0000029989us-gaap:ParentMember2018-12-31

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

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

FOR THE FISCAL YEAR ENDED DECEMBER 31, ~~2018~~2020

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 the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filerþ

Smaller reporting companyo

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. o

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☑

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

The aggregate market value of the voting and non-voting common stock held by non-affiliates as of June 30, ~~2018~~2020 was ~~$16,936,300,000.~~

Portions of the Omnicom Group Inc. Definitive Proxy Statement for the Annual Meeting of Shareholders scheduled to be held on May ~~20, 2019~~4, 2021 are incorporated by reference into Part III of this report to the extent described herein.

ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, ~~2018~~2020

FORWARD-LOOKING STATEMENTS

Certain statements in this Annual Report on Form 10-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: the impact of the COVID-19 pandemic, 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; the 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; the 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 Item 1A, “Risk Factors” and Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this report. Except as required under applicable law, the Company does not assume any obligation to update these forward-looking statements.

PART I

Introduction

This report is our ~~2018~~2020 annual report to shareholders and our ~~2018~~2020 Annual Report on Form 10-K, or ~~2018~~2020 10-K.

Omnicom Group Inc., a New York corporation formed in 1986, through its branded networks and agencies provides advertising, marketing and corporate communications services to over 5,000 clients in more than ~~100~~70 countries. The terms “Omnicom,” “the Company,” “we,” “our” and “us” each refer to Omnicom Group Inc. and its subsidiaries unless the context indicates otherwise.

Item 1. Business

Our Business

Omnicom is a strategic holding company ~~and a leading global provider of~~providing advertising, marketing and corporate communications ~~services.~~services to clients through our branded networks and agencies around the world. We operate in a highly competitive industry and compete against other global, national and regional advertising and marketing services companies, as well as technology, social media and professional services companies. The proliferation of media channels, including the rapid development and integration of interactive technologies and ~~mediums,~~media, has fragmented consumer audiences targeted by our clients. These developments make it more complex for marketers to reach their target audiences in a cost-effective way, causing them to turn to global service providers such as Omnicom for a customized mix of advertising and marketing services designed to optimize their total marketing expenditure. As discussed below, in 2020 the COVID-19 pandemic negatively impacted our business.

On a global, pan-regional and local basis, our networks and agencies provide a comprehensive range of services in the following fundamental disciplines: advertising, customer relationship management, or CRM, which includes CRM Consumer Experience and CRM Execution & Support, public relations and healthcare. Advertising includes creative services, as well as strategic media planning and buying and data analytics services. CRM Consumer Experience includes Omnicom’s Precision Marketing Group and digital/direct agencies, as well as our branding, shopper marketing and experiential marketing ~~agencies and~~agencies. CRM Execution & Support includes field marketing, sales support, merchandising and point of sale, as well as other specialized marketing and custom communications services. Public relations services include corporate communications, crisis management, public affairs and media and media relations services. Healthcare includes advertising and media services to global healthcare clients. Our business model was built and continues to evolve around our clients. Our fundamental business principle is that our clients’ specific marketing requirements are the central focus of how we structure our service offerings and allocate our resources. This client-centric business model requires that multiple agencies within Omnicom collaborate in formal and informal virtual client networks utilizing our key client matrix organization structure. This collaboration allows us to cut across our internal organizational structures to execute our clients’ marketing requirements in a consistent and comprehensive manner. We use our client-centric approach to grow our business by expanding our service offerings to existing clients, moving into new markets and obtaining new clients. In addition to collaborating through our client service models, our agencies and networks collaborate across internally developed technology platforms. Annalect, our proprietary data and analytics platform, serves as the strategic resource for all of our agencies and networks to share when developing client service strategies across our virtual networks. Omni, our people-based precision marketing and insights platform, identifies and defines personalized consumer experiences at scale across creative, media and CRM, as well as other disciplines.

include:



advertising						investor relations
branding						marketing research
content marketing						media planning and buying
corporate social responsibility consulting						merchandising and point of sale
crisis communications						mobile marketing
custom publishing						multi-cultural marketing
data analytics						non-profit marketing
database management						organizational communications
digital/direct marketing						package design
digital transformation						product placement
entertainment marketing						promotional marketing
experiential marketing						public affairs
field marketing						public relations
financial/corporate business-to-business advertising						retail marketing



~~financial/corporate business-to-business advertising~~	~~retail marketing~~
graphic arts/digital imaging	sales support
healthcare marketing and communications		search engine marketing
instore design		shopper marketing
interactive marketing		social media marketing
		sports and event marketing

Certain business trends had positively impacted our business and industry. These trends include clients increasingly expanding the focus of their brand strategies from national markets to pan-regional and global markets and integrating traditional and non-traditional marketing channels, as well as utilizing new communications technologies and emerging digital platforms. As clients increase their demands for marketing effectiveness and efficiency, they ~~have made it a practice~~continue to consolidate their business within one or a small number of service ~~provider~~providers in the pursuit of a single engagement covering all consumer touch points. We have structured our business around ~~this trend.~~these trends. We believe that our key client matrix organization structure approach to collaboration and integration of our services and solutions ~~has provided~~provides a competitive advantage to our business in the past and we expect this to continue over the medium and long term. Our key client matrix organization structure facilitates superior client management and allows for greater integration of the services required by the world’s largest brands. Our ~~over-arching~~overarching strategy is to continue to use our virtual client networks to grow our business relationships with our largest clients by serving them across our networks, disciplines and geographies.

In ~~addition,~~2020, the COVID-19 pandemic negatively impacted our business and results of operations. Efforts to mitigate the impact of the pandemic, including government actions to restrict travel, limit public gatherings, shelter-in-place orders and mandatory closures of businesses, resulted in ~~2018,~~many of our clients reducing or suspending their spending for our advertising, marketing and corporate communication services. As a result, for the year ended December 31, 2020, revenue decreased 11.9%, compared to 2019, primarily due to the impact of the COVID-19 pandemic. We anticipate that the negative impact from the pandemic on our revenue will continue through the first quarter of 2021 as compared to the prior year period. However, we ~~substantially completed~~expect organic revenue growth for the ~~process~~first half of ~~forming practice~~2021. The impact of the COVID-19 pandemic on our revenue has been, and may continue to be, material, depending on several factors, including the potential for prolonged or additional governmental actions to mitigate the effects of the pandemic. It is possible that the COVID-19 pandemic will accelerate certain trends that began pre-pandemic, particularly those relating to online commerce, brand building and how we deploy our personnel. We expect that some of these trends will benefit our agencies and provide revenue growth opportunities, as well as increasing flexibility with respect to our use of physical locations and our cost structure, but some trends may negatively affect us including potential disruption by new participants and technologies (see Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” or MD&A, of this report).

We continually evaluate our portfolio of businesses to identify areas ~~within~~for investment and acquisition opportunities, as well as to identify non-strategic or underperforming businesses for disposition. For information about our ~~global network structure~~acquisitions and dispositions, see MD&A - Acquisitions and Goodwill and Notes 5 and 13, respectively, to ~~bring together agencies operating~~the consolidated financial statements. None of our acquisitions or dispositions, individually or in ~~common disciplines. This action leverages existing resources and,~~the aggregate, was material to our results of operations or financial position in ~~close coordination with our key client matrix organization, enhances~~ the ~~development of custom client solutions.~~three years ended December 31, 2020.

The various components of our business, including revenue by discipline and geographic area, and material factors that affected us in ~~2018~~2020 are discussed in ~~Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” or~~the MD&A, of this report. None of our acquisitions or dispositions, individually or in the aggregate, in the three-year period ended December 31, 2018 was material to our results of operations or financial position. For information about our acquisitions, see Note 5 to the consolidated financial statements.&A.

Our Clients

Our clients operate in virtually every sector of the global economy. In many cases, multiple agencies or networks serve different ~~brand,~~brands, product groups or both within the same client. For example, in ~~2018~~2020 our largest client represented ~~3.0%~~3.4% of revenue and was served by more than ~~225~~110 of our agencies. Our 100 largest clients, many of which represent ~~many of~~ the ~~world's major~~largest global marketers, ~~comprised~~represented approximately ~~51%~~54% of revenue and were each served, on average, by more than 6050 of our agencies.

Government Regulations

We are subject to various local, state and federal laws and regulations in the countries in which we conduct business. Compliance with these laws and regulations in the normal course of business did not have a material effect on our business, results of operations or financial position. Additional information regarding the impact of government regulations on our business is included in Item 1A. Risk Factors under the heading Regulatory Risks.

Human Capital Resources

Our ~~Employees~~

~~At December 31, 2018, we employed approximately 70,400 people worldwide.~~employees are our most important assets. We believe a critical component to our success depends on the ability to attract, develop and retain key personnel. The skill sets of our workforce across our agencies and within each discipline are similar. Common to all is the ability to understand a client’s brand or product and ~~their~~its selling proposition and to develop a unique message to communicate the value of the brand or product to the client’s target audience, whether through traditional channels or emerging digital platforms. Recognizing the importance of this core competency, we ~~have established tailored~~support and develop our employees through training and ~~education~~development programs ~~for~~that build and strengthen employees’ leadership and professional skills.

Human capital management strategies are developed collectively by senior management, including the management teams of the Company’s networks and practice areas, and are overseen by the Company’s Board of Directors. We are committed to efforts that ensure that the workplace is equitable, ethical, fosters an inclusive work environment across our ~~client service professionals around this competency.~~global workforce and respects human rights. Our human capital management priorities include, among other things, providing competitive wages and benefits, succession planning, promoting diversity and inclusion and adopting codes of conduct and business ethics to be implemented throughout the Company.

At December 31, 2020, we employed approximately 64,100 people worldwide. The United States, our largest employee base, employed about 20,800 people. None of our regular employees in the United States is represented by a labor union. The approximate number of employees in our principal geographic regions were 27,100 in the Americas, 25,800 in Europe, Middle East and Africa, or EMEA, and 11,200 in Asia Pacific. Certain employees in a few countries outside of the United States, primarily in Europe, are represented by work councils. See the MD&A for a discussion of the effect of salary and related costs on our results of operations.

Information About Our Executive Officers ~~of the Registrant~~

At ~~January 31, 2019,~~February 11, 2021, our executive officers were:



Name	Position	Age
John D. Wren	Chairman of the Board and Chief Executive Officer	6668
Philip J. Angelastro	Executive Vice President and Chief Financial Officer	5456
Michael J. O’Brien	~~Senior~~Executive Vice President, General Counsel and Secretary	5759
Andrew L. Castellaneta	Senior Vice President, Chief Accounting Officer	6062
Peter L. Swiecicki	Senior Vice President, Finance and Controller	6062
Rochelle M. Tarlowe	Senior Vice President and Treasurer	50
Jonathan B. Nelson	CEO, Omnicom Digital	5153

Each executive officer has held ~~his~~their present position for at least five years, ~~except:~~except Mr. Wren was named Chairman of the Board and Chief Executive Officer in May 2018 and previously served as President and Chief Executive Officer from 1997 to May 2018; ~~Mr. Angelastro~~and Ms. Tarlowe was named ~~Executive~~Senior Vice President and ~~Chief Financial Officer~~Treasurer in ~~September 2014~~May 2019 and previously served as Senior Vice President ~~Finance~~ and ~~Controller~~Treasurer of Avis Budget Group from ~~2002~~2007 until September 2014; Mr. Castellaneta was named Senior Vice President, Chief Accounting Officer in January 2015 and previously served as Assistant Controller from 2000 until January 2015; and Mr. Swiecicki was named Senior Vice President, Finance and Controller in January 2015 and previously served as Director of Business Operations from 2013 until January 2015 after holding various positions with BBDO Worldwide from 1983 until 2013.April 2019. Additional information about our directors and executive officers will appear in our definitive proxy statement, which is expected to be filed with the United States Securities and Exchange Commission, or SEC, by ~~April 10, 2019~~.

March 25, 2021.

Available Information

We file annual, quarterly and current reports and any amendments to those reports, proxy statements and other information with the SEC. Documents we file with the SEC are available free of charge on our website at http://investor.omnicomgroup.com, as soon as reasonably practicable after such material is filed with the SEC. The information included on or available through our website is not part of this or any other report we file with the SEC. Any document that we file with the SEC is available on the SEC’s website at www.sec.gov.

Item 1A. Risk Factors

Economic Risks

The COVID-19 pandemic has adversely impacted our business, results of operations and financial position and could adversely impact our business, results of operations and financial position in the future.

In 2020, the COVID-19 pandemic negatively impacted our business, results of operations and financial position. Most of our clients' businesses were negatively affected by the COVID-19 pandemic. As long as the COVID-19 pandemic remains a threat, global economic conditions will continue to be volatile and such uncertainty cuts across all clients, industries and geographies. Demand for our services can be expected to continue to be adversely affected as marketers reduce expenditures in the short term due to the uncertain impact of the pandemic on the global economy. The extent of the impact of the COVID-19 pandemic on our business will depend on numerous factors that we are not able to accurately predict, including the duration and scope of the pandemic, government actions to mitigate the effects of the pandemic, and the intermediate and long-term impact of the pandemic on marketers' spending plans.

Adverse economic conditions, a reduction in client spending, a deterioration in the credit markets or a delay in client payments could have a material effect on our business, results of operations and financial position.

Economic conditions have a direct impact on our business, results of operations and financial position. Adverse global or regional economic conditions, including those caused by the COVID-19 pandemic, pose a risk that clients may reduce, postpone or cancel spending on advertising, marketing and corporate communications projects. Such actions would reduce the demand for our services and could result in a reduction in our revenue, which would adversely affect our business, results of operations and

financial position. A contraction in the availability of credit may make it more difficult for us to meet our working capital requirements. In addition, a disruption in the credit markets could adversely affect our clients and could cause them to delay payment for our services or take other actions that would negatively affect our working capital. In such circumstances, we may need to obtain additional financing to fund our day-to-day working capital requirements, which may not be available on favorable terms, or at all. Even if we take action to respond to adverse economic conditions, reductions in revenue and disruptions in the credit markets by aligning our cost structure and more efficiently managing our working capital, such actions may not be effective.

In an economic downturn, the risk of a material loss related to media purchases and production costs incurred on behalf of our clients could significantly increase, and methods for managing or mitigating such risk may be less available or unavailable.

In the normal course of business, our agencies enter into contractual commitments with media providers and production companies on behalf of our clients at levels that can substantially exceed the revenue from our services. These commitments are included in accounts payable when the services are delivered by the media providers or production companies. If permitted by local law and the client agreement, many of our agencies purchase media and production services for our clients as an agent for a disclosed principal. In addition, while operating practices vary by country, media type and media vendor, in the United States and certain foreign markets, many of our agencies’ contracts with media and production providers specify that our agencies are not liable to the media and production providers under the theory of sequential liability until and to the extent we have been paid by our client for the media or production services.

Where purchases of media and production services are made by our agencies as a principal or are not subject to the theory of sequential liability, the risk of a material loss as a result of payment default by our clients could increase significantly and such a loss could have a material adverse effect on our business, results of operations and financial position.

In addition, our methods of managing the risk of payment default, including obtaining credit insurance, requiring payment in advance, mitigating the potential loss in the marketplace or negotiating with media providers, may be less available or unavailable during a severe economic downturn.

Business and Operational Risks

Clients periodically review and change their advertising, marketing and corporate communications requirements and relationships. If we are unable to remain competitive or retain key clients, our business, results of operations and financial position may be adversely affected.

We operate in a highly competitive industry. Key competitive considerations for retaining existing clients and winning new clients include our ability to develop solutions that meet client needs in a rapidly changing environment, the quality and effectiveness of our services and our ability to serve clients efficiently, particularly large multinational clients, on a broad geographic basis. While many of our client relationships are long-standing, from time to time clients put their advertising, marketing and corporate communications business up for competitive review. We have won and lost accounts as a result of these reviews. To the extent that we are not able to remain competitive or retain key clients, our revenue may be adversely affected, which could have a material adverse effect on our business, results of operations and financial position.

~~The loss of several of our largest clients could have a material adverse effect on our business, results of operations and financial position.~~

Our 100 largest clients represent approximately 51% of our revenue. Clients generally are able to reduce or cancel current or future spending on advertising, marketing and corporate communications projects at any time on short notice for any reason. A significant reduction in spending on our services by our largest clients, or the loss of several of our largest clients, if not replaced by new clients or an increase in business from existing clients, would adversely affect our revenue and could have a material adverse effect on our business, results of operations and financial position.

Acquiring new clients and retaining existing clients depends on our ability to avoid and manage conflicts of interest arising from other client relationships, retaining key personnel and maintaining a highly skilled workforce.

Our ability to acquire new clients and retain existing clients may, in some cases, be limited by clients’ perceptions of, or policies concerning, conflicts of interest arising from other client relationships. If we are unable to maintain multiple agencies to manage multiple client relationships and avoid potential conflicts of interests, our business, results of operations and financial position may be adversely affected.

~~Our employees are our most important assets and~~As a service business, our ability to attract and retain key personnel is an important aspect of our competitiveness. If we are unable to attract and retain key personnel, our ability to provide our services in the manner clients have come to expect may be adversely affected, which could harm our reputation and result in a loss of clients, which could have a material adverse effect on our business, results of operations and financial position.

~~Currency exchange rate fluctuations~~The loss of several of our largest clients could ~~impact~~have a material adverse effect on our business, results of operations and financial position.

~~Our international operations represent~~In 2020, our 100 largest clients represented approximately ~~48%~~54% of our ~~2018~~ revenue. ~~We operate~~Clients generally are able to reduce or cancel current or future spending on advertising, marketing and corporate communications projects at any time on short notice for any reason. A significant reduction in ~~all major international markets including the Euro Zone, the United Kingdom,~~spending on our services by our largest clients, or the ~~U.K., Australia, Brazil, Canada, China and Japan. Our agencies transact business in more than 50 different currencies. Substantially all~~loss of several of our ~~foreign operations transact~~largest clients, if not replaced by new clients or an increase in business ~~in their local currency~~from existing clients, would adversely affect our revenue and ~~accordingly, their financial statements are translated into U.S. Dollars. As~~could have a ~~result, both~~material adverse ~~and beneficial fluctuations in foreign exchange rates impact~~effect on our business, results of operations and financial position. ~~In addition, funds transferred to the United States can be adversely or beneficially impacted by changes in foreign currency exchange rates.~~

We rely extensively on information technology systems, and cybersecurity incidents could adversely affect us.

We rely on information technology systems and infrastructure to process, store and transmit data, summarize results, manage our business and maintain client advertising and marketing information. Increased cybersecurity threats and attacks, which are ~~becoming more sophisticated,~~constantly evolving, pose a risk to our systems and networks. For example, in February 2021, we experienced a cybersecurity incident that resulted in the disruption of certain of our information technology systems at one of our networks. Based on the information currently known and our investigation to date, we do not believe the incident will have a material impact on our business, operations or financial results. However, cybersecurity threats and attacks in the future could be material. Security breaches, improper use of our systems and unauthorized access to our data and information by employees and others may pose a risk that sensitive data may be exposed to unauthorized persons or to the public. We also have access to sensitive or personal data or information that is subject to privacy laws and regulations. Our systems and processes to protect against, detect, prevent, respond to and mitigate cybersecurity incidents and our organizational training for employees to develop an understanding of cybersecurity risks and threats may be unable to prevent material security breaches, theft, modification or loss of data, employee malfeasance and additional known and unknown threats. Such events could adversely affect our business and reputation. ~~In addition, we~~We also use third-party service providers, including cloud providers, to store, transmit and process data. ~~Our insurance may not protect us against damages resulting from~~These third-party service providers could also be subject to cybersecurity incidents ~~which~~that could adversely affect us.

In addition, in 2020 and continuing into 2021, the overwhelming majority of our workforce temporarily transitioned to working from home during the COVID-19 pandemic. The increase in the number of our employees working from home may increase certain business and procedural control risks, including increased risk of cybersecurity incidents and exposure of sensitive business and client advertising and marketing information as well as personal data or information.

Risks Related to International Operations

Currency exchange rate fluctuations have impacted, and in the future could impact our business, results of operations and financial position.

In 2020, our international operations represented approximately 45% of our revenue. We operate in all major international markets including the Euro Zone, the United Kingdom, or the U.K., Australia, Brazil, Canada, China and Japan. Our agencies transact business in more than 50 different currencies. Substantially all of our foreign operations transact business in their local currency, and accordingly their financial statements are translated into U.S. Dollars. As a result, both adverse and beneficial fluctuations in foreign exchange rates impact our business, results of operations and financial position. In addition, funds transferred to the United States can be adversely or beneficially impacted by changes in foreign currency exchange rates.

As a global business we face certain risks of doing business internationally, and we are exposed to risks from operating in high-growth markets and developing countries, which could have a material adverse effect on our business, results of operations and financial position.

The operational and financial performance of our international businesses are affected by global and regional economic conditions, competition for new business and staff, currency exchange rate fluctuations, political conditions, differing regulatory environments and other risks associated with extensive international operations. In addition, we conduct business in numerous high-growth markets and developing countries that tend to have longer billing collection cycles, currency repatriation restrictions and commercial laws that can be undeveloped, vague, inconsistently enforced, retroactively applied or frequently changed. The risks associated with our international operations could have a material adverse effect on our business, results of operations and financial position. Additionally, our operations are subject to the United States Foreign Corrupt Practices Act and other anti-corruption and anti-bribery laws and regulations. These laws and regulations are complex and stringent, and any violation could have an adverse effect on our business and reputation. For financial information by geographic region, see Note 8 to the consolidated financial statements.

We have substantial operations in the U.K. and the Euro Zone. On December 31, 2020, the U.K. completed its separation from the European Union, or E.U., (commonly referred to as “Brexit”) and entered into an agreement, or Brexit Agreement, with the E.U. that defines the terms of their relationship, covering, among other things, trade and tariffs, services and travel. The uncertainties related to the impact of the Brexit Agreement have cross-border operational, financial and tax implications, among others, and any economic volatility that may arise in the U.K., the E.U. or elsewhere may adversely affect our business.

Risks Related to Acquisitions

We may be unsuccessful in evaluating material risks involved in completed and future acquisitions.

We regularly evaluate potential acquisitions of businesses that are complementary to our businesses and client needs. As part of the process, we conduct business, legal and financial due diligence to identify and evaluate material risks involved in any particular transaction. Despite our efforts, we may be unsuccessful in ascertaining or evaluating all such risks. As a result, the intended advantages of any given acquisition may not be realized. If we fail to identify certain material risks from one or more acquisitions, our business, results of operations and financial position could be adversely affected.

Our goodwill is an intangible asset that may become impaired, which could have a material adverse effect on our business, results of operations and financial position.

In accordance with generally accepted accounting principles in the United States, or U.S. GAAP or GAAP, we have recorded a significant amount of goodwill related to our acquisitions; a substantial portion of which represents the intangible specialized know-how of the acquired workforce. As discussed in Note 2 to the consolidated financial statements, we review the carrying value of goodwill for impairment annually at June 30 and whenever events or circumstances indicate the carrying value may not be recoverable. The estimates and assumptions about future results of operations and cash flows made in connection with the impairment testing could differ from future actual results of operations and cash flows. While we have concluded, for each year presented in the financial statements included in this report, that our goodwill is not impaired, future events could cause us to conclude that the intangible asset values associated with a given operation may become impaired. Any resulting non-cash impairment charge could have a material adverse effect on our business, results of operations and financial position.

Regulatory Risks

Government regulation and consumer advocates may limit the scope and content of our services, which could affect our ability to meet our clients’ needs, which could have a material adverse effect on our business, results of operations and financial position.

Government agencies and consumer groups directly or indirectly affect or attempt to affect the scope, content and manner of presentation of advertising, marketing and corporate communications services, through regulation or other governmental action, which could affect our ability to meet our clients’ needs. Such regulation may seek, among other things, to limit the tax deductibility of advertising expenditures by certain industries or for certain products and services. In addition, there has been a tendency on the part of businesses to resort to the judicial system to challenge advertising practices and claims, which could cause our clients affected by such actions to reduce their spending on our services. Any regulatory or judicial action that affects our ability to meet our clients' needs or reduces client spending on our services could have a material adverse effect on our business, results of operations and financial position.

Further, laws and regulations related to user privacy, use of personal information and Internet tracking technologies have been proposed or enacted in the United States and a number of international markets. These laws and regulations could affect the acceptance of new communications technologies and the use of current communications technologies as advertising ~~mediums.~~media. These actions could affect our business and reduce demand for certain of our services, which ~~could have a material adverse effect on our business, results of operations and financial position.~~

As a global business we face certain risks of doing business internationally and we are exposed to risks from operating in high-growth markets and developing countries, which could have a material adverse effect on our business, results of operations and financial position.

The operational and financial performance of our international businesses are affected by global and regional economic conditions, competition for new business and staff, currency exchange rate fluctuation, political conditions, regulatory environment and other risks associated with extensive international operations. In addition, we conduct business in numerous high-growth markets and developing countries which tend to have longer billing collection cycles, currency repatriation restrictions and commercial laws that can be undeveloped, vague, inconsistently enforced, retroactively applied or frequently changed. The risks associated with our international operations could have a material adverse effect on our business, results of operations and financial position. Additionally, our operations are subject to the United States Foreign Corrupt Practices Act and other anti-corruption and anti-bribery laws and regulations. These laws and regulations are complex and stringent, and any violation could have an adverse effect on our business and reputation. For financial information by geographic region, see Note 8 to the consolidated financial statements.

We have substantial operations in the U.K. and the Euro Zone. In June 2016, voters in the U.K. elected to withdraw from the European Union, or E.U. (commonly referred to as “Brexit”). Unless the E.U. agrees to an extension, the U.K. is scheduled to exit the E.U. on March, 29, 2019, and it is possible that the U.K. may exit without an agreement in place. The uncertainties related to Brexit have cross-border operational, financial and tax implications, among others, and any economic volatility that may arise in the U.K., the E.U. or elsewhere may adversely affect our business.

~~We may be unsuccessful in evaluating material risks involved in completed and future acquisitions.~~

We regularly evaluate potential acquisitions of businesses that are complementary to our businesses and client needs. As part of the process, we conduct business, legal and financial due diligence with the goal of identifying and evaluating material risks involved in any particular transaction. Despite our efforts, we may be unsuccessful in ascertaining or evaluating all such risks. As a result, the intended advantages of any given acquisition may not be realized. If we fail to identify certain material risks from one or more acquisitions, our business, results of operations and financial position could be adversely affected.

~~Our goodwill is an intangible asset that may become impaired, which could have a material adverse effect on our business, results of operations and financial position.~~

In accordance with generally accepted accounting principles in the United States, or U.S. GAAP or GAAP, we have recorded a significant amount of goodwill related to our acquisitions; a substantial portion of which represents the intangible specialized know-how of the acquired workforce. As discussed in Note 2 to the consolidated financial statements, we review the carrying value of goodwill for impairment annually at the end of the second quarter of the year and whenever events or circumstances indicate the carrying value may not be recoverable. The estimates and assumptions about future results of operations and cash flows made in connection with the impairment testing could differ from future actual results of operations and cash flows. While we have concluded, for each year presented in the financial statements included in this report, that our goodwill is not impaired, future events could cause us to conclude that the intangible asset values associated with a given operation may become impaired. Any resulting non-cash impairment charge could have a material adverse effect on our business, results of operations and financial position.

We could be affected by future laws or regulations enacted in response to climate change concerns and other actions.

~~Generally, our~~Our businesses are not directly affected by current laws and other regulations aimed at mitigating the impact of climate change by reducing emissions or otherwise, although our businesses could be in the future. However, we could be indirectly affected by increased prices for goods or services provided to us by companies that are directly affected by ~~these~~ laws and regulations ~~and~~aimed at mitigating the impact of climate change. Specifically, these companies may seek to pass their increased costs through to their customers. Further, if our clients are impacted by such laws or requirements, either directly or indirectly, their spending for advertising and marketing services may decline, which could adversely impact our business, results of operations and financial position. Additionally, to comply with potential future changes in environmental laws and regulations, we may need to incur additional costs; therefore, at this time, we cannot estimate what impact such regulations may have on our business, results of operations and financial position.

Item 1B. Unresolved Staff Comments

None.

Item 2. Properties

We conduct business and maintain offices throughout the world. The facility requirements of our businesses are similar across geographic regions and disciplines. Substantially all our office space is leased under operating leases with varying expiration dates. Lease obligations of our foreign operations are generally denominated in their local currency. We believe that our facilities are adequate for our current operations and are well maintained. Our principal corporate offices are located at ~~437 Madison~~280 Park Avenue, New York, New York; 1055 Washington Boulevard, Stamford, Connecticut and 525 Okeechobee Boulevard, West Palm Beach, Florida. We also maintain executive offices in London, England; Shanghai, China and Singapore.

We lease substantially all our office space under operating leases that expire at various dates. Lease obligations of our foreign operations are generally denominated in their local currency. Office base rent expense was ~~$287.8 million~~, ~~$330.4 million~~Notes 2 and~~$334.1 million~~ ~~in 2018, 2017 and 2016, respectively, net of rent received from non-cancelable third-party subleases.~~

~~Future minimum office base rent under non-cancelable operating leases, net of rent receivable from existing non-cancelable third-party subleases, is (in millions):~~

Net Rent
2019 $ 308.5
2020 266.3
2021 219.6
2022 183.5
2023 150.3
Thereafter 662.4
$ 1,790.6

~~See Note~~ 16 to the consolidated financial statements ~~for~~provide a description of our lease ~~commitments,~~expense, which ~~comprise~~comprises a significant component of our occupancy and other ~~costs. See Note 22 to the consolidated financial statements for a discussion of the impact of the adoption of FASB Accounting Standards Codification Topic 842,~~ ~~Leases.~~costs, and our lease commitments.

Item 3. Legal Proceedings

In the ordinary course of business, we are involved in various legal proceedings. We do not ~~presently~~ expect that these proceedings will have a material adverse effect on our results of operations or financial position.

In December 2016, two of our subsidiaries received subpoenas from the U.S. Department of Justice Antitrust Division concerning its ongoing investigation of video production and post-production practices in the advertising industry. In November 2018, the Company received confirmation that the investigation of the Company's subsidiaries had been closed without any action taken against the Company, its subsidiaries or employees.

Item 4. Mine Safety Disclosures

Not Applicable.

PART II

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

Our common stock is listed and traded on the New York Stock Exchange under the symbol ~~“OMC.”~~OMC. As of ~~January 31, 2019,~~February 11, 2021, there were ~~2,014~~1,930 registered holders of our common stock.

Common stock repurchases during the three months ended December 31, ~~2018~~2020 were:

Period
Total Number of
Shares Purchased

Average Price Paid
Per Share

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

Maximum Number
of Shares that May
Yet Be Purchased
Under the Plans
or Programs
October 1 - 31, 2018 504,601
$ 71.56
— —
November 1 - 30, 2018 —
—
— —
December 1 - 31, 2018 260,488
70.91
— —
765,089
$ 71.34
— —


Period	Total Number of Shares Purchased	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
October 1 - October 31, 2020	51,487	$	50.22	—	—
November 1 - November 30, 2020	—	—		—	—
December 1 - December 31, 2020	5,316	64.34		—	—
	56,803	$	51.54	—	—

During the three months ended December 31, ~~2018,~~2020, we ~~purchased 600,000 shares of our common stock in the open market for general corporate purposes and~~ withheld ~~165,089~~56,803 shares from employees to satisfy estimated statutory income tax obligations related to the vesting of restricted stock ~~awards and~~awards. We did not purchase any shares of our common stock ~~option exercises.~~in the open market. The value of the common stock withheld was based on the closing price of our common stock on the applicable vesting or exercise date. There were no unregistered sales of equity securities during the three months ended December 31, ~~2018.~~2020.

For information on securities authorized for issuance under our equity compensation plans, see Item 12, “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters,” which relevant information will be included in our definitive proxy statement, which is expected to be filed with the SEC by ~~April 10, 2019~~.March 25, 2021.

~~Item 6. Selected Financial Data~~

~~The following selected financial data should be read in conjunction with our consolidated financial statements and related notes that begin on page F-1 of this report, as well as the MD&A.~~

(In millions, except per share amounts)
For the years ended December 31: 2018 2017 2016 2015 2014
Revenue $ 15,290.2
$ 15,273.6
$ 15,416.9
$ 15,134.4
$ 15,317.8
Operating Profit 2,133.5
2,083.8
2,030.5
1,920.1
1,944.1
Net Income - Omnicom Group Inc. 1,326.4
1,088.4
1,148.6
1,093.9
1,104.0
Net Income Per Common Share - Omnicom Group Inc.:

Basic 5.85
4.68
4.80
4.43
4.27
Diluted 5.83
4.65
4.78
4.41
4.24
Dividends Declared Per Common Share 2.40
2.25
2.15
2.00
1.90
(In millions)
At December 31: 2018 2017 2016 2015 2014
Cash and cash equivalents and short-term investments $ 3,657.9
$ 3,796.4
$ 3,022.8
$ 2,619.7
$ 2,390.3
Total assets 24,617.0
24,931.2
23,165.4
22,110.7
21,428.4
Long-term debt, including current portion 4,883.7
4,912.9
4,920.6
4,565.6
4,542.5
Long-term liabilities 1,197.8
1,091.2
892.3
800.5
774.3
Total shareholders’ equity 2,547.1
2,615.1
2,162.0
2,452.4
2,850.0

~~In 2018, we adopted FASB Accounting Standards Codification, or ASC, Topic 606,~~ ~~Revenue from Contracts with Customers,~~ or ASC 606. As a result of the adoption of ASC 606, in 2018 revenue and operating profit decreased $146.1 million and $6.6 million, respectively. See Note 1 to the consolidated financial statements for additional information.

In 2017, the Tax Cuts and Jobs Act, or Tax Act, reduced net income - Omnicom Group Inc. See Note 11 to the consolidated financial statements for additional information regarding the impact of the Tax Act on income tax expense.

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

EXECUTIVE SUMMARY

Impact of the COVID-19 Pandemic on our Business

In 2020, the COVID-19 pandemic negatively impacted our business and results of operations. Efforts to mitigate the impact of the pandemic, including government actions to restrict travel, limit public gatherings, shelter-in-place orders and mandatory closures of businesses, resulted in many of our clients reducing or suspending their spending for our advertising, marketing and corporate communication services. As a result, for the year ended December 31, 2020, revenue decreased $1,782.6 million, or 11.9%, compared to 2019, primarily due to the impact of the COVID-19 pandemic. We anticipate that the negative impact from the pandemic on our revenue will continue through the first quarter of 2021 as compared to the prior year period. However, we expect organic revenue growth for the first half of 2021. The impact of the COVID-19 pandemic on our revenue has been, and may continue to be, material, depending on several factors, including the potential for prolonged or additional governmental actions to mitigate the effects of the pandemic. It is possible that the COVID-19 pandemic will accelerate certain trends that began pre-pandemic, particularly those relating to online commerce, brand building and how we deploy our personnel. We expect that some of these trends will benefit our agencies and provide revenue growth opportunities, as well as increasing flexibility with respect to our use of physical locations and our cost structure, but some trends may negatively affect us including potential disruption by new participants and technologies.

In response to the impact of the COVID-19 pandemic, in the second quarter of 2020, we took actions to align our cost structure and reduce our workforce and facility requirements and continued the review of businesses for disposal and assets for impairment. As a result, we recorded a pre-tax charge of $277.9 million, which is comprised of incremental severance of $150.0 million, real estate operating lease right-of-use, or ROU, asset and other asset impairment charges of $55.8 million, other exit costs of $47.0 million and dispositions and other charges of $25.1 million (see Note 1 to the consolidated financial statements). These actions reduced headcount by over 6,000 and reduced the related facility requirements, which should result in significant reductions in future operating expenses.

In addition, during 2020, we reduced salary and service costs by $162.6 million related to reimbursements and tax credits under government programs in several countries, including the Coronavirus Aid, Relief, and Economic Security Act, or the CARES Act, in the United States, the Kurzarbeit program in Germany, and other government reimbursement programs in the U.K., France, Canada and other jurisdictions (see Note 1 to the consolidated financial statements). Further, in the fourth quarter of 2020, we recorded asset impairment charges of $55.8 million associated with underperforming assets, which is included in salary and service costs.

pandemic remains a threat, global economic conditions continue to be volatile and such uncertainty cuts across all clients, industries and geographies. Overall, while we have a diversified portfolio of service offerings, clients and geographies, demand for our services can be expected to continue to be adversely affected as marketers reduce expenditures in the short term due to the uncertain impact of the pandemic on the global economy. We expect global economic performance and our performance to vary by geography until the impact of the COVID-19 pandemic on the global economy moderates.

Although we have experienced a decrease in our cash flow from operating activities, we took numerous proactive steps to strengthen our liquidity and financial position that are intended to mitigate the potential impact of the COVID-19 pandemic on our liquidity. In February 2020, we issued $600 million 2.45% Senior Notes due April 30, 2030, or the 2.45% Notes. In March 2020, the net proceeds from the issuance of the 2.45% Notes were used to redeem the remaining $600 million principal amount of our 4.45% Senior Notes due August 15, 2020, or the 2020 Notes. As a result, we have no notes maturing until May 2022. In April 2020, we issued $600 million of 4.20% Senior Notes due June 1, 2030, or the 4.20% Notes, and we entered into a new $400 million 364 day revolving credit facility, or the 364 Day Credit Facility. The 364 Day Credit Facility is in addition to our existing $2.5 billion multi-currency revolving credit facility, or Credit Facility, which we extended to mature in February 2025. In addition, in March 2020, we suspended our share repurchase activity.

