 30, 2016 related to the reclassification. October 17, 2017 11
Current Credit Picture Twelve Months Ended September 30 2017 2016 (a) EBITDA $ 2,326.5 $ 2,275.1 (b) GrossInterestExpense221.3 204.7 EBITDA/GrossInterestExpense10.5 x 11.1 x TotalDebt/EBITDA2.1 x 2.2 x NetDebt /EBITDA1.3 x 1.3 x Debt (c) BankLoans(DueLessThan1Year)$ 39 $ 25 CP&BorrowingsIssuedUnderRevolver SeniorNotes 4,900 4,900 OtherDebt27 107 Total Debt $ 4,966 $ 5,032 Cash,CashEquivalentsandShortTermInvestments1,851 1,969 Net Debt (b) $ 3,115 $ 3,063 (a) EBITDA is a non-gaap performance measure. See page 26 for the definition of this measure and page 21 for the reconciliation of non-gaap financial measures. (b) Net Debt is a non-gaap liquidity measure. See page 26 for the definition of this measure, which is reconciled in the table above. (c) See pages 16 and 17 for additional information on our Senior Notes. October 17, 2017 12
Historical Returns Return on Invested Capital (ROIC) (a) : TwelvemonthsendedSeptember30,201720.2% TwelvemonthsendedSeptember30,201619.4% (b) Return on Equity : TwelvemonthsendedSeptember30,201748.9% TwelvemonthsendedSeptember30,201647.1% (a) Return on Invested Capital is After Tax Reported Operating Profit (a non-gaap performance measure see page 26 for the definition of this measure and page 22 for the reconciliation of non-gaap financial measures) divided by the average of Invested Capital at the beginning and the end of the period (book value of all long-term liabilities and short-term interest bearing debt plus shareholders equity less cash, cash equivalents and short term investments). (b) Return on Equity is Reported Net Income for the given period divided by the average of shareholders equity at the beginning and end of the period. October 17, 2017 13
Net Cash Returned to Shareholders through Dividends and Share Repurchases From 2007 through September 30, 2017, Omnicom distributed 106% of Net Income to shareholders through Dividends and Share Repurchases. Billions 2.7 105% $6.5 2.2 $6.0 99% $5.5 98% $4.5 1.8 1.5 76% $3.6 $4.0 106% $12.0 106% $10.7 107% $9.9 $10.0 107% $8.7 3.6 102% $7.6 3.2 $8.0 98% 1.1 7.7 $2.8 7.2 0.8 6.6 101% $2.0 5.9 4.4 4.9 $2.0 $1.0 0.6 3.5 2.7 1.6 $0.0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 YTD 2017 Cumulative Cost of Net Shares Repurchased - Payments for repurchases of common stock less proceeds from stock plans. Cumulative Dividends Paid Cumulative Net Income - Omnicom Group Inc. % of Cumulative Net Income Returned to Shareholders - Cumulative Dividends Paid plus Cumulative Cost of Net Shares Repurchased divided by Cumulative Net Income. October 17, 2017 14
Supplemental Financial Information October 17, 2017 15
Omnicom Debt Structure BankLoans$39 2019SeniorNotes$500 2026SeniorNotes$1,4002020SeniorNotes$1,000 2024SeniorNotes2022Senior$750Notes$1,250 The above chart sets forth Omnicom s debt outstanding at September 30, 2017. The amounts reflected above for the 2019, 2020, 2022, 2024 and 2026 Senior Notes represent the principal amount of these notes at maturity on July 15, 2019, August 15, 2020, May 1, 2022, November 1, 2024 and April 15, 2026, respectively. October 17, 2017 16
Omnicom Debt Maturity Profile $1,400 Senior Notes $1,200 2020 Senior Notes $1,000 $400 $200 $0 2026 Senior 2022 Notes 2024 Senior $800 Notes 2019 $600 Senior Notes Other Borrowings 1718181919 20202121 2222 23 23 242425 25 26 - - - - - - - 26-----------DecJunDecJunDecJunDecJunDecJunDecJunDecJunDecJunDecJunDec - Other borrowings at September 30, 2017 include short-term borrowings of $39 million which are due in less than one year. For purposes of this presentation we have included these borrowings as outstanding through July 31, 2021, the date of expiration of our five-year credit facility. October 17, 2017 17
2017 Acquisition Related Expenditures Year to Date (a) (b) (c) AcquisitionofBusinessesandAffiliates $ 27.3 AcquisitionofAdditionalNoncontrollingInterests 10.2 ContingentPurchasePricePayments 107.7 Total Acquisition Expenditures (d) $ 145.2 (a) Includes acquisitions of a majority interest in agencies resulting in their consolidation, including additional interest in existing affiliate agencies resulting in majority ownership. (b) Includes the acquisition of additional equity interests in already consolidated subsidiary agencies which are recorded to Equity Noncontrolling Interest. (c) Includes additional consideration paid for acquisitions completed in prior periods. (d) Total Acquisition Expenditures figure is net of cash acquired. October 17, 2017 18
Condensed Cash Flow Nine Months Ended September 30 2017 2016 Net Income $ 904.4 $ 866.3 (a) Share-BasedCompensation60.6 69.8 DepreciationandAmortizationofIntangibleAssets212.4 220.3 OtherItemstoReconciletoNetCashUsedinOperatingActivities,net(6.1) (22.0) ChangesinOperatingCapital(1,327.3) (798.7) (a) Net Cash (Used in)/provided by Operating Activities (156.0) 335.7 CapitalExpenditures(108.3) (100.5) Proceedsfrom/(Purchasesof)Investments58.1 (16.4) AcquisitionofBusinessesandInterestinAffiliates,netofcashacquired(27.3) (268.5) Net Cash Used in Investing Activities (77.5) (385.4) (a) DividendspaidtoCommonShareholders(387.9) (374.2) DividendspaidtoNoncontrollingInterestShareholders(87.1) (71.1) ProceedsfromShort-term&Long-termDebt,net7.5 388.4 StockRepurchases,netofProceedsfromStockPlans(513.7) (441.6) AcquisitionofAdditionalNoncontrollingInterests(10.2) (59.8) PaymentofContingentPurchasePriceObligations(107.7) (93.6) OtherFinancingActivities,net(22.8) (24.7) (a) Net Cash Used in Financing Activities (1,121.9) (676.6) Effect of exchange rate changes on cash and cash equivalents 196.2 57.7 Net Decrease in Cash and Cash Equivalents $ (1,159.2) $ (668.6) (a) On January 1, 2017 we adopted ASU 2016-09. ASU 2016-09 also provides that cash flows related to additional tax benefits or deficiencies related to share-based compensation be classified in operating activities on a retrospective basis. In the prior year the additional benefits or deficiencies were classified as net proceeds in financing activities (grouped with stock repurchases and proceeds from stock plans). Accordingly, for the nine months ended September 30, 2016, net cash provided by operating activities increased $19.1 million and net cash used in financing activities increased $19.1 million to conform to the current presentation. However there was no effect on the net decrease in cash and cash equivalents for the nine months ended September 30, 2016 related to the reclassification. October 17, 2017 19
2017 vs. 2016 Non-GAAP Financial Measures EBITA Revenue $ 3,719.5 $ 3,791.1 $ 11,097.1 $ 11,175.1 (a) Operatingexpenses 3,255.3 3,338.0 9,657.5 9,768.1 Operating Profit 464.2 453.1 1,439.6 1,407.0 OperatingProfitMargin%12.5%12.0%13.0%12.6% Addback:Amortizationofintangibleassets27.9 29.0 86.8 85.7 (b) EBITA $ 492.1 $ 482.1 $ 1,526.4 $ 1,492.7 (c) EBITAMargin% 13.2%12.7%13.8%13.4% (a) Additional information regarding our operating expenses can be found on page 23. Third Quarter Year to Date 2017 2016 2017 2016 (b) EBITA is a non-gaap financial performance measure. Please see page 26 for the definition of this measure and page 21 for the reconciliation of non-gaap financial measures, which reconciles the EBITA figures presented above to net income for the periods presented above. (c) EBITA Margin is a non-gaap financial performance measure. Please see page 26 for the definition of this measure, which is calculated by dividing EBITA by revenue for the periods presented. October 17, 2017 20