Results of Operations for the Year Ended December 31, 2020

We are a strategic holding company providing advertising, marketing and corporate communications services to clients through our branded networks and agencies around the world. On a global, pan-regional and local basis, our networks and agencies provide a comprehensive range of services in the following fundamental disciplines: advertising, CRM, which includes CRM Consumer Experience and CRM Execution & Support, public relations and healthcare. Our business model was built and continues to evolve around our clients. While our networks and agencies operate under different names and frame their ideas in different disciplines, we organize our services around our clients. Our fundamental business principle is that our clients’ specific marketing requirements are the central focus of how we structure our service offerings and allocate our resources. This client-centric business model requires that multiple agencies within Omnicom collaborate in formal and informal virtual client networks utilizing our key client matrix organization structure. This collaboration allows us to cut across our internal organizational structures to execute our clients’ marketing requirements in a consistent and comprehensive manner. We use our client-centric approach to grow our business by expanding our service offerings to existing clients, moving into new markets and obtaining new clients. In addition, we pursue selective acquisitions of complementary companies with strong entrepreneurial management teams that typically currently serve or could serve our existing clients.

As a leading global advertising, marketing and corporate communications company, we operate in all major markets and have a large and diverse client base. In ~~2018,~~2020, our largest client represented ~~3.0%~~3.4% of revenue and our 100 largest clients, which represent many of the world's major marketers, ~~comprised~~represented approximately ~~51%~~54% of revenue. Our clients operate in virtually every sector of the global economy with no one industry ~~comprising~~representing more than ~~14%~~16% of our revenue in ~~2018.~~2020. Although our revenue is generally balanced between the United States and international markets and we have a large and diverse client base, we are not immune to general economic downturns.

As described in more detail below, in 2018, revenue increased $16.6 million, or 0.1%, compared to 2017. Changes in foreign exchange rates increased revenue $85.1 million, or 0.6%, acquisition revenue, net of disposition revenue, reduced revenue $326.6 million, or 2.1%, reflecting the disposition of certain non-strategic businesses, and organic growth increased revenue $404.2 million, or 2.6%. In addition, the impact of the adoption of ASC 606 (see Note 1 to the consolidated financial statements) reduced revenue by $146.1 million, or 1.0%.

Global economic conditions have a direct impact on our business and financial performance. Adverse global or regional economic conditions, such as those currently arising from the COVID-19 pandemic, pose a risk that our clients may reduce, postpone or cancel spending on advertising, marketing and corporate communications services, which would reduce the demand for our services. Revenue is typically lower in the first and third quarters and higher in the second and fourth quarters, reflecting client spending patterns during the year and additional project work that usually occurs in the fourth quarter. ~~Additionally,~~As a result of the impact related to the COVID-19 pandemic, we experienced a significant decline in our year-over-year organic revenue growth in the second, third and fourth quarters of 2020, which will likely continue at least through the first half of 2021. We anticipate that the negative impact from the pandemic on our revenue will continue through the first quarter of 2021 as compared to the prior year period. However, we expect organic revenue growth for the first half of 2021.

In 2020, revenue decreased $1,782.6 million, or 11.9%, compared to 2019. Changes in foreign exchange rates reduced revenue $60.9 million, or 0.4%, acquisition revenue, net of disposition revenue, reduced revenue $56.7 million, or 0.4%, reflecting the disposition of certain non-strategic businesses, and organic growth reduced revenue $1,665.0 million, or 11.1%.

Certain global events targeted by major marketers for advertising expenditures, such as the FIFA World Cup and the Olympics, and certain national events, such as the U.S. election process, may affect our revenue period-over-period in certain businesses. Typically, these events do not have a significant impact on our revenue in any period.

Beginning in March 2020 and continuing through the fourth quarter of 2020, our business experienced the effects from reductions in client spending due to the impact related to the COVID-19 pandemic. The spending reductions impacted all our businesses and markets. The most significantly impacted businesses were our advertising discipline, CRM Consumer Experience discipline, especially in our event marketing businesses, and CRM Execution & Support discipline, primarily in our field marketing and merchandising businesses. In ~~2018, our agencies in~~ North America, ~~continued their modest growth with uneven performance across~~we experienced a decline in organic revenue attributable to the COVID-19 pandemic in all our ~~service disciplines.~~disciplines, except healthcare. In Europe ~~while mixed~~and the Middle East and Africa, almost all businesses

and regions experienced a decline in organic revenue resulting from the COVID-19 pandemic, which was marginally offset by ~~country, most~~an increase primarily from the strengthening of ~~our businesses had strong growth, however,~~ the ~~continuing uncertain~~British Pound and Euro against the U.S. Dollar. In addition, the economic and political conditions in the U.K. and the E.U.~~, have been complicated~~ resulting from the implementation of the Brexit Agreement remain uncertain and could negatively impact our businesses in the U.K. and the E.U. In Latin America, the impact of the COVID-19 pandemic compounded by the ~~status of Brexit. In Brazil,~~continuing unstable economic and political conditions in Brazil resulted in negative organic growth in Brazil and throughout the region. In addition, the weakening of foreign currency exchange rates against the U.S. Dollar in all countries further contributed to the ~~continuing volatility~~reduction in revenue in the ~~market. Most of~~region. In Asia-Pacific, almost all our businesses in ~~Asia-Pacific~~the region experienced negative organic growth as a result of the COVID-19 pandemic, and the weakening of most currencies against the U.S. Dollar had ~~positive growth consistent with recent periods.~~a marginal negative impact on revenue. The economic and fiscal issues, including the impact related to the COVID-19 pandemic, facing the countries we operate in can be expected to continue to cause economic uncertainty and volatility; however, the impact on our business varies by country. We monitor economic conditions closely, as well as client revenue levels and other ~~factors and, in~~factors. In response to reductions in our ~~client~~ revenue ~~if necessary,~~that are expected to continue at least through the first half of 2021, beginning in the second quarter of 2020, we ~~will take~~took actions ~~available to us~~ to align our cost structure with changes in client demand and manage our working capital. ~~There~~However, there can be no assurance whether, or to what extent, our efforts to mitigate any impact of the current and future adverse economic conditions, reductions in client revenue, changes in client creditworthiness and other developments will be ~~effective.~~effective or that additional actions will not be necessary.

~~Certain~~Prior to the COVID-19 pandemic, certain business trends ~~have~~generally had a positive impact on our business and industry. These trends include clients increasingly expanding the focus of their brand strategies from national markets to pan-regional and global markets and integrating traditional and non-traditional marketing channels, as well as utilizing new communications technologies and emerging digital platforms. As clients increase their demands for marketing effectiveness and efficiency, they have made it a practice to consolidate their business within one service provider in the pursuit of a single engagement covering all consumer touch points. We have structured our business around these trends. ~~We believe that~~While the current economic environment caused many clients to reduce spending for our services, certain trends such as increased spending on digital marketing platforms, and our key client matrix organization structure approach to collaboration and integration of our services and solutions ~~have provided~~provide a competitive advantage to our ~~business in the past and we~~business. We expect this advantage to continue over the medium and long term. In addition, in 2018, we completed the process of forming practice areas within our global network structure to bring together agencies operating in common disciplines. This action leverages existing resources and, in close coordination with our key client matrix organization, enhances the development of custom client solutions.

Driven by our clients’ continuous demand for more effective and efficient marketing activities, we strive to provide an extensive range of advertising, marketing and corporate communications services through various client-centric networks that are organized to meet specific client objectives. These services include, among others, advertising, ~~branding,~~brand consulting, content marketing, corporate social responsibility consulting, crisis communications, custom publishing, data analytics, database management, digital/direct marketing, digital transformation, entertainment marketing, experiential marketing, field marketing, financial/corporate business-to-business advertising, graphic arts/digital imaging, healthcare marketing and communications, in-store design, interactive marketing, investor relations, marketing research, media planning and buying, merchandising and point of sale, mobile marketing, multi-cultural marketing, non-profit marketing, organizational communications, package design, product placement, promotional marketing, public affairs, public relations, retail marketing, sales support, search engine marketing, shopper marketing, social media marketing and sports and event marketing.

In the near term, barring unforeseen events and excluding the impact of changes in foreign exchange rates, because of continued improvement in operating performance by many of our agencies and new business activities, we expect our organic revenue to increase modestly for 2019 and over the long term to be in excess of the weighted average nominal GDP growth in our major markets. We expect to continue to identify acquisition opportunities intended to build upon the core capabilities of our strategic disciplines and business platforms, expand our operations in high-growth and emerging markets and enhance our capabilities to leverage new technologies that are being used by marketers today.

We continually evaluate our portfolio of businesses to identify areas for investment and acquisition opportunities, as well as to identify non-strategic or underperforming businesses for disposition. ~~During~~In the ~~third quarter~~first and second quarters of ~~2018,~~2019, we disposed of certain businesses, primarily in our CRM Execution & Support discipline, and recorded a net gain of $178.4 million primarily related to the sale of Sellbytel, our European-based outsourced sales, service and support company. Also, during the third quarter, we took certain repositioning actions in an effort to continue to improve our strategic position and achieve operating efficiencies, and we recorded charges of $149.4 million for incremental severance, office lease consolidation and termination, asset write-offs, and other charges. We expect the reduction to our earnings for the disposition activity to be substantially offset by savings achieved from the operating efficiencies and cost reductions, as well as any incremental earnings from new acquisition activity, and we expect a net reduction to revenue of approximately 3% to 3.5% in the first half of 2019 and 2.5% for the full year.discipline.

Given our size and breadth, we manage our business by monitoring several financial indicators. The key indicators that we focus on are revenue and operating expenses. We analyze revenue growth by reviewing the components and mix of the growth, including growth by principal regional market and marketing discipline, the impact from foreign currency exchange rate changes, growth from acquisitions, net of dispositions, and growth from our largest clients. Operating expenses are comprised of cost of services, selling, general and administrative expenses, or SG&A, and depreciation and amortization.

In ~~2018,~~2020, our revenue ~~increased 0.1%~~decreased 11.9% compared to ~~2017.~~2019. Changes in foreign exchange rates ~~increased~~reduced revenue ~~0.6%~~0.4%, acquisition revenue, net of disposition revenue, reduced revenue ~~2.1%~~0.4%, and organic growth ~~increased~~decreased revenue ~~2.6%. Across~~11.1% as all our markets were negatively impacted by the COVID-19 pandemic. The change in revenue across our principal regional markets ~~the changes in revenue~~ were: North America decreased ~~2.8%~~10.6%, Europe ~~increased 6.0%~~decreased 12.2%, Asia-Pacific ~~increased 3.6%~~decreased 8.8% and Latin America decreased ~~7.5%~~31.7%. In North America, modest growth in the United States was offset by a decrease in revenue primarily resulting from the impact of the adoption of ASC 606, the disposition of our specialty print media business in the second quarter of 2017 and negative performance in Canada. Organic revenue growth in the United States was led by our CRM Consumer Experience, healthcare, advertising and media and public relations businesses, and was partially offset by a decrease in our CRM Execution & Support discipline. The revenue increase in Europe resulted from strong organic revenue in the region, particularly in France, Spain and the Czech Republic, modest organic revenue growth in the U.K., and the strengthening of the Euro and the British Pound against the U.S. Dollar in the first half of the year, which was partially offset by disposition activity and negative performance in Germany. The decrease in revenue in Latin America was primarily a result of the weakening of the Brazilian Real against the U.S. Dollar. In Asia-Pacific, organic growth in most countries in the region, especially Australia, China, New Zealand and India, was partially offset by disposition activity. The change in revenue in ~~2018~~2020, compared to ~~2017,~~2019, in our ~~four~~ fundamental disciplines was: Advertising ~~increased 1.3%~~decreased 13.1%, CRM Consumer Experience ~~increased 0.2%~~decreased 15.6%, CRM Execution & Support decreased ~~11.0%~~16.7%, Public Relations ~~increased 1.7%~~decreased 5.6% and Healthcare increased ~~12.7%~~3.4%.

We measure cost of services in two distinct categories: salary and service costs and occupancy and other costs. As a service business, salary and service costs make up athe significant portion of our operating expenses and substantially all these costs comprise the essential components directly linked to the delivery of our services. Salary and service costs include employee compensation and benefits, freelance labor and ~~direct~~third-party service costs, which include third-party supplier costs and client-related travel costs. Occupancy and other costs consist of the indirect costs related to the delivery of our services, including office rent and other occupancy costs, equipment rent, technology costs, general office expenses and other expenses.

SG&A expenses, which ~~increased slightly~~decreased year-over-year, primarily consist of third-party marketing costs, professional fees and compensation and benefits and occupancy and other costs of our corporate and executive offices, which includes group-wide finance and accounting, treasury, legal and governance, human resource oversight and similar costs.

Operating expenses, which include the net gain from the disposition of subsidiaries and the repositioning charges, as described above (see Note 13 to the consolidated financial statements), decreased $33.1 million, in 2018 compared to 2017. SalaryIn 2020, salary and service costs, which tend to fluctuate with changes in revenue, ~~increased $78.9~~decreased $1,399.4 million, or ~~0.7%~~12.8%, ~~in 2018~~ compared to ~~2017. The~~2019. Salary and related service costs in 2020 decreased $644.3 million, or 9.3%, year-over-year, ~~increase~~ primarily ~~reflects~~as a result of the ~~incremental~~ severance and ~~other charges of $73.7 million incurred in connection with the repositioning~~furlough actions ~~taken~~we took in the ~~third~~second quarter of ~~2018.~~2020. Also, during 2020, we reduced salary and service costs by $162.6 million related to reimbursements and tax credits under government programs in several countries (see Note 1 to the consolidated financial statements). Third-party service costs, which include expenses incurred with third-party vendors primarily when we act as a principal when performing services for our clients, decreased $755.1 million, or 18.5%, year-over-year reflecting the decrease in revenue and the impact of actions we took to align our cost structure. Occupancy and other costs, which are less directly linked to changes in revenue than salary and service costs, ~~increased $68.8~~decreased $83.3 million, or ~~5.5%~~6.8%, in ~~2018~~2020 as compared to ~~2017. The year-over-year change reflects a decrease of $4.7~~2019. Operating profit decreased $523.5 million ~~which was offset by $73.5 million of repositioning charges primarily related~~ to ~~office lease consolidation and termination actions taken in the third quarter of 2018.~~$1,598.8 million. Operating margin ~~increased year-over-year~~decreased to ~~14.0%~~12.1% from ~~13.6%~~14.2%, and EBITA margin ~~increased year-over-year~~decreased to ~~14.6%~~12.8% from ~~14.4%. The net gain on disposition of subsidiaries and repositioning expenses, increased~~14.8% year-over-year. In 2020, operating profit, ~~and~~ operating margin ~~year-over year~~and EBITA margin included a net decrease aggregating $171.1 million related to the COVID-19 repositioning costs recorded in the second quarter and asset impairment charges recorded in the fourth quarter, partially offset by ~~$29.0 million~~an increase related to reimbursements and ~~0.2%, respectively.~~tax credits under government programs in several countries(see Note 1 to the consolidated financial statements).

~~Net~~In 2020, net interest expense increased ~~$10.3~~$5.5 million year-over-year to ~~$209.2 million in 2018 compared to 2017.~~$189.5 million. Interest expense on debt ~~increased $17.4~~decreased $27.6 million to ~~$241.9~~$199.6 million, primarily reflecting a reduction in ~~2018.~~interest expense from our refinancing activity at lower interest rates in the second half of 2019 and the first quarter of 2020, partially offset by a loss of $7.7 million on the early redemption of the remaining $600 million principal amount of the 2020 Notes in the first quarter of 2020 and the interest expense from the issuance of the 4.20% Notes in April 2020 (see Note 7 to the consolidated financial statements). Interest income in ~~2018 increased $7.5~~2020 decreased $28.0 million ~~compared~~year-over-year to ~~the prior year.~~$32.3 million primarily due to lower rates.

Our effective tax rate for ~~2018, decreased period-over-period~~2020 increased year-over-year to ~~25.6%~~27.1% from ~~36.9%~~26.0%. The non-deductibility in ~~2017. The decrease was primarily attributable to the reduction~~certain jurisdictions of a portion of the ~~U.S. federal statutory income~~COVID-19 repositioning costs recorded in the second quarter of 2020 had the effect of increasing our effective tax rate ~~to 21% from 35%~~for 2020. This increase was substantially offset by a lower effective tax rate on our foreign earnings resulting from ~~the Tax Act which was enacted~~a change in ~~December 2017. Additionally,~~legislation. In 2019, income tax expense ~~for 2018 reflects the following: a reduction of approximately $19~~was reduced by $10.8 million primarily ~~as a result of the successful resolution of foreign tax claims, a reduction of $25.0 million related to~~from the net ~~income~~favorable settlements of uncertain tax ~~effect of~~positions in certain jurisdictions. After considering these items, our effective rate for 2020 would have approximated the net gain on disposition of subsidiaries and repositioning actions (see Note 13 to the consolidated financial statements) and additional income tax expense of $28.9 million, reflecting the finalization of the provisional estimate of the effect of the Tax Act recorded in the fourth quarter of 2017 (see Note 11 to the consolidated financial statements).rate for 2019.

Net income - Omnicom Group Inc. in ~~2018 increased,~~2020 decreased $393.7 million to $945.4 million from $1,339.1 million in 2019. The year-over-year decrease is due to the factors described above, $238.0 million, or 21.9%, to $1,326.4 million from $1,088.4 million in 2017. The net gain on disposition of subsidiaries and repositioning actions, after the allocable share of $6.9 million to noncontrolling interests, and the additional income tax expense from the finalization of the provisional estimate of the effect of the Tax Act, increased net income - Omnicom Group Inc. $18.2 million.above. Diluted net income per share - Omnicom Group Inc. ~~increased 25.4%~~decreased to ~~$5.83~~$4.37 in ~~2018,~~2020, compared to ~~$4.65~~$6.06 in ~~2017,~~2019, due to the factors described above, as well as the impact of the reduction in our weighted average common shares outstanding resulting from repurchases of our common stock through March 2020, net of shares issued for restricted stock awards, stock option exercises and the employee stock purchase ~~plan.~~plan during the year. As discussed above and in Note 1 to the consolidated financial statements, our results of operations for 2020 included COVID-19 repositioning costs and asset impairment charges, which were partially offset by an increase attributable to reimbursements and tax credits under government programs in several countries. The ~~net gain~~after-tax impact of these items on ~~disposition of subsidiaries and repositioning actions net of the additional income tax expense from the finalization of the provisional estimate of the effect of the Tax Act, increased diluted~~ net income ~~per share~~ - Omnicom Group Inc. ~~$0.08.~~was $146.8 million.

CRITICAL ACCOUNTING POLICIES

The following summary of our critical accounting policies provides a better understanding of our financial statements and the related discussion in this MD&A. We believe that the following policies may involve a higher degree of judgment and complexity in their application than most of our accounting policies and represent the critical accounting policies used in the preparation of our financial statements. Readers are encouraged to consider this summary together with our financial statements and the related notes, including Note 2, for a more complete understanding of the critical accounting policies discussed below.

We prepare our financial statements in conformity with U.S. GAAP and are required to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. We use a fair value approach in testing goodwill for impairment and when evaluating our equity method ~~and cost method~~ investments to determine if an other-than-temporary impairment has occurred. Actual results could differ from those estimates and assumptions.

Acquisitions and Goodwill

~~We have made and expect to continue to make selective acquisitions.~~ The evaluation of potential acquisitions is based on various factors, including specialized know-how, reputation, geographic coverage, competitive position and service offerings of the target businesses, as well as our experience and judgment.

Business combinations are accounted for using the acquisition method. The assets acquired, including identified intangible assets, liabilities assumed and any noncontrolling interest in the acquired business are recorded at their acquisition date fair values. In circumstances where control is obtained and less than 100% of a business is acquired, goodwill is recorded as if 100%

were acquired. Acquisition-related costs, including advisory, legal, accounting, valuation and other costs are expensed as incurred. Certain acquisitions include an initial payment at closing and provide for future additional contingent purchase price payments (earn-outs), which are recorded as a liability at the acquisition date fair value. Subsequent changes in the fair value of the liability are recorded in results of operations. The results of operations of acquired businesses are included in results of operations from the acquisition date. In 2018, we completed six acquisitions of new subsidiaries.

Our acquisition strategy is focused on acquiring the expertise of an assembled workforce in order to continue to build upon the core capabilities of our various strategic business platforms and agency brands through the expansion of their geographic

reach or their service capabilities to better serve our clients. Additional key factors we consider include the competitive position and specialized know-how of the acquisition targets. Accordingly, as is typical in most service businesses, a substantial portion of the assets we acquire are intangible assets primarily consisting of the know-how of the personnel, which is treated as part of goodwill and ~~under U.S. GAAP~~ is not required to be valued ~~separately.~~separately under U.S. GAAP. For each acquisition, we undertake a detailed review to identify other intangible assets that are required to be valued separately. A significant portion of the identifiable intangible assets acquired is derived from customer relationships, including the related customer contracts, as well as trade names. In valuing these identified intangible assets, we typically use an income approach and consider comparable market participant measurements.

We evaluate goodwill for impairment at least annually at the end of the second quarter of ~~the~~each fiscal year and whenever events or circumstances indicate the carrying value may not be recoverable. Under FASB ASC Topic 350, Intangibles - Goodwill and Other, we have the option of either assessing qualitative factors to determine whether it is more-likely-than-not that the carrying value of our reporting units exceeds their respective fair value or proceeding directly to the goodwill impairment test. ~~Although not required, we~~We performed the annual impairment test and compared the fair value of each of our reporting units to its respective carrying value, including goodwill. We identified our regional reporting units as components of our operating segments, which are our five global agency networks. The regional reporting units of each agency network are responsible for the agencies in their region. They report to the segment managers and facilitate the administrative and logistical requirements of our key client matrix organization structure for delivering services to clients in their regions. We have concluded that for each of our operating segments, their regional reporting units have similar economic characteristics and should be aggregated for purposes of testing goodwill for impairment at the operating segment level. Our conclusion was based on a detailed analysis of the aggregation criteria set forth in FASB ASC Topic 280, Segment Reporting, and in FASB ASC Topic 350. Consistent with our fundamental business strategy, the agencies within our regional reporting units serve similar clients in similar industries, and in many cases the same clients. In addition, the agencies within our regional reporting units have similar economic characteristics. The main economic components of each agency are employee compensation and related costs and direct service costs and occupancy and other costs, which include rent and occupancy costs, technology costs that are generally limited to personal computers, servers and off-the-shelf software and other overhead expenses. Finally, the expected benefits of our acquisitions are typically shared by multiple agencies in various regions as they work together to integrate the acquired agency into our virtual client network strategy.

Goodwill Impairment Review - Estimates and Assumptions

We use the following valuation methodologies to determine the fair value of our reporting units: (1) the income approach, which utilizes discounted expected future cash flows, (2) comparative market participant multiples for EBITDA (earnings before interest, taxes, depreciation and amortization), and (3) when available, consideration of recent and similar acquisition transactions.

In applying the income approach, we use estimates to derive the discounted expected cash flows (“DCF”) for each reporting unit that serves as the basis of our valuation. These estimates and assumptions include revenue growth and operating margin, EBITDA, tax rates, capital expenditures, weighted average cost of capital and related discount rates and expected long-term cash flow growth rates. All of these estimates and assumptions are affected by conditions specific to our businesses, economic conditions related to the industry we operate in, as well as conditions in the global economy. The assumptions that have the most significant effect on our valuations derived using a DCF methodology are: (1) the expected long-term growth rate of our reporting units' cash flows and (2) the weighted average cost of capital (“WACC”) for each reporting unit.

At June 30, 2020 we adjusted our assumptions to reflect the economic conditions in light of the impact on our business related to the COVID-19 pandemic, including downward adjustment to our revenue and earnings assumptions, reducing our long-term growth rate and increasing the weighted average cost of capital, or WACC, for each reporting unit and limiting our estimate of our equity value to reflect the decline in our share price that occurred during the first half of 2020. In addition, the assumptions reflected the expected cost reductions from our severance and real estate facility repositioning actions (see Notes 1 and 11 to the consolidated financial statements).

The assumptions used for the long-term growth rate and WACC in our evaluations as of June 30, ~~2018~~2020 and ~~2017~~2019 were:


	2020	2019
Long-Term Growth Rate	3%	4%
WACC	10.6% - 10.8%	10.1% - 10.6%

June 30,
2018 2017
Long-Term Growth Rate 4% 4%
WACC 10.5% - 11.1% 9.6% - 10.3%

Long-term growth rate represents our estimate of the long-term growth rate for our industry and the markets of the global economy we operate in. For the past ten years, the average historical revenue growth rate of our reporting units and the Average Nominal GDP, or NGDP, growth of the countries comprising the major markets that account for substantially all of our revenue was approximately ~~3.2%~~4.2% and ~~3.4%~~4.3%, respectively. We considered this history when determining the long-term growth rates used in our annual impairment test at June 30, ~~2018.~~2020 and lowered it to reflect the potential future effects of the unprecedented COVID-19 pandemic on the global economy, which are not reflected in the 10-year historical analysis. We believe marketing expenditures over the long term have a high correlation to ~~GDP.~~NGDP. Based on our historical performance, we also believe that our long-term growth rate will exceed ~~Average Nominal GDP~~NGDP growth in the markets we operate in, which are similar across our reporting units. For our annual test as of June 30, ~~2018,~~2020, we used an estimated long-term growth rate of 4%3.0%.

When performing the annual impairment test as of June 30, ~~2018~~2020 and estimating the future cash flows of our reporting units, we considered the current macroeconomic environment, as well as industry and market specific conditions at mid-year ~~2018.~~2020. In the first half of ~~2018,~~2020, our revenue ~~increased 2.2%~~declined 11.7%, which excluded our net disposition activity and the impact from changes in foreign exchange rates. ~~While~~The COVID-19 pandemic significantly impacted the global economy. Government actions taken to mitigate the impact of the pandemic negatively impacted many of our clients' businesses, and in ~~Europe had improved performance,~~turn, clients have reduced their demand for our services. In addition, the ~~continuing uncertain economic~~assumptions reflected the expected cost reductions from our severance and ~~political conditions in~~real estate facility repositioning actions (see Notes 1 and 13 to the E.U. have been further complicated by the United Kingdom's ongoing negotiations with the European Council to withdraw from the E.U. During the first half of 2018, weakness in certain Latin American economies we operate in has the potential to affect our near-term performance in that region. We considered the effect of these conditions in our annual impairment test.consolidated financial statements).

The WACC is comprised of: (1) a risk-free rate of return, (2) a business risk index ascribed to us and to companies in our industry comparable to our reporting units based on a market derived variable that measures the volatility of the share price of equity securities relative to the volatility of the overall equity market, (3) an equity risk premium that is based on the rate of return on equity of publicly traded companies with business characteristics comparable to our reporting units, and (4) a current after-tax market rate of return on debt of companies with business characteristics similar to our reporting units, each weighted by the relative market value percentages of our equity and debt.

Our five reporting units vary in size with respect to revenue and the amount of debt allocated to them. These differences drive variations in fair value among our reporting units. In addition, these differences as well as differences in book value, including goodwill, cause variations in the amount by which fair value exceeds book value among the reporting units. The reporting unit goodwill balances and debt vary by reporting unit primarily because our three legacy agency networks were acquired at the formation of Omnicom and were accounted for as a pooling of interests that did not result in any additional debt or goodwill being recorded. The remaining two agency networks were built through a combination of internal growth and acquisitions that were accounted for using the acquisition method and as a result, they have a relatively higher amount of goodwill and debt.

Goodwill Impairment Review - Conclusion

Based on the results of our impairment test, we concluded that our goodwill at June 30, ~~2018~~2020 was not impaired, because the fair value of each of our reporting units was ~~substantially~~ in excess of its respective net book value. For our reporting units with negative book value, we concluded that the fair value of their total assets was in excess of book value. The minimum decline in fair value that one of our reporting units would need to experience in order to fail the goodwill impairment test was approximately ~~60%~~20%. Notwithstanding our belief that the assumptions we used for WACC and long-term growth rate in our impairment testing ~~are~~were reasonable, we performed a sensitivity analysis for each of our reporting units. The results of this sensitivity analysis on our impairment test as of June 30, ~~2018~~2020 revealed that if the WACC increased by 1% and/or the long-term growth rate decreased by 1%, the fair value of each of our reporting units would continue to be ~~substantially~~ in excess of its respective net book value and would pass the impairment test.

We will continue to perform our impairment test ~~at the end of the second quarter of~~ each year at June 30th unless events or circumstances trigger the need for an interim impairment test. There were no events through December 31, 2020 that would change our impairment assessment. The estimates used in our goodwill impairment test do not constitute forecasts or projections of future results of operations, but rather are estimates and assumptions based on historical results and assessments of macroeconomic factors affecting our reporting units as of the valuation date. We believe that our estimates and assumptions are reasonable, but they are subject to change from period to period. Actual results of operations and other factors will likely differ from the estimates used in our discounted cash flow valuation, and it is possible that differences could be significant. A change in the estimates we use could result in a decline in the estimated fair value of one or more of our reporting units from the amounts derived as of our latest valuation and could cause us to fail our goodwill impairment test if the estimated fair value for the reporting unit is less than the carrying value of the net assets of the reporting unit, including its goodwill. A large decline in estimated fair value of a reporting unit could result in a non-cash impairment charge and may have an adverse effect on our results of operations and financial condition.

Subsequent to the annual impairment test at June 30, 2018 and considering our operating performance in the second half of the year, there were no events or circumstances that triggered the need for an interim impairment test. Additional information about acquisitions and goodwill appears in Notes 2, 5 and 6 to the consolidated financial statements.

Effective January 1, 2018, we adopted ASC 606 (see Note 1 to the consolidated financial statements). As described below, in accordance with ASC 606 we changed certain aspects of our revenue recognition accounting policy. ASC 606 was applied using the modified retrospective method, where the cumulative effect of the initial application was recognized as an adjustment to opening retained earnings at January 1, 2018. Therefore, comparative prior periods have not been adjusted and continue to be reported under FASB ASC Topic 605, Revenue ~~Recognition~~.

~~Under ASC 606, revenue~~ is recognized when a customer obtains control of promised goods or services (the performance obligation) in an amount that reflects the consideration we expect to receive in exchange for those goods or services (the transaction price). We measure revenue by estimating the transaction price based on the consideration specified in the client arrangement. Revenue is recognized as the performance obligations are satisfied. Our revenue is primarily derived from the planning and execution of advertising communications and marketing services in the following fundamental disciplines: ~~Advertising,~~advertising, which includes creative advertising services and strategic media planning and buying services, ~~Customer Relationship Management~~customer relationship management or CRM, which includes CRM Consumer Experience and CRM Execution & Support, ~~Public Relations~~public relations and ~~Healthcare Advertising.~~healthcare advertising. Our client contracts are primarily fees for service on a rate per hour or per project basis. Revenue is recorded net of sales, use and value added taxes.

Performance ~~Obligations~~

Obligations. In substantially all our disciplines, the performance obligation is to provide advisory and consulting services at an agreed-upon level of effort to accomplish the specified engagement. Our client contracts are comprised of diverse arrangements involving fees based on any one or a combination of the following: an agreed fee or rate per hour for the level of effort expended by our employees; commissions based on the client’s spending for media purchased from third parties; qualitative or quantitative incentive provisions specified in the contract; and reimbursement for third-party costs that we are required to include in revenue when we control the vendor services related to these costs and we act as principal. The transaction price of a contract is allocated to each distinct performance obligation based on its relative stand-alone selling price and is recognized as revenue when, or as, the customer receives the benefit of the performance obligation. Clients typically receive and consume the benefit of our services as they are performed. Substantially all our client contracts provide that we are compensated for services performed to date and allow for cancellation by either party on short notice, typically 90 days, without penalty.

Generally, our short-term contracts, which normally take 30 to 90 days to complete, are performed by a single agency and consist of a single performance obligation. As a result, we do not consider the underlying services as separate or distinct performance obligations because our services are highly interrelated, occur in close proximity, and the integration of the various components of a marketing message is essential to overall service. In certain of our long-term client contracts, which have a term of up to one year, the performance obligation is a stand-ready obligation, because we provide a constant level of similar services over the term of the contract. In other long-term contracts, when our services are not a stand-ready obligation, we consider our services distinct performance obligations and allocate the transaction price to each separate performance obligation based on its stand-alone selling price, including contracts for strategic media planning and buying services, which are considered to be multiple performance obligations, and we allocate the transaction price to each distinct service based on the staffing plan and the stand-alone selling price. In substantially all of our creative services contracts, we have distinct performance obligations for our services, including certain creative services contracts where we act as an agent and arrange, at the client’s direction, for ~~third-parties~~third parties to perform studio production efforts.

Revenue Recognition ~~Methods~~

Methods.A substantial portion of our revenue is recognized over time, as the services are performed, because the client receives and consumes the benefit of our performance throughout the contract period, or we create an asset with no alternative use and are contractually entitled to payment for our performance to date in the event the client terminates the contract for convenience. For these ~~over time~~ client contracts, other than when we have a stand-ready obligation to perform services, revenue is recognized over time using input measures that correspond to the level of staff effort expended to satisfy the performance obligation on a rate per hour or equivalent basis. For client contracts when we have a stand-ready obligation to perform services on an ongoing basis over the life of the contract, typically for periods up to one year, where the scope of these arrangements is broad and there are no significant gaps in performing the services, we recognize revenue using a time-based measure resulting in a straight-line revenue recognition. From time to time, there may be changes in the client service requirements during the term of a contract and the changes could be significant. These changes are typically negotiated as new contracts covering the additional requirements and the associated costs, as well as additional fees for the incremental work to be performed.

To a lesser extent, for certain other contracts where our performance obligations are satisfied in phases, we recognize revenue over time using certain output measures based on the measurement of the value transferred to the customer, including milestones achieved. Where the transaction price or a portion of the transaction price is derived from commissions based on a percentage of purchased media from third parties, the performance obligation is not satisfied until the media is run and we have an enforceable contract providing a right to payment. Accordingly, revenue for commissions is recognized at a point in time, typically when the media is run, including when it is not subject to cancellation by the client or media vendor.

Principal vs. ~~Agent~~

Agent. In substantially all our businesses, we incur third-party costs on behalf of clients, including direct costs and incidental, or ~~out- of-pocket~~out-of-pocket costs. Third-party direct costs incurred in connection with the creation and delivery of advertising or marketing communication services include, among others: purchased media, studio production services, specialized talent, including artists and other freelance labor, event marketing supplies, materials and services, promotional items, market research and third-party data and other related expenditures. Out-of-pocket costs include, among others: transportation, hotel, meals and telecommunication charges incurred by us in the course of providing our services. Billings related to out-of-pocket costs are included in revenue since we control the goods or services prior to delivery to the client.

However, the inclusion of billings related to third-party direct costs in revenue depends on whether we act as a principal or as an agent in the client arrangement. In most of our businesses, including ~~Advertising,~~advertising, which also includes studio production efforts and media planning and buying services, ~~Public Relations, Healthcare Advertising~~public relations, healthcare advertising and most of our CRM Consumer Experience businesses, we act as an agent and arrange, at the client's direction, for third parties to perform certain services. In these cases, we do not control the goods or services prior to the transfer to the client. As a result, revenue is recorded net of these costs, equal to the amount retained for our fee or commission.

In certain businesses we may act as principal when contracting for third-party services on behalf of our clients. In our events business and most of our CRM Execution & Support businesses, including field marketing and certain specialty marketing businesses, we act as principal because we control the specified goods or services before they are transferred to the client and we are responsible for providing the specified goods or services, or we are responsible for directing and integrating third-party vendors to fulfill our performance obligation at the agreed upon contractual price. In such arrangements, we also take pricing risk under the terms of the client contract. In certain specialty media buying ~~business,~~businesses, we act as principal when we control the buying process for the purchase of the media and contract directly with the media vendor. In these arrangements, we assume the pricing risk under the terms of the client contract. When we act as principal, we include billable amounts related to third-party costs in the transaction price and record revenue over time at the gross amount billed, including out-of-pocket costs, consistent with the manner that we recognize revenue for the underlying services contract. However, in media buying contracts where we act as principal, we recognize revenue at a point in time, typically when the media is run, including when it is not subject to cancellation by the client or media vendor.

Variable ~~Consideration~~

Consideration. Someof our client arrangements include variable consideration provisions, which include performance incentives, tiered commission structures and vendor rebates in certain markets outside of the United States. Variable consideration is estimated and included in total consideration at contract inception based on either the expected value method or the most likely outcome method. These estimates are based on historical award experience, anticipated performance and other factors known at the time. Performance incentives are typically recognized in revenue over time. Variable consideration for our media businesses in certain international markets includes rebate revenue and is recognized when it is probable that the media will be run, including when it is not subject to cancellation by the client. In addition, when we receive rebates or credits from vendors for transactions entered into on behalf of clients, they are remitted to the clients in accordance with contractual requirements or retained by us based on the terms of the client contract or local law. Amounts passed on to clients are recorded as a liability and amounts retained by us are recorded as revenue when earned, ~~which is~~ typically when the media is run.

NEW ACCOUNTING STANDARDS

See Note 22 to the consolidated financial statements for information on the adoption of new accounting standards and accounting standards not yet adopted.

~~RESULTS OF OPERATIONS~~

~~Accounting Changes~~

Upon adoption of ASC 606, our accounting policy for certain third-party out-of-pocket costs, which are incurred in connection with our services and are billed to clients, was required to be changed. In addition, our policy for performance incentives (variable consideration) included in certain client contracts was required to be changed. The inclusion of third-party out-of-pocket costs in revenue depends on whether we act as a principal or agent in the client arrangement. Under ASC 606, the principal versus agent assessment is based on whether we control the specified goods or services before they are transferred to the customer. As a result of the adoption of ASC 606, certain third-party costs are no longer included in revenue and cost of services. This change was the principal adjustment to our reported revenue and operating expenses included in the table below. However, the change had no impact on operating profit.

In addition, performance incentives included in certain client contracts can increase revenue if we meet certain quantitative or qualitative objectives in delivering our services. Under ASC 606, performance incentives are now treated as variable consideration. Prior to the adoption of ASC 606, performance incentives were recognized in revenue under ASC 605 when specific quantitative goals were achieved or when our performance against qualitative goals was acknowledged by the client. Under ASC 606, variable consideration is estimated and included in total consideration at contract inception based on either the expected value method or the most likely outcome method. These estimates are based on historical award experience, anticipated performance and our best judgment at the time. As a result of this change, we recorded a cumulative effect adjustment to increase opening retained earnings at January 1, 2018 by $19.5 million, to reflect the transition requirements of ASC 606. The effect of this change on our financial position and cash flows was not material.

~~The impact of the adoption of ASC 606 on revenue, operating expenses and operating profit for the year ended December 31, 2018 was (in millions):~~

As Reported Adjustments Amounts without the Adoption of ASC 606
Revenue $ 15,290.2
$ 146.1
$ 15,436.3
Operating Expenses 13,156.7
139.5
13,296.2
Operating Profit 2,133.5
6.6
2,140.1

~~The impact of the adoption of ASC 606 on net income - Omnicom Group Inc., diluted net income per share - Omnicom Group Inc. and the consolidated financial statements was not material.~~

RESULTS OF OPERATIONS - ~~2018~~2020 Compared to ~~2017~~2019 (in millions):


								Year Ended December 31,
	2018			2017				2020			2019
Revenue	$	15,290.2		$	15,273.6		Revenue	$	13,171.1		$	14,953.7
Operating Expenses:							Operating Expenses:
Salary and service costs	11,306.1			11,227.2			Salary and service costs	9,572.8			10,972.2
Occupancy and other costs	1,309.6			1,240.8			Occupancy and other costs	1,138.5			1,221.8
Net gain on disposition of subsidiaries	(178.4		)	—
COVID-19 repositioning costs							COVID-19 repositioning costs	277.9			—
Cost of services	12,437.3			12,468.0			Cost of services	10,989.2			12,194.0
Selling, general and administrative expenses	455.4			439.7			Selling, general and administrative expenses	360.5			405.9
Depreciation and amortization	264.0			282.1			Depreciation and amortization	222.6			231.5
	13,156.7			13,189.8				11,572.3			12,831.4
Operating Profit	2,133.5			2,083.8			Operating Profit	1,598.8			2,122.3
Operating Margin - %	14.0		%	13.6		%	Operating Margin - %	12.1		%	14.2		%

Interest Expense	266.4			248.6			Interest Expense	221.8			244.3
Interest Income	57.2			49.7			Interest Income	32.3			60.3
Income Before Income Taxes and Income From Equity Method Investments	1,924.3			1,884.9
Income Before Income Taxes and Income (Loss) From Equity Method Investments							Income Before Income Taxes and Income (Loss) From Equity Method Investments	1,409.3			1,938.3

Income Tax Expense	492.7			696.2			Income Tax Expense	381.7			504.4
Income From Equity Method Investments	8.9			3.5
Income (Loss) From Equity Method Investments							Income (Loss) From Equity Method Investments	(6.8)			2.0
Net Income	1,440.5			1,192.2			Net Income	1,020.8			1,435.9
Net Income Attributed To Noncontrolling Interests	114.1			103.8			Net Income Attributed To Noncontrolling Interests	75.4			96.8
Net Income - Omnicom Group Inc.	$	1,326.4		$	1,088.4		Net Income - Omnicom Group Inc.	$	945.4		$	1,339.1

Non-GAAP Financial Measures

We use EBITA and EBITA Margin as additional operating performance measures that exclude the non-cash amortization expense of intangible assets, which primarily consists of amortization of intangible assets arising from acquisitions. We define EBITA as earnings before interest, taxes and amortization of intangible assets, and EBITA Margin as EBITA divided by revenue. EBITA and EBITA Margin are non-GAAP financial measures. We believe that EBITA and EBITA Margin are useful measures for investors to evaluate the performance of our business. 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.

The following table reconciles the U.S. GAAP financial measure of net income - Omnicom Group Inc. to EBITA and EBITA Margin for the ~~for the~~ periods presented (in millions):


	Year Ended December 31,
	2020			2019
Net Income - Omnicom Group Inc.	$	945.4		$	1,339.1
Net Income Attributed To Noncontrolling Interests	75.4			96.8
Net Income	1,020.8			1,435.9
Income (Loss) From Equity Method Investments	(6.8)			2.0
Income Tax Expense	381.7			504.4
Income Before Income Taxes and Income (Loss) From Equity Method Investments	1,409.3			1,938.3
Interest Expense	221.8			244.3
Interest Income	32.3			60.3
Operating Profit	1,598.8			2,122.3
Add back: Amortization of intangible assets	83.1			83.8
Earnings before interest, taxes and amortization of intangible assets (“EBITA”)	$	1,681.9		$	2,206.1
Revenue	$	13,171.1		$	14,953.7
EBITA	$	1,681.9		$	2,206.1
EBITA Margin - %	12.8		%	14.8		%

2018 2017
Net Income - Omnicom Group Inc. $ 1,326.4
$ 1,088.4
Net Income Attributed To Noncontrolling Interests 114.1
103.8
Net Income 1,440.5
1,192.2
Income From Equity Method Investments 8.9
3.5
Income Tax Expense 492.7
696.2
Income Before Income Taxes and Income From Equity Method Investments 1,924.3
1,884.9
Interest Expense 266.4
248.6
Interest Income 57.2
49.7
Operating Profit 2,133.5
2,083.8
Add back: Amortization of intangible assets 102.5
113.8
Earnings before interest, taxes and amortization of intangible assets (“EBITA”) $ 2,236.0
$ 2,197.6

Revenue $ 15,290.2
$ 15,273.6
EBITA $ 2,236.0
$ 2,197.6
EBITA Margin - % 14.6 % 14.4 %

Revenue

~~In 2018, revenue increased $16.6~~Revenue for 2020 decreased $1,782.6 million, or ~~0.1%~~11.9%, compared to ~~$15,290.2 million from $15,273.6 million in 2017.~~2019. Changes in foreign exchange rates ~~increased~~reduced revenue ~~$85.1 million,~~0.4%, acquisition revenue, net of disposition revenue, reduced revenue ~~$326.6~~0.4% and negative organic growth decreased revenue 11.1% as all our geographic markets were negatively impacted by the COVID-19 pandemic (see Note 1 to the consolidated financial statements). The change in revenue across our principal regional markets were: North America decreased $901.7 million, Europe decreased $499.7 million, Asia-Pacific decreased $145.8 million and Latin America decreased $128.0 million. In North America, we experienced a decline in organic ~~growth increased~~ revenue ~~$404.2 million.~~

~~The impact of changes~~attributable to the COVID-19 pandemic in ~~foreign exchange rates increased~~all our disciplines, except healthcare. In Europe and the Middle East and Africa, almost all businesses and regions experienced a decline in organic revenue ~~0.6%, or $85.1 million,~~resulting from the COVID-19 pandemic, which was marginally offset by an increase primarily ~~resulting~~ from the strengthening of the ~~Euro and~~ British Pound and Euro against the U.S. Dollar. In Latin America, the impact of the COVID-19 pandemic compounded by the continuing unstable economic and political conditions in Brazil resulted in negative organic growth in Brazil and throughout the region. In addition, the weakening of foreign currency exchange rates against the U.S. Dollar ~~partially offset by~~in all countries further contributed to the reduction in revenue in the region. In Asia-Pacific, almost all our businesses in the region experienced negative organic growth as a result of the COVID-19 pandemic, and the weakening of ~~the Brazilian Real, Russian Ruble and Australian Dollar~~most currencies against the U.S. ~~Dollar.~~Dollar had a marginal negative impact on revenue.

The components of revenue change in the United States (“Domestic”) and the remainder of the world (“International”) were (in millions):


																	Total				Domestic				International
	Total					Domestic					International						$		%		$		%		$		%
	$			%		$			%		$			%
December 31, 2017	$	15,273.6				$	8,196.9				$	7,076.7
December 31, 2019																December 31, 2019	$	14,953.7			$	8,033.0			$	6,920.7
Components of revenue change:																Components of revenue change:
Foreign exchange rate impact	85.1			0.6	%	—			—	%	85.1			1.2	%	Foreign exchange rate impact	(60.9)		(0.4)	%	—		—	%	(60.9)		(0.9)	%
Acquisition revenue, net of disposition revenue	(326.6		)	(2.1	)%	(108.7		)	(1.3	)%	(217.9		)	(3.1	)%	Acquisition revenue, net of disposition revenue	(56.7)		(0.4)	%	(36.8)		(0.5)	%	(19.9)		(0.3)	%
Organic growth	404.2			2.6	%	58.0			0.7	%	346.2			4.9	%	Organic growth	(1,665.0)		(11.1)	%	(810.1)		(10.1)	%	(854.9)		(12.4)	%
Impact of adoption of ASC 606	(146.1		)	(1.0	)%	(146.4		)	(1.8	)%	0.3			—	%
December 31, 2018	$	15,290.2		0.1	%	$	7,999.8		(2.4	)%	$	7,290.4		3.0	%
December 31, 2020																December 31, 2020	$	13,171.1	(11.9)	%	$	7,186.1	(10.5)	%	$	5,985.0	(13.5)	%

The components and percentages are calculated as follows:

•The foreign exchange impact is calculated by translating the current period’s local currency revenue using the prior period average exchange rates to derive current period constant currency revenue (in this case ~~$15,205.1~~$13,232.0 million for the Total column). The foreign exchange impact is the difference between the current period revenue in U.S. Dollars and the current period constant currency revenue ($~~15,290.2~~13,171.1 million less ~~$15,205.1~~$13,232.0 million for the Total column).

•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 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 dispositions through the disposition date. The acquisition revenue and disposition revenue amounts are netted in the table.

•Organic growth is calculated by subtracting the foreign exchange rate impact, and the acquisition revenue, net of disposition revenue components from total revenue ~~growth, excluding the impact of the adoption of ASC 606.~~growth.

~~The impact of the adoption of ASC 606 is discussed above in the “Accounting Changes” section.~~

Changes in the value of foreign currencies against the U.S. Dollar affect our results of operations and financial position. For the most part, because the revenue and expense of our foreign operations are both denominated in the same local currency, the economic impact on operating margin is minimized. Assuming exchange rates at February ~~11, 2019~~12, 2021 remain unchanged, we ~~estimate~~expect the impact of changes in foreign exchange rates to ~~reduce~~increase revenue between 2.5% and 3.0% in the first half of ~~2019~~2021, and by approximately 2.5% ~~to 3% and 1.5%~~ for the full year.

Revenue and organic growth ~~expressed as a percentage and excluding the impact of ASC 606,~~ in our principal regional markets were (in millions):


	Year Ended December 31,
	2020		2019		$ Change		% Organic Growth
Americas:
North America	$	7,577.1	$	8,478.8	$	(901.7)	(10.1)	%
Latin America	275.4		403.4		(128.0)		(15.1)	%
EMEA:
Europe	3,607.7		4,107.4		(499.7)		(12.4)	%
Middle East and Africa	207.2		314.6		(107.4)		(32.3)	%
Asia-Pacific	1,503.7		1,649.5		(145.8)		(8.5)	%
	$	13,171.1	$	14,953.7	$	(1,782.6)	(11.1)	%

2018 2017 $ Change % Organic Growth
Americas:
North America $ 8,442.5
$ 8,686.0
$ (243.5 ) 0.4 %
Latin America 457.5
494.8
(37.3 ) 2.0 %
EMEA:
Europe 4,375.4
4,127.9
247.5
5.7 %
Middle East and Africa 304.4
314.6
(10.2 ) (2.9 )%
Asia-Pacific 1,710.4
1,650.3
60.1
7.9 %
$ 15,290.2
$ 15,273.6
$ 16.6
2.6 %

InRevenue in Europe, which includes our primary markets ~~are~~of the U.K. and the Euro ~~Zone.~~Zone, decreased $499.7 million in 2020 compared to 2019. Revenue ~~for 2018~~ in the U.K., representing 9.7% of revenue, decreased $151.5 million. Revenue in Continental Europe, which ~~represents 9.5% of total revenue, increased 4.3%, and revenue in~~comprises the Euro Zone and the other European countries, ~~which together comprised 19.1%~~representing 17.7% of ~~total~~ revenue, ~~increased 6.9%.~~

~~In North America, modest growth in the United States was offset by a~~decreased $348.2 million. The decrease in revenue ~~primarily~~is due to negative organic growth resulting from the impact of the adoption of ASC 606, the disposition of our specialty print media business in the second quarter of 2017 and negative performance in Canada. Organic revenue growth in the United States was led by our CRM Consumer Experience, healthcare, advertising and media and public relations businesses, and was partially offset by a decrease in our CRM Execution & Support discipline. The revenue increase in Europe resulted from strong organic revenue in the region, particularly in France, Spain and the Czech Republic, modest organic revenue growth in the U.K., and the strengthening of the Euro and the British Pound against the U.S. Dollar in the first half of the year, which was partially offset by disposition activity and negative performance in Germany. The decrease in revenue in Latin America was primarily a result of the weakening of the Brazilian Real against the U.S. Dollar. In Asia-Pacific, organic growth in most countries in the region, especially Australia, China, New Zealand and India, was partially offset by disposition activity.COVID-19 pandemic.

In the normal course of business, our agencies both gain and lose business from clients each year due to a variety of factors. ~~The net change~~In 2020, the reduction in ~~2018 was an overall gain in~~spending by existing clients resulting from the COVID-19 pandemic offset the benefit from gains of new business. Under our client-centric approach, we seek to broaden our relationships with all of our clients. ~~Our~~In 2020 and 2019, our largest client represented 3.4% and 3.0% of revenue, ~~in 2018 and 2017.~~respectively. Our ten largest and 100 largest clients represented ~~19.1%~~20.8% and ~~50.7%~~54.0% of revenue ~~in 2018,~~for 2020, respectively, and 19.6% and ~~50.5%~~51.3% of revenue ~~in 2017,~~for 2019, respectively.

In an effort to monitor the changing needs of our clients and to further expand the scope of our services to key clients, we monitor revenue across a broad range of disciplines and group them into the following categories: advertising, CRM, which includes CRM Consumer Experience and CRM Execution & Support, public relations and healthcare.

~~Revenue for 2018~~All our business experienced the effects from client spending reductions related to the COVID-19 pandemic. The spending reductions impacted all our disciplines and ~~2017~~markets. The most significantly impacted were our advertising discipline, our CRM Consumer Experience discipline, especially in our event marketing businesses, and ~~the change~~our CRM Execution & Support discipline, primarily in ~~revenue~~our field marketing and merchandising businesses. Our Public Relations discipline was less significantly impacted, and our Healthcare discipline performed well. Revenue and organic growth ~~from 2017~~ by discipline were (in millions):


	Year Ended December 31,
	2020				2019				2020 vs. 2019		2020
	$		% of Revenue		$		% of Revenue		$ Change		% Organic Growth
Advertising	$	7,369.0	56.0	%	$	8,483.8	56.7	%	$	(1,114.8)	(12.2)	%
CRM Consumer Experience	2,175.7		16.5	%	2,577.9		17.2	%	(402.2)		(15.8)	%
CRM Execution & Support	1,133.5		8.6	%	1,361.2		9.1	%	(227.7)		(15.1)	%
Public Relations	1,301.8		9.9	%	1,378.9		9.3	%	(77.1)		(4.2)	%
Healthcare	1,191.1		9.0	%	1,151.9		7.7	%	39.2		3.3	%
	$	13,171.1			$	14,953.7			$	(1,782.6)	(11.1)	%

Year Ended December 31,
2018 2017 2018 vs. 2017
$
% of
Revenue
$
% of
Revenue

$
Change
% Organic Growth
Advertising $ 8,281.0
54.2 % $ 8,175.9
53.6 % $ 105.1
2.9 %
CRM Consumer Experience 2,620.7
17.1 % 2,615.9
17.1 % 4.8
5.9 %
CRM Execution & Support 1,900.5
12.4 % 2,135.8
14.0 % (235.3 ) (2.7 )%
Public Relations 1,435.1
9.4 % 1,411.4
9.2 % 23.7
1.8 %
Healthcare 1,052.9
6.9 % 934.6
6.1 % 118.3
4.5 %
$ 15,290.2
$ 15,273.6
$ 16.6
2.6 %

We provide services to clients that operate in various industry sectors. Revenue by sector ~~for 2018 and 2017~~ was:


	Year Ended December 31,
	2020		2019
Food and Beverage	14	%	14	%
Consumer Products	8	%	9	%
Pharmaceuticals and Healthcare	16	%	14	%
Financial Services	8	%	8	%
Technology	9	%	7	%
Auto	10	%	10	%
Travel and Entertainment	7	%	9	%
Telecommunications	6	%	6	%
Retail	7	%	7	%
Services	2	%	2	%
Oil, Gas and Utilities	1	%	2	%
Not-for-Profit	1	%	1	%
Government	3	%	2	%
Education	1	%	1	%
Other	7	%	8	%
	100	%	100	%

2018 2017
Food and Beverage 13 % 13 %
Consumer Products 9 % 10 %
Pharmaceuticals and Health Care 13 % 12 %
Financial Services 8 % 8 %
Technology 8 % 9 %
Auto 10 % 10 %
Travel and Entertainment 7 % 7 %
Telecommunications 5 % 5 %
Retail 6 % 6 %
Other 21 % 20 %

Certain industry sectors have been negatively affected by the impact of the COVID-19 pandemic more significantly than others.

Operating expenses ~~for 2018 compared to 2017~~ were (in millions):


	Year Ended December 31,
	2020				2019				2020 vs. 2019
	$		% of Revenue		$		% of Revenue		$ Change		% Change
Revenue	$	13,171.1			$	14,953.7			$	(1,782.6)	(11.9)	%
Operating Expenses:
Salary and service costs:
Salary and related service costs	6,250.9		47.5	%	6,895.2		46.1	%	(644.3)		(9.3)	%
Third-party service costs	3,321.9		25.2	%	4,077.0		27.3	%	(755.1)		(18.5)	%
	9,572.8		72.7	%	10,972.2		73.4	%	(1,399.4)		(12.8)	%
Occupancy and other costs	1,138.5		8.6	%	1,221.8		8.2	%	(83.3)		(6.8)	%
COVID-19 repositioning costs	277.9		2.1	%	—		—	%	277.9		—	%
Cost of services	10,989.2				12,194.0				(1,204.8)
Selling, general and administrative expenses	360.5		2.7	%	405.9		2.7	%	(45.4)		(11.2)	%
Depreciation and amortization	222.6		1.7	%	231.5		1.5	%	(8.9)		(3.8)	%
	11,572.3		87.9	%	12,831.4		85.8	%	(1,259.1)		(9.8)	%
Operating Profit	$	1,598.8	12.1	%	$	2,122.3	14.2	%	$	(523.5)	(24.7)	%

Year Ended December 31,
2018 2017 2018 vs. 2017
$
% of
Revenue
$
% of
Revenue

$
Change

%
Change
Revenue $ 15,290.2
$ 15,273.6
$ 16.6
0.1 %
Operating Expenses:
Salary and service costs 11,306.1
73.9 % 11,227.2
73.5 % 78.9
0.7 %
Occupancy and other costs 1,309.6
8.6 % 1,240.8
8.1 % 68.8
5.5 %
Net gain on disposition of subsidiaries (178.4 ) (1.2 )% —
— % (178.4 )
Cost of services 12,437.3
12,468.0
(30.7 )
Selling, general and administrative expenses 455.4
3.0 % 439.7
2.9 % 15.7
3.6 %
Depreciation and amortization 264.0
1.7 % 282.1
1.8 % (18.1 ) (6.4 )%
13,156.7
86.0 % 13,189.8
86.4 % (33.1 ) (0.3 )%
Operating Profit $ 2,133.5
14.0 % $ 2,083.8
13.6 % $ 49.7
2.4 %

In the third quarter of 2018, we disposed of certain businesses, primarily in our CRM Execution & Support discipline, and recorded a net gain of $178.4 million. Also, during the third quarter, we took certain repositioning actions in an effort to continue to improve our strategic position and achieve operating efficiencies, and we recorded charges of $149.4 million for incremental severance, office lease consolidation and termination, asset write-offs and other charges. The impact of the repositioning actions and net gain on sale of subsidiaries on operating expenses for 2018 was (dollars in millions):

Operating expenses, which include the net gain from the disposition of subsidiaries and the repositioning charges, as described above (see Note 13 to the consolidated financial statements), decreased $33.1 million, in 2018 compared to 2017. Salary2020, salary and service costs, which tend to fluctuate with changes in revenue, ~~increased $78.9~~decreased $1,399.4 million, or ~~0.7%~~12.8%, ~~in 2018~~ compared to ~~2017. The~~2019. Salary and related service costs in 2020 decreased $644.3 million, or 9.3%, year-over-year, ~~increase~~ primarily ~~reflects~~as a result of the ~~incremental~~ severance and ~~other charges of $73.7 million incurred in connection with the repositioning~~furlough actions ~~taken~~we took in the ~~third~~second quarter of ~~2018.~~2020. Also, during 2020, we reduced salary and service costs by $162.6 million related to reimbursements and tax credits under government programs in several countries (see Note 1 to the consolidated financial statements). Third-party service costs, which include expenses incurred with third-party vendors primarily when we act as a principal when performing services for our clients, decreased $755.1 million, or 18.5%, year-over-year reflecting the decrease in revenue and the impact of actions we took to align our cost structure. Occupancy and other costs, which are less directly linked to changes in revenue than salary and service costs, ~~increased $68.8~~decreased $83.3 million, or ~~5.5%~~6.8%, in ~~2018~~2020 as compared to ~~2017. The year-over-year change reflects a decrease of $4.7~~2019. Operating profit decreased $523.5 million ~~which was offset by $73.5 million of repositioning charges primarily related~~ to ~~office lease consolidation and termination actions taken in the third quarter of 2018.~~$1,598.8 million. Operating margin ~~increased year-over-year~~decreased to ~~14.0%~~12.1% from ~~13.6%~~14.2%, and EBITA margin ~~increased year-over-year~~decreased to ~~14.6%~~12.8% from ~~14.4%. The net gain on disposition of subsidiaries and repositioning expenses, increased~~14.8% year-over-year. In 2020, operating profit, ~~and~~ operating margin ~~year-over~~and EBITA margin included a net decrease aggregating $171.1 million related to the COVID-19 repositioning costs recorded in the

second quarter and asset impairment charges, which are included in salary and service costs, recorded in the fourth quarter, partially offset by an increase related to reimbursements and tax credits under government programs in several countries during the year ~~by $29.0 million and 0.2%, respectively.~~(see Note 1 to the consolidated financial statements).

Net Interest Expense

~~Net~~In 2020, net interest expense increased ~~$10.3~~$5.5 million year-over-year to ~~$209.2 million in~~ ~~2018. Interest~~$189.5 million. Interest expense on debt ~~increased $17.4~~decreased $27.6 million to ~~$241.9~~$199.6 million, primarily reflecting a reduction in ~~2018, primarily due to~~interest expense from our refinancing activity at lower interest rates in the second half of 2019 and the first quarter of 2020, partially offset by a ~~reduced benefit~~loss of $7.7 million on the early redemption of the remaining $600 million principal amount of the 2020 Notes in the first quarter of 2020 and the interest expense from the ~~fixed-to-floating interest rate swaps resulting from higher rates on~~issuance of the floating rate leg. Our long-term debt portfolio at December 31, 2018, after taking into consideration our outstanding interest rate swaps, was approximately 75% fixed rate obligations and 25% floating rate obligations and was unchanged from December 31, 2017. A discussion of our interest rate swaps is included4.20% Notes in April 2020 (see Note 7 to the consolidated financial ~~statements.~~statements). Interest income in ~~2018 increased~~ ~~$7.5~~2020 decreased $28.0 million year-over-year to ~~$57.2~~$32.3 million primarily due to ~~higher interest earned on the cash held by our international treasury centers.~~

Our effective tax rate for ~~2018 decreased~~2020 increased year-over-year to ~~25.6%~~27.1% from ~~36.9%~~26.0%. The non-deductibility in ~~2017. The decrease was primarily attributable to the reduction~~certain jurisdictions of a portion of the ~~U.S. federal statutory~~COVID-19 repositioning costs recorded in the second quarter of 2020 had the effect of increasing our effective tax rate for 2020. This increase was substantially offset by a lower effective tax rate on our foreign earnings resulting from a change in legislation. In 2019, income tax ~~rate to 21% from 35% resulting from the Tax Act. Income tax~~ expense ~~in 2018~~ was reduced by ~~approximately $19~~$10.8 million primarily ~~as a result of the successful resolution of foreign tax claims and $7.4 million related to the excess tax benefits from share-based compensation.~~

~~Additionally, income tax expense for 2018 reflects the following items recorded in the third quarter of 2018 (in millions):~~

~~The net gain resulting~~ from the net ~~disposition~~favorable settlements of ~~subsidiaries reflects favorable local~~uncertain tax ~~rates applied to~~positions in certain ~~non-U.S. gains. The tax benefit on~~jurisdictions. After considering these items, our effective rate for 2020 would have approximated the ~~repositioning actions was calculated based on the jurisdictions where the charges were incurred~~rate for 2019.

Net Income and reflects the likelihood that we will be unable to obtain a tax benefit for all charges incurred. Further, in 2018 we recorded additional income tax expense of $28.9 million reflecting the finalization of the provisional estimate of the effect of the Tax Act recorded in the fourth quarter of 2017 (see Note 11 to the consolidated financial statements).

Net Income Per Share - Omnicom Group Inc.

Net income - Omnicom Group Inc. in ~~2018 increased,~~2020 decreased $393.7 million to $945.4 million from $1,339.1 million in 2019. The year-over-year decrease is due to the factors described above, $238.0 million, or 21.9%, to $1,326.4 million from $1,088.4 million in 2017. The net gain on disposition of subsidiaries and repositioning actions, after the allocable share of $6.9 million to noncontrolling interests, and the additional income tax expense from the finalization of the provisional estimate of the effect of the Tax Act, increased net income - Omnicom Group Inc. $18.2 million.above. Diluted net income per share - Omnicom Group Inc. ~~increased 25.4%~~decreased to ~~$5.83~~$4.37 in ~~2018,~~2020, compared to ~~$4.65~~$6.06 in ~~2017,~~2019, due to the factors described above, as well as the impact of the reduction in our weighted average common shares outstanding resulting from repurchases of our common stock through March 2020, net of shares issued for restricted stock awards, stock option exercises and the employee stock purchase ~~plan.~~plan during the year. As discussed above and in Note 1 to the consolidated financial statements, our results of operations for 2020 included COVID-19 repositioning costs and asset impairment charges, which were partially offset by an increase attributable to reimbursements and tax credits under government programs in several countries. The after-tax affect of these items on net income - Omnicom Group Inc. was $146.8 million.

The impact on net income Omnicom Group Inc. of these actions was (in millions):


	COVID-19 Repositioning Costs		Impairment Charges - Underperforming Assets		Reimbursements and Tax Credits Under Government Programs		Total

















Increase (decrease) to income before income taxes	$	(277.9)	$	(55.8)	$	162.6	$	(171.1)
Increase (decrease) in income tax expense	(54.8)		(8.7)		39.2		(24.3)
Increase (decrease) in net income Omnicom Group Inc.	$	(223.1)	$	(47.1)	$	123.4	$	(146.8)

RESULTS OF OPERATIONS - 2019 Compared to 2018 (in millions):


	Year Ended December 31,
	2019			2018
Revenue	$	14,953.7		$	15,290.2
Operating Expenses:
Salary and service costs	10,972.2			11,306.1
Occupancy and other costs	1,221.8			1,309.6
Net gain on disposition of subsidiaries	—			(178.4)
Cost of services	12,194.0			12,437.3
Selling, general and administrative expenses	405.9			455.4
Depreciation and amortization	231.5			264.0
	12,831.4			13,156.7
Operating Profit	2,122.3			2,133.5
Operating Margin - %	14.2		%	14.0		%





Interest Expense	244.3			266.4
Interest Income	60.3			57.2
Income Before Income Taxes and Income From Equity Method Investments	1,938.3			1,924.3


Income Tax Expense	504.4			492.7
Income From Equity Method Investments	2.0			8.9
Net Income	1,435.9			1,440.5
Net Income Attributed To Noncontrolling Interests	96.8			114.1
Net Income - Omnicom Group Inc.	$	1,339.1		$	1,326.4

Our results for 2018 include the effect of the net gain on disposition of subsidiaries of $178.4 million and repositioning ~~actions net~~charges of $149.4 million, after the allocation of $6.9 million to noncontrolling interests, and the additional income tax expense of $3.9 million from the finalization of the provisional estimate of the effect of the Tax Cut and Jobs Act ~~increased diluted net income per share - Omnicom Group Inc. $0.08.~~

~~RESULTS OF OPERATIONS -~~of 2017, ~~Compared to 2016 (in millions):~~

~~As discussed below, in 2017 the~~or Tax Act, ~~reduced~~substantially offset by the impact of a lower tax rate on the net ~~income - Omnicom Group Inc. by $106.3 million~~gain on disposition of subsidiaries. The following discussion of our results of operations compares 2019 to 2018 as reported and ~~diluted net income per share - Omnicom Group Inc. by $0.45.~~adjusted for the effects of these transactions. See page 24 for a reconciliation of the adjusted 2018 amounts.

Non-GAAP Financial Measures

The following table reconciles the U.S. GAAP financial measure of net income - Omnicom Group Inc. to EBITA and EBITA Margin for the ~~for the~~ periods presented (in millions):

In ~~2017,~~2019, revenue decreased ~~$143.3~~$336.5 million, or 2.2%, to ~~$15,273.6~~$14,953.7 million from ~~$15,416.9~~$15,290.2 million in ~~2016.~~2018. Changes in foreign exchange rates ~~increased~~reduced revenue ~~$42.9~~$315.9 million, acquisition revenue, net of disposition revenue, ~~decreased~~reduced revenue ~~$647.3~~$445.1 million, and organic growth increased revenue ~~$461.1~~$424.5 million. The impact of changes in foreign exchange rates reduced revenue 2.1%, or $315.9 million, primarily resulting from the weakening of substantially all foreign currencies, especially the Euro, British Pound, Australian Dollar, Brazilian Real and Canadian Dollar against the U.S. Dollar.

The components of revenue change in the United States (“Domestic”) and the remainder of the world (“International”) were (in millions):

The components and percentages are calculated as follows:

•The foreign exchange impact is calculated by translating the current period’s local currency revenue using the prior period average exchange rates to derive current period constant currency revenue (in this case ~~$15,230.7~~$15,269.6 million for the Total column). The foreign exchange impact is the difference between the current period revenue in U.S. Dollars and the current period constant currency revenue ($~~15,273.6~~14,953.7 million less ~~$15,230.7~~$15,269.6 million for the Total column).

•Organic growth is calculated by subtracting the foreign exchange rate impact, and the acquisition revenue, net of disposition revenue components from total revenue growth.

•The percentage change is calculated by dividing the individual component amount by the prior period revenue base of that component ($~~15,416.9~~15,290.2 million for the Total column).

~~In 2017, changes~~Changes in ~~foreign exchange rates continued to negatively impact revenue but at a more moderate rate as compared to 2016. The impact~~the value of foreign ~~exchange rates in 2017 increased revenue by 0.3%, or $42.9 million. While a number of~~ currencies ~~weakened~~ against the U.S. Dollar ~~including the Australian Dollar, Brazilian Real, Canadian Dollar~~affect our results of operations and ~~Russian Ruble,~~financial position. For the most ~~significant~~part, because the revenue and expense of our foreign operations are both denominated in the same local currency, the economic impact ~~resulted from the weakening of the British Pound.~~on operating margin is minimized.

Revenue and organic growth ~~for 2017 and the change in revenue from 2016~~ in our principal regional markets were (in millions):


	Year Ended December 31,
	2019		2018		$ Change		% Organic Growth
Americas:
North America	$	8,478.8	$	8,442.5	$	36.3	2.8	%
Latin America	403.4		457.5		(54.1)		(0.2)	%
EMEA:
Europe	4,107.4		4,375.4		(268.0)		3.1	%
Middle East and Africa	314.6		304.4		10.2		6.5	%
Asia-Pacific	1,649.5		1,710.4		(60.9)		2.2	%
	$	14,953.7	$	15,290.2	$	(336.5)	2.8	%

2017 2016 $ Change % Organic Growth
Americas:
North America $ 8,686.0
$ 9,174.0
$ (488.0 ) 0.6 %
Latin America 494.8
423.6
71.2
0.6 %
EMEA:
Europe 4,127.9
3,904.2
223.7
7.0 %
Middle East and Africa 314.6
278.9
35.7
12.5 %
Asia-Pacific 1,650.3
1,636.2
14.1
5.8 %
$ 15,273.6
$ 15,416.9
$ (143.3 ) 3.0 %

InRevenue in Europe, which includes our primary markets ~~are~~of the U.K. and the Euro ~~Zone.~~Zone, decreased $268.0 million in 2019 as compared to the prior year. Revenue ~~for 2017~~ in the U.K., ~~which represents 9.1%~~representing 9.6% of total revenue, decreased ~~0.9%, and revenue~~$23.7 million, primarily due to the weakening of the British Pound against the U.S. Dollar. Revenue in Continental Europe, which comprises the Euro Zone and the other European countries, ~~which together represent~~representing 17.9% of total revenue, ~~increased 9.4%.~~

decreased $244.3 million, primarily due to disposition activity and the unfavorable impact from changes in foreign exchange rates.

In North America, ~~moderate~~improved organic growth in the United States and ~~strong growth in~~ Canada was ~~partially~~substantially offset by a decrease in revenue resulting from disposition activity in the United States and the weakening of the Canadian Dollar against the U.S. Dollar. ~~In Europe,~~Organic revenue growth in the ~~U.K., Spain, Russia~~United States was led by our advertising and ~~Italy~~media, CRM Consumer Experience and healthcare businesses, and was partially offset by a decrease in organic revenue growth primarily in our CRM Execution & Support businesses. In Europe, modest organic growth in the region, especially in the U.K. and Spain, was offset by the weakening of substantially all currencies in the ~~British Pound~~region against the U.S. Dollar, disposition activity and ~~Russian Ruble~~negative performance in France. In Latin America, the weakening of currencies in the region against the U.S. Dollar and negative performance ~~in the Netherlands. The increase in revenue in Latin America was a result of our acquisition~~and disposition activity in Brazil ~~which~~offset modest organic growth in Chile and Mexico. In Asia-Pacific, organic growth in most countries in the region, especially Japan, New Zealand and India, was ~~partially~~ offset by the weakening of most currencies in the region against the U.S. Dollar, ~~especially the Brazilian Real. The continuing uncertainty~~disposition activity and negative performance in ~~the economic and political climate in Brazil resulted in~~China, which faced a difficult comparison due to strong organic ~~revenue declines that partially offset the growth from our acquisition and also overshadowed strong~~ growth in ~~Mexico. In Asia-Pacific, growth in the major economies in the region was also partially offset by the weakening of most currencies in the region against the U.S. Dollar.~~2018.

In the normal course of business, our agencies both gain and lose business from clients each year due to a variety of factors. The net change in ~~2017~~2019 was an overall gain in new business. Under our client-centric approach, we seek to broaden our relationships with all of our clients. ~~Our~~In 2019 and 2018, our largest client represented 3.0% ~~and 3.0%~~ of ~~revenue in 2017 and 2016, respectively.~~revenue. Our ten largest and 100 largest clients represented 19.6% and ~~50.5%~~51.3% of revenue in ~~2017,~~2019, respectively, and ~~18.3%~~19.1% and ~~52.4%~~50.7% of revenue in ~~2016,~~2018, respectively.