Reconciliation of Non-GAAP Financial Measures EBITA and EBITDA Three Months Ended Nine Months Ended Twelve Months Ended September 30 September 30 September 30 2017 2016 2017 2016 2017 2016 Net Income - Omnicom Group Inc. $ 263.6 $ 253.8 $ 834.0 $ 798.3 $ 1,184.3 $ 1,129.9 NetIncomeAttributedtoNoncontrolling Interests23.3 24.4 70.4 68.0 100.5 100.7 Net Income 286.9 278.2 904.4 866.3 1,284.8 1,230.6 IncomefromEquityMethodInvestments1.1 1.4 2.7 4.0 4.1 6.2 IncomeTaxExpense132.0 134.3 406.7 417.7 589.5 594.4 Income Before Tax 417.8 411.1 1,308.4 1,280.0 1,870.2 1,818.8 NetInterestExpense46.4 42.0 131.2 127.0 171.3 163.6 Operating Profit 464.2 453.1 1,439.6 1,407.0 2,041.5 1,982.4 AmortizationofIntangibleAssets27.9 29.0 86.8 85.7 116.3 114.2 EBITA 492.1 482.1 1,526.4 1,492.7 2,157.8 2,096.6 Depreciation40.7 44.1 125.6 134.6 168.7 178.5 EBITDA $ 532.8 $ 526.2 $ 1,652.0 $ 1,627.3 $ 2,326.5 $ 2,275.1 The above reconciles the GAAP financial measure of Net Income Omnicom Group Inc. to the non-gaap financial measures of EBITDA and EBITA for the periods presented. EBITDA and EBITA, which are defined on page 26, are non-gaap financial measures within the meaning of applicable SEC rules and regulations. Our credit facility defines EBITDA as earnings before deducting interest expense, income taxes, depreciation and amortization. Our credit facility uses EBITDA to measure our compliance with covenants, such as interest coverage and leverage ratios, as presented on page 12 of this presentation. October 17, 2017 21
Reconciliation of Non-GAAP Financial Measures Nine Months Ended September 30 2017 2016 Net Cash (Used in)/provided by Operating Activities $ (156.0) $ 335.7 (a) Operating Activities items excluded from Free Cash Flow: ChangesinOperatingCapital(1,327.3) (798.7) Free Cash Flow $ 1,171.3 $ 1,134.4 (a) Nine Months Ended September 30 2017 2016 Net Decrease in Cash and Cash Equivalents $ (1,159.2) $ (668.6) Cash Flow items excluded from Net Free Cash Flow: ChangesinOperatingCapital(1,327.3) (798.7) ProceedsfromShort-term&Long-termDebt,net7.5 388.4 OtherFinancingActivities,net(22.8) (24.7) Effectofexchangeratechangesoncashandcashequivalents196.2 57.7 Net Free Cash Flow $ (12.8) $ (291.3) (b) EffectiveTaxRatefortheapplicableperiod31.5% 32.7% IncomeTaxesonReportedOperatingProfit643.1 648.2 After Tax Reported Operating Profit $ 1,398.4 $ 1,334.2 Twelve Months Ended September 30 2017 2016 Reported Operating Profit 2,041.5 1,982.4 (a) On January 1, 2017 we adopted ASU 2016-09. ASU 2016-09 also provided that cash flows related to additional tax benefits or deficiencies related to share-based compensation be classified in operating activities on a retrospective basis. In the prior year the additional benefits or deficiencies were classified in financing activities. Accordingly, for the nine months ended September 30, 2016, net cash provided by operating activities increased $19.1 million and free cash flow increased $19.1 million to conform to the current presentation. (b) The annualized effective tax rate for the twelve months ended September 30, 2017 includes the impact of the reduction to income tax expense of $19.5 million arising from a larger cash tax deduction as compared to the book tax deduction taken on the share based awards that were vested and exercised in the nine months ended September 30, 2017 in connection with the adoption of ASU 2016-09 on January 1, 2017, as described on page 1. October 17, 2017 22
Supplemental Information Third Quarter Year to Date 2017 % of 2016 % of 2017 % of 2016 % of Rev Rev Rev Rev Revenue $ 3,719.5 $ 3,791.1 $ 11,097.1 $ 11,175.1 Operating expenses: Salaryandservicecosts2,770.5 74.5%2,851.6 75.2%8,200.8 73.9%8,298.9 74.3% Occupancyandotherexpenses316.7 8.5%309.2 8.2%915.7 8.3%925.8 8.3% Cost of services 3,087.2 83.0%3,160.8 83.4%9,116.5 82.2%9,224.7 82.5% Selling,generalandadministrativeexpenses99.5 2.7%104.1 2.7%328.6 3.0%323.1 2.9%Depreciationandamortization68.6 1.8%73.1 1.9%212.4 1.9%220.3 2.0% Total operating expenses 3,255.3 87.5%3,338.0 88.0%9,657.5 87.0%9,768.1 87.4%Operating Profit $ 464.2 $ 453.1 $ 1,439.6 $ 1,407.0 Net Interest expense: Interestexpense59.0 52.9 169.2 157.6 Interestincome12.6 10.9 38.0 30.6 Net Interest expense $ 46.4 $ 42.0 $ 131.2 $ 127.0 October 17, 2017 23
Third Quarter Acquisition Perceptive is a leading customer intelligence agency within the Australasia markets, providing technology-based research and insight for its clients. Agency services include quantitative and qualitative research, transnational and behavioral data analytics, software development, data science, visualization and client service. Perceptive also provides customer experience program management services to its clients using its internally-developed Customer Monitor platform. Located in Auckland, New Zealand, Perceptive will operate as a separate division of Clemenger Group within the BBDO Worldwide network. October 17, 2017 24