Revenue ~~for 2017 and 2016 and the change in revenue~~ and organic growth ~~from 2016~~ by discipline were (in millions):

We provide services to clients that operate in various industry sectors. Revenue by sector ~~for 2017 and 2016~~ was:


	Year Ended December 31,
	2019		2018
Food and Beverage	14	%	14	%
Consumer Products	9	%	9	%
Pharmaceuticals and Health Care	14	%	14	%
Financial Services	8	%	8	%
Technology	7	%	8	%
Auto	10	%	10	%
Travel and Entertainment	9	%	8	%
Telecommunications	6	%	5	%
Retail	7	%	8	%
Services	2	%	2	%
Oil, Gas and Utilities	2	%	2	%
Not-for-Profit	1	%	2	%
Government	2	%	2	%
Education	1	%	—	%
Other	8	%	8	%
	100	%	100	%

2017 2016
Food and Beverage 13 % 13 %
Consumer Products 10 % 10 %
Pharmaceuticals and Health Care 12 % 12 %
Financial Services 8 % 7 %
Technology 9 % 9 %
Auto 10 % 8 %
Travel and Entertainment 7 % 7 %
Telecommunications 5 % 5 %
Retail 6 % 6 %
Other 20 % 23 %

Operating expenses for ~~2017~~2019 compared to ~~2016~~2018 were (in millions):


	Year Ended December 31,
	2019				2018				2019 vs. 2018
	$		% of Revenue		$		% of Revenue		$ Change		% Change
Revenue	$	14,953.7			$	15,290.2			$	(336.5)	(2.2)	%
Operating Expenses:
Salary and service costs:
Salary and service costs	6,895.2		46.1	%	7,127.1		46.6	%	(231.9)		(3.3)	%
Third-party service costs	4,077.0		27.3	%	4,179.0		27.3	%	(102.0)		(2.4)	%
	10,972.2		73.4	%	11,306.1		73.9	%	(333.9)		(3.0)	%
Occupancy and other costs	1,221.8		8.2	%	1,309.6		8.6	%	(87.8)		(6.7)	%
Net gain on disposition of subsidiaries	—		—	%	(178.4)		(1.2)	%	178.4
Cost of services	12,194.0				12,437.3				(243.3)
Selling, general and administrative expenses	405.9		2.7	%	455.4		3.0	%	(49.5)		(10.9)	%
Depreciation and amortization	231.5		1.5	%	264.0		1.7	%	(32.5)		(12.3)	%
	12,831.4		85.8	%	13,156.7		86.0	%	(325.3)		(2.5)	%
Operating Profit	$	2,122.3	14.2	%	$	2,133.5	14.0	%	$	(11.2)	(0.5)	%

Operating expenses in 2019 decreased ~~$196.6~~$325.3 million, or ~~1.5%~~2.5%, year-over-year, primarily as a result of our disposition activity in ~~2017 compared to 2016.~~2019 and 2018, and the weakening of substantially all foreign currencies against the U.S. Dollar. Operating expenses for 2018 also included a net reduction of $29.0 million, comprised of a $178.4 million reduction for the impact of the net gain on disposition of subsidiaries, partially offset by an increase in operating expenses of $149.4 million for repositioning charges, which included $73.7 million in salary and service costs for incremental severance and $73.5 million in occupancy and other costs for office lease termination and consolidation. Salary and service costs, which tend to fluctuate with changes in revenue, decreased ~~$191.8~~$333.9 million, or ~~1.7%~~3.0%, in ~~2017~~2019 compared to ~~2016.~~2018 due to our disposition activity in 2019 and 2018, as well as the incremental severance charge of $73.7 million recorded in 2018 that did not affect 2019. Occupancy and other costs, which are less directly linked to changes in revenue than salary and service costs, ~~increased $10.2~~decreased $87.8 million, or ~~0.8%~~6.7%, in ~~2017~~2019 compared to ~~2016, principally resulting~~2018 due to our disposition activity in 2019 and 2018, and the office lease termination and consolidation charge of $73.5 million recorded in 2018 that did not affect 2019. Operating margin increased 0.2% to 14.2% year-over-year and EBITA margin increased 0.2% year-over-year to 14.8%. The net decrease in operating expenses of $29.0 million in 2018 related to the net gain on disposition of subsidiaries partially offset by the charges for the repositioning actions, increased both operating margin and EBITA margin for 2018 by 0.2%. Adjusting for the net decrease of $29.0 million in 2018 in operating expenses, Non-GAAP operating margin for 2019 increased to 14.2% from 13.8% in 2018 and adjusted EBITA margin for 2019 increased to 14.8% from 14.4% in 2018. The year-over-year increase primarily reflects a change in the mix of our business during the current period, including the positive effects following the disposition of underperforming businesses in the current and prior year and our repositioning activity in the third quarter of 2018, as well as our ongoing efforts to ~~leverage scale~~manage our cost structure and ~~enhance efficiency. SG&A expenses decreased $4.2 million year-over-year primarily related to professional fees incurred in connection with~~increase the efficiency of the operations of our ~~acquisition activities. As a result, operating margin in 2017 increased to 13.6% from 13.2% in 2016 and EBITA margin increased year-over-year to 14.4% from 13.9%.~~

Net Interest Expense

~~Net~~In 2019, net interest expense ~~increased~~ ~~$10.2~~decreased $25.2 millionyear-over-year to~~$198.9 million in~~ ~~2017~~. ~~Interest~~ $184.0 million. In 2019, interest expense on debt ~~increased $14.8~~decreased $14.7 million to ~~$224.5~~$227.2 million, primarily reflecting a reduction in ~~2017, primarily due to a reduced benefit~~interest expense from refinancing activity in the third quarter of 2019 at lower interest rates, including the maturity and retirement of the 2019 Notes and the settlement of the outstanding fixed-to-floating interest rate swaps, ~~resulting from higher rates~~partially offset by a loss on the ~~floating rate leg~~partial redemption of the 2020 Notes and higher interest expense on commercial paper. Our long-term debt portfolio at December 31, 2017, after taking into consideration our outstanding interest rate swaps, was approximately 75% fixed rate obligations and 25% and was unchanged from December 31, 2016. A discussionthe issuance of ~~our interest rate swaps is included in~~the Euro Notes (see Note 7 to the consolidated financial ~~statements.~~statements). Interest income in ~~2017~~2019 increased ~~$7.1~~$3.1 million year-over-year to ~~$49.7~~$60.3 million due to higher ~~interest earned on~~ cash ~~held by~~balances at our ~~international~~ treasury centers.

Our effective tax rate for ~~2017 was 36.9% compared~~2019 increased slightly year-over-year to ~~32.6%~~26.0% from 25.6% in 2018. The effective tax rate for ~~2016.~~2019 includes a reduction of $10.8 million primarily from the net favorable settlement of uncertain tax positions in the second quarter of 2019. The effective tax rate for 2018 reflects a net increase ~~is attributable~~of $3.9 million related to an increase in income tax expense for an adjustment to the ~~estimated impact of~~provisional amounts related to the Tax Act, ~~of $106.3 million partially~~substantially offset by the ~~recognition~~impact of ~~an excess~~a lower tax ~~benefit from share-based compensation~~rate on the net gain on disposition of ~~$20.8 million resulting from the adoption of FASB ASU 2016-09, which requires that beginning in 2017 excess tax benefits~~subsidiaries.

Net Income and deficiencies arising from share-based compensation be recognized in results of operations in the period when the restricted stock awards vest or stock options are exercised. In prior years, excess tax benefits and deficiencies from share-based compensation were recorded in additional paid-in capital.

Net Income Per Share - Omnicom Group Inc.

Net income - Omnicom Group Inc. ~~decreased $60.2 million, or 5.2%, to $1,088.4 million~~ in ~~2017 from $1,148.6 million in 2016. The year-over-year decrease is~~2019 increased, due to the ~~impact~~factors described above, $12.7 million, or 1.0%, to $1,339.1 million from $1,326.4 million in 2018. The net gain on disposition of subsidiaries and repositioning charges, after the allocated share of $6.9 million to noncontrolling interests, and the additional income tax expense from the finalization of the provisional

estimate of the effect of the Tax Act, ~~of $106.3 million, which is partially offset~~increased net income - Omnicom Group Inc. in 2018 by ~~the after tax increase from the factors described above.~~$18.2 million. Diluted net income per share - Omnicom Group Inc. ~~decreased 2.7%~~increased 3.9% to ~~$4.65~~$6.06 in ~~2017,~~2019, compared to ~~$4.78~~$5.83 in ~~2016. The impact of~~2018, due to the ~~Tax Act reduced diluted net income per share - Omnicom Group Inc. $0.45. In addition,~~factors described above, as well as the impact of the reduction in our weighted average common shares outstanding resulting from repurchases of our common stock, net of shares issued for restricted stock awards, ~~and~~ stock option exercises and ~~shares issued under our~~the employee stock purchase ~~plan improved~~plan. The net gain on disposition of subsidiaries and repositioning charges net of the additional income tax expense from the finalization of the provisional estimate of the effect of the Tax Act, increased diluted net income per share - Omnicom Group Inc. in ~~2017 compared to 2016.~~

~~Effect of the Tax Act~~

~~The following table presents the effect of the Tax Act on~~2018 by $0.08, and Non-GAAP diluted net income ~~tax expense, net income~~per share - Omnicom Group Inc. increased 5.4% in 2019 compared to 2018 adjusted for these items.

Reconciliation of Non-GAAP Financial Measures

Non-GAAP operating profit, adjusted EBITA, Non-GAAP net income – Omnicom Group Inc., and Non-GAAP diluted ~~earnings~~net income per share – Omnicom Group Inc. ~~(in millions):~~

~~Excluding~~are Non-GAAP financial measures which adjusts the ~~effect~~2018 financial measures for the impact of the ~~Tax Act from~~net gain on disposition of subsidiaries of $178.4 million and repositioning charges of $149.4 million, a net increase of $3.9 million in income tax expense, and an allocation of $6.9 million to noncontrolling interests for these items. Accordingly, when comparing operating profit, EBITA, net income - Omnicom Group Inc. and diluted net income per share - Omnicom Group Inc. ~~are Non-GAAP measures.~~for 2019 to 2018, we also present the 2018 reported amounts and EBITA on page 14 adjusted for the effects of these transactions. We believe ~~that~~ these Non-GAAP measures aid investors by providing additional insight into our operational performance and help ~~investors understand~~clarify trends affecting our business. For comparability of reporting, management considers Non-GAAP measures in conjunction with GAAP financial results in evaluating business performance. These Non-GAAP financial measures presented should not be considered a substitute for, or superior to, the ~~effect~~measures of financial performance prepared in accordance with GAAP.

The following table reconciles our financial results presented above to the ~~Tax Act on our reported results.~~Non-GAAP Financial Measures (in millions, except per share amounts):


	Year Ended December 31,
	2019		2018
Non-GAAP operating profit and adjusted EBITA:
Net Income - Omnicom Group Inc.	$	1,339.1	$	1,326.4
Net Income Attributed To Noncontrolling Interests	96.8		114.1
Net Income	1,435.9		1,440.5
Income From Equity Method Investments	2.0		8.9
Income Tax Expense	504.4		492.7
Income Before Income Taxes and Income From Equity Method Investments	1,938.3		1,924.3
Interest Expense	244.3		266.4
Interest Income	60.3		57.2
Operating profit	2,122.3		2,133.5
Net gain on disposition of subsidiaries	—		(178.4)
Repositioning charges	—		149.4
Non-GAAP operating profit	2,122.3		2,104.5
Add back: Amortization of intangible assets	83.8		102.5
Adjusted EBITA	$	2,206.1	$	2,207.0
Non-GAAP net income - Omnicom Group Inc. and Non-GAAP diluted net income per share Omnicom Group Inc.:
Net income - Omnicom Group Inc.	$	1,339.1	$	1,326.4
Net pre-tax gain on disposition of subsidiaries and repositioning actions	—		(29.0)
Net income tax benefit of gain on disposition of subsidiaries and repositioning actions	—		(25.0)
Allocation to noncontrolling interests	—		6.9
Net increase in tax expense related to the Tax Act	—		28.9
Non-GAAP net income - Omnicom Group Inc.	$	1,339.1	$	1,308.2

Diluted Net Income Per Share - Omnicom Group Inc.	$	6.06	$	5.83
Net gain on disposition of subsidiaries, repositioning actions and impact of Tax Act	—		(0.08)
Non-GAAP diluted net income per share - Omnicom Group Inc.	$	6.06	$	5.75

Weighted average shares	220.9		227.6

LIQUIDITY AND CAPITAL RESOURCES

Although we experienced a decrease in our cash flow from operations, we took numerous proactive steps to strengthen our liquidity and financial position that are intended to mitigate the impact of the COVID-19 pandemic on our liquidity. In February 2020, we issued $600 million of the 2.45% Notes. In March 2020, the net proceeds from the issuance of the 2.45% Notes were used to redeem the remaining $600 million principal amount of the 2020 Notes. As a result, we have no notes maturing until May 2022. In April 2020, we issued $600 million of the 4.20% Notes, and we entered into the $400 million 364 Day Credit facility maturing on April 2, 2021. The 364 Day Credit Facility is in addition to our existing $2.5 billion Credit Facility. Additionally, in March 2020, we suspended our share repurchase activity.

Cash Sources and Requirements

Our primary liquidity sources are our operating cash flow and cash and cash ~~equivalents and short-term investments.~~equivalents. Additional liquidity sources include our ~~credit facilities and commercial paper program, and access to the capital markets. At December 31, 2018, we have a~~ $2.5 billion ~~revolving credit facility, or~~ Credit Facility ~~expiring~~maturing on ~~July 31,~~February 14, 2025, the $400 million 364 Day Credit Facility maturing on April 2, 2021, the uncommitted credit lines aggregating ~~$1.2~~$1.1 billion, ~~and~~ the ability to issue up to $2 billion of commercial ~~paper. Borrowings under~~paper and access the ~~Credit Facility may be in U.S. Dollars, British Pounds or Euro.~~capital markets. Our liquidity funds our non-discretionary cash requirements and our discretionary spending.

Borrowings under our credit facilities may use LIBOR as the benchmark interest rate. The LIBOR benchmark rate is expected to be phased out by the end of June 2023. We do not expect that the discontinuation of the LIBOR rate will have a material impact on our liquidity or results of operations.

Working capital is our principal non-discretionary funding requirement. In addition, we have contractual obligations related

to our ~~senior notes,~~long-term debt (principal and interest payments), recurring business operations, primarily related to lease obligations, and

contingent purchase price obligations (earn-outs) from ~~prior~~ acquisitions. Our principal discretionary cash spending includes dividend

payments to common shareholders, capital expenditures, strategic acquisitions and repurchases of our common stock. Our typical working capital cycle results in a short-term borrowing ~~requirements~~requirement that normally ~~peak in~~peaks during the second quarter of the year due to the timing of payments for incentive compensation, income taxes and contingent purchase price obligations. In addition, our $500 million 6.25% Senior Notes due 2019 mature on July 15, 2019 and are classified as current. Based on past performance and current expectations, we believe that our operating cash flow will be sufficient to meet our non-discretionary cash requirements, and our discretionary spending for the next twelve months.

Cash and cash equivalents ~~decreased $143.6~~increased $1,294.8 million from December 31, ~~2017.~~2019. The components of the ~~decrease were:~~increase, including the net increase from our refinancing activities, were (in millions):

Sources
Cash flow from operations $ 1,722.3
Less: Increase in operating capital (80.5 )
Principal cash sources 1,641.8
Uses
Capital expenditures $ (195.7 )
Dividends paid to common shareholders (548.5 )
Dividends paid to noncontrolling interest shareholders (134.9 )
Acquisition payments, including payment of contingent purchase price obligations and acquisition of additional noncontrolling interests, net of cash acquired (477.1 )
Repurchases of common stock, net of proceeds from stock plans (568.3 )
Principal cash uses (1,924.5 )
Principal cash sources in excess of principal cash uses (282.7 )
Foreign exchange rate changes (203.0 )
Investing activities and other 261.6
Increase in operating capital 80.5
Decrease in cash and cash equivalents $ (143.6 )


Sources
Cash flow from operations			$	1,724.6
Less: Increase in operating capital			(30.9)
Principal cash sources			1,693.7
Uses
Capital expenditures	$	(75.4)
Dividends paid to common shareholders	(562.7)
Dividends paid to noncontrolling interest shareholders	(95.5)
Acquisition payments, including payment of contingent purchase price obligations and acquisition of additional noncontrolling interests, net of proceeds from sale of investments	(117.4)
Repurchases of common stock, net of proceeds from stock plans	(217.9)
Principal cash uses			(1,068.9)
Principal cash sources in excess of principal cash uses			624.8
Effect of foreign exchange rate changes on cash and cash equivalents			114.7
Other net financing and investing activities			524.4
Increase in operating capital			30.9
Increase in cash and cash equivalents			$	1,294.8

Principal cash sources and principal cash uses ~~amounts~~ are Non-GAAP liquidity measures. These amounts exclude changes in working capital and other investing and financing activities, including commercial paper issuances and redemptions used to fund working capital changes. This presentation reflects the metrics used by us to assess our sources and uses of cash and was derived from our consolidated statement of cash flows. We believe that this presentation is meaningful to understand the primary sources and uses of our cash flow and the effect on our cash and cash equivalents. Non-GAAP liquidity measures should not be considered in isolation from, or as a substitute for, financial information presented in compliance with U.S. GAAP. Non-GAAP liquidity measures as reported by us may not be comparable to similarly titled amounts reported by other companies. Additional information regarding our cash flows can be found in our consolidated financial statements.

At December 31, 2020, we have the following contractual obligations:

•Principal payments on long-term debt of $5.8 billion, of which $1.25 billion is due in 2022 and $750 million in due in 2024 (see Note 7 to the consolidated financial statements). Depending on the conditions in the credit markets we may refinance this debt, or we may use cash from operations, including temporally accessing our Credit Facility, to repay this debt.

•Interest payments on long-term debt due within the next five years aggregate $684.1 million, of which $176.4 million is payable in 2021.

•The liability for minimum lease payments for operating leases and finance leases due within the next five years aggregate $1.2 billion, of which $363.5 million is due in 2021 (see Note 16 to the consolidated financial statements).

•At December 31, 2020, the obligation for our defined benefit pension plans was $309.3 million and the liability for our postemployment arrangements was $164.6 million. In 2020, we contributed $9.1 million to our defined benefit plans and paid $8.7 million for our postemployment arrangements. We do not expect these payments to increase significantly in 2021 (see Note 12 to the consolidated financial statements).

•The liability of contingent purchase price payments (earn-outs) at December 31, 2020, was $71.9 million, of which $32.1 million is payable in 2021 (see Note 5 to the consolidated financial statements).

•The liability for the transition tax on accumulated foreign earnings due in the next five years is $105.6 million, of which $11.6 million is payable in 2021 (see Note 11 to the consolidated financial statements).

Based on past performance and current expectations, we believe that our operating cash flow will be sufficient to meet our non-discretionary cash requirements for the next twelve months.

Cash Management

Our regional treasury centers in North America, Europe and Asia manage our cash and liquidity. Each day, operations with excess funds invest ~~these~~those funds with their regional treasury center. Likewise, operations that require funds borrow from their regional treasury center. ~~The~~Treasury centers with excess cash invest on a short-term basis with third parties, generally with maturities ranging from overnight to less than 90 days. Certain treasury centers ~~aggregate~~have notional pooling arrangements that are used to manage their cash and set-off foreign exchange imbalances. The arrangements require each treasury center to have its own notional pool account and to maintain a notional positive account balance. Additionally, under the ~~net position which is either invested with or borrowed from third parties.~~terms of the arrangement, set-off of foreign exchange positions are limited to the long and short positions within their own account. To the extent that our treasury centers require liquidity, they have the ability to issue up to a total of $2 billion of U.S. Dollar-denominated commercial paper or borrow under the Credit Facility, 364 Day Credit Facility, or the uncommitted credit lines. This process enables us to manage our debt more efficiently and utilize our cash more effectively, as well as manage our risk to foreign exchange rate imbalances. In countries where we either do not conduct treasury operations or it is not feasible for one of our treasury centers to fund net borrowing requirements on an intercompany basis, we arrange for local currency uncommitted credit lines.

We have a policy governing counterparty credit risk with financial institutions that hold our cash and cash equivalents and we have deposit limits for each institution. In countries where we conduct treasury operations, generally the counterparties are either branches or subsidiaries of institutions that are party to the Credit Facility. These institutions generally have credit ratings equal to or better than our credit ratings. In countries where we do not conduct treasury operations, all cash and cash equivalents are held by counterparties that meet specific minimum credit standards.

At December 31, ~~2018,~~2020, our foreign subsidiaries held approximately ~~$962 million~~$2.3 billion of our total cash and cash equivalents of ~~$3.7~~$5.6 billion. Most of the cash is available to us, net of any foreign withholding taxes payable upon repatriation to the United States.

~~Our~~At December 31, 2020, our net debt position, which we define as total debt, including short-term debt, less cash and cash equivalents and short-term investments ~~at December 31, 2018 increased $105.6~~decreased $624.4 million as compared to December 31, ~~2017.~~2019. The ~~increase~~decrease in net debt ~~is due to a decrease in cash and cash equivalents and short-term investments of $138.5 million~~ primarily ~~arising~~resulted from the ~~unfavorable impact~~excess of ~~foreign exchange rate changes on~~principal cash ~~and~~sources over principal cash ~~equivalents~~uses of ~~$203.0 million, partially offset by an increase in operating capital of $80.5~~$624.8 million.

The components of net debt ~~at December 31, 2018 and 2017~~ were (in millions):


	December 31,
	2020		2019
Short-term debt	$	3.9	$	10.1
Long-term debt, including current portion	5,807.3		5,134.3
Total debt	5,811.2		5,144.4
Cash and cash equivalents and short-term investments	5,600.5		4,309.3
Net debt	$	210.7	$	835.1

2018 2017
Short-term debt $ 8.1
$ 11.8
Long-term debt, including current portion 4,883.7
4,912.9
Total debt 4,891.8
4,924.7
Cash and cash equivalents and short-term investments 3,657.9
3,796.4
Net debt $ 1,233.9
$ 1,128.3

Net debt is a Non-GAAP liquidity measure. This presentation, together with the comparable U.S. GAAP liquidity measures, reflects one of the key metrics used by us to assess our cash management. Non-GAAP liquidity measures should not be considered in isolation from, or as a substitute for, financial information presented in compliance with U.S. GAAP. Non-GAAP liquidity measures as reported by us may not be comparable to similarly titled amounts reported by other companies.

Debt Instruments and Related Covenants

~~At December 31, 2018,~~On February 19, 2020, we issued $600 million of the ~~total~~2.45% Notes. The net proceeds from the issuance, after deducting the underwriting discount and offering expenses, were $592.6 million and were used to redeem the remaining $600 million principal amount of ~~our~~the 2020 Notes on March 23, 2020. In connection with the redemption, we recorded a loss on extinguishment of $7.7 million in interest expense. Following the redemption, there were no 2020 Notes outstanding.

On April 1, 2020, in response to the potential effects on market liquidity arising from the COVID-19 pandemic, we issued $600 million of the 4.20% Notes. The net proceeds from the issuance, after deducting the underwriting discount and offering expenses, were $592.5 million and were used for general corporate purposes, which included working capital expenditures, fixed ~~rate senior notes was $4.9 billion,~~asset expenditures and repayment of commercial paper and short-term debt.

The 2.45% Notes and the ~~total notional amount~~4.20% Notes are senior unsecured obligations of ~~the outstanding fixed-to-floating interest rate swaps was $1.25 billion. The interest rate swaps have the economic effect~~Omnicom that rank equal in right of ~~converting our long-term debt portfolio to approximately 75% fixed rate obligations~~payment with all existing and ~~25% floating rate obligations. A discussion of our interest rate swaps is included in Note 7 to the consolidated financial statements.~~future unsecured senior indebtedness.

Omnicom ~~Group Inc., or OGI,~~ and its wholly owned finance subsidiary, Omnicom Capital Inc., or OCI, are co-obligors under ~~all~~ the senior ~~notes. The senior~~notes due 2022, 2024 and 2026. These notes are a joint and several liability of ~~OGI~~Omnicom and OCI, and ~~OGI~~Omnicom unconditionally guarantees OCI’s obligations with respect to the ~~senior~~ notes. OCI provides funding for our operations by incurring debt and lending the proceeds to our operating subsidiaries. OCI’s assets primarily consist of cash and cash equivalents and intercompany loans made to our operating subsidiaries, and the related interest receivable. There are no restrictions on the ability of ~~OGI~~OCI or ~~OCI~~Omnicom to obtain funds from our subsidiaries through dividends, loans or advances. ~~The senior~~Such notes are senior unsecured obligations that rank equal in right of payment with all existing and future unsecured senior indebtedness.

Omnicom and OCI have, jointly and severally, fully and unconditionally guaranteed OFHP’s obligations with respect to the Euro denominated notes due 2027 and 2031. OFHP’s assets consist of its investments in several wholly owned finance companies that function as treasury centers that provide funding for various operating companies in Europe, Brazil, Australia and other countries in the Asia-Pacific region. The finance companies’ assets consist of cash and cash equivalents and intercompany loans that they make or have made to the operating companies in their respective regions and the related interest receivable. There are no restrictions on the ability of Omnicom, OCI or OFHP to obtain funds from their subsidiaries through dividends, loans or advances. The Euro denominated notes and the related guarantees are senior unsecured obligations that rank equal in right of payment with all existing and future unsecured senior indebtedness of OFHP and each of Omnicom and OCI, respectively.

The Credit Facility ~~contains~~and the 364 Day Credit Facility each contain a financial ~~covenants~~covenant that ~~require~~requires us to maintain a Leverage Ratio of consolidated indebtedness to consolidated EBITDA (earnings before interest, taxes, depreciation, amortization and non-cash charges) of no more than 3 times for the most recently ended 12-month period (EBITDA is defined as earnings before interest, taxes, depreciation and amortization) and an Interest Coverage Ratio of consolidated EBITDA to interest expense of at least 53.5 times for the most recently ended 12-month period. On October 26, 2020, we amended the Credit Facility and the 364 Day Credit Facility to provide additional flexibility with respect to the Leverage Ratio covenant. The amendments increase the maximum Leverage Ratio to 4.0 times through December 31, 2021 for the Credit Agreement and to 4.0 times through the maturity for the 364 Day Credit Facility. At December 31, ~~2018,~~2020, we were in compliance with these covenants as our Leverage Ratio was ~~2.1 times and our Interest Coverage Ratio was 9.9~~3.0 times. The Credit Facility ~~does~~and the 364 Day Credit Facility do not limit our ability to declare or pay dividends or repurchase our common stock.

At December 31, ~~2018,~~2020, our long-term and short-term debt was rated BBB+ and A2 by S&P and Baa1 and P2 by Moody's. Our access to the commercial paper market and the cost of these borrowings are affected by market conditions and our credit ~~ratings~~ratings. Our long-term debt, Credit Facility and ~~market conditions. Our senior notes and~~the 364 Day Credit Facility do not contain provisions that require acceleration of cash payments in the event of a downgrade in our credit ~~ratings are downgraded.~~ratings.

Credit Markets and Availability of Credit

In light of the uncertainty of future economic conditions, we will continue to take actions available to us to respond to changing economic conditions, and we will continue to actively manage our discretionary expenditures. We have not repurchased any of our common stock since March 13, 2020, and we do not plan to resume our repurchases until we believe economic conditions have begun to stabilize. We will continue to monitor and manage the level of credit made available to our clients. We believe that these actions, in addition to the availability of our Credit Facility and 364 Day Credit Facility, are sufficient to fund our near-term working capital needs and our discretionary spending. For additional information about our credit facilities, see Note 7 to the consolidated financial statements.

We have typically ~~fund~~funded our day-to-day liquidity by issuing commercial paper. In the third and fourth quarters of 2020, we reduced our commercial paper issuances as compared to the prior year period primarily as a result of the issuance of the 4.20% Notes in April 2020. In 2019, we issued short-term debt in a private placement to reduce our commercial paper issuances. This short-term debt was redeemed in the third quarter of 2019. Additional liquidity sources include our Credit Facility, 364 Day Credit Facility or the uncommitted credit lines. At December 31, ~~2018,~~2020, there were no outstanding commercial paper issuances or borrowings under the Credit Facility, the 364 Day Credit Facility or ~~material borrowings under~~ the uncommitted credit lines.

Commercial paper activity ~~for the three years ended December 31, 2018~~ was (dollars in millions):


	Year Ended December 31,
	2020			2019			2018
Average amount outstanding during the year	$	50.1		$	272.3		$	411.7
Maximum amount outstanding during the year	$	401.2		$	825.0		$	1,218.7
Average days outstanding	4.6			4.0			5.7
Weighted average interest rate	1.52		%	2.40		%	2.19		%

2018 2017 2016
Average amount outstanding during the year $ 411.7
$ 902.3
$ 861.3
Maximum amount outstanding during the year $ 1,218.7
$ 1,769.8
$ 1,608.9
Average days outstanding 5.7
13.0
11.2
Weighted average interest rate 2.19 % 1.29 % 0.70 %

~~While we~~We expect to continue ~~funding our day-to-day liquidity by~~ issuing commercial paper ~~we may draw on~~to fund our ~~Credit Facility.~~day-to-day liquidity. However, disruptions in the credit markets may lead to periods of illiquidity in the commercial paper market and higher credit spreads. To mitigate any ~~future~~ disruption in the credit markets and to fund our liquidity, we may borrow under the Credit Facility, 364 Day Credit Facility or the uncommitted credit lines or access the capital markets if favorable conditions exist. We will continue to monitor closely our liquidity and conditions in the credit markets. We cannot predict with any certainty the impact on us of any ~~future~~ disruptions in the credit markets. In such circumstances, we may need to obtain additional financing to fund our day-to-day working capital requirements. Such additional financing may not be available on favorable terms, or at all.

~~Contractual Obligations and Other Commercial Commitments~~

~~In the normal course of business, we enter into numerous contractual and commercial undertakings. The following tables should be read in conjunction with our consolidated financial statements.~~

~~Contractual obligations at December 31, 2018 were (in millions):~~

Obligation Due

Total
Obligation
2019 2020 - 2021 2022 - 2023 After 2023
Long-term debt:
Principal $ 4,900.0
$ 500.0
$ 1,000.0
$ 1,250.0
$ 2,150.0
Interest 767.4
184.5
274.0
170.7
138.2
Lease obligations 1,953.6
364.7
565.6
357.0
666.3
Contingent purchase price obligations 146.5
65.4
72.3
8.8
—
Transition tax liability on accumulated foreign earnings 139.1
15.1
23.6
33.9
66.5
Defined benefit pension plans benefit obligation 258.4
8.9
26.1
32.7
190.7
Postemployment arrangements benefit obligation 126.5
7.8
14.8
15.0
88.9
Uncertain tax positions 182.8
25.6
47.2
71.9
38.1
$ 8,474.3
$ 1,172.0
$ 2,023.6
$ 1,940.0
$ 3,338.7

Certain acquisitions include an initial payment at closing and provide for future additional contingent purchase price payments (earn-outs) that are recorded as a liability at the acquisition date fair value. Subsequent changes in the fair value of the liability are recorded in results of operations.

~~The Tax Act included a transition tax on accumulated foreign earnings, which is payable through 2025. See Note 11 to the consolidated financial statements for additional information.~~

The unfunded benefit obligation for our defined benefit pension plans and liability for our postemployment arrangements was $327.5 million at December 31, 2018. In 2018, we contributed $8.0 million to our defined benefit pension plans and paid $8.1 million in benefits for our postemployment arrangements. We do not expect these payments to increase significantly in 2019.

The liability for uncertain tax positions is subject to uncertainty as to when or if the liability will be paid. We have assigned the liability to the periods presented based on our judgment as to when these liabilities will be resolved by the appropriate taxing authorities.

See Note 16 to the consolidated financial statements for a description of our lease commitments, which comprise a significant component of our occupancy and other costs. See Note 22 to the consolidated financial statements for a discussion of the impact of the adoption of FASB Accounting Standards Codification Topic 842, ~~Leases.~~

~~Commercial commitments at December 31, 2018 were (in millions):~~

Commitment Expires
Total
Commitment 2019 2020 - 2021 2022 - 2023 After 2023
Standby letters of credit $ 4.6
$ 1.0
$ —
$ 2.5
$ 1.1
Guarantees 115.3
87.5
16.5
6.7
4.6
$ 119.9
$ 88.5
$ 16.5
$ 9.2
$ 5.7

~~At December 31, 2018, there were no significant off-balance sheet arrangements.~~

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

We manage our exposure to foreign ~~currency~~ exchange ~~rate risk~~ and interest rate risk through various strategies, including the use of derivative financial instruments. We use forward foreign exchange contracts as economic hedges to manage the cash flow volatility arising from foreign ~~currency~~ exchange rate fluctuations. We may use interest rate swaps to manage our interest expense and structure our long-term debt portfolio to achieve a mix of fixed rate and floating rate debt. We do not use derivatives for trading or speculative purposes. Using derivatives exposes us to the risk that counterparties to the derivative contracts will fail to meet their contractual obligations. We manage that risk through careful selection and ongoing evaluation of the counterparty financial institutions based on specific minimum credit standards and other factors.

We evaluate the effects of changes in foreign currency exchange rates, interest rates and other relevant market risks on our derivatives. We periodically determine the potential loss from market risk on our derivatives by performing a value-at-risk, or VaR, analysis. VaR is a statistical model that uses historical currency exchange ~~and interest~~ rate data to measure the potential impact on future earnings of our derivative financial instruments assuming normal market conditions. The VaR model is not intended to represent actual losses but is used as a risk estimation and management tool. Based on the results of the model, we estimate with 95% confidence a maximum one-day change in the net fair value of our derivative financial instruments at December 31, ~~2018~~2020 was not significant.

Foreign Currency Exchange Risk

~~Our~~In 2020, our international operations ~~represent~~represented approximately ~~48%~~45% of our revenue. Changes in the value of foreign currencies against the U.S. Dollar affect our results of operations and financial position. For the most part, because the revenue and expenses of our foreign operations are denominated in the same local currency, the economic impact on operating margin is minimized. The effects of foreign currency exchange transactions on our results of operations are discussed in Note 2 to the consolidated financial statements.

~~While our~~We operate in all major international markets ~~include~~including the Euro Zone, the U.K., Australia, Brazil, Canada, China and ~~Japan, our~~Japan. Our agencies transact business in more than 50 different currencies. As an integral part of our global treasury operations, we centralize our cash and use notional multicurrency pools ~~and to a lesser extent forward foreign exchange contracts,~~ to manage the foreign currency exchange risk that arises from imbalances between subsidiaries and their respective treasury centers from which they borrow or invest funds. At December 31, 2018, there were no outstanding forward foreign exchange contracts and at December 31, 2017, we had outstanding forward foreign exchange contracts with an aggregate notional amount of $92.8 million.centers. In addition, there are circumstances where revenue and expense transactions are not denominated in the same currency. In these instances, amounts are either promptly settled or hedged with forward foreign exchange contracts. To manage ~~that~~this risk, at December 31, 2020 and 2019, we had outstanding forward foreign exchange contracts with an aggregate notional amount of ~~$86.1~~$169.6 million and ~~$136.3~~$284.2 million, atrespectively. At December 31, ~~2018~~2020 and ~~2017, respectively. The~~2019, the net fair value of the forward foreign contracts ~~at December 31, 2018 and 2017~~ was ~~a current liability of $0.1 million and a current asset of $0.9 million, respectively.~~not material (see Note 20 to the consolidated financial statements).

Foreign currency derivatives are designated as economic hedges; therefore, any gain or loss in fair value incurred on those instruments is generally offset by decreases or increases in the fair value of the underlying ~~exposures.~~exposure. By using these financial instruments, we ~~reduced~~reduce financial risk of adverse foreign exchange changes by foregoing any gain which might ~~have occurred~~occur if the markets ~~moved~~move favorably. The terms of our forward foreign exchange contracts are generally less than 90 days.

Interest Rate Risk

We may use interest rate swaps to manage our interest cost and structure our long-term debt portfolio to achieve a mix of fixed rate and floating rate debt. Based on market conditions, we may terminate the swaps to reduce our exposure to rising interest rates or to monetize any gain and lock in a reduction in interest expense. Gains or losses on termination will be amortized to interest expense over the term of the underlying debt. At December 31, ~~2018, the total notional amount of the outstanding fixed-to-floating interest rate swaps was $1.25 billion. The interest rate swaps have the economic effect of converting~~2020, our long-term debt ~~portfolio to approximately 75% fixed rate obligations and 25% floating rate obligations. A discussion~~consists entirely of ~~our interest rate swaps is included in Note 7 to the consolidated financial statements.~~

fixed-rate debt.

Credit Risk

We provide advertising, marketing and corporate communications services to several thousand clients that operate in nearly every sector of the global economy and we grant credit to qualified clients in the normal course of business. Due to the diversified nature of our client base, we do not believe that we are exposed to a concentration of credit risk as our largest client represented ~~3.0%~~3.4% of revenue in ~~2018.~~2020. However, during periods of economic downturn, the credit profiles of our clients could change.

Item 8. Financial Statements and Supplementary Data

See Item 15, “Exhibits, Financial Statement Schedules.”

Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure

None.

Item 9A. Controls and Procedures

We maintain disclosure controls and procedures designed to ensure that information required to be disclosed in reports we file with the SEC is recorded, processed, summarized and reported within applicable time periods. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports we file or submit under the Securities Exchange Act of 1934, as amended, or the Exchange Act, is accumulated and communicated to management, including our Chief Executive Officer, or CEO, and Chief Financial Officer, or CFO, as appropriate to allow timely decisions regarding required disclosure. Management, including our CEO and CFO, conducted an evaluation of the effectiveness of our disclosure controls and procedures as of December 31, ~~2018.~~2020. Based on that evaluation, our CEO and CFO concluded that, as of December 31, ~~2018,~~2020, our disclosure controls and procedures are effective to ensure that decisions can be made timely with respect to required disclosures, as well as ensuring that the recording, processing, summarization and reporting of information required to be included in our Annual Report on Form 10-K for the year ended December 31, ~~2018~~2020 are appropriate.

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). Management, with the participation of our CEO, CFO and our agencies, conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on that evaluation, our CEO and CFO concluded that our internal control over financial reporting was effective as of December 31, ~~2018.~~2020. There have not been any changes in our internal control over financial reporting during our most recent fiscal quarter that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

KPMG LLP, an independent registered public accounting firm that audited our consolidated financial statements included in this Annual Report on Form 10-K, has issued an attestation report on Omnicom’s internal control over financial reporting as of December 31, ~~2018,~~2020, dated February ~~12, 2019,~~18, 2021, which is included on page F-2 of this ~~2018~~2020 10-K.

Item 9B. Other Information

None.

Item 16. Form 10-K Summary

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



		OMNICOM GROUP INC.
February ~~12, 2019~~18, 2021	BY:	/s/ PHILIP J. ANGELASTRO
		Philip J. Angelastro Executive Vice President and Chief Financial Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.


Signature			Title		Date

~~Signature~~			~~Title~~	~~Date~~

/s/ JOHN D. WREN	Chairman and Chief Executive Officer and Director (Principal Executive Officer)			February ~~12, 2019~~18, 2021
John D. Wren

/s/ PHILIP J. ANGELASTRO			Executive Vice President and Chief Financial Officer (Principal Financial Officer)		February ~~12, 2019~~18, 2021
Philip J. Angelastro

/s/ ANDREW L. CASTELLANETA			Senior Vice President, Chief Accounting Officer ~~(Principal~~ (Principal Accounting Officer)		February ~~12, 2019~~18, 2021
Andrew L. Castellaneta

/s/ A~~LAN~~ ~~R. BATKIN~~MARY C. CHOKSI			Director		February ~~12, 2019~~18, 2021
~~Alan R. Batkin~~Mary C. Choksi

/s/ M~~ARY~~ C.LEONARD S. C~~HOKSI~~OLEMAN, JR.			Director		February ~~12, 2019~~18, 2021
~~Mary C. Choksi~~

~~/s/ ROBERT~~ C~~HARLES~~ C~~LARK~~	~~Director~~	~~February 12, 2019~~
~~Robert Charles Clark~~

~~/s/ LEONARD~~ ~~S. COLEMAN, JR.~~	~~Director~~	~~February 12, 2019~~
Leonard S. Coleman, Jr.

/s/ SUSAN S. DENISON			Director		February ~~12, 2019~~18, 2021
Susan S. Denison

/s/ RONNIES.HAWKINS			Director		February ~~12, 2019~~18, 2021
Ronnie S. Hawkins

/s/ DEBORAH J. KISSIRE			Director		February ~~12, 2019~~18, 2021
Deborah J. Kissire

/s/ GRACIAC. MARTORE			Director		February ~~12, 2019~~18, 2021
Gracia C. Martore

/s/ LINDA JOHNSON RICE			Director		February ~~12, 2019~~18, 2021
Linda Johnson Rice

/s/ VALERIEM. WILLIAMS			Director		February ~~12, 2019~~18, 2021
Valerie M. Williams

MANAGEMENT REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Management is responsible for the preparation of the consolidated financial statements and related information of Omnicom Group Inc., or Omnicom. Management uses its best judgment to ensure that the consolidated financial statements present fairly, in all material respects, Omnicom’s consolidated financial position and results of operations in conformity with generally accepted accounting principles in the United States.

The financial statements have been audited by an independent registered public accounting firm in accordance with the standards of the Public Company Accounting Oversight Board. Their report expresses the independent accountant’s judgment as to the fairness of management’s reported financial position, results of operations and cash flows. This judgment is based on the procedures described in the ~~fourth~~fifth and ~~fifth~~sixth paragraphs of their report.

Omnicom management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Securities Exchange Act Rule 13a-15(f). Management, with the participation of our Chief Executive Officer, or CEO, Chief Financial Officer, or CFO, and our agencies, conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on that evaluation, our CEO and CFO concluded that our internal control over financial reporting was effective as of December 31, ~~2018.~~2020. There have not been any changes in our internal control over financial reporting during our fourth fiscal quarter that have materially affected or are reasonably likely to affect our internal control over financial reporting.

18, 2021.

The Board of Directors of Omnicom has an Audit Committee comprised of ~~five~~four independent directors. The Audit Committee meets periodically with financial management, Internal Audit and the independent auditors to review accounting, control, audit and financial reporting matters.

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

~~The~~To the Shareholders and Board of Directors of

Omnicom Group Inc.:

Opinions on the Consolidated Financial Statements and Internal Control ~~over~~Over Financial Reporting

We have audited the accompanying consolidated balance sheets of Omnicom Group Inc. and subsidiaries (the ~~“Company”)~~Company) as of December 31, ~~2018~~2020 and ~~2017,~~2019, the related consolidated statements of income, comprehensive income, equity, and cash flows for each of the years in the three-year period ended December 31, ~~2018,~~2020, and the related notes and financial statement schedule II (collectively, the ~~“consolidated~~consolidated financial ~~statements”)~~statements). We also have audited the Company’s internal control over financial reporting as of December 31, ~~2018,~~2020, based on criteria established in Internal Control - Integrated Framework(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of ~~Omnicom Group Inc. and subsidiaries~~the Company as of December 31, ~~2018~~2020 and ~~2017,~~2019, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, ~~2018,~~2020, in conformity with U.S. generally accepted accounting principles. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, ~~2018,~~2020, based on criteria established in Internal Control -Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Change in Accounting Principle

As discussed in Note 16 to the consolidated financial statements, the Company has changed its method of accounting for leases effective January 1, 2019 due to the adoption of Accounting Standards Codification Topic 842, Leases.

Basis for Opinions

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

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

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

Definition and Limitations of Internal Control ~~over~~Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with ~~U.S.~~ generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

F-2

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

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Evaluation of the sufficiency of audit evidence over revenue recognition

As discussed in Note 3 to the consolidated financial statements, the Company provides an extensive range of advertising, marketing and corporate communication services through its branded networks and agencies, which operate in all major markets throughout the Americas, EMEA and Asia Pacific regions. Consolidated revenues across all disciplines and global economic markets was $13,171.1 million for the year-ended December 31, 2020.

We identified the evaluation of the sufficiency of audit evidence over revenue recognition as a critical audit matter. Revenue is recognized from contracts with customers that are based on statements of work which are typically separately negotiated with the client at a local agency level and local agencies execute tens of thousands of contracts per year. Evaluating the sufficiency of audit evidence obtained required a high degree of auditor judgment because of the volume of contracts entered into across the branded networks and agencies for which revenue was recorded. This included selecting the locations where testing would be performed and the supervision and review of procedures performed at those locations.

The following are the primary procedures we performed to address this critical audit matter. We applied auditor judgment to determine the scope of agencies at which we performed audit procedures and the nature and extent of the procedures performed at each location. At each agency where procedures over revenue were performed, we (1) evaluated the design and tested the operating effectiveness of certain internal controls over revenue recognition, including controls to check that local agencies recorded revenue in accordance with the Company’s accounting policies and billings were recorded and presented in accordance with client agreements, (2) examined a selection of contracts and assessed that the Company’s accounting policies were applied consistently and accurately, and (3) assessed the recording of revenue by selecting certain transactions and comparing the amounts recognized for consistency with the underlying documentation including contracts with customers. We evaluated the sufficiency of audit evidence obtained by assessing the results of procedures performed over revenue recognition.

/s/ KPMG LLP

We have served as the Company’s auditor since 2002.

New York, New York

February ~~12, 2019~~

18, 2021

F-3

~~F-2~~

OMNICOM GROUP INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In millions, except per share amounts)


	December 31,
	2020		2019
ASSETS
Current Assets:
Cash and cash equivalents	$	5,600.5	$	4,305.7
Short-term investments, at cost	0		3.6
Accounts receivable, net of allowance for doubtful accounts of $30.4 and $21.5	7,813.4		7,829.0
Work in process	1,101.2		1,257.6
Other current assets	1,075.0		1,188.8
Total Current Assets	15,590.1		14,584.7
Property and Equipment at cost, less accumulated depreciation of $1,156.7 and $1,142.8	585.2		663.4
Operating Lease Right-Of-Use Assets	1,223.4		1,398.3
Equity Method Investments	85.3		106.8
Goodwill	9,609.7		9,440.5
Intangible Assets, net of accumulated amortization of $817.2 and $759.2	298.5		338.2
Other Assets	255.0		251.5
TOTAL ASSETS	$	27,647.2	$	26,783.4
LIABILITIES AND EQUITY
Current Liabilities:
Accounts payable	$	11,513.0	$	11,768.4
Customer advances	1,361.3		1,215.3
Current portion of debt	0		602.4
Short-term debt	3.9		10.1
Taxes payable	244.5		252.8
Other current liabilities	2,402.4		2,131.9
Total Current Liabilities	15,525.1		15,980.9
Long-Term Liabilities	970.7		1,006.8
Long-Term Liability - Operating Leases	1,114.0		1,274.7
Long-Term Debt	5,807.3		4,531.9
Deferred Tax Liabilities	443.5		408.1
Commitments and Contingent Liabilities (Note 18)	0		0
Temporary Equity - Redeemable Noncontrolling Interests	209.7		207.3
Equity:
Shareholders’ Equity:
Preferred stock, $1.00 par value, 7.5 million shares authorized, NaN issued	0		0
Common stock, $0.15 par value, 1.0 billion shares authorized, 297.2 million shares issued, 215.0 million and 217.1 million shares outstanding	44.6		44.6
Additional paid-in capital	747.8		760.9
Retained earnings	8,190.6		7,806.3
Accumulated other comprehensive income (loss)	(1,213.8)		(1,197.6)
Treasury stock, at cost, 82.2 million and 80.1 million shares	(4,684.8)		(4,560.3)
Total Shareholders’ Equity	3,084.4		2,853.9
Noncontrolling interests	492.5		519.8
Total Equity	3,576.9		3,373.7
TOTAL LIABILITIES AND EQUITY	$	27,647.2	$	26,783.4

December 31,
2018 2017
ASSETS
Current Assets:
Cash and cash equivalents $ 3,652.4
$ 3,796.0
Short-term investments, at cost 5.5
0.4
Accounts receivable, net of allowance for doubtful accounts of $26.8 and $32.1 7,666.1
8,083.8
Work in process 1,161.5
1,110.6
Other current assets 1,241.4
1,125.2
Total Current Assets 13,726.9
14,116.0
Property and Equipment at cost, less accumulated depreciation of $1,185.0 and $1,279.2 694.4
690.9
Equity Method Investments 120.9
120.3
Goodwill 9,384.3
9,337.5
Intangible Assets, net of accumulated amortization of $737.4 and $879.9 382.8
368.4
Other Assets 307.7
298.1
TOTAL ASSETS $ 24,617.0
$ 24,931.2
LIABILITIES AND EQUITY
Current Liabilities:
Accounts payable $ 11,464.3
$ 11,574.6
Customer advances 1,159.0
1,266.7
Current portion of debt 499.6
—
Short-term debt 8.1
11.8
Taxes payable 180.6
330.0
Other current liabilities 1,958.6
1,925.8
Total Current Liabilities 15,270.2
15,108.9
Long-Term Debt 4,384.1
4,912.9
Long-Term Liabilities 1,197.8
1,091.2
Deferred Tax Liabilities 413.7
483.6
Commitments and Contingent Liabilities (Note 18)

Temporary Equity - Redeemable Noncontrolling Interests 244.3
182.4
Equity:
Shareholders’ Equity:
Preferred stock, $1.00 par value, 7.5 million shares authorized, none issued —
—
Common stock, $0.15 par value, 1.0 billion shares authorized, 297.2 million shares issued, 223.9 million and 230.1 million shares outstanding 44.6
44.6
Additional paid-in capital 728.8
828.3
Retained earnings 7,016.1
6,210.6
Accumulated other comprehensive income (loss) (1,228.5 ) (963.0 )
Treasury stock, at cost, 73.3 million and 67.1 million shares (4,013.9 ) (3,505.4 )
Total Shareholders’ Equity 2,547.1
2,615.1
Noncontrolling interests 559.8
537.1
Total Equity 3,106.9
3,152.2
TOTAL LIABILITIES AND EQUITY $ 24,617.0
$ 24,931.2

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

F-4

~~F-3~~

OMNICOM GROUP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(In millions, except per share amounts)


	Year Ended December 31,
	2020		2019		2018
Revenue	$	13,171.1	$	14,953.7	$	15,290.2
Operating Expenses:
Salary and service costs	9,572.8		10,972.2		11,306.1
Occupancy and other costs	1,138.5		1,221.8		1,309.6
COVID-19 repositioning costs	277.9		0		0
Net gain on disposition of subsidiaries	0		0		(178.4)
Cost of services	10,989.2		12,194.0		12,437.3
Selling, general and administrative expenses	360.5		405.9		455.4
Depreciation and amortization	222.6		231.5		264.0
	11,572.3		12,831.4		13,156.7
Operating Profit	1,598.8		2,122.3		2,133.5
Interest Expense	221.8		244.3		266.4
Interest Income	32.3		60.3		57.2
Income Before Income Taxes and Income (Loss) From Equity Method Investments	1,409.3		1,938.3		1,924.3
Income Tax Expense	381.7		504.4		492.7
Income (Loss) From Equity Method Investments	(6.8)		2.0		8.9
Net Income	1,020.8		1,435.9		1,440.5
Net Income Attributed To Noncontrolling Interests	75.4		96.8		114.1
Net Income - Omnicom Group Inc.	$	945.4	$	1,339.1	$	1,326.4

Net Income Per Share - Omnicom Group Inc.:
Basic	$	4.38	$	6.09	$	5.85
Diluted	$	4.37	$	6.06	$	5.83

Years Ended December 31,
2018 2017 2016
Revenue $ 15,290.2
$ 15,273.6
$ 15,416.9
Operating Expenses:
   Salary and service costs 11,306.1
11,227.2
11,419.0
   Occupancy and other costs 1,309.6
1,240.8
1,230.6
   Net gain on disposition of subsidiaries (178.4 ) —
—
Cost of services 12,437.3
12,468.0
12,649.6
   Selling, general and administrative expenses 455.4
439.7
443.9
   Depreciation and amortization 264.0
282.1
292.9
13,156.7
13,189.8
13,386.4
Operating Profit 2,133.5
2,083.8
2,030.5
Interest Expense 266.4
248.6
231.3
Interest Income 57.2
49.7
42.6
Income Before Income Taxes and Income From Equity Method Investments 1,924.3
1,884.9
1,841.8
Income Tax Expense 492.7
696.2
600.5
Income From Equity Method Investments 8.9
3.5
5.4
Net Income 1,440.5
1,192.2
1,246.7
Net Income Attributed To Noncontrolling Interests 114.1
103.8
98.1
Net Income - Omnicom Group Inc. $ 1,326.4
$ 1,088.4
$ 1,148.6

Net Income Per Share - Omnicom Group Inc.:
Basic $ 5.85
$ 4.68
$ 4.80
Diluted $ 5.83
$ 4.65
$ 4.78

Dividends Declared Per Common Share $ 2.40
$ 2.25
$ 2.15

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

F-5

~~F-4~~

OMNICOM GROUP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In millions)


	Year Ended December 31,
	2020		2019		2018
Net Income	$	1,020.8	$	1,435.9	$	1,440.5
Other Comprehensive Income (Loss):
Cash flow hedge:
Amortization of loss included in interest expense	5.5		5.5		5.6
Income tax effect	(1.6)		(1.6)		(1.6)
	3.9		3.9		4.0
Defined benefit pension plans and postemployment arrangements:
Unrecognized actuarial gains (losses) and prior service cost for the period	(29.5)		(45.5)		10.4
Amortization of prior service cost and actuarial losses	13.9		8.7		16.6
Income tax effect	4.5		10.7		(7.9)
	(11.1)		(26.1)		19.1
Available-for-sale securities:
Reclassification	0		0		0.3

Foreign currency translation adjustment	(5.0)		74.9		(319.1)

Other Comprehensive Income (Loss)	(12.2)		52.7		(295.7)

Comprehensive Income	1,008.6		1,488.6		1,144.8
Comprehensive Income Attributed To Noncontrolling Interests	79.5		96.3		83.9
Comprehensive Income - Omnicom Group Inc.	$	929.1	$	1,392.3	$	1,060.9

Years Ended December 31,
2018 2017 2016
Net Income $ 1,440.5
$ 1,192.2
$ 1,246.7
Other Comprehensive Income (Loss):
Cash flow hedge:
Amortization of loss included in interest expense 5.6
5.3
4.0
Loss for the period —
—
(48.9 )
Income tax effect (1.6 ) (2.1 ) 18.7
4.0
3.2
(26.2 )
Defined benefit pension plans and postemployment arrangements:
Unrecognized actuarial gains (losses) and prior service cost for the period 10.4
(12.2 ) (18.3 )
Amortization of prior service cost and actuarial losses 16.6
16.1
14.0
Income tax effect (7.9 ) (1.7 ) 1.6
19.1
2.2
(2.7 )
Available-for-sale securities:
Unrealized gain for the period —
0.8
0.2
Income tax effect —
(0.3 ) (0.1 )
Reclassification 0.3
—
—
0.3
0.5
0.1

Foreign currency translation adjustment (319.1 ) 412.7
(319.4 )

Other Comprehensive Income (Loss) (295.7 ) 418.6
(348.2 )

Comprehensive Income 1,144.8
1,610.8
898.5
Comprehensive Income Attributed To Noncontrolling Interests 83.9
129.4
90.5
Comprehensive Income - Omnicom Group Inc. $ 1,060.9
$ 1,481.4
$ 808.0

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

F-6

~~F-5~~

OMNICOM GROUP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EQUITY

~~Three Years Ended December 31, 2018~~

(In millions, except per share amounts)


	Year Ended December 31,
	2020		2019		2018
Common Stock, shares	297.2		297.2		297.2

Common Stock, par value	$	44.6	$	44.6	$	44.6
Additional Paid-in Capital:
Beginning balance	760.9		728.8		828.3

Acquisition of noncontrolling interests	5.7		(22.3)		(39.7)
Change in temporary equity	3.3		38.2		(71.1)
Share-based compensation	71.0		72.5		70.5
Stock issued, share-based compensation	(93.1)		(56.3)		(59.2)
Ending balance	747.8		760.9		728.8
Retained Earnings:
Beginning balance	7,806.3		7,016.1		6,210.6
Cumulative effect of accounting changes	0		22.3		23.6
Net income	945.4		1,339.1		1,326.4
Common stock dividends declared	(561.1)		(571.2)		(544.5)
Ending balance	8,190.6		7,806.3		7,016.1
Accumulated Other Comprehensive Income (Loss):
Beginning balance	(1,197.6)		(1,228.5)		(963.0)
Cumulative effect of accounting changes	0		(22.3)		0
Other comprehensive income (loss)	(16.2)		53.2		(265.5)
Ending balance	(1,213.8)		(1,197.6)		(1,228.5)
Treasury Stock:
Beginning balance	(4,560.3)		(4,013.9)		(3,505.4)
Stock issued, share-based compensation	97.5		63.8		72.8
Common stock repurchased	(222.0)		(610.2)		(581.3)
Ending balance	(4,684.8)		(4,560.3)		(4,013.9)
Shareholders’ Equity	3,084.4		2,853.9		2,547.1
Noncontrolling Interests:
Beginning balance	519.8		559.8		537.1
Cumulative effect of accounting changes	0		0		0.4
Net income	75.4		96.8		114.1
Other comprehensive income (loss)	4.1		(0.5)		(30.2)
Dividends to noncontrolling interests	(95.5)		(97.3)		(134.9)
Acquisition of noncontrolling interests	(42.0)		(54.4)		(42.3)
Increase in noncontrolling interests from business combinations	30.7		15.4		115.6
Ending balance	492.5		519.8		559.8
Total Equity	$	3,576.9	$	3,373.7	$	3,106.9

Dividends Declared Per Common Share	$	2.60	$	2.60	$	2.40

Omnicom Group Inc.
Common Stock
Additional
Paid-in
Capital

Retained
Earnings

Accumulated
Other
Comprehensive
Income (Loss)

Treasury
Stock

Shareholders’
Equity

Noncontrolling
Interests

Total
Equity
Shares Par Value
Balance as of December 31, 2015 397.2
$ 59.6
$ 859.9
$ 10,178.2
$ (1,015.4 ) $ (7,629.9 ) $ 2,452.4
$ 437.0
$ 2,889.4
Net income 1,148.6
1,148.6
98.1
1,246.7
Other comprehensive income (loss) (340.6 ) (340.6 ) (7.6 ) (348.2 )
Dividends to noncontrolling interests (87.2 ) (87.2 )
Acquisition of noncontrolling interests (87.7 ) (87.7 ) (16.0 ) (103.7 )
Increase in noncontrolling interests from business combinations
73.3
73.3
Change in temporary equity
(33.0 )
(33.0 )
(33.0 )
Common stock dividends declared ($2.15 per share) (513.9 ) (513.9 ) (513.9 )
Share-based compensation 93.4
93.4
93.4
Stock issued, share-based compensation (34.3 ) 79.3
45.0
45.0
Common stock repurchased (602.2 ) (602.2 ) (602.2 )
Treasury stock retired (100.0 ) (15.0 ) (5,135.7 ) 5,150.7
—
—
Balance as of December 31, 2016 297.2
�� 44.6
798.3
5,677.2
(1,356.0 ) (3,002.1 ) 2,162.0
497.6
2,659.6
Cumulative effect of accounting changes 4.5
(31.6 ) (27.1 ) —
(27.1 )
Net income 1,088.4
1,088.4
103.8
1,192.2
Other comprehensive income (loss) 393.0
393.0
25.6
418.6
Dividends to noncontrolling interests (101.7 ) (101.7 )
Acquisition of noncontrolling interests (25.7 ) (25.7 ) (8.2 ) (33.9 )
Increase in noncontrolling interests from business combinations 20.0
20.0
Change in temporary equity 27.1
27.1
27.1
Common stock dividends declared ($2.25 per share) (523.4 ) (523.4 ) (523.4 )
Share-based compensation 80.2
80.2
80.2
Stock issued, share-based compensation (56.1 ) 65.1
9.0
9.0
Common stock repurchased

(568.4 ) (568.4 ) (568.4 )
Balance as of December 31, 2017 297.2
44.6
828.3
6,210.6
(963.0 ) (3,505.4 ) 2,615.1
537.1
3,152.2
Cumulative effect of accounting changes

23.6
23.6
0.4
24.0
Net income 1,326.4
1,326.4
114.1
1,440.5
Other comprehensive income (loss) (265.5 ) (265.5 ) (30.2 ) (295.7 )
Dividends to noncontrolling interests (134.9 ) (134.9 )
Acquisition of noncontrolling interests (39.7 ) (39.7 ) (42.3 ) (82.0 )
Increase in noncontrolling interests from business combinations 115.6
115.6
Change in temporary equity (71.1 ) (71.1 ) (71.1 )
Common stock dividends declared ($2.40 per share) (544.5 ) (544.5 )

(544.5 )
Share-based compensation 70.5
70.5

70.5
Stock issued, share-based compensation (59.2 ) 72.8
13.6

13.6
Common stock repurchased (581.3 ) (581.3 )

(581.3 )
Balance as of December 31, 2018 297.2
$ 44.6
$ 728.8
$ 7,016.1
$ (1,228.5 ) $ (4,013.9 ) $ 2,547.1
$ 559.8
$ 3,106.9

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

F-7

~~F-6~~

OMNICOM GROUP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)


	Year Ended December 31,
	2020		2019		2018
Cash Flows from Operating Activities:
Net income	$	1,020.8	$	1,435.9	$	1,440.5
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of right-of-use assets	139.5		147.7		161.5
Amortization of intangible assets	83.1		83.8		102.5
Amortization of net deferred gain on interest rate swaps	(8.1)		(14.8)		(12.9)
Share-based compensation	70.8		72.5		70.5
COVID-19 repositioning costs	277.9		0		0
Net gain from disposition of subsidiaries	0		0		(178.4)
Impact of Tax Act	0		0		28.9
Other, net	109.7		5.8		29.2
Increase in operating capital	30.9		125.1		80.5
Net Cash Provided By Operating Activities	1,724.6		1,856.0		1,722.3
Cash Flows from Investing Activities:
Capital expenditures	(75.4)		(102.2)		(195.7)
Acquisition of businesses and interests in affiliates, net of cash acquired	(67.1)		(10.0)		(350.4)
Proceeds from disposition of subsidiaries	3.2		79.4		308.4


Proceeds from sale of investments and other	3.2		1.9		15.9

Net Cash Used In Investing Activities	(136.1)		(30.9)		(221.8)
Cash Flows from Financing Activities:
Proceeds from borrowings	1,186.6		1,112.4		0
Repayment of debt	(600.0)		(900.0)		0
Change in short-term debt	(5.6)		2.0		0
Dividends paid to common shareholders	(562.7)		(564.3)		(548.5)
Repurchases of common stock	(222.0)		(610.2)		(581.3)
Proceeds from stock plans	4.1		6.5		13.0
Acquisition of additional noncontrolling interests	(22.3)		(51.4)		(43.6)
Dividends paid to noncontrolling interest shareholders	(95.5)		(97.3)		(134.9)
Payment of contingent purchase price obligations	(31.2)		(64.6)		(99.0)
Other, net	(59.8)		(55.1)		(46.8)
Net Cash Used In Financing Activities	(408.4)		(1,222.0)		(1,441.1)
Effect of foreign exchange rate changes on cash and cash equivalents	114.7		50.2		(203.0)
Net Increase (Decrease) in Cash and Cash Equivalents	1,294.8		653.3		(143.6)
Cash and Cash Equivalents at the Beginning of Year	4,305.7		3,652.4		3,796.0
Cash and Cash Equivalents at the End of Year	$	5,600.5	$	4,305.7	$	3,652.4

Years Ended December 31,
2018 2017 2016

Net income $ 1,440.5
$ 1,192.2
$ 1,246.7
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation 161.5
168.3
177.7
Amortization of intangible assets 102.5
113.8
115.2
Amortization of deferred gain on interest rate swaps (12.9 ) (12.9 ) (15.4 )
Share-based compensation 70.5
80.2
93.4
Net gain from disposition of subsidiaries (178.4 ) —
—
Impact of Tax Act 28.9
106.3
—
Other, net 29.2
27.5
32.0
Increase in operating capital 80.5
348.5
302.8
Net Cash Provided By Operating Activities 1,722.3
2,023.9
1,952.4
Cash Flows from Investing Activities:
Capital expenditures (195.7 ) (156.0 ) (165.5 )
Acquisition of businesses and interests in affiliates, net of cash acquired (350.4 ) (26.3 ) (308.8 )
Proceeds from disposition of subsidiaries 308.4
—
—
Proceeds from sale of investments and other 15.9
66.9
(7.3 )
Net Cash Used In Investing Activities (221.8 ) (115.4 ) (481.6 )
Cash Flows from Financing Activities:
Dividends paid to common shareholders (548.5 ) (515.2 ) (505.4 )
Repurchases of common stock (581.3 ) (568.4 ) (602.2 )
Proceeds from stock plans 13.0
10.7
26.8
Acquisition of additional noncontrolling interests (43.6 ) (17.0 ) (72.7 )
Dividends paid to noncontrolling interest shareholders (134.9 ) (101.7 ) (87.2 )
Payment of contingent purchase price obligations (99.0 ) (108.4 ) (110.5 )
Change in short-term debt —
(18.1 ) (1.2 )
Proceeds from borrowings —
—
1,389.6
Repayment of debt —
—
(1,000.0 )
Other, net (46.8 ) (24.5 ) (35.5 )
Net Cash Used In Financing Activities (1,441.1 ) (1,342.6 ) (998.3 )
Effect of foreign exchange rate changes on cash and cash equivalents (203.0 ) 227.9
(75.5 )
Net Increase (Decrease) in Cash and Cash Equivalents (143.6 ) 793.8
397.0
Cash and Cash Equivalents at the Beginning of Year 3,796.0
3,002.2
2,605.2
Cash and Cash Equivalents at the End of Year $ 3,652.4
$ 3,796.0
$ 3,002.2

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

F-8

~~F-7~~

OMNICOM GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Presentation of Financial Statements

The terms “Omnicom,” “the Company,” “we,” “our” and “us” each refer to Omnicom Group Inc. and its subsidiaries, unless the context indicates otherwise. The accompanying consolidated financial statements were prepared in accordance with generally accepted accounting principles in the United States, or U.S. GAAP or GAAP. All intercompany balances and transactions have been eliminated.

~~Accounting Changes~~Risks and Uncertainties

~~Effective January 1, 2018, we adopted FASB ASC Topic 606,~~ ~~Revenue from Contracts with Customers~~, or ASC 606. In accordance with ASC 606, we changed certain aspects of our revenue recognition accounting policy as described below. ASC 606 was applied using the modified retrospective method, where the cumulative effectImpact of the initial application was recognized as an adjustment to opening retained earnings at January 1, 2018. Therefore, comparative prior periods have not been adjusted and continue to be reported under FASB ASC Topic 605, ~~Revenue Recognition, or ASC 605.~~

~~Upon adoption of ASC 606,~~COVID-19 Pandemic on our accounting policy for certain third-party out-of-pocket costs, which are incurred in connection with our services and are billed to clients, was required to be changed. Our policy for performance incentives (variable consideration) included in certain client contracts was required to be changed. The inclusion of third-party out-of-pocket costs in revenue depends on whether we act as a principal or agent in the client arrangement. Under ASC 606, the principal versus agent assessment is based on whether we control the specified goods or services before they are transferred to the customer. As a result of the adoption of ASC 606, certain third-party costs are no longer included in revenue and cost of services. This change was the principal adjustment to our reported revenue and operating expenses included in the table below. However, the change had no impact on operating profit.Business

In ~~addition, performance incentives included in certain client contracts can increase revenue if we meet certain quantitative or qualitative objectives in delivering~~2020, the COVID-19 pandemic negatively impacted our ~~services. Under ASC 606, performance incentives are now treated as variable consideration. Prior~~business and results of operations. Efforts to mitigate the adoption of ASC 606, performance incentives were recognized in revenue under ASC 605 when specific quantitative goals were achieved or when our performance against qualitative goals was acknowledged by the client. Under ASC 606, variable consideration is estimated and included in total consideration at contract inception based on either the expected value method or the most likely outcome method. These estimates are based on historical award experience, anticipated performance and our best judgment at the time. As a result of this change, we recorded a cumulative effect adjustment to increase opening retained earnings at January 1, 2018 by $19.5 million, to reflect the transition requirements of ASC 606. The effect of this change on our financial position and cash flows was not material.

~~The~~ impact of the ~~adoption~~pandemic, including government actions to restrict travel, limit public gatherings, shelter-in-place orders and mandatory closures of ~~ASC 606 on revenue, operating expenses~~businesses, resulted in many of our clients reducing or suspending their spending for our advertising, marketing and ~~operating profit~~corporate communication services. As a result, for the year ended December 31, ~~2018 was (in millions):~~

As Reported Adjustments Excluding Impact of Adoption of ASC 606
Revenue $ 15,290.2
$ 146.1
$ 15,436.3
Operating Expenses 13,156.7
139.5
13,296.2
Operating Profit 2,133.5
6.6
2,140.1

2020, revenue decreased $1,782.6 million, or 11.9%, compared to 2019, primarily due to the impact of the COVID-19 pandemic. The impact of the ~~adoption~~COVID-19 pandemic on our revenue has been, and may continue to be, material, depending on several factors, including the potential for prolonged or additional governmental actions to mitigate the effects of ~~ASC 606 on net income - Omnicom Group Inc., diluted net income per share - Omnicom Group Inc.~~the pandemic in the near-term, and the ~~unaudited consolidated financial statements was not material.~~intermediate and long-term impact on marketers' spending plans.

~~Effective January 1, 2018,~~In response to the impact of the COVID-19 pandemic, in the second quarter of 2020, we ~~adopted ASU 2016-01,~~ ~~Recognition~~took actions to align our cost structure and ~~Measurement~~reduce our workforce and facility requirements and continued the review of ~~Financial Assets~~businesses for disposal and ~~Financial Liabilities, or ASU 2016-01, which revised the classification and measurement of investments in equity securities. ASU 2016-01 requires that equity investments, except those accounted~~assets for ~~under the equity method of accounting, be measured at fair value and changes in fair value are recognized in net income, and provides~~impairment. As a new measurement alternative for equity investments that do not have a readily determinable fair value (cost method investments). These investments are measured at cost, less any impairment, adjusted for observable price changes and, upon adoption, we elected to record our equity investments that do not have a readily determinable fair value using the alternative measurement method. We adopted ASU 2016-01 using the modified retrospective method and, accordingly,result, we recorded a ~~cumulative effect adjustment~~pre-tax charge of $277.9 million, which is comprised of incremental severance of $150.0 million, real estate operating lease right-of-use, or ROU, asset and other asset impairment charges of $55.8 million, other exit costs of $47.0 million and dispositions and other charges of $25.1 million.

In addition, during 2020 we reduced salary and service costs by $162.6 million related to ~~increase opening retained earnings at January~~reimbursements and tax credits under government programs in several countries, including the Coronavirus Aid, Relief, and Economic Security Act, or the CARES Act, in the United States, the Kurzarbeit program in Germany, and other government reimbursement programs in the U.K., France, Canada and other jurisdictions.

The COVID-19 pandemic negatively impacted most of our clients' businesses. As a result, clients have cut costs, including postponing or reducing marketing communication expenditures. While certain industries such as healthcare and pharmaceuticals, technology and telecommunications, financial services and consumer products have been less affected, as long as the COVID-19 pandemic remains a threat, global economic conditions continue to be volatile and such uncertainty cuts across all clients, industries and geographies. Overall, while we have a diversified portfolio of service offerings, clients and geographies, demand for our services can be expected to continue to be adversely affected as marketers reduce expenditures in the short term due to the uncertain impact of the pandemic on the global economy. We expect global economic performance and our performance to vary by geography until the impact of the COVID-19 pandemic on the global economy moderates.

Although we have experienced a decrease in our cash flow from operating activities, we took numerous proactive steps to strengthen our liquidity and financial position that are intended to mitigate the potential impact of the COVID-19 pandemic on our liquidity. In February 2020, we issued $600 million 2.45% Senior Notes due April 30, 2030, or the 2.45% Notes. In March 2020, the net proceeds from the issuance of the 2.45% Notes were used to redeem the remaining $600 million principal amount of our 4.45% Senior Notes due August 15, 2020, or the 2020 Notes. As a result, we have no notes maturing until May 2022. In April 2020, we issued $600 million of 4.20% Senior Notes due June 1, ~~2018 by $4.1~~2030, or the 4.20% Notes, and we entered into a new $400 million 364 day revolving credit facility, or the 364 Day Credit Facility. The 364 Day Credit Facility is in addition to our existing $2.5 billion multi-currency revolving credit facility, or Credit Facility, which we extended to mature in February 2025. In addition, in March 2020, we suspended our share repurchase activity.

The impact on the global economy and resulting decline in the price of our common stock was determined to be a trigger event in the first quarter of 2020 that required us to perform a review of our long-lived assets for impairment, primarily related to goodwill, amortizable intangible assets and equity method investments. We updated our review in June 2020, and the result of the review of intangible assets and goodwill is discussed in Note 5. In the second quarter of 2020, we disposed of one of our equity method investments and recognized a non-cash after-tax charge of $3.9 million.

In the fourth quarter of 2020 we recorded asset impairment charges of $55.8 million associated with underperforming assets, which is included in salary and service costs.

F-9

~~F-8~~

OMNICOM GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~Effective January 1, 2018, we adopted ASU 2017-07,~~ ~~Compensation - Retirement Benefits, or ASU 2017-07. ASU 2017-07 requires that only the service cost component~~The impact of periodic benefit cost is recorded in salary and service cost. All other components of net periodic benefit cost are excluded from operating profit. ASU 2017-07 is applied retrospectively, and accordingly, for 2018, 2017 and 2016 we reclassified $24.5 million, $24.1 million and $21.6 million, respectively, from salary and service costs to interest expense, which increasedthese actions on operating profit ~~but had no effect on~~and income ~~before income taxes and income~~(loss) from equity method investments ~~net income~~was (in millions):


	Increase (Decrease)
	Operating Profit		Income (Loss) from Equity Method Investments

















COVID-19 repositioning costs	$	(277.9)
Impairment charges - underperforming assets	(55.8)
Impairment charge - equity method investment			$	(3.9)
Reimbursements and tax credits under government programs	162.6
	$	(171.1)	$	(3.9)

Accounting Changes

Adoption of ASU 2016-13

On January 1, 2020, we adopted ASU 2016-13, Financial Instruments - ~~Omnicom Group Inc.~~Credit Losses: Measurement of Credit Losses on Financial Instruments, or ~~net income per share~~ASU 2016-13, which changes the impairment model for most financial assets, including accounts receivable. The new model uses a forward-looking expected loss method. Historically, the credit loss experience on our client billings has not resulted in material bad debt expense. Accordingly, the adoption of ASU 2016-13 did not have a significant impact on our financial position, or on our results of operations.