Third Quarter Acquisition Established in 2009 with a focus on Search Engine Optimization and Content Marketing & Outreach, Verve Search is a market leader providing multi-lingual SEO strategy, executing global SEO campaigns, and creating high-value content for clients. Verve has been recognized as Best Small SEO Agency at the UK Search Awards for the past two years. Based in Southwest London, United Kingdom, Verve will operate as a separate division of OMG UK within the Omnicom Media Group network. October 17, 2017 25
Disclosure The preceding materials have been prepared for use in the October 17, 2017 conference call on Omnicom s results of operations for the period ended September 30, 2017. The call will be archived on the Internet at http://investor.omnicomgroup.com/investor-relations/news-events-and-filings/. Forward-Looking Statements Certain statements in this presentation constitute forward-looking statements, including statements within the meaning of the Private Securities Litigation Reform Act of 1995. In addition, from time to time, the Company or its representatives have made, or may make, forward-looking statements, orally or in writing. These statements may discuss goals, intentions and expectations as to future plans, trends, events, results of operations or financial condition, or otherwise, based on current beliefs of the Company s management as well as assumptions made by, and information currently available to, the Company s management. Forward-looking statements may be accompanied by words such as aim, anticipate, believe, plan, could, should, would, estimate, expect, forecast, future, guidance, intend, may, will, possible, potential, predict, project or similar words, phrases or expressions. These forward-looking statements are subject to various risks and uncertainties, many of which are outside the Company s control. Therefore, you should not place undue reliance on such statements. Factors that could cause actual results to differ materially from those in the forward-looking statements include: international, national or local economic conditions that could adversely affect the Company or its clients; losses on media purchases and production costs incurred on behalf of clients; reductions in client spending, a slowdown in client payments and a deterioration in the credit markets; ability to attract new clients and retain existing clients in the manner anticipated; changes in client advertising, marketing and corporate communications requirements; failure to manage potential conflicts of interest between or among clients; unanticipated changes relating to competitive factors in the advertising, marketing and corporate communications industries; ability to hire and retain key personnel; currency exchange rate fluctuations; reliance on information technology systems; changes in legislation or governmental regulations affecting the Company or its clients; risks associated with assumptions the Company makes in connection with its critical accounting estimates and legal proceedings; and the Company s international operations, which are subject to the risks of currency repatriation restrictions, social or political conditions and regulatory environment. The foregoing list of factors is not exhaustive. You should carefully consider the foregoing factors and the other risks and uncertainties that may affect the Company s business, including those described in the Risk Factors in Omnicom s Annual Report on Form 10-K for the year ended December 31, 2016. Except as required under applicable law, the Company does not assume any obligation to update these forward-looking statements. Non-GAAP Financial Measures We present financial measures determined in accordance with generally accepted accounting principles in the United States ( GAAP ) and adjustments to the GAAP presentation ( Non-GAAP ), which we believe are meaningful for understanding our performance. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information presented in compliance with GAAP. Non-GAAP financial measures as reported by us may not be comparable to similarly titled amounts reported by other companies. We provide a reconciliation of non-gaap measures to the comparable GAAP measures on pages 20, 21 and 22. The Non-GAAP measures used in this presentation include the following: Free Cash Flow, defined as net income plus depreciation, amortization, share based compensation expense plus/(less) other items to reconcile to net cash provided by operating activities. We believe Free Cash Flow is a useful measure of liquidity to evaluate our ability to generate excess cash from our operations. Primary Uses of Cash, defined as dividends to common shareholders, dividends paid to non-controlling interest shareholders, capital expenditures, cash paid on acquisitions, payments for additional interest in controlled subsidiaries and stock repurchases, net of the proceeds and excess tax benefit from our stock plans, and excludes changes in operating capital and other investing and financing activities, including commercial paper issuances and redemptions used to fund working capital changes. We believe this liquidity measure is useful in identifying the significant uses of our cash. Net Free Cash Flow, defined as Free Cash Flow less the Primary Uses of Cash. Net Free Cash Flow is one of the metrics used by us to assess our sources and uses of cash and was derived from our consolidated statements of cash flows. We believe that this liquidity measure is meaningful for understanding our primary sources and primary uses of that cash flow. EBITDA, defined as operating profit before interest, taxes, depreciation and amortization. We believe EBITDA is meaningful operating performance measure because the financial covenants in our credit facilities are based on EBITDA. EBITA, defined as operating profit before interest, taxes and amortization and EBITA margin, defined as EBITA divided by revenue. We use EBITA and EBITA margin as additional operating performance measures, which excludes the non-cash amortization expense of intangible assets (primarily consisting of amortization arising from acquisitions). Accordingly, we believe it is a useful measure for investors to evaluate the performance of our businesses. Net Debt, defined as total debt less cash, cash equivalents and short-term investments. We believe net debt, together with the comparable GAAP measures, reflects one of the liquidity metrics used by us to assess our cash management. After Tax Reported Operating Profit, defined as reported operating profit less income taxes calculated using the effective tax rate for the applicable period. Management uses after tax operating profit as a measure of after tax operating performance as it excludes the after tax effects of financing and investing activities on results of operations. Other Information All dollar amounts are in millions except for per share amounts and figures shown on pages 2 and 4 and the net cash returned to shareholders figures on page 14. The information contained in this document has not been audited, although some data has been derived from Omnicom s historical financial statements, including its audited financial statements. In addition, industry, operational and other non-financial data contained in this document have been derived from sources that we believe to be reliable, but we have not independently verified such information, and we do not, nor does any other person, assume responsibility for the accuracy or completeness of that information. Certain amounts in prior periods have been reclassified to conform to our current presentation. The inclusion of information in this presentation does not mean that such information is material or that disclosure of such information is required. October 17, 2017 26