As a result of the adoption of ASU 2016-13, we changed our accounting policy for allowance for doubtful accounts as follows: We maintain an allowance for doubtful accounts related to potential losses that could arise due to our customers' inability to make required payments. This allowance requires management to apply judgment in deriving the estimated reserve. In connection with the estimate of our allowance, we perform ongoing credit evaluations of our customers’ financial condition, including information related to their credit ratings obtained from independent third-party firms. If, as a result, we become aware that additional reserves may be necessary, we perform additional analysis including, but not limited to, factors such as a customer’s creditworthiness, intent and ability to pay and overall financial position. If the data we use to calculate the allowance for doubtful accounts does not timely reflect the future ability to collect outstanding receivables, including the effects of the COVID-19 pandemic on our clients' credit, additional provisions for doubtful accounts may be needed and our results of operations could be affected. For 2020, we recorded bad debt expense of $23.5 million and increased our allowance for doubtful accounts to $30.4 million.

Adoption of ASU 2018-15

On January 1, 2020, we adopted ASU 2018-15, Intangibles - ~~Omnicom Group Inc.~~Goodwill and Other, Internal-Use Software, or ASU 2018-15, which aligns the accounting for implementation costs incurred in a cloud computing arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. We adopted ASU 2018-15 on a prospective basis for implementation costs for new or existing arrangements incurred on or after the adoption date. The adoption of ASU 2018-15 did not have a significant impact on our results of operations or financial position.

2. Significant Accounting Policies

Revenue Recognition.~~Under ASC 606, revenue~~Revenue is recognized when a customer obtains control of promised goods or services (the performance obligation) in an amount that reflects the consideration we expect to receive in exchange for those goods or services (the transaction price). We measure revenue by estimating the transaction price based on the consideration specified in the client arrangement. Revenue is recognized as the performance obligations are satisfied. Our revenue is primarily derived from the planning and execution of advertising communications and marketing services in the following fundamental disciplines: ~~Advertising,~~advertising, which includes creative advertising services and strategic media planning and buying services, ~~Customer Relationship Management~~customer relationship management or CRM, which includes CRM Consumer Experience and CRM Execution & Support, ~~Public Relations~~public relations and ~~Healthcare Advertising.~~healthcare advertising. Our client contracts are primarily fees for service on a rate per hour or per project basis. Revenue is recorded net of sales, use and value added taxes.

Performance ~~Obligations~~

Obligations.In substantially all our disciplines, the performance obligation is to provide advisory and consulting services at an agreed-upon level of effort to accomplish the specified engagement. Our client contracts are comprised of diverse arrangements involving fees based on any one or a combination of the following: an agreed fee or rate per hour for the level of effort expended by our employees; commissions based on the client’s spending for media purchased from third parties; qualitative or quantitative incentive provisions specified in the contract; and reimbursement for third-party costs that we are required to include in revenue when we control the vendor services related to these costs and we act as principal. The transaction price of a contract is allocated to each distinct performance obligation based on its relative stand-alone selling price and is recognized as revenue when, or as, the customer receives the benefit of the performance obligation. Clients typically receive and consume the benefit of our services as they are performed. Substantially all our client contracts provide that we are compensated for services performed to date and allow for cancellation by either party on short notice, typically 90 days, without penalty.

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OMNICOM GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Revenue Recognition ~~Methods~~

Methods. A substantial portion of our revenue is recognized over time, as the services are performed, because the client receives and consumes the benefit of our performance throughout the contract period, or we create an asset with no alternative use and are contractually entitled to payment for our performance to date in the event the client terminates the contract for convenience. For these ~~over time~~ client contracts, other than when we have a stand-ready obligation to perform services, revenue is recognized over time using input measures that correspond to the level of staff effort expended to satisfy the performance obligation on a rate per hour or equivalent basis. For client contracts when we have a stand-ready obligation to perform services on an ongoing basis over the life of the contract, typically for periods up to one year, where the scope of these arrangements is broad and there are no significant gaps in performing the services, we recognize revenue using a time-based measure resulting in a straight-line revenue recognition. From time to time, there may be changes in the client service requirements during the term of a contract and the changes could be significant. These changes are typically negotiated as new contracts covering the additional requirements and the associated costs, as well as additional fees for the incremental work to be performed.

~~F-9~~

~~OMNICOM GROUP INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

Principal vs. ~~Agent~~

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OMNICOM GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Variable ~~Consideration~~

Operating Expenses.Operating expenses ~~are comprised of~~include cost of services, selling, general and administrative expenses, or SG&A, ~~expenses~~ and depreciation and amortization. We measure cost of services in two distinct categories: salary and service costs and occupancy and other costs. As a service business, salary and service costs make up the vast majority of our operating expenses and substantially all these costs comprise the essential components directly linked to the delivery of our services. Salary and service costs include employee compensation and benefits, freelance labor and direct service costs, which include third-party supplier costs and client-related travel costs. Occupancy and other costs consist of the indirect costs related to the delivery of our services, including office rent and other occupancy costs, equipment rent, technology costs, general office expenses and other expenses. SG&A expenses primarily consist of third-party marketing costs, professional fees and compensation and benefits and occupancy and other costs of our corporate and executive offices, which includes group-wide finance and accounting, treasury, legal and governance, human resource oversight and similar costs.

~~F-10~~

~~OMNICOM GROUP INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

Cash and Cash Equivalents. Cash and cash equivalents ~~consist of~~include cash in banks and highly liquid interest-bearing time deposits with original maturities of three months or less. Due to the short-term nature of these investments, carrying value approximates fair value. We have a policy governing counterparty credit risk for financial institutions that hold our cash and cash equivalents and we have deposit limits for each institution.

Short-Term Investments.Short-term investments ~~consist of~~include interest-bearing time deposits with maturities of less than twelve months. Short-term investments are carried at cost, which approximates fair value.

Work in Process. Work in process ~~consists of~~represents accrued costs incurred on behalf of customers, including media and production costs, and fees and other third-party costs that have not yet been billed. Media and production costs are billed during the production ~~process. Unbilled~~process in accordance with the terms of the client contract. Substantially all unbilled fees and costs ~~are in the process of being~~will be billed ~~to clients, typically~~ within the next 30 days.

Property and Equipment.Property and equipment are carried at cost and are depreciated over the estimated useful lives of the assets using the straight-line method. The estimated useful lives range from seven to ten years for furniture and three to five years for equipment. Leasehold improvements are amortized on a straight-line basis over the shorter of the ~~related~~ lease term or the estimated useful life of the asset. Assets under ~~capital lease~~finance leases are ~~depreciated~~amortized on a straight-line basis over the lease term.

Equity Method Investments. Investments in companies where we exercise significant influence over the operating and financial policies of the investee and own less than 50% of the equity are accounted for using the equity method. Our proportionate share of the net income or loss of equity method investments is included in results of operations and any dividends received reduce the carrying value of the investment. The excess of the cost of our investment over our proportionate share of the fair value of the net assets of the investee at the acquisition date is recognized as goodwill and included in the carrying amount of the investment. Goodwill in the equity method investments is not amortized. Gains and losses from changes in our ownership interests are recorded in results of operations until control is achieved. ~~Where~~In circumstances where a change in our ownership interest results in obtaining control, the existing carrying value of the investment is remeasured to the acquisition date fair value and any gain or loss is recognized in results of operations. We periodically review the carrying value of the equity method investments to determine if there has been an other-than-temporary decline in carrying value. A variety of factors are considered when determining if a decline in carrying value is other-than-temporary, including the financial condition and business prospects of the investee, as well as our investment intent.

Marketable Equity ~~Investments.~~ ~~Equity investments, except those accounted for under the~~Securities. Marketable equity ~~method of accounting,~~securities are measured at fair value ~~at each reporting period~~ and changes in fair value are recognized in results of operations. ~~Our equity investments are accounted for as follows:~~

Marketable equity investments have a readily determinable fair value and are recorded at fair value. The carrying value of these investments was $1.5 million and $1.4 million December 31, 2018 and 2017, respectively.

Non-Marketable Equity Securities.Non-marketable equity ~~investments(cost method investments)~~securities do not have a readily determinable fair value and are ~~recorded~~measured at cost, less any impairment, and are adjusted for ~~qualifying~~ observable ~~price changes. The carrying~~changes in fair value from transactions for identical or similar securities of ~~these investments was $11.8 million and $14.4 million at December 31, 2018 and 2017, respectively.~~the same issuer.

Goodwill and Intangible Assets. Goodwill represents the excess of the acquisition cost over the fair value of the net assets acquired. Goodwill is not amortized but is periodically reviewed for impairment. Intangible assets comprise customer relationships, including the related customer contracts and trade names, and purchased and internally developed software and are

F-12

OMNICOM GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

amortized over their estimated useful lives ranging from five to twelve years. We consider a number of factors in determining the useful lives and amortization method, including the pattern in which the economic benefits are consumed, as well as trade name recognition and customer attrition. There is no estimated residual value for the intangible assets.

We review the carrying value of goodwill for impairment annually at ~~the end of the second quarter of the year~~June 30 and whenever events or circumstances indicate the carrying value may not be recoverable. The impairment evaluation compares the fair value of each reporting unit, which we identified as our five agency networks, to its carrying value, including goodwill. If the fair value of the reporting unit is equal to or greater than its carrying value, goodwill is not impaired. Goodwill is impaired when the carrying value of the reporting unit exceeds its fair value. Goodwill is written down to its fair value through a non-cash expense recorded in results of operations in the period the impairment is identified.

We identified our regional reporting units as components of our operating segments, which are our five agency networks. The regional reporting units and practice areas of each agency network monitor the performance and are responsible for the agencies in their region. ~~They~~The regional reporting units report to the segment managers and facilitate the administrative and logistical requirements of our client-centric strategy for delivering services to clients in their regions. We have concluded that, for each of our operating segments, their regional reporting units had similar economic characteristics and should be aggregated for purposes of testing goodwill for impairment at the operating segment level. Our conclusion was based on a detailed analysis of the aggregation criteria set forth in FASB ASC Topic 280, Segment Reporting, and the guidance set forth in FASB ASC Topic 350, Intangibles - Goodwill and Other.

~~F-11~~

~~OMNICOM GROUP INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

Consistent with our fundamental business strategy, the agencies within our regional reporting units serve similar clients in similar industries, and in many cases the same clients. The main economic components of each agency are employee compensation and related costs and direct service costs and occupancy and other costs, which include rent and occupancy costs, technology costs that are generally limited to personal computers, servers and off-the-shelf software and other overhead costs. Finally, the expected benefits of our acquisitions are typically shared by multiple agencies in various regions as they work together to integrate the acquired agency into our client service strategy. We use the following valuation methodologies to determine the fair value of our reporting units: (1) the income approach, which utilizes discounted expected future cash flows, (2) comparative market participant multiples of EBITDA (earnings before interest, taxes, depreciation and amortization) and (3) when available, consideration of recent and similar acquisition transactions.

Based on the results of the annual impairment test, we concluded that at June 30, ~~2018~~2020 and ~~2017 our~~2019 goodwill was not impaired because either the fair value of each reporting unit was substantially in excess of its respective net book ~~value.~~value, or for reporting units with a negative book value, fair value of assets exceeds total assets. Subsequent to the annual impairment test of goodwill at June 30, ~~2018,~~2020, there ~~were~~have been no events or circumstances that triggered the need for an interim impairment test.

DebtIssuance Costs. Debt issuance costs are capitalized and amortized in interest expense over the life of the related debt and are presented as a reduction to the carrying amount of debt.

Temporary Equity - Redeemable Noncontrolling Interests. Owners of noncontrolling equity interests in some of our subsidiaries have the right in certain circumstances to require us to purchase all or a portion of their equity interests at fair value as defined in the applicable agreements. The intent of the parties is to approximate fair value at the time of redemption by using a multiple of earnings that is consistent with generally accepted valuation practices used by market participants in our industry. These contingent redemption rights are embedded in the equity security at issuance, are not free-standing instruments, do not represent a de facto financing and are not under our control.

Treasury Stock.Repurchases ofour common stock are accounted for at cost and are recorded as treasury stock. Reissued treasury stock, primarily in connection with share-based compensation plans, is accounted for at average cost. Gains or losses on reissued treasury stock arising from the difference between the average cost and the fair value of the award are recorded in additional paid-in capital and do not affect results of operations.

Business Combinations.Business combinations are accounted for using the acquisition method and accordingly, the assets acquired, including identified intangible assets, liabilities assumed and any noncontrolling interest in the acquired business are recorded at acquisition date fair value. In circumstances where control is obtained and less than 100% of a business is acquired, goodwill is recorded as if 100% were acquired. Acquisition-related costs, including advisory, legal, accounting, valuation and other costs are expensed as incurred. Certain acquisitions include an initial payment at closing and provide for future additional contingent purchase price payments (earn-outs), which are recorded as a liability at the acquisition date fair value using the discount rate in effect on the acquisition date. Subsequent changes in the fair value of the liability are recorded in results of operations. Amounts earned under the contingent purchase price arrangements may be subject to a maximum and payment is not contingent upon future employment. The results of operations of acquired businesses are included in results of operations from the acquisition date.

Noncontrolling Interests.Noncontrolling interests represent equity interests in certain subsidiaries held by ~~third-parties.~~third parties. Noncontrolling interests are presented as a component of equity and the proportionate share of net income attributed to the noncontrolling interests is recorded in results of operations. Changes in noncontrolling interests that do not result in a loss of control are accounted for in equity. Gains and losses resulting from a loss of control are recorded in results of operations.

F-13

OMNICOM GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Foreign Currency Translation and Transactions. Substantially all of our foreign subsidiaries use their local currency as their functional currency. Assets and liabilities are translated into U.S. Dollars at the exchange rate on the balance sheet date and revenue and expenses are translated at the average exchange rate for the period. Translation adjustments are recorded in accumulated other comprehensive income. Net foreign currency transaction gains and ~~(losses)~~losses are recorded in results of ~~operations were~~ ~~$2.1~~operations. In 2020 and 2019, we recorded losses of $4.8 million, ~~$(7.8)~~ and $11.2 million, respectively, and~~$12.7 million~~ in 2018, ~~2017 and 2016, respectively.~~we recorded gains of $2.1 million.

Share-Based Compensation. Share-based compensation for restricted stock and stock option awards is measured at the grant date fair value. The fair value of restricted stock awards is determined and fixed using the closing price of our common stock on the grant date and is recorded in additional paid-in capital. The fair value of stock option awards is determined using the Black-Scholes option valuation model. For awards ~~that have~~with a service only vesting condition, compensation expense is recognized on a straight-line basis over the requisite service period. For awards with a performance vesting condition, compensation expense is recognized on a graded-vesting basis. Typically, all share-based awards are settled with treasury stock. See Note 10 for additional information regarding our specific award plans.

~~F-12~~

~~OMNICOM GROUP INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

Salary Continuation Agreements. Arrangements with certain present and former employees provide for continuing payments for periods up to ten years after cessation of full-time employment in consideration for agreement by the employees not to compete with us and to render consulting services during the postemployment period. Such payments, which are subject to certain limitations, including our operating performance during the postemployment period, represent the fair value of the services rendered and are expensed in such periods.

Severance. The liability for one-time termination benefits, such as severance pay or benefit payouts, is measured and recognized at fair value in the period the liability is incurred. Subsequent changes to the liability are recognized in results of operations in the period of change.

Defined Benefit Pension Plans and Postemployment Arrangements. The funded status of our defined benefit plans is recorded as an asset or liability. Funded status is the difference between the fair value of plan assets and the benefit obligation at December 31, the measurement date, determined on a plan-by-plan basis. The benefit obligation for the defined benefit plans is the projected benefit obligation (“PBO”), which represents the actuarial present value of benefits expected to be paid upon retirement based on estimated future compensation levels. The fair value of plan assets represents the current market value. Overfunded plans where the fair value of plan assets exceeds the benefit obligation are aggregated and recorded as a prepaid pension asset equal to the excess. Underfunded plans where the benefit obligation exceeds the fair value of plan assets are aggregated and recorded as a liability equal to the excess. ~~We record the liability for our postemployment arrangements.~~ The benefit obligation ofliability for our postemployment arrangements is the PBO and these arrangements are not funded. The current portion of the benefit obligation for the defined benefit plans and postemployment arrangements, which represents the actuarial present value of benefits payable in the next twelve months that exceed the fair value of plan assets, is recorded in other current liabilities and the long-term portion is recorded in long-term liabilities.

Deferred Compensation. Some of our subsidiaries have ~~individual~~ deferred compensation arrangements with certain executives that provide for payments over varying terms upon retirement, cessation of employment or death. The cost of these arrangements is accrued during the employee’s service period.

Income Taxes. We use the asset and liability method of accounting for income taxes. Under this method, income tax expense is recognized for the amount of taxes payable for the current period and the deferred taxes recognized during the period. Deferred income taxes reflect the temporary difference between assets and liabilities that are recognized for financial reporting purposes and income tax purposes and are recorded as noncurrent. Deferred income taxes are measured using the enacted tax rates that are assumed to be in effect when the differences reverse. Valuation allowances are recorded where it is more likely than not that all or a portion of a deferred tax asset will not be realized. In assessing the need for a valuation allowance, we evaluate factors such as prior earnings history, expected future earnings, carry-back and carry-forward periods and tax strategies that could potentially enhance the likelihood of the realization of a deferred tax asset.

Interest and penalties related to tax positions taken in our tax returns are recorded in income tax expense. We record a liability for uncertain tax positions that reflects the treatment of certain tax positions taken in our tax returns, or planned to be taken in a future tax returns, which have not been reflected in income tax expense. Until these positions are sustained by the taxing authorities or the statute of limitations concerning such issues lapses, we do not generally recognize the tax benefits resulting from such positions.

Net Income Per Share. Basic net income per share is based on the weighted average number of common shares outstanding during the period. Diluted net income per share is based on the weighted average number of common shares outstanding, plus the dilutive effect of common share equivalents, which include outstanding stock options and restricted stock awards.

~~Net income per share~~Leases.At the inception of a contract we assess whether the contract is, ~~computed~~or contains, a lease. A lease is classified as a finance lease if any one of the following criteria are met: the lease transfers ownership of the asset by the end of the lease term, the lease

F-14

OMNICOM GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

contains an option to purchase the asset that is reasonably certain to be exercised, the lease term is for a major part of the remaining useful life of the asset or the present value of the lease payments equals or exceeds substantially all of the fair value of the asset. A lease is classified as an operating lease if it does not meet any one of the criteria. Substantially all our operating leases are leases for office space, and substantially all our finance leases are leases for office furniture and technology equipment.

For all leases a ROU asset and lease liability are recognized at the lease commencement date. The lease liability represents the present value of the lease payments under the lease. The ROU asset is initially measured at cost, which includes the initial lease liability, plus any initial direct costs incurred, consisting mainly of brokerage commissions, less any lease incentives received. All ROU assets are reviewed for impairment. The lease liability is initially measured as the present value of the lease payments, discounted using the ~~two-class method, which is an earnings allocation method~~interest rate implicit in the lease or, if that rate cannot be readily determined, our secured incremental borrowing rate for ~~computing net income per share when a company's capital structure includes common stock~~the same term as the underlying lease. For real estate and ~~participating securities. Certain~~certain equipment operating leases, we use our secured incremental borrowing rate. For finance leases, we use the rate implicit in the lease or our secured incremental borrowing rate if the implicit lease rate cannot be determined.

Lease payments included in the measurement of the ~~unvested restricted stock awards receive non-forfeitable dividends at~~lease liability comprise: the ~~same rate as~~fixed noncancelable lease payments, payments for optional renewal periods where it is reasonably certain the ~~common stock~~renewal period will be exercised, and ~~therefore~~payments for early termination options unless it is reasonably certain the lease will not be terminated early. Lease components, including fixed payments for real estate taxes and insurance for office space leases, are ~~considered participating securities. Under~~included in the ~~two-class method, basic and diluted net income per share is reduced for a presumed hypothetical distribution of earnings to holders~~measurement of the ~~unvested restricted stock awards receiving non-forfeitable dividends.~~initial lease liability.

Office space leases may contain variable lease payments, which include payments based on an index or rate. Variable lease payments based on an index or rate are initially measured using the index or rate in effect at lease commencement. Additional payments based on the change in an index or rate, or payments based on a change in our portion of the operating expenses, including real estate taxes and insurance, are recorded as a period expense when incurred. Lease modifications result in remeasurement of the lease liability.

Operating lease expense is recognized on a straight-line basis over the lease term. Lease expense may include variable lease payments incurred in the period that were not included in the initial lease liability. Finance lease expense consists of the amortization of the ROU asset on a straight-line basis over the lease term and interest expense determined on an amortized cost basis. Finance lease payments are allocated between a reduction of the lease liability and interest expense.

Concentration of Credit Risk. We provide advertising, marketing and corporate communications services to several thousand clients that operate in nearly every industry sector of the global economy and we grant credit to qualified clients in the normal course of business. Due to the diversified nature of our client base, we do not believe that we are exposed to a concentration of credit risk as our largest client accounted for ~~3.0%~~3.4% of revenue in ~~2018.~~2020.

~~F-13~~

~~OMNICOM GROUP INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

Derivative Financial Instruments. All derivative instruments, including certain derivative instruments embedded in other contracts, are recorded at fair value. Derivatives qualify for hedge accounting if: the hedging instrument is designated as a hedge, the hedged exposure is specifically identifiable and exposes us to risk, and a change in fair value of the derivative financial instrument and an opposite change in the fair value of the hedged exposure have a high degree of correlation. The method of assessing hedge effectiveness and measuring hedge ineffectiveness is formally documented. Hedge effectiveness is assessed, and hedge ineffectiveness is measured at least quarterly throughout the designated hedge period. If the derivative is a hedge, depending on the nature of the hedge, changes in the fair value of the derivative will either be offset against the change in fair value of the hedged asset, liability or firm commitment through results of operations or recognized in other comprehensive income until the hedged item is recognized in results of operations. We do not use derivatives for trading or speculative purposes. Using derivatives exposes us to the risk that counterparties to the derivative contracts will fail to meet their contractual obligations. We manage that risk through careful selection and ongoing evaluation of the counterparty financial institutions based on specific minimum credit standards and other factors.

Fair Value. We apply the fair value measurement guidance in FASB ASC Topic 820, Fair Value Measurements and Disclosures, for our financial assets and liabilities that are required to be measured at fair value and for our nonfinancial assets and liabilities that are not required to be measured at fair value on a recurring basis, which includes goodwill and other identifiable intangible assets. The measurement of fair value requires the use of techniques based on observable and unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect our market assumptions. The inputs create the following fair value hierarchy:

•Level 1 - Unadjusted quoted prices in active markets for identical assets or liabilities.

•Level 2 - Unadjusted quoted prices in active markets for similar assets or liabilities; unadjusted quoted prices for identical assets or liabilities in markets that are not active; and model-derived valuations with observable inputs.

•Level 3 - Unobservable inputs for the asset or liability.

We use unadjusted quoted market prices to determine the fair value of our financial assets and liabilities and classify such items in Level 1. We use unadjusted quoted market prices for similar assets and liabilities in active markets and model-derived valuations and classify such items in Level 2.

F-15

OMNICOM GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In determining the fair value of financial assets and liabilities, we consider certain market valuation adjustments that market participants would consider in determining fair value, including: counterparty credit risk adjustments applied to financial assets and liabilities, taking into account the actual credit risk of the counterparty when valuing assets measured at fair value and credit risk adjustments applied to reflect our credit risk when valuing liabilities measured at fair value.

Reclassifications. Certain reclassifications have been made to the prior year financial information to conform to the current year presentation.

3. Revenue

Nature of our services

We provide an extensive range of advertising, marketing and corporate communications services through various client-centric networks that are organized to meet specific client objectives. Our branded networks and agencies operate in all major markets and provide services in the following fundamental disciplines: advertising, customer relationship management, or CRM, which includes CRM Consumer Experience and CRM Execution & Support, public relations and healthcare. Advertising includes creative services, as well as strategic media planning and buying and data analytics services. CRM Consumer Experience includes Omnicom’s Precision Marketing Group and digital/direct agencies, as well as our ~~branding,~~brand consulting, shopper marketing and experiential marketing ~~agencies, and~~agencies. CRM Execution & Support includes field marketing, sales support, merchandising and point of sale, as well as other specialized marketing and custom communications services. Public relations services include corporate communications, crisis management, public affairs and media and media relations services. Healthcare includes advertising and media services to global healthcare clients. At the core of all our services is the ability to create or develop a client’s marketing or corporate communications message into content that can be delivered to a target audience across different communications mediums. ~~Our client-centric business model requires that multiple agencies within Omnicom collaborate~~

Primarily as a result of the COVID-19 pandemic (see Note 1), our revenue decreased in ~~formal~~all our major markets and ~~informal virtual client networks utilizing our key client matrix organization structure. This collaboration allows us~~all disciplines except for healthcare, as compared to cut across our internal organizational structures to execute our clients’ marketing requirements in a consistent and comprehensive manner. In addition to collaborating through our client service models, our agencies and networks collaborate across internally developed technology platforms. Annalect, our proprietary data and analytics platform, serves as the strategic resource for all of our agencies and networks to share when developing client service strategies across our virtual networks. Omni, our people-based precision marketing and insights platform, identifies and defines personalized consumer experiences at scale across creative, media and CRM, as well as other disciplines.

~~F-14~~

~~OMNICOM GROUP INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

prior year periods.

Revenue by discipline ~~for the year ended December 31, 2018 and 2017~~ was (in millions):


								Year Ended December 31,
	2018		2018 Excluding Impact of Adoption of ASC 606		2017			2020		2019		2018
Advertising	$	8,281.0	$	8,289.1	$	8,175.9	Advertising	$	7,369.0	$	8,483.8	$	8,281.0
CRM Consumer Experience	2,620.7		2,758.3		2,615.9		CRM Consumer Experience	2,175.7		2,577.9		2,629.6
CRM Execution & Support	1,900.5		1,900.4		2,135.8		CRM Execution & Support	1,133.5		1,361.2		1,891.6
Public Relations	1,435.1		1,435.5		1,411.4		Public Relations	1,301.8		1,378.9		1,435.1
Healthcare	1,052.9		1,053.0		934.6		Healthcare	1,191.1		1,151.9		1,052.9
	$	15,290.2	$	15,436.3	$	15,273.6		$	13,171.1	$	14,953.7	$	15,290.2

Economic factors affecting our revenue

Global economic conditions have a direct impact on our revenue. Adverse economic conditions pose a risk that our clients may reduce, postpone or cancel spending for our services, which would impact our ~~revenue.~~ revenue (see Note 1).

Revenue in our principal geographic markets ~~for the year ended December 31, 2018 and 2017~~ was (in millions):


								Year Ended December 31,
	2018		2018 Excluding Impact of Adoption of ASC 606		2017			2020		2019		2018
Americas:							Americas:
North America	$	8,442.5	$	8,589.4	$	8,686.0	North America	$	7,577.1	$	8,478.8	$	8,442.5
Latin America	457.5		456.2		494.8		Latin America	275.4		403.4		457.5
EMEA:							EMEA:
Europe	4,375.4		4,377.2		4,127.9		Europe	3,607.7		4,107.4		4,375.4
Middle East and Africa	304.4		304.4		314.6		Middle East and Africa	207.2		314.6		304.4
Asia-Pacific	1,710.4		1,709.1		1,650.3		Asia-Pacific	1,503.7		1,649.5		1,710.4
	$	15,290.2	$	15,436.3	$	15,273.6		$	13,171.1	$	14,953.7	$	15,290.2

The Americas ~~comprises~~is comprised of North America, which includes the United States, Canada and Puerto Rico, and Latin America, which includes South America and Mexico. EMEA ~~comprises~~is comprised of Europe, the Middle East and Africa. Asia-Pacific ~~comprises~~includes Australia, Greater China, India, Japan, Korea, New Zealand, Singapore and other Asian countries. ~~The reduction in revenue in 2018 for North America primarily reflects the sale of our specialty print media business~~Revenue in the ~~second quarter of 2017.~~United States in 2020 and 2019 was $7,186.1 million and $8,033.0 million, respectively.

F-16

OMNICOM GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Contract assets and liabilities

Work in process includes contract assets, unbilled fees and costs, and media and production costs. Contract liabilities primarily consist of customer advances. ~~At December 31, 2018 and 2017, work~~Work in process and contract liabilities were (in millions):


						December 31,
	2018		2017			2020		2019
Work in process:					Work in process:
Contract assets and unbilled fees and costs	$	540.1	$	546.3	Contract assets and unbilled fees and costs	$	501.1	$	689.2
Media and production costs	621.4		564.3		Media and production costs	600.1		568.4
	$	1,161.5	$	1,110.6		$	1,101.2	$	1,257.6
Contract liabilities:					Contract liabilities:
Customer advances	$	1,159.0	$	1,266.7	Customer advances	$	1,361.3	$	1,215.3

Work in process ~~consists of~~represents accrued costs incurred on behalf of customers, including media and production costs, and fees and other third-party costs that have not yet been billed. Media and production costs are billed during the production process in accordance with the terms of the client contract. Contract assets ~~which~~ primarily include incentive fees, which are not material and will be billed to clients in accordance with the terms of the client contract. Substantially all unbilled fees and costs will be billed within the next 30 days. The contract liability primarily represents advance billings to customers in accordance with the terms of the client contracts, primarily for the reimbursement of third-party costs that are generally incurred in the near term. ~~There were no~~No impairment losses to the contract assets were recorded in ~~2018.~~2020 and 2019.

~~F-15~~

~~OMNICOM GROUP INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

4. Net Income per Share

The computations of basic and diluted net income per share ~~for the three years ended December 31, 2018~~ were (in millions, except per share amounts):


	Year Ended December 31,
	2020		2019		2018
Net income available for common shares:
Net income - Omnicom Group Inc.	$	945.4	$	1,339.1	$	1,326.4


Weighted average shares:
Basic	215.6		219.8		226.6
Dilutive stock options and restricted shares	0.6		1.1		1.0
Diluted	216.2		220.9		227.6

Anti-dilutive stock options and restricted shares	0.8		0		1.0
Net income per share - Omnicom Group Inc.:
Basic	$	4.38	$	6.09	$	5.85
Diluted	$	4.37	$	6.06	$	5.83

2018 2017 2016
Net Income Available for Common Shares:
Net income - Omnicom Group Inc. $ 1,326.4
$ 1,088.4
$ 1,148.6
Net income allocated to participating securities (0.1 ) (1.6 ) (6.5 )
$ 1,326.3
$ 1,086.8
$ 1,142.1
Weighted Average Shares:
Basic 226.6
232.3
237.9
Dilutive stock options and restricted shares 1.0
1.6
1.3
Diluted 227.6
233.9
239.2

Anti-dilutive stock options and restricted shares 1.0
1.0
—
Net Income per Share - Omnicom Group Inc.:
Basic $ 5.85
$ 4.68
$ 4.80
Diluted $ 5.83
$ 4.65
$ 4.78

5. Business Combinations

~~In 2018, we~~Acquisitions completed ~~six acquisitions, which~~in 2020 increased goodwill ~~$422.6~~$82.4 million. ~~Also,~~In addition, during 2020, we acquired additional equity interests in certain majority owned subsidiaries, ~~in 2018,~~ which are accounted for as equity transactions, and no additional goodwill was recorded. None of ~~these~~the acquisitions in 2020, either individually or in the aggregate, was material to our results of operations or financial position.

The evaluation of potential acquisitions is based on various factors, including specialized know-how, reputation, geographic coverage, competitive position and service offerings, as well as our experience and judgment. Our acquisition strategy is focused on acquiring the expertise of an assembled workforce in order to continue to build upon the core capabilities of our strategic business platforms and agency brands, through the expansion of their geographic area or their service capabilities to better serve our clients. Certain acquisitions include an initial payment at closing and provide for future additional contingent purchase price payments (earn-outs), which are derived using the performance of the acquired ~~entity~~company and are based on predetermined formulas. ~~Contingent~~At December 31, 2020 and 2019, contingent purchase price obligations ~~at December 31, 2018 and 2017~~ were ~~$146.5~~$71.9 million and ~~$215.6~~$107.7 million, respectively, of which ~~$65.4~~$32.1 million and ~~$92.6~~$29.5 million, respectively, are included in other current liabilities.

For each acquisition, we undertake a detailed review to identify other intangible assets that are required to be valued separately. We use several market participant measurements to determine fair value. This approach includes consideration of similar and recent transactions, as well as utilizing discounted expected cash flow methodologies, and when available and as appropriate, we use comparative market multiples to supplement our analysis. As is typical for most service businesses, a substantial portion of the intangible asset value we acquire is the specialized know-how of the workforce, which is treated as part

F-17

OMNICOM GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

of goodwill and is not valued separately. A significant portion of the identifiable intangible assets acquired is derived from customer relationships, including the related customer contracts, as well as trade names. One of the primary drivers in executing our acquisition strategy is the existence of, or the ability to, expand our existing client relationships. The expected benefits of our acquisitions are typically shared across multiple agencies and regions.

6. Goodwill and Intangible Assets

Goodwill and intangible assets were (in millions):


	December 31,
	2020						2019
	Gross Carrying Value		Accumulated Amortization		Net Carrying Value		Gross Carrying Value		Accumulated Amortization		Net Carrying Value

Goodwill	$	10,141.6	$	(531.9)	$	9,609.7	$	9,957.5	$	(517.0)	$	9,440.5

Intangible assets:
Purchased and internally developed software	$	377.6	$	(307.0)	$	70.6	$	350.7	$	(288.5)	$	62.2
Customer related and other	738.1		(510.2)		227.9		746.7		(470.7)		276.0
	$	1,115.7	$	(817.2)	$	298.5	$	1,097.4	$	(759.2)	$	338.2

Changes in goodwill were (in millions):


	Year Ended December 31,
	2020		2019
January 1	$	9,440.5	$	9,384.3
Acquisitions	50.8		5.5
Noncontrolling interests in acquired businesses	31.6		17.2
Contingent purchase price obligations of acquired businesses	0		24.7
Dispositions	(18.8)		(19.1)
Foreign currency translation	105.6		27.9
December 31	$	9,609.7	$	9,440.5

The decline in our stock price at the onset of the COVID-19 pandemic in March 2020 was determined to be a trigger event requiring us to perform an impairment review of our goodwill. We concluded our goodwill was not impaired. At June 30, 2020, we updated our first quarter 2020 assessment and performed our annual goodwill impairment test. Our assumptions reflect the economic conditions in light of the impact of the COVID-19 pandemic on our business, including downward adjustment to our revenue and earnings assumptions, reducing our long-term growth rate to 3.0%, compared to 3.5% in the prior year, increasing the weighted average cost of capital, or WACC, for each reporting unit to between 10.6% and 10.8%, compared to between 10.1% and 10.6% in the prior year, and limiting our estimate of our equity value to reflect the decline in our share price that occurred during the first half of 2020. In addition, the assumptions reflect the expected cost reductions from our severance and real estate repositioning actions (see Notes 1 and 13). Based on the results of the impairment test, we concluded that at June 30, 2020 our goodwill was not impaired because the fair value of each of our reporting units was significantly in excess of its respective carrying value, and for our reporting units with negative book value, we concluded that the fair value of their total assets was in excess of book value. We performed a sensitivity analysis of our assumptions, including a 1 percent change to our WACC or long-term growth assumptions. The results of the sensitivity analysis confirmed our conclusion that goodwill at June 30, 2020 was not impaired. If economic conditions further deteriorate from June 30, 2020, including further declines in GDP estimates, our share price, increased interest rates or other factors, our goodwill could become impaired, and we could incur a non-cash charge against our earnings. The minimum decline in fair value that one of our reporting units would need to experience in order to fail the goodwill impairment test was approximately 20%.

In addition, we evaluated our customer related and other intangible assets for impairment. We compared the carrying value of these assets against the undiscounted cash flows expected to be generated from the assets, and we concluded that at June 30, 2020, our customer related and other intangible assets were not impaired.

There were no events through December 31, 2020 that would change our assumptions and resulting impairment assessments. NaN goodwill impairment losses were recorded in 2020 or 2019, and there are 0 accumulated goodwill impairment losses.

F-18

~~F-16~~

OMNICOM GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~6. Goodwill and Intangible Assets~~

~~Goodwill and intangible assets at December 31, 2018 and 2017 were (in millions):~~

2018 2017

Gross
Carrying
Value

Accumulated
Amortization

Net
Carrying
Value

Gross
Carrying
Value

Accumulated
Amortization

Net
Carrying
Value
Goodwill $ 9,898.6
$ (514.3 ) $ 9,384.3
$ 9,871.8
$ (534.3 ) $ 9,337.5
Intangible assets:
Purchased and internally developed software $ 356.4
$ (302.2 ) $ 54.2
$ 368.2
$ (303.0 ) $ 65.2
Customer related and other 763.8
(435.2 ) 328.6
880.1
(576.9 ) 303.2
$ 1,120.2
$ (737.4 ) $ 382.8
$ 1,248.3
$ (879.9 ) $ 368.4

~~Changes in goodwill for the years ended December 31, 2018 and 2017 were (in millions):~~

2018 2017
January 1 $ 9,337.5
$ 8,976.1
Acquisitions 250.6
19.3
Noncontrolling interests in acquired businesses 112.0
18.9
Contingent purchase price obligations of acquired businesses 60.0
27.1
Dispositions (143.6 ) (4.6 )
Foreign currency translation (232.2 ) 300.7
December 31 $ 9,384.3
$ 9,337.5

~~There were no goodwill impairment losses recorded in 2018 or 2017 and there are no accumulated goodwill impairment losses.~~

7. Debt

Credit Facilities

~~At December 31, 2018,~~On February 14, 2020, we amended our ~~short-term liquidity sources include a~~ $2.5 billion ~~revolving credit facility, or~~ Credit Facility ~~expiring~~to extend its term to February 14, 2025. To strengthen our liquidity position to mitigate the impact of the COVID-19 pandemic (see Note 1), on ~~July 31, 2021,~~April 3, 2020, we entered into the $400 million 364 Day Credit Facility, maturing on April 2, 2021. We have uncommitted credit lines aggregating ~~$1.2~~$1.1 billion and the ability to issue up to $2 billion of commercial paper.

~~There~~ These facilities provide additional liquidity sources for operating capital and general corporate purposes. At December 31, 2020, there were no0 outstanding commercial paper issuances or borrowings under the Credit Facility, the 364 Day Credit Facility or ~~material borrowings under~~ the uncommitted credit ~~lines at December 31, 2018 and 2017. Available and unused credit lines at December 31, 2018 and 2017 were (in millions):~~

2018 2017
Credit Facility $ 2,500.0
$ 2,500.0
Uncommitted credit lines 1,231.6
1,181.0
Available and unused credit lines $ 3,731.6
$ 3,681.0
lines.

The Credit Facility ~~contains~~and the 364 Day Credit Facility each contain a financial ~~covenants~~covenant that ~~require~~requires us to maintain a Leverage Ratio of consolidated indebtedness to consolidated EBITDA (earnings before interest, taxes, depreciation, amortization and non-cash charges) of no more than 3 times for the most recently ended 12-month period (EBITDA is defined as earnings before interest, taxes, depreciation and amortization) and an Interest Coverage Ratio of consolidated EBITDA to interest expense of at least 53.5 times for the most recently ended 12-month period. On October 26, 2020, we amended the Credit Facility and the 364 Day Credit Facility to provide additional flexibility with respect to the Leverage Ratio covenant. The amendments increase the maximum Leverage Ratio to 4.0 times through December 31, 2021 for the Credit Agreement and to 4.0 times through the maturity for the 364 Day Credit Facility. At December 31, ~~2018~~2020, we were in compliance with these covenants as our Leverage Ratio was ~~2.1 times and our Interest Coverage Ratio was 9.9~~3.0 times. The Credit Facility ~~does~~and the 364 Day Credit Facility do not limit our ability to declare or pay dividends or repurchase our common stock.

Short-Term Debt

~~Short-term debt at~~At December 31, ~~2018~~2020 and ~~2017~~2019, short-term debt of ~~$8.1~~$3.9 million and ~~$11.8~~$10.1 million, respectively, ~~consists of~~represented bank overdrafts and short-term borrowings primarily of our international subsidiaries. The weighted average interest rate was ~~4.2%~~3.5% and ~~2.6%~~2.5%, respectively. Due to the short-term nature of this debt, carrying value approximates fair value.

Long-Term Debt

Long-term debt was (in millions):


	December 31,
	2020		2019
4.45% Senior Notes due 2020	$	0	$	600.0
3.625% Senior Notes due 2022	1,250.0		1,250.0
3.65% Senior Notes due 2024	750.0		750.0
3.60% Senior Notes due 2026	1,400.0		1,400.0
€500 Million 0.80% Senior Notes due 2027	611.5		561.4
2.45% Senior Notes due 2030	600.0		0
4.20% Senior Notes due 2030	600.0		0
€500 Million 1.40% Senior Notes due 2031	611.5		561.4

	5,823.0		5,122.8
Unamortized premium (discount), net	(5.1)		0.8
Unamortized debt issuance costs	(27.0)		(20.0)
Unamortized deferred gain from settlement of interest rate swaps	16.4		30.7

	5,807.3		5,134.3
Current portion	0		(602.4)
Long-term debt	$	5,807.3	$	4,531.9

On February 19, 2020, we issued $600 million of the 2.45% Notes. The net proceeds from the issuance, after deducting the underwriting discount and offering expenses, were $592.6 million and were used to redeem the remaining $600 million principal amount of the 2020 Notes on March 23, 2020. In connection with the redemption of the 2020 Notes, we recorded a loss on extinguishment of $7.7 million in interest expense. Following the redemption, there were 0 2020 Notes outstanding.

Additionally, to strengthen our liquidity and financial position and to mitigate the potential impact of the COVID-19 pandemic, on April 1, 2020, we issued $600 million of the 4.20% Notes. The net proceeds from the issuance, after deducting the underwriting discount and offering expenses, were $592.5 million and were used for general corporate purposes, which included working capital expenditures, fixed asset expenditures, acquisitions, repayment of commercial paper and short-term debt, refinancing of other debt, or other capital transactions.

The 2.45% Notes and the 4.20% Notes are senior unsecured obligations of Omnicom that rank equal in right of payment with all existing and future unsecured senior indebtedness.

F-19

~~F-17~~

OMNICOM GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~Long-Term Debt~~

~~Long-term debt at December 31, 2018 and 2017 was (in millions):~~

2018 2017
6.25% Senior Notes due 2019 $ 500.0
$ 500.0
4.45% Senior Notes due 2020 1,000.0
1,000.0
3.625% Senior Notes due 2022 1,250.0
1,250.0
3.65% Senior Notes due 2024 750.0
750.0
3.60% Senior Notes due 2026 1,400.0
1,400.0
4,900.0
4,900.0
Unamortized premium (discount), net 4.9
6.2
Unamortized debt issuance costs (16.4 ) (20.3 )
Unamortized deferred gain from settlement of interest rate swaps 48.0
66.4
Fair value adjustment attributed to outstanding interest rate swaps (52.8 ) (39.4 )
4,883.7
4,912.9
Current portion (499.6 ) —
Long-term debt $ 4,384.1
$ 4,912.9

Omnicom and OCI have, jointly and severally, fully and unconditionally guaranteed the obligations of Omnicom Finance Holdings plc, or OFHP, a U.K.-based wholly owned subsidiary of Omnicom, with respect to the Euro denominated notes due 2027 and 2031. OFHP’s assets consist of its investments in several wholly owned finance companies that function as treasury centers, which provide funding for various operating companies in Europe, Brazil, Australia and other countries in the Asia-Pacific region. The ~~contractual~~finance companies’ assets consist of cash and cash equivalents and intercompany loans that they make or have made to the operating companies in their respective regions and the related interest receivable. There are no restrictions on the ability of Omnicom, OCI or OFHP to obtain funds from their subsidiaries through dividends, loans or advances. The Euro denominated notes and the related guarantees are senior unsecured obligations that rank equal in right of payment with all existing and future unsecured senior indebtedness of OFHP and each of Omnicom and OCI, respectively.

At December 31, 2020, the maturities of our long-term debt ~~at December 31, 2018 are~~were (in millions):

2019 $ 500.0
2020 1,000.0
2021 —
2022 1,250.0
2023 —
Thereafter 2,150.0
$ 4,900.0

We use fixed-to-floating interest rate swaps to manage our interest cost and structure our long-term debt portfolio to achieve a mix of fixed rate and floating rate debt. Interest rate swaps hedge the risk of changes in fair value of the underlying senior notes attributable to changes in the benchmark LIBOR interest rate. The interest rate swaps qualify and are designated as fair value hedges on the underlying senior notes and have the economic effect of converting the underlying fixed rate senior notes to floating rate obligations. Gains and losses attributed to changes in the fair value of the swaps substantially offset changes in the fair value of the underlying senior notes attributed to changes in the benchmark interest rate.

We have a $750 million interest rate swap on our 3.65% Senior Notes due 2024, or 2024 Notes and a $500 million interest rate swap on our 3.60% Senior Notes due 2026, or 2026 Notes. Under the swap agreement for the 2024 Notes, we receive fixed interest payments of 3.65% and pay a variable interest equal to three-month LIBOR, plus a spread of 1.72%. Under the swap agreement for the 2026 Notes, we receive fixed interest payments of 3.60% and pay a variable interest equal to three-month LIBOR, plus a spread of 1.982%.

At December 31, 2018, we recorded long-term liabilities of $21.8 million and $31.0 million representing the fair value of the swaps on the 2024 Notes and 2026 Notes, respectively, and at December 31, 2017, we recorded long-term liabilities of $14.7 million and $24.7 million, respectively. The interest rate swaps have the economic effect of converting our long-term debt portfolio to approximately 75% fixed rate obligations and 25% floating rate obligations.

~~F-18~~

~~OMNICOM GROUP INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~


2021	$	0
2022	1,250.0
2023	0
2024	750.0
2025	0
Thereafter	3,823.0
Total principal payments	$	5,823.0

Interest Expense

Interest expense ~~for the three years ended December 31, 2018~~ is composed of (in millions):


	Year Ended December 31,
	2020		2019		2018
Long-term debt	$	186.4	$	194.6	$	201.6
Commercial paper	0.9		6.5		9.6
Interest rate swaps	0		6.1		5.2
Amortization of deferred gain on interest rate swaps	(8.1)		(14.8)		(12.9)
Fees	6.5		4.7		5.6


Pension and other interest	36.1		47.2		57.3
	$	221.8	$	244.3	$	266.4

2018 2017 2016
Long-term debt $ 201.6
$ 201.6
$ 205.5
Interest rate swaps 5.2
(7.2 ) (13.1 )
Amortization of deferred gain on interest rate swaps (12.9 ) (12.9 ) (15.4 )
Commercial paper 9.6
12.5
6.8
Fees 5.6
5.6
5.6
Pension and other interest 57.3
49.0
41.9
$ 266.4
$ 248.6
$ 231.3

8. Segment Reporting

Our five branded agency networks operate in the advertising, marketing and corporate communications services industry, and are organized into agency networks, virtual client networks, regional reporting units and operating groups or practice areas. Our networks, virtual client networks and agencies increasingly share clients and provide clients with integrated services. The main economic components of each agency are employee compensation and related costs and direct service costs and occupancy and other costs which include rent and occupancy costs, technology costs and other overhead expenses. Therefore, given these similarities, we aggregate our operating segments, which are our five agency networks, into one reporting segment.

The agency networks' regional reporting units comprise three principal regions: the Americas, EMEA and Asia-Pacific. The regional reporting units monitor the performance and are responsible for the agencies in their region. Agencies within the regional reporting units serve similar clients in similar industries and in many cases the same clients and have similar economic characteristics.

F-20

OMNICOM GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Revenue and long-lived assets and goodwill by geographic region ~~at and for the three years ended December 31, 2018~~ were (in millions):


	Americas		EMEA		Asia-Pacific
December 31, 2020
Revenue	$	7,852.5	$	3,814.9	$	1,503.7
Long-lived assets and goodwill	7,610.9		3,142.3		665.1
December 31, 2019
Revenue	$	8,882.2	$	4,422.0	$	1,649.5
Long-lived assets and goodwill	7,782.0		3,061.3		658.9
December 31, 2018
Revenue	$	8,900.0	$	4,679.8	$	1,710.4
Long-lived assets and goodwill	6,946.1		2,578.9		553.7

Americas EMEA Asia-Pacific
2018
Revenue $ 8,900.0
$ 4,679.8
$ 1,710.4
Long-lived assets and goodwill 6,946.1
2,578.9
553.7
2017
Revenue $ 9,180.8
$ 4,442.5
$ 1,650.3
Long-lived assets and goodwill 6,633.8
2,840.8
553.8
2016
Revenue $ 9,597.6
$ 4,183.1
$ 1,636.2
Long-lived assets and goodwill 6,662.7
2,469.1
519.1

The Americas comprises North America, which includes the United States, Canada and Puerto Rico, and Latin America, which includes South America and Mexico. EMEA comprises Europe, the Middle East and Africa. Asia-Pacific comprises Australia, China, India, Japan, Korea, New Zealand, Singapore and other Asian countries. Revenue in the United States for 2018, 2017 and 2016 was $7,999.8 million, $8,196.9 million and $8,627.8 million, respectively. The reduction in revenue in 2018 and 2017 for North America and the United States primarily reflects the sale of our specialty print media business in the second quarter of 2017.

9. Equity Method Investments

Income (loss) from our equity method investments in 2020, 2019 and 2018 was $(6.8) million, $2.0 million and $8.9 million, ~~$3.5 million~~respectively. At December 31, 2020 and ~~$5.4 million~~ ~~in 2018, 2017 and 2016, respectively. Our~~2019, our proportionate share in ~~their~~the net assets ~~at December 31, 2018 and 2017~~of the equity method investments was ~~$42.9~~$30.1 million and ~~$40.7~~$37.0 million, respectively. ~~Our equity~~Equity method investments are not material to our results of operations or financial position; therefore, summarized financial information is not required to be presented. In the second quarter 2020, we sold an equity method investment and recorded a loss of $3.9 million (see Note 1).

~~F-19~~

~~OMNICOM GROUP INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

10. Share-Based Compensation Plans

Share-based incentive awards are granted to employees under the 2013 Incentive Award Plan, or the 2013 Plan, which is administered by the Compensation Committee of the Board of Directors, or the Compensation Committee. Awards include stock options, restricted stock and other stock awards. The maximum number of shares of common stock that can be granted under the 2013 Plan is 33 million shares plus any shares awarded under the 2013 Plan and any prior plan that have been forfeited or have expired. Stock option awards reduce the number of shares available for grant on a one-for-one basis and all other awards reduce the number of shares available for grant by 3.5 shares for each share awarded. The terms of each award and the exercise date are determined by the Compensation Committee. The 2013 Plan does not permit the holder of an award to elect cash settlement under any circumstances. At December 31, ~~2018,~~2020, there were ~~26,731,624~~21,419,944 shares available for grant under the 2013 Plan. If all shares available for grant were for awards other than stock options, shares available for grant would be ~~7,637,607~~.6,119,984.

Share-based compensation expense in 2020, 2019 and 2018 was $70.8 million, $72.5 million and $70.5 million,~~$80.2 million~~ ~~and~~ ~~$93.4 million~~ ~~in 2018, 2017 and 2016,~~ respectively. At December 31, ~~2018,~~2020, unamortized share-based compensation that will be expensed over the next five years is ~~$160.7 million~~.$168.0 million.

We record a deferred tax asset for the share-based compensation expense recognized for financial reporting purposes that has not been deducted on our income tax return. ~~Beginning in 2017,~~Any excess tax ~~benefits and deficiencies~~benefit or deficiency related to share-based compensation ~~are~~is recorded as compensation expense in results of operations upon vesting of restricted stock awards or exercise of stock options. Excess tax benefits and deficiencies represent the difference between the actual compensation deduction for tax purposes, which is calculated as the difference between the grant date price of the award, and the price of our common stock on the vesting or exercise date. In ~~2018 and 2017~~2020, we recognized ~~excess~~a tax ~~benefits~~deficiency of ~~$7.4~~$3.6 million, and ~~$20.8 million, respectively.~~in 2019, we recognized a tax benefit of $2.8 million.

Stock Options

The exercise price of stock option awards cannot be less than 100% of the market price of our common stock on the grant ~~date. The 2017 option awards vest 100% three years from grant~~ date and ~~have a maximum contractual life of six years. All prior option awards~~ have a maximum contractual life of 10 years.

Stock option activity ~~for the three years ended December 31, 2018~~ was:

2018 2017 2016
Shares
Weighted
Average
Exercise
Price
Shares
Weighted
Average
Exercise
Price
Shares
Weighted
Average
Exercise
Price
January 1 1,593,422
$63.11 719,757
$27.88 1,140,547
$28.86
Granted —

1,000,000
$84.94 —

Exercised (500,122 ) $24.43 (102,335 ) $23.40 (420,790 ) $30.56
Forfeited (105,250 ) $84.94 (24,000 ) $84.94 —

December 31 988,050
$80.37 1,593,422
$63.11 719,757
$27.88

Exercisable December 31 117,300
$46.43 617,422
$28.61 695,757
$26.54

~~Options outstanding and exercisable at December 31, 2018 were:~~


	Year Ended December 31,
	2020		2019			2018
	Shares	Weighted Average Exercise Price		Shares	Weighted Average Exercise Price		Shares	Weighted Average Exercise Price
January 1	866,000	$83.80		988,050	$80.37		1,593,422	$63.11

Exercised	0	0		(57,300)	$23.40		(500,122)	$24.43
Forfeited	(97,250)	$84.94		(64,750)	$84.94		(105,250)	$84.94
December 31	768,750	$83.65		866,000	$83.80		988,050	$80.37

Exercisable December 31	768,750	$83.65		60,000	$68.42		117,300	$46.43

F-21

Options Outstanding Options Exercisable
Exercise Price Range Shares
Weighted Average
Remaining
Contractual Life

Weighted Average
Exercise Price
Shares
Weighted Average
Exercise Price
$23.00 to $24.00 57,300
0.2 years $23.40 57,300
$23.40
$66.00 to $71.00 60,000
5.4 years $68.42 60,000
$68.42
$84.00 to $85.00 870,750
4.2 years $84.94 —
$84.94
988,050
117,300

The 2017 option award grant date fair value of $9.87 was determined using the Black-Scholes option valuation model. The assumptions for the model, without adjusting for the risk of forfeiture and lack of liquidity, were: expected life 4.5 years, risk free interest rate 2.0%, expected volatility 16.3% and dividend yield 2.6%.

~~F-20~~

OMNICOM GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

At December 31, 2020, options outstanding and exercisable were:


			Options Outstanding			Options Exercisable
Exercise Price Range			Shares	Weighted Average Remaining Contractual Life	Weighted Average Exercise Price	Shares	Weighted Average Exercise Price

$66.00	to	$71.00	60,000	3.4 years	$68.42	60,000	$68.42
$84.00	to	$85.00	708,750	2.3 years	$84.94	708,750	$84.94
			768,750			768,750

Restricted Stock

Restricted stock activity ~~for the three years ended December 31, 2018~~ was:


								Year Ended December 31,
	2018		2017		2016			2020	2019	2018
January 1	2,859,373		3,802,105		4,349,105		January 1	2,547,001	2,553,902	2,859,373
Granted	815,810		966,919		1,100,396		Granted	1,511,719	956,135	815,810
Vested	(944,048	)	(1,757,269	)	(1,438,386	)	Vested	(874,431)	(798,468)	(944,048)
Forfeited	(177,233	)	(152,382	)	(209,010	)	Forfeited	(171,301)	(164,568)	(177,233)
December 31	2,553,902		2,859,373		3,802,105		December 31	3,012,988	2,547,001	2,553,902

Weighted average grant date fair value of shares granted in the period	$67.62		$74.10		$73.16		Weighted average grant date fair value of shares granted in the period	$51.26	$72.13	$67.62

Weighted average grant date fair value at December 31	$69.77		$68.85		$61.72		Weighted average grant date fair value at December 31	$61.44	$70.89	$69.77

Generally, restricted shares vest ratably over five years from the grant date provided the employee remains employed by us. Restricted shares may not be sold, transferred, pledged or otherwise encumbered until the forfeiture restrictions lapse. Under most circumstances, the employee forfeits the shares if employment ceases prior to the end of the restriction period.

Performance Restricted Stock Units

The Compensation Committee grants certain employees performance restricted stock units, or PRSU. Each PRSU represents the right to receive one share of common stock on vesting. The ultimate number of PRSUs received by the employee depends on the Company's average return on equity over a three year period compared to the average return on equity of a peer group of principal competitors over the same period. The PRSUs vest three years from the grant date. The PRSUs have a service and performance vesting condition and compensation expense is recognized on a graded-vesting basis. Over the performance period, compensation expense is adjusted upward or downward based on our estimate of the probability of achieving the performance target for the portion of the awards subject to the performance vesting condition. We have assumed that all the PRSUs will vest.

PRSU activity ~~for the three years ended December 31, 2018~~ was:


	Year Ended December 31,
	2020			2019				2018
	Shares	Weighted Average Grant Date Fair Value			Shares	Weighted Average Grant Date Fair Value			Shares	Weighted Average Grant Date Fair Value
January 1	538,134	$	77.99		509,844	$	80.41		488,887	$	82.01
Granted	186,197	61.36			181,782	75.64			182,582	73.72
Distributed	(173,770)	84.94			(153,492)	83.23			(161,625)	77.68

December 31	550,561	$	70.17		538,134	$	77.99		509,844	$	80.41

2018 2017 2016
Shares Weighted Average Grant Date Fair Value Shares Weighted Average Grant Date Fair Value Shares Weighted Average Grant Date Fair Value
January 1 488,887
$ 82.01
462,381
$ 77.05
534,456
$ 66.05
Granted 182,582
73.72
173,770
84.94
153,492
83.23
Distributed (161,625 ) 77.68
(147,264 ) 69.89
(225,567 ) 55.20
December 31 509,844
$ 80.41
488,887
$ 82.01
462,381
$ 77.05

Employee Stock Purchase Plan

The employee stock purchase plan, or ESPP, enables employees to purchase our common stock through payroll deductions over each plan quarter at 95% of the market price on the last trading day of the plan quarter. Purchases are limited to 10% of eligible compensation as defined by the Employee Retirement Income Security Act of 1974, or ERISA. ~~Our~~In 2020, 2019 and 2018, employees purchased ~~91,086~~91,605 shares, ~~101,862~~76,040 shares and ~~97,935~~91,086 shares, ~~in 2018, 2017 and 2016,~~ respectively. All shares purchased were treasury stock, for which we received ~~$6.5~~$5.2 million,, ~~$7.6~~ $5.6 million and ~~$7.8~~$6.5 million,, respectively. At December 31, ~~2018,~~2020, there were ~~8,675,351~~8,507,706 shares available under the ESPP.

~~11. Income Taxes~~

We file a consolidated U.S. federal income tax return and income tax returns in various state and local jurisdictions. Our subsidiaries file tax returns in various foreign jurisdictions. Our principal foreign jurisdictions include the United Kingdom, France and Germany. The Internal Revenue Service has completed its examination of our federal tax returns through 2012. Tax returns in the United Kingdom, France and Germany have been examined through 2013, 2014 and 2009, respectively.

On December 22, 2017, the Tax Act was enacted into law. The Tax Act reduced the U.S. federal statutory income tax rate to 21% from 35% for tax years beginning after December 31, 2017 and made several changes to existing tax law that affect our tax assets and liabilities related to previously reported taxable income. The significant changes required that we record tax expense on the accumulated earnings of our foreign subsidiaries and adjust our previously reported deferred tax positions to reflect the impact

F-22

~~F-21~~

OMNICOM GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

11. Income Taxes

The components of income before income taxes were (in millions):


	Year Ended December 31,
	2020		2019		2018
Domestic	$	711.1	$	913.1	$	643.7
International	698.2		1,025.2		1,280.6
	$	1,409.3	$	1,938.3	$	1,924.3

Income tax expense (benefit) was (in millions):


	Year Ended December 31,
	2020		2019		2018
Current:
U.S. federal	$	172.2	$	180.2	$	273.8
U.S. state and local	39.5		33.9		35.5
International	189.1		306.9		305.2
	400.8		521.0		614.5
Deferred:
U.S. federal	(17.4)		19.1		(104.2)
U.S. state and local	(6.1)		(22.5)		2.8
International	4.4		(13.2)		(20.4)
	(19.1)		(16.6)		(121.8)
	$	381.7	$	504.4	$	492.7

The reconciliation from the statutory U.S. federal income tax rate to our effective tax rate is:


	2020		2019		2018
Statutory U.S. federal income tax rate	21.0	%	21.0	%	21.0	%
U.S. state and local income taxes, net of U.S. federal income tax benefit	2.2		0.5		1.6
Effect of Tax Act	0		0		1.5
Impact of foreign operations	3.4		4.5		3.8
Other	0.5		0		(2.3)
Effective tax rate	27.1	%	26.0	%	25.6	%

Our effective tax rate for 2020 increased year-over-year to 27.1% from 26.0%. The non-deductibility in certain jurisdictions of a portion of the ~~revised statutory federal rate as~~COVID-19 repositioning costs recorded in the second quarter of ~~the enactment date. In December 2017, the SEC issued~~ ~~Staff Accounting Bulletin 118~~, or SAB 118, which provided guidance on accounting for the impact of the Tax Act. SAB 118 provides that provisional amounts should be recognized in our financial statements where accounting for certain effects of the Tax Act are not complete and a reasonable estimate of the effects of the Tax Act can be made. Accordingly, at December 31, 2017, we estimated2020 had the effect of increasing our effective tax rate for 2020. This increase was substantially offset by a lower effective tax rate on our foreign earnings resulting from a change in legislation. The effective tax rate for 2019 includes a reduction of $10.8 million primarily from the net favorable settlement of uncertain tax positions in various jurisdictions in the second quarter of 2019. The international tax rate differentials in 2020 and 2019 are primarily attributed to our earnings in Germany, Australia, France, Japan and Brazil being taxed at higher rates than the U.S. statutory tax rate.

The Tax Cuts and Jobs Act of 2017, or Tax Act, among other things, implemented a territorial tax system and ~~recorded~~imposed a net increase to income tax expense of $106.3 million. Our estimate was based on our understanding of the Tax Act and currently available guidance. In 2018, we finalized the provisional amounts based on additional information regarding theone-time transition tax on ~~our~~the deemed repatriation of accumulated earnings of foreign ~~earnings. As a result, we recorded additional income tax expense of $28.9 million~~.

We were required to account for effect of U.S. federal tax rate changes on our deferred tax balances by measuring deferred tax assets and liabilities at the rate at which they are expected to reverse in the future, which as a result of the Tax Act is 21%.subsidiaries. At December 31, ~~2017,~~2020 and 2019, the ~~remeasurement of our deferred~~transition tax ~~assets~~liability was $112.0 million and ~~liabilities reduced income tax expense by $173.3 million.~~

$123.6 million, respectively. The territorial tax system ~~will allow~~allows us to repatriate ~~future~~ earnings of our foreign subsidiaries without incurring additional U.S. tax by providing a 100% dividend exemption. ~~However, while the change to~~While a territorial tax system limits U.S. federal income tax to domestic ~~earnings,~~source income, foreign source income is subject to tax in the appropriate foreign jurisdiction at the local rate, which in certain jurisdictions may be higher than the U.S. federal statutory income tax rate of 21%. As a result, the foreign tax rate differential will cause our effective tax rate to be higher than the U.S. federal statutory income tax rate.

The Tax Act imposed a one-time transition tax on our accumulated foreign earnings at December 31, 2017. The portion of the foreign earnings comprising cash and other specified assets is taxed at a 15.5% rate and any remaining amount is taxed at an 8% rate. In 2017, we recorded a provisional amount of $192.1 million in income tax expense for the transition tax. After taking into consideration available foreign tax credits and other items, at December 31, 2017, we recorded a net cash liability of $102.9 million, which we elected to pay over an eight year period. In 2018, we finalized the provisional amount. At December 31, 2018 the cash liability, which reflects the finalization of the provisional amount and payments, was $139.1 million. Although the adoption of a territorial tax system allows for the repatriation of foreign earnings after December 31, 2017 without incurring U.S. income tax, withholding taxes by the foreign jurisdictions will be applied to any dividends remitted to the U.S. As a result, at December 31, 2018 and 2017, we recorded a charge of $3.0 million and $87.5 million, respectively, related to these withholding taxes.

We have elected to account for any tax on the global intangible low-taxed income, or GILTI, in the period in which it is incurred. ~~At December 31, 2018,~~In 2020 and 2019, we provided ~~$12.9~~$3.0 million and $14.7 million, respectively, for tax impacts of GILTI.

~~Income before income taxes for the three years ended December 31, 2018 was (in millions):~~

2018 2017 2016
Domestic $ 643.7
$ 832.4
$ 805.2
International 1,280.6
1,052.5
1,036.6
$ 1,924.3
$ 1,884.9
$ 1,841.8

~~Income tax expense (benefit) for the three years ended December 31, 2018 was (in millions):~~

2018 2017 2016
Current:
Federal $ 273.8
$ 458.8
$ 381.8
State and local 35.5
36.5
12.6
International 305.2
280.2
332.1
614.5
775.5
726.5
Deferred:
Federal (104.2 ) (205.5 ) (88.2 )
State and local 2.8
11.1
12.0
International (20.4 ) 115.1
(49.8 )
(121.8 ) (79.3 ) (126.0 )
$ 492.7
$ 696.2
$ 600.5

~~F-22~~

~~OMNICOM GROUP INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~The reconciliation from the statutory U.S. federal income tax rate to our effective tax rate is:~~

2018 2017 2016
Statutory U.S. federal income tax rate 21.0 % 35.0 % 35.0 %
State and local income taxes, net of federal income tax benefit 1.5
1.3
0.9
Effect of Tax Act 1.6
5.6
—
International tax rate differentials 1.1
(3.8 ) (4.0 )
Other 0.4
(1.2 ) 0.7
Effective tax rate 25.6 % 36.9 % 32.6 %

The international tax rate differentials in 2018 are primarily attributed to our earnings in Canada, Australia, Japan, Colombia and Hong Kong being taxed at higher rates than the U.S. statutory tax rate, reduced by approximately $19 million resulting from the successful resolution of foreign tax claims.

Income tax expense in 2020, 2019 and 2018 ~~2017~~includes $3.8 million, $2.2 million and ~~2016 includes~~ $3.6 million,~~$2.5 million~~ ~~and~~ ~~$2.3 million~~, respectively, of interest, net of tax benefit, and penalties related to tax positions taken on our tax returns. At December 31, ~~2018~~2020 and ~~2017,~~2019, accrued interest and penalties were ~~$21.1~~$23.5 million and ~~$16.1~~$20.0 million,, respectively.

F-23

OMNICOM GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The components of deferred tax assets and liabilities ~~at December 31, 2018~~ and ~~2017~~balance sheet classification were (in millions):


	December 31,
	2020		2019
Deferred tax assets:
Compensation	$	236.5	$	210.9
Tax loss and credit carryforwards	67.0		60.6
Basis differences from acquisitions	20.8		22.9
Basis differences from short-term assets and liabilities	34.4		42.2
Other	(5.8)		4.6
Deferred tax assets	352.9		341.2
Valuation allowance	(15.9)		(7.6)
Net deferred tax assets	$	337.0	$	333.6
Deferred tax liabilities:
Goodwill and intangible assets	$	611.1	$	598.0
Unremitted foreign earnings	91.9		69.0
Basis differences from investments	(1.1)		9.0
Financial instruments	0.8		0.9
Deferred tax liabilities	$	702.7	$	676.9

Long-term deferred tax assets	$	77.8	$	64.8
Long-term deferred tax liabilities	$	443.5	$	408.1

2018 2017
Deferred tax assets:
Compensation $ 209.7
$ 173.7
Tax loss and credit carryforwards 38.1
40.3
Basis differences from acquisitions 13.9
18.0
Basis differences from short-term assets and liabilities 35.7
39.5
Other 10.8
17.8
Deferred tax assets 308.2
289.3
Valuation allowance (3.0 ) (3.3 )
Net deferred tax assets $ 305.2
$ 286.0
Deferred tax liabilities:
Goodwill and intangible assets $ 577.5
$ 562.2
Unremitted foreign earnings 69.2
94.9
Basis differences from investments 9.6
9.8
Financial instruments 0.8
41.4
Deferred tax liabilities $ 657.1
$ 708.3

Long-term deferred tax assets $ 61.8
$ 61.3

Long-term deferred tax liabilities $ 413.7
$ 483.6

We have concluded that it is more likely than not that we will be able to realize our net deferred tax assets in future periods because results of future operations are expected to generate sufficient taxable income. The valuation allowance of ~~$3.0~~$15.9 million and ~~$3.3~~$7.6 million at December 31, ~~2018~~2020 and ~~2017,~~2019, respectively, relates to tax losses and tax credit carryforwards in the U.S. and in international jurisdictions. Tax loss and credit carryforwards for which there is no valuation allowance are available for periods ranging from ~~2019~~2021 to ~~2038,~~2040, which is longer than the forecasted utilization of such carryforwards.

A reconciliation of our unrecognized tax benefits ~~at December 31, 2018 and 2017~~ is (in millions):


	December 31,
	2020		2019
January 1	$	206.8	$	182.8
Additions:
Current year tax positions	3.9		12.3
Prior year tax positions	2.8		29.4
Reduction of prior year tax positions	(26.1)		(13.1)
Settlements	(2.5)		(5.0)

Foreign currency translation	(2.0)		0.4
December 31	$	182.9	$	206.8

2018 2017
January 1 $ 173.7
$ 116.9
Additions:
Current year tax positions 30.1
67.1
Prior year tax positions 5.2
5.5
Reduction of prior year tax positions (25.4 ) (16.5 )
Foreign currency translation (0.8 ) 0.7
December 31 $ 182.8
$ 173.7

~~F-23~~

~~OMNICOM GROUP INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

The majority of the liability for uncertain tax positions is recorded in long-term liabilities. At December 31, ~~2018~~2020 and ~~2017,~~2019, approximately $174.0 million and ~~$142.8~~$179.0 million,, respectively, of the liability for uncertain tax positions would affect our effective tax rate upon resolution of the uncertain tax positions.

We file a consolidated U.S. federal income tax return and income tax returns in various state and local jurisdictions. Our subsidiaries file tax returns in various foreign jurisdictions. Our principal foreign jurisdictions include the United Kingdom, France and Germany. The Internal Revenue Service has completed its examination of our U.S. federal tax returns through 2015. Tax returns in the United Kingdom, France and Germany have been examined through 2017, 2016 and 2009, respectively.

In response to the economic impact of the COVID-19 pandemic, the CARES Act, was signed into law on March 27, 2020. We have determined that the CARES Act did not have a material impact on our income tax expense or effective tax rate for 2020.

12. Pension and Other Postemployment Benefits

Defined Contribution Plans

Our domestic and international subsidiaries provide retirement benefits for their employees primarily through defined contribution profit sharing and savings plans. Contributions to the plans vary by subsidiary and have generally been in amounts up

F-24

OMNICOM GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

to the maximum percentage of total eligible compensation of participating employees that is deductible for income tax purposes. Contribution expense in 2020, 2019 and 2018 was $108.1 million, $115.2 million and $118.8 million, ~~$112.9 million~~ ~~and~~ ~~$108.5 million~~ ~~in 2018, 2017 and 2016,~~ respectively.

Defined Benefit Pension Plans

Two of our U.S. businesses and several of our non-U.S. businesses sponsor noncontributory defined benefit pension plans. These plans provide benefits to employees based on formulas recognizing length of service and earnings. The U.S. plans cover approximately ~~900~~800 participants, are closed to new participants and do not accrue future benefit credits. The non-U.S. plans, which include plans required by local law, cover approximately ~~6,000~~5,100 participants and are not subject to ERISA.

We have a Senior Executive Restrictive Covenant and Retention Plan, or Retention Plan, for certain executive officers selected by the Compensation Committee. The Retention Plan is a non-qualified deferred compensation severance plan that was adopted to secure non-competition, non-solicitation, non-disparagement and ongoing consulting services from such executive officers and to strengthen the retention aspect of executive officer compensation. The Retention Plan provides annual payments upon termination following at least seven years of service with Omnicom or its subsidiaries to the participants or to their beneficiaries. A participant’s annual benefit is payable for 15 consecutive calendar years following termination, but in no event prior to age 55. The annual benefit is equal to the lesser of (i) the participant’s final average pay times an applicable percentage, which is based upon the executive’s years of service as an executive officer, not to exceed 35% or (ii) $1.5 million adjusted for cost-of-living, beginning with the second annual payment, not to exceed 2.5% per year. The Retention Plan is not funded and benefits are paid when due.

The components of net periodic benefit expense ~~for the three years ended December 31, 2018~~ were (in millions)


											Year Ended December 31,
	2018			2017			2016				2020		2019		2018
Service cost	$	7.7		$	10.1		$	7.8		Service cost	$	7.5	$	7.9	$	7.7
Interest cost	7.9			7.9			7.8			Interest cost	7.7		8.2		7.9
Expected return on plan assets	(2.8		)	(3.6		)	(3.7		)	Expected return on plan assets	(2.6)		(3.5)		(2.8)
Amortization of prior service cost	4.4			4.6			4.5			Amortization of prior service cost	0.8		0.8		4.4
Amortization of actuarial losses	6.9			7.0			5.3
Amortization of actuarial loss										Amortization of actuarial loss	6.7		2.5		6.9
	$	24.1		$	26.0		$	21.7			$	20.1	$	15.9	$	24.1

Included in accumulated other comprehensive income at December 31, ~~2018~~2020 and ~~2017~~2019 were unrecognized actuarial losses and unrecognized prior service cost of ~~$70.0~~$96.5 million (~~$42.0~~ ($60.2 million net of income taxes) and ~~$90.0~~$93.9 million (~~$56.0~~ ($58.3 million net of income taxes), respectively, that have not yet been recognized in net periodic benefit cost. The unrecognized actuarial gains and losses and unrecognized prior service cost included in accumulated other comprehensive income and expected to be recognized in net periodic benefit cost in ~~2019~~2021 is ~~$11.7 million~~.$7.5 million.

The weighted average assumptions used to determine net periodic benefit expense ~~for the three years ended December 31, 2018~~ were:

~~OMNICOM GROUP INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~


	Year Ended December 31,
	2020		2019		2018
Discount rate	2.4	%	2.9	%	3.6	%
Compensation increases	2.5	%	2.5	%	2.5	%
Expected return on plan assets	5.1	%	5.5	%	5.8	%

The expected long-term rate of return for plan assets for the U.S. plans is based on several factors, including current and expected asset allocations, historical and expected returns on various asset classes and current and future market conditions. A total return investment approach using a mix of equities and fixed income investments maximizes the long-term return. This strategy is intended to minimize plan expense by achieving long-term returns in excess of the growth in plan liabilities over time. The discount rate used to compute net periodic benefit cost is based on yields of available high-quality bonds and reflects the expected cash flow as of the measurement date. The expected returns on plan assets and discount rates for the non-U.S. plans are based on local factors, including each plan’s investment approach, local interest rates and plan participant profiles.

Experience gains and losses and the effects of changes in actuarial assumptions are generally amortized over a period no longer than the expected average future service of active employees.

Our funding policy is to contribute amounts sufficient to meet minimum funding requirements in accordance with the applicable employee benefit and tax laws that the plans are subject to, plus such additional amounts as we may determine to be appropriate. WeIn 2020 and 2019, we contributed ~~$8.0~~$9.1 million ~~$8.3~~and $7.1 million, ~~and~~ ~~$6.6 million~~ ~~in 2018, 2017 and 2016,~~ respectively, to ~~our~~the defined benefit pension plans. We do not expect ~~our~~the contributions for ~~2019~~2021 to differ materially from ~~our 2018~~the 2020 contributions.

~~At December 31, 2018 and 2017, the benefit obligation, fair value of plan assets and funded status of our defined benefit pension plans were (in millions):~~

~~At December 31, 2018 and 2017, the funded status was classified as follows (in millions):~~

~~The accumulated benefit obligation for our defined benefit pension plans at December 31, 2018 and 2017, was $219.9 million and $264.5 million, respectively.~~

~~At December 31, 2018 and 2017, plans with benefit obligations in excess of plan assets were (in millions):~~

OMNICOM GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The change in benefit obligation and fair value of plan assets of the defined benefit pension plans were (in millions):


	December 31,
	2020		2019
Benefit Obligation:
January 1	$	293.5	$	258.4
Service cost	7.5		7.9
Interest cost	7.7		8.2
Amendments, curtailments and settlements	(0.2)		1.4
Actuarial loss	17.2		28.8
Benefits paid	(13.5)		(9.2)
Foreign currency translation	(2.9)		(2.0)
December 31	$	309.3	$	293.5
Fair Value of Plan Assets:
January 1	$	64.3	$	57.4
Actual return on plan assets	5.0		8.7
Employer contributions	9.1		7.1
Benefits paid	(13.5)		(9.2)

Foreign currency translation and other	(1.6)		0.3
December 31	$	63.3	$	64.3

The funded status and balance sheet classification of the defined benefit pension plans were (in millions):


	December 31,
	2020		2019
Funded Status	$	(246.0)	$	(229.2)

Other assets	$	2.7	$	2.8
Other current liabilities	(5.2)		(5.1)
Long-term liabilities	(243.5)		(226.9)
	$	(246.0)	$	(229.2)

At December 31, 2020 and 2019, the accumulated benefit obligation for our defined benefit pension plans was $243.9 million and $268.9 million, respectively.

Plans with benefit obligations in excess of plan assets were (in millions):


	December 31,
	2020		2019
Benefit obligation	$	(294.0)	$	(280.7)
Plan assets	45.4		48.3
	$	(248.6)	$	(232.4)

The weighted average assumptions used to determine the benefit obligation ~~at December 31, 2018 and 2017,~~ were:

At December 31, ~~2018,~~2020, the estimated benefits expected to be paid over the next 10 years are (in millions):


New York			13-1514814
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

~~New York~~		~~13-1514814~~
~~(State or other jurisdiction of~~ ~~incorporation or organization)~~	~~(I.R.S. Employer Identification No.)~~

~~437 Madison~~280 Park Avenue, New York, NY		~~10022~~10017
(Address of principal executive offices)			(Zip Code)



Title of each class	Trading Symbols	Name of each exchange on which registered
Common Stock, ~~$.15~~$0.15 Par Value	OMC	New York Stock Exchange
0.800% Senior Notes due 2027	OMC/27	New York Stock Exchange
1.400% Senior Notes due 2031	OMC/31	New York Stock Exchange


					Page
			PART I		~~Page~~
Item 1.			~~PART I~~
~~Item 1~~Business.	~~Business~~			1
Item 1A.			Risk Factors		3
Item 1B.			Unresolved Staff Comments		6
~~Item 2.~~	~~Properties~~	6
~~Item 3.~~	~~Legal Proceedings~~	6
Item 4.2.			Properties		6
Item 3.			Legal Proceedings		6
Item 4.			Mine Safety Disclosures		6
			PART II
Item 5.			Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities		7
Item 6. 7.			~~Selected Financial Data~~		7
~~Item 7.~~	Management’s Discussion and Analysis of Financial Condition and Results of Operations	87
Item 7A.			Quantitative and Qualitative Disclosures About Market Risk		28
Item 8.			Financial Statements and Supplementary Data		29
Item 9.			Changes in and Disagreements With Accountants on Accounting and Financial Disclosure		29
Item 9A.			Controls and Procedures		29
~~Item 9B.~~	~~Other Information~~	29
	~~PART III~~
Item ~~10.~~9B.			Other Information		29
			PART III
Item 10.			Directors, Executive Officers and Corporate Governance		30
Item 11.			Executive Compensation		30
Item 12.			Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		30
Item 13.			Certain Relationships and Related Transactions, and Director Independence		30
Item 14.			Principal Account ant Fees and Services		30
			PART IV
Item ~~14.~~15.			~~Principal Accounting Fees~~Exhibit and ~~Services~~		30
	~~PART IV~~
~~Item 15.~~	~~Exhibits,~~ Financial Statement Schedules	30
~~Item 16.~~	~~Form 10-K Summary~~	33
~~Signatures~~Item 16.			Form 10-K Summary		3433
Signatures					34

Management Report on Internal Control Over Financial Reporting					~~F-1~~F-1
Report of Independent Registered Public Accounting Firm					~~F-2~~F-2
Consolidated Financial Statements					~~F-3~~F-4
Notes to Consolidated Financial Statements					~~F-8~~F-9
~~Selected Quarterly Financial Data~~					~~F-34~~
Schedule II - Valuation and Qualifying Accounts		~~S-1~~S-1



(a)(1)		Financial Statements:		Page

	Management Report on Internal Control Over Financial Reporting		~~F-1~~F-1
		Report of Independent Registered Public Accounting Firm		~~F-2~~F-2
		Consolidated Balance Sheets at December 31, ~~2018~~2020 and ~~2017~~2019		~~F-3~~F-4
		Consolidated Statements of Income for the Three Years Ended December 31, ~~2018~~2020		~~F-4~~F-5
		Consolidated Statements of Comprehensive Income for the Three Years Ended December 31, ~~2018~~2020		~~F-5~~F-6
		Consolidated Statements of Equity for the Three Years Ended December 31, ~~2018~~2020		~~F-6~~F-7
		Consolidated Statements of Cash Flows for the Three Years Ended December 31, ~~2018~~2020		~~F-7~~F-8
		Notes to Consolidated Financial Statements		~~F-8~~F-9
(a)(2)		~~Selected Quarterly Financial Data (Unaudited)~~		~~F-34~~

~~(a)(2)~~	Financial Statement Schedules:
		Schedule II - Valuation and Qualifying Accounts for the Three Years Ended December 31, ~~2018~~2020		~~S-1~~S-1

	All other schedules are omitted because they are not applicable.



	Net Rent
2019	$	308.5
2020	266.3
2021	219.6
2022	183.5
2023	150.3
Thereafter	662.4
	$	1,790.6



Period	Total Number of Shares Purchased	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
October 1 - 31, 2018	504,601	$	71.56	—	—
November 1 - 30, 2018	—	—		—	—
December 1 - 31, 2018	260,488	70.91		—	—
	765,089	$	71.34	—	—



	(In millions, except per share amounts)
For the years ended December 31:	2018		2017		2016		2015		2014
Revenue	$	15,290.2	$	15,273.6	$	15,416.9	$	15,134.4	$	15,317.8
Operating Profit	2,133.5		2,083.8		2,030.5		1,920.1		1,944.1
Net Income - Omnicom Group Inc.	1,326.4		1,088.4		1,148.6		1,093.9		1,104.0
Net Income Per Common Share - Omnicom Group Inc.:
Basic	5.85		4.68		4.80		4.43		4.27
Diluted	5.83		4.65		4.78		4.41		4.24
Dividends Declared Per Common Share	2.40		2.25		2.15		2.00		1.90
	(In millions)
At December 31:	2018		2017		2016		2015		2014
Cash and cash equivalents and short-term investments	$	3,657.9	$	3,796.4	$	3,022.8	$	2,619.7	$	2,390.3
Total assets	24,617.0		24,931.2		23,165.4		22,110.7		21,428.4
Long-term debt, including current portion	4,883.7		4,912.9		4,920.6		4,565.6		4,542.5
Long-term liabilities	1,197.8		1,091.2		892.3		800.5		774.3
Total shareholders’ equity	2,547.1		2,615.1		2,162.0		2,452.4		2,850.0



	June 30,
	2018	2017
Long-Term Growth Rate	4%	4%
WACC	10.5% - 11.1%	9.6% - 10.3%



	As Reported		Adjustments		Amounts without the Adoption of ASC 606
Revenue	$	15,290.2	$	146.1	$	15,436.3
Operating Expenses	13,156.7		139.5		13,296.2
Operating Profit	2,133.5		6.6		2,140.1



	Increase (Decrease)
	Repositioning Actions		Net Gain on Disposition of Subsidiaries			Total
Salary and service costs	$	73.7	$	—		$	73.7
Occupancy and other costs	73.5		—			73.5
Net gain on disposition of subsidiaries	—		(178.4		)	(178.4		)
Cost of services	147.2		(178.4		)	(31.2		)
Selling, general and administrative expenses	2.2		—			2.2
Depreciation and amortization	—		—			—
	$	149.4	$	(178.4	)	$	(29.0	)



	Increase (Decrease)
	Income Before Income Taxes			Income Tax Expense
Net gain on disposition of subsidiaries	$	178.4		$	11.0
Repositioning actions	(149.4		)	(36.0		)
Adjustment to provisional effect of the Tax Act	—			28.9
	$	29.0		$	3.9



	2017 As Reported			Effect of Tax Act			2017 Excluding Effect of Tax Act
Income before income taxes and income from equity method investments	$	1,884.9		$	—		$	1,884.9
Income tax expense	$	696.2		$	106.3		$	589.9
Effective tax rate	36.9		%				31.3		%
Net income - Omnicom Group Inc.	$	1,088.4		$	(106.3	)	$	1,194.7
Diluted net income per share - Omnicom Group Inc.	$	4.65		$	(0.45	)	$	5.10



			Obligation Due
	Total Obligation		2019		2020 - 2021		2022 - 2023		After 2023
Long-term debt:
Principal	$	4,900.0	$	500.0	$	1,000.0	$	1,250.0	$	2,150.0
Interest	767.4		184.5		274.0		170.7		138.2
Lease obligations	1,953.6		364.7		565.6		357.0		666.3
Contingent purchase price obligations	146.5		65.4		72.3		8.8		—
Transition tax liability on accumulated foreign earnings	139.1		15.1		23.6		33.9		66.5
Defined benefit pension plans benefit obligation	258.4		8.9		26.1		32.7		190.7
Postemployment arrangements benefit obligation	126.5		7.8		14.8		15.0		88.9
Uncertain tax positions	182.8		25.6		47.2		71.9		38.1
	$	8,474.3	$	1,172.0	$	2,023.6	$	1,940.0	$	3,338.7



			Commitment Expires
	Total Commitment		2019		2020 - 2021		2022 - 2023		After 2023
Standby letters of credit	$	4.6	$	1.0	$	—	$	2.5	$	1.1
Guarantees	115.3		87.5		16.5		6.7		4.6
	$	119.9	$	88.5	$	16.5	$	9.2	$	5.7



(a)(3)		Exhibits:
Exhibit Number		Description
3(i)		Restated Certificate of Incorporation of Omnicom Group Inc. (Exhibit 3.1 to our Quarterly Report on Form 10-Q (File No. 1-10551) for the quarter ended September 30, 2011 and incorporated herein by reference).

3(ii)	By-laws of Omnicom Group Inc., as amended and restated on December 11, 2018 (Exhibit 3.1 to our Current Report on Form 8-K (File No. 1-10551) dated December 14, 2018 and incorporated herein by reference).



4.1	Indenture, dated as of July 1, 2009, among Omnicom Group Inc., Omnicom Capital Inc., Omnicom Finance Inc. and Deutsche Bank Trust Company Americas, as trustee (“2009 Base Indenture”) (Exhibit 4.1 to our Current Report on Form 8-K (File No. 1-10551) dated July 1, 2009 ~~(“July 1, 2009 8-K”)~~ and incorporated herein by reference).

4.2	First Supplemental Indenture to the 2009 Base Indenture, dated as of July 1, 2009, among Omnicom Group Inc., Omnicom Capital Inc., Omnicom Finance Inc. and Deutsche Bank Trust Company Americas, as trustee, in connection with our issuance of $500 million 6.25% Senior Notes due 2019 (Exhibit 4.2 to the July 1, 2009 8-K and incorporated herein by reference).

~~4.3~~	Second Supplemental Indenture to the 2009 Base Indenture, dated as of August 5, 2010, among Omnicom Group Inc., Omnicom Capital Inc., Omnicom Finance Inc. and Deutsche Bank Trust Company Americas, as trustee, in connection with our issuance of $1 billion 4.45% Senior Notes due 2020 (Exhibit 4.1 to our Current Report on Form 8-K (File No. 1-10551) dated August 5, 2010 (“August 5, 2010 8-K”) and incorporated herein by reference).

~~4.4~~	Third Supplemental Indenture to the 2009 Base Indenture, dated as of April 23, 2012, among Omnicom Group Inc., Omnicom Capital Inc., Omnicom Finance Inc. and Deutsche Bank Trust Company Americas, as trustee, in connection with our issuance of $750 million 3.625% Senior Notes due 2022 (Exhibit 4.1 to our Current Report on Form 8-K (File No. 1-10551) dated April 23, 2012 and incorporated herein by reference).

~~4.5~~4.3	Fourth Supplemental Indenture to the 2009 Base Indenture, dated as of July 20, 2012, among Omnicom Group Inc., Omnicom Capital Inc. and Deutsche Bank Trust Company Americas, as trustee, (Exhibit 4.4 to our Current Report on Form 8-K (File No. 1-10551) dated July 20, 2012 and incorporated herein by reference).

~~4.6~~4.4	Fifth Supplemental Indenture to the 2009 Base Indenture, dated as of August 9, 2012, among Omnicom Group Inc., Omnicom Capital Inc. and Deutsche Bank Trust Company Americas, as trustee, in connection with our issuance of $500 million 3.625% Senior Notes due 2022 (Exhibit 4.1 to our Current Report on Form 8-K (File No. 1-10551) dated August 9, 2012 (“August 9, 2012 8-K”) and incorporated herein by reference).

~~4.7~~4.5	~~Form of 6.25% Notes due 2019 (Exhibit 4.3 to the July 1, 2009 8-K and incorporated herein by reference).~~

~~4.8~~	~~Form of 4.45% Notes due 2020 (Exhibit 4.2 to the August 5, 2010 8-K and incorporated herein by reference).~~

~~4.9~~	Form of 3.625% Notes due 2022 (Exhibit 4.2 to the August 9, 2012 8-K and incorporated herein by reference).

~~4.10~~4.6	Base Indenture, dated as of October 29, 2014, among Omnicom Group Inc., Omnicom Capital Inc. and Deutsche Bank Trust Company Americas, as trustee (“2014 Base Indenture”), (Exhibit 4.1 to our Current Report on Form 8-K (File No. 1-10551) dated October 29, 2014 (“October 29, 2014 8-K”) and incorporated herein by reference).

~~4.11~~4.7	First Supplemental Indenture to the 2014 Base Indenture, dated as of October 29, 2014, among Omnicom Group Inc., Omnicom Capital Inc. and Deutsche Bank Trust Company Americas, as trustee, in connection with our issuance of $750 million 3.65% Senior Notes due 2024 (Exhibit 4.2 to the October 29, 2014 8-K and incorporated herein by reference).

~~4.12~~4.8	Form of 3.65% Notes due 2024 (included in Exhibit 4.2 to the October 29, 2014 8-K and incorporated herein by reference).

~~4.13~~4.9	Second Supplemental Indenture to the 2014 Base Indenture, dated as of April 6, 2016, among Omnicom Group Inc., Omnicom Capital Inc. and Deutsche Bank Trust Company Americas, as trustee, in connection with the issuance of $1.4 billion 3.60% Senior Notes due 2026 (Exhibit 4.1 to our Current Report on Form 8-K (File No. 1-10551) dated April 6, 2016 (“April 6, 2016 8-K”) and incorporated herein by reference).

~~4.14~~4.10	Form of 3.60% Notes due 2026 (included in Exhibit 4.1 to the April 6, 2016 8-K and incorporated herein by reference).
4.11		Base Indenture, dated as of July 8, 2019, among Omnicom Finance Holdings plc, as issuer, Omnicom Group Inc. and Omnicom Capital Inc., as guarantors, and Deutsche Bank Trust Company Americas, as trustee (“2019 Base Indenture”), (Exhibit 4.1 to our Current Report on Form 8-K (File No. 1-10551) dated ~~April 6, 2016~~July 8, 2019 (“July 8, 2019 8-K”) and incorporated herein by reference).
4.12		First Supplemental Indenture to the 2019 Base Indenture, dated as of July 8, 2019, among Omnicom Finance Holdings plc, as issuer, Omnicom Group Inc. and Omnicom Capital Inc., as guarantors, and Deutsche Bank Trust Company Americas, as trustee, in connection with the issuance of €500 million aggregate principal amount of Senior Notes due 2027 and €500 million aggregate principal amount of Senior Notes due 20 31 (Exhibit 4.2 to the July 8, 2019 8-K and incorporated herein by reference).
4.13		Form of 0.80% Notes due 2027 (included in Exhibit 4.2 to the July 8, 2019 8-K and incorporated herein by reference).
4.14		Form of 1.40% Notes due 2031 (included in Exhibit 4.2 to the July 8, 2019 8-K and incorporated herein by reference).
4.15		Base Indenture, dated as of February 21, 2020, among Omnicom Group Inc., as issuer, and Deutsche Bank Trust Company Americas, as trustee (Exhibit 4.1 to our Current Report on Form 8-K (File No. 1-10551) filed on February 21, 2020 ("February 21, 2020 8-K") and incorporated herein by reference).
4.16		First Supplemental Indenture, dated as of February 21, 2020, among Omnicom Group Inc., as issuer, and Deutsche Bank Trust Company Americas, as trustee (Exhibit 4.2 to the February 21, 2020 8-K and incorporated herein by reference).
4.17		Form of 2.450% Notes due 2030 (Included in Exhibit 4.2 to the February 21, 2020 8-K and incorporated herein by reference).
4.18		Second Supplemental Indenture, dated as of April 1, 2020, among Omnicom Group Inc., as issuer, and Deutsche Bank Trust Company Americas, as trustee (Exhibit 4.1 to our Current Report on Form 8-K (File No. 1-10551) filed on April 1, 2020 (“April 1, 2020 8-K”) and incorporated herein by reference).



~~10.1~~4.19		Form of 4.200% Notes due 2030 (Included in Exhibit 4.1 to the April 1, 2020 8-K and incorporated herein by reference).
4.20		Description of Securities (Exhibit 4.17 to our Annual Report on Form 10-K (File No. 1-10551) for the year ended December 31, 2019 and incorporated herein by reference).
10.1		Second Amended and Restated Five Year Credit Agreement, dated as of ~~July 31, 2014,~~February 14, 2020, by and among Omnicom Capital Inc., a Connecticut corporation, Omnicom Finance ~~plc,~~Limited, a private limited company organized under the laws of England and Wales, Omnicom Group Inc., a New York corporation, any other subsidiary of Omnicom Group Inc. designated for borrowing privileges, the banks, financial institutions and other institutional lenders and initial issuing banks listed on the signature pages thereof, ~~Citigroup Global Markets Inc.~~Citibank, N.A., ~~J.P. Morgan Securities LLC, HSBC Securities (USA) Inc.~~JPMorgan Chase Bank, N.A., and Wells Fargo Securities, LLC, as lead arrangers and book managers, JPMorgan Chase Bank, N.A.~~, HSBC Securities (USA) Inc.~~ and Wells Fargo Bank, National Association, as syndication agents, Bank of America, N.A., BNP Paribas, Barclays Bank PLC, Deutsche Bank Securities Inc. and ~~U.S.~~HSBC Bank USA, National Association, as documentation agents, and Citibank, N.A., as administrative agent for the lenders (Exhibit 10.1 to our Current Report on Form 8-K (File No. 1-10551) filed on ~~August 1, 2014~~February 19, 2020 and incorporated herein by reference).

10.2	~~Director Equity Plan~~364-Day Credit Agreement, dated as of April 3, 2020, by and among Omnicom Capital Inc., Omnicom Group Inc., the banks, financial institutions and other institutional lenders and initial issuing banks listed on the signature pages thereof, Citibank, N.A., BofA Securities, Inc., Mizuho Bank, Ltd. and U.S. Bank National Association, as joint lead arrangers and joint book managers, Bank of America, N.A., Mizuho Bank, Ltd. and U.S. Bank National Association, as syndication agents, and Citibank, N.A., as administrative agent for ~~Non-employee Directors (Appendix B~~the lenders (Exhibit 10.1 to our ~~Proxy Statement~~Current Report on Form 8-K (File No. 1-10551) filed on April ~~23, 2004~~6, 2020 and incorporated herein by reference).
10.3		Amendment No. 1 to the Credit Agreement, dated October 26, 2020, to the Second Amended and Restated Five Year Credit Agreement, dated as of February 14, 2020, by and among Omnicom Capital Inc., Omnicom Finance Limited, Omnicom Group Inc., any other subsidiary of Omnicom Group Inc. designated for borrowing privileges, the banks, financial institutions and other institutional lenders party thereto, Citibank, N.A., JPMorgan Chase Bank, N.A., and Wells Fargo Securities, LLC, as lead arrangers and book managers, JPMorgan Chase Bank, N.A. and Wells Fargo Bank, National Association, as syndication agents, Bank of America, N.A., BNP Paribas, Barclays Bank PLC, Deutsche Bank Securities Inc. and HSBC Bank USA, National Association, as documentation agents, and Citibank, N.A., as administrative agent for the lenders (Exhibit 10.1 to our Quarterly Report on Form 10-Q (File No. 1-10551) for the quarter ended September 30, 2020 ("September 30, 2020 10-Q") and incorporated herein by reference).
~~10.3~~10.4		Amendment No. 1 to the Credit Agreement, dated October 26, 2020, to the 364-Day Credit Agreement, dated as of April 3, 2020, by and among Omnicom Capital Inc., Omnicom Group Inc., the banks, financial institutions and other institutional lenders party thereto, Citibank, N.A., BofA Securities, Inc., Mizuho Bank, Ltd. and U.S. Bank National Association, as joint lead arrangers and joint book managers, Bank of America, N.A., Mizuho Bank, Ltd. and U.S. Bank National Association, as syndication agents, and Citibank, N.A., as administrative agent for the lenders (Exhibit 10.2 to the September 30, 2020 10-Q and incorporated herein by reference ).
10.5		Director Compensation and Director Compensation and Deferred Stock Program Stock Program (Exhibit 10.1 to our Quarterly Report on Form 10-Q (File No. 1-10551) for the quarter ended March 31, 2020 ("March 31, 2020 10-Q") and incorporated herein by reference).
10.6		Standard form of our Executive Salary Continuation Plan Agreement (Exhibit 10.5 to our Annual Report on Form 10-K (File No. 1-10551) for the year ended December 31, 2012 and incorporated herein by reference).
10.7
~~10.4~~	Standard form of the Director Indemnification Agreement (Exhibit 10.25 to our Annual Report on Form 10-K (File No. 1-10551) for the year ended December 31, 1989 and incorporated herein by reference).

~~10.5~~10.8	Senior Management Incentive Plan as amended and restated on December 4, 2008 (Exhibit 10.9 to our Annual Report on Form 10-K (File No. 1-10551) for the year ended December 31, 2008 (“2008 10-K”) and incorporated herein by reference).

~~10.6~~10.9	Omnicom Group Inc. SERCR Plan (Exhibit 10.10 to our Annual Report on Form 10-K (File No. 1-10551) for the year ended December 31, 2011 and incorporated herein by reference).

~~10.7~~10.10	Form of Award Agreement under the Omnicom Group Inc. SERCR Plan (Exhibit 10.2 to our Current Report on Form 8-K (File No. 1-10551) dated December 13, 2006 and incorporated herein by reference).

~~10.8~~10.11	Omnicom Group Inc. Amended and Restated 2007 Incentive Award Plan (Appendix A to our Proxy Statement (File No. 1-10551) filed on April 15, 2010 and incorporated herein by reference).

~~10.9~~10.12	Form of Indemnification Agreement (Exhibit 10.1 to our Quarterly Report on Form 10-Q (File No. 1-10551) for the quarter ended June 30, 2007 and incorporated herein by reference).



~~10.10~~10.13	Restricted Stock Unit Deferred Compensation Plan (Exhibit 10.16 to the 2008 10-K and incorporated herein by reference).

~~10.11~~10.14	Restricted Stock Deferred Compensation Plan (Exhibit 10.17 to the 2008 10-K and incorporated herein by reference).

~~10.12~~10.15	Amendment No. 1 to the Restricted Stock Deferred Compensation Plan (Exhibit 10.18 to the 2008 10-K and incorporated herein by reference).

~~10.13~~10.16	Amendment No. 2 to the Restricted Stock Deferred Compensation Plan (Exhibit 10.19 to the 2008 10-K and incorporated herein by reference).

~~10.14~~10.17	Form of Grant Notice and Option Agreement (Exhibit 10.20 to our Annual Report on Form 10-K (File No. 1-10551) for the year ended December 31, 2010 (“2010 10-K”) and incorporated herein by reference).

~~10.15~~10.18	Form of Grant Notice and Restricted Stock Agreement (Exhibit 10.21 to 2010 10-K and incorporated herein by reference).

~~10.16~~10.19	Form of Grant Notice and Restricted Stock Unit Agreement (Exhibit 10.22 to 2010 10-K and incorporated herein by reference).

~~10.17~~10.20	Form of Grant Notice and Performance Restricted Stock Unit Agreement (Exhibit 10.1 to our Quarterly Report on Form 10-Q (File No. 1-10551) for the quarter ended June 30, 2011 and incorporated herein by reference).

~~10.18~~10.21	Omnicom Group Inc. 2013 Incentive Award Plan (Appendix A to our Proxy Statement (File No. 1-10551) filed on April 11, 2013 and incorporated herein by reference).

~~10.19~~10.22	Director Compensation and Deferred Stock Program (Exhibit 10.19 to our Annual Report on Form 10-K (File No. 1-10551) for the year ended December 31, 2016 and incorporated herein by reference).

~~10.20~~10.23	Separation Agreement, dated October 12, 2018, by and between Omnicom Capital Inc. and Dennis Hewitt (Exhibit 10.1 to our Current Report on Form 8-K (File No. 1-10551) filed on October 18, 2018 and incorporated herein by reference).


10.24		Rochelle Tarlowe employment letter (Exhibit 10.3 to the March 31, 2020 10-Q and incorporated herein by reference).
21		Subsidiaries of the Registrant.

23	Consent of KPMG LLP.

31.1	Certification of Chairman and Chief Executive Officer required by Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended.

31.2	Certification of Executive Vice President and Chief Financial Officer required by Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended.

32	Certification of the Chairman and Chief Executive Officer ~~and President~~ and the Executive Vice President and Chief Financial Officer required by Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended, and 18 U.S.C. Section ~~1350~~1350..
101.INS		Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)
~~101~~101.SCH		Inline XBRL Taxonomy Extension Schema Document
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document
104		Cover Page Interactive Data ~~Files.~~File (formatted as inline XBRL and contained in Exhibit 101)



	Years Ended December 31,
	2018			2017		2016
Revenue	$	15,290.2		$	15,273.6	$	15,416.9
Operating Expenses:
Salary and service costs	11,306.1			11,227.2		11,419.0
Occupancy and other costs	1,309.6			1,240.8		1,230.6
Net gain on disposition of subsidiaries	(178.4		)	—		—
Cost of services	12,437.3			12,468.0		12,649.6
Selling, general and administrative expenses	455.4			439.7		443.9
Depreciation and amortization	264.0			282.1		292.9
	13,156.7			13,189.8		13,386.4
Operating Profit	2,133.5			2,083.8		2,030.5
Interest Expense	266.4			248.6		231.3
Interest Income	57.2			49.7		42.6
Income Before Income Taxes and Income From Equity Method Investments	1,924.3			1,884.9		1,841.8
Income Tax Expense	492.7			696.2		600.5
Income From Equity Method Investments	8.9			3.5		5.4
Net Income	1,440.5			1,192.2		1,246.7
Net Income Attributed To Noncontrolling Interests	114.1			103.8		98.1
Net Income - Omnicom Group Inc.	$	1,326.4		$	1,088.4	$	1,148.6

Net Income Per Share - Omnicom Group Inc.:
Basic	$	5.85		$	4.68	$	4.80
Diluted	$	5.83		$	4.65	$	4.78

Dividends Declared Per Common Share	$	2.40		$	2.25	$	2.15



	Omnicom Group Inc.
	Common Stock						Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Treasury Stock			Shareholders’ Equity			Noncontrolling Interests			Total Equity
	Shares			Par Value
Balance as of December 31, 2015	397.2			$	59.6		$	859.9		$	10,178.2		$	(1,015.4	)	$	(7,629.9	)	$	2,452.4		$	437.0		$	2,889.4
Net income										1,148.6									1,148.6			98.1			1,246.7
Other comprehensive income (loss)													(340.6		)				(340.6		)	(7.6		)	(348.2		)
Dividends to noncontrolling interests																						(87.2		)	(87.2		)
Acquisition of noncontrolling interests							(87.7		)										(87.7		)	(16.0		)	(103.7		)
Increase in noncontrolling interests from business combinations																						73.3			73.3
Change in temporary equity							(33.0		)										(33.0		)				(33.0		)
Common stock dividends declared ($2.15 per share)										(513.9		)							(513.9		)				(513.9		)
Share-based compensation							93.4												93.4						93.4
Stock issued, share-based compensation							(34.3		)							79.3			45.0						45.0
Common stock repurchased																(602.2		)	(602.2		)				(602.2		)
Treasury stock retired	(100.0	)		(15.0		)				(5,135.7		)				5,150.7			—						—
Balance as of December 31, 2016	297.2		��	44.6			798.3			5,677.2			(1,356.0		)	(3,002.1		)	2,162.0			497.6			2,659.6
Cumulative effect of accounting changes							4.5			(31.6		)							(27.1		)	—			(27.1		)
Net income										1,088.4									1,088.4			103.8			1,192.2
Other comprehensive income (loss)													393.0						393.0			25.6			418.6
Dividends to noncontrolling interests																						(101.7		)	(101.7		)
Acquisition of noncontrolling interests							(25.7		)										(25.7		)	(8.2		)	(33.9		)
Increase in noncontrolling interests from business combinations																						20.0			20.0
Change in temporary equity							27.1												27.1						27.1
Common stock dividends declared ($2.25 per share)										(523.4		)							(523.4		)				(523.4		)
Share-based compensation							80.2												80.2						80.2
Stock issued, share-based compensation							(56.1		)							65.1			9.0						9.0
Common stock repurchased																(568.4		)	(568.4		)				(568.4		)
Balance as of December 31, 2017	297.2			44.6			828.3			6,210.6			(963.0		)	(3,505.4		)	2,615.1			537.1			3,152.2
Cumulative effect of accounting changes										23.6									23.6			0.4			24.0
Net income										1,326.4									1,326.4			114.1			1,440.5
Other comprehensive income (loss)													(265.5		)				(265.5		)	(30.2		)	(295.7		)
Dividends to noncontrolling interests																						(134.9		)	(134.9		)
Acquisition of noncontrolling interests							(39.7		)										(39.7		)	(42.3		)	(82.0		)
Increase in noncontrolling interests from business combinations																						115.6			115.6
Change in temporary equity							(71.1		)										(71.1		)				(71.1		)
Common stock dividends declared ($2.40 per share)										(544.5		)							(544.5		)				(544.5		)
Share-based compensation							70.5												70.5						70.5
Stock issued, share-based compensation							(59.2		)							72.8			13.6						13.6
Common stock repurchased																(581.3		)	(581.3		)				(581.3		)
Balance as of December 31, 2018	297.2			$	44.6		$	728.8		$	7,016.1		$	(1,228.5	)	$	(4,013.9	)	$	2,547.1		$	559.8		$	3,106.9



	As Reported		Adjustments		Excluding Impact of Adoption of ASC 606
Revenue	$	15,290.2	$	146.1	$	15,436.3
Operating Expenses	13,156.7		139.5		13,296.2
Operating Profit	2,133.5		6.6		2,140.1



	2018		2017
Credit Facility	$	2,500.0	$	2,500.0
Uncommitted credit lines	1,231.6		1,181.0
Available and unused credit lines	$	3,731.6	$	3,681.0



	2018			2017
6.25% Senior Notes due 2019	$	500.0		$	500.0
4.45% Senior Notes due 2020	1,000.0			1,000.0
3.625% Senior Notes due 2022	1,250.0			1,250.0
3.65% Senior Notes due 2024	750.0			750.0
3.60% Senior Notes due 2026	1,400.0			1,400.0
	4,900.0			4,900.0
Unamortized premium (discount), net	4.9			6.2
Unamortized debt issuance costs	(16.4		)	(20.3		)
Unamortized deferred gain from settlement of interest rate swaps	48.0			66.4
Fair value adjustment attributed to outstanding interest rate swaps	(52.8		)	(39.4		)
	4,883.7			4,912.9
Current portion	(499.6		)	—
Long-term debt	$	4,384.1		$	4,912.9



Severance	$	68.4
Office lease consolidation and termination	73.5
Asset write-offs related to disposals and other costs	7.5
	$	149.4


	2018
Office rent	$	295.0
Equipment rent	16.6
Third-party sublease rent	(7.2)
Total rent cost	$	304.4



	Operating Leases			Capital Leases
2019	$	327.3		$	41.8
2020	278.2			38.2
2021	226.2			29.3
2022	186.1			15.6
2023	150.9			6.6
Thereafter	663.6			3.9
Total	1,832.3			135.4
Sublease rent	(14.1		)
Net operating lease payments	$	1,818.2
Interest component				(7.9		)
Present value of minimum capital lease payments				$	127.5


	Operating Leases		Finance Leases
2021	$	313.8	$	49.7
2022	256.6		36.7
2023	193.6		24.2
2024	167.9		11.9
2025	141.9		4.1
Thereafter	536.2		3.7
Total lease payments	1,610.0		130.3
Less: Imputed interest	225.5		6.2
Present value of lease liability	$	1,384.5	$	124.1



	2018			2017
Assets under capital lease:
Cost	$	258.2		$	229.3
Accumulated depreciation	(133.8		)	(121.0		)
	$	124.4		$	108.3
Capital lease obligations:
Current	$	38.6		$	31.6
Long-term	88.9			78.9
	$	127.5		$	110.5


	Cash Flow Hedge		Defined Benefit Pension Plans and Postemployment Arrangements		Foreign Currency Translation		Total

January 1, 2019	$	(22.3)	$	(69.3)	$	(1,136.9)	$	(1,228.5)
Other comprehensive income (loss) before reclassifications	0		(32.3)		75.4		43.1
Cumulative effect of accounting change	(5.6)		(16.7)		0		(22.3)
Reclassification from accumulated other comprehensive income (loss)	3.9		6.2		0		10.1
December 31, 2019	(24.0)		(112.1)		(1,061.5)		(1,197.6)

Other comprehensive income (loss) before reclassifications	0		(21.0)		(9.0)		(30.0)
Reclassification from accumulated other comprehensive income (loss)	3.9		9.9		0		13.8
December 31, 2020	$	(20.1)	$	(123.2)	$	(1,070.5)	$	(1,213.8)



	Cash Flow Hedge			Available-for-Sale Securities			Defined Benefit Pension Plans and Postemployment Arrangements			Foreign Currency Translation			Total
January 1, 2017	$	(29.5	)	$	(0.8	)	$	(90.6	)	$	(1,235.1	)	$	(1,356.0	)
Other comprehensive income (loss) before reclassifications	—			0.5			(7.2		)	387.1			380.4
Reclassification from accumulated other comprehensive income (loss)	3.2			—			9.4			—			12.6
December 31, 2017	(26.3		)	(0.3		)	(88.4		)	(848.0		)	(963.0		)
Other comprehensive income (loss) before reclassifications	—			—			7.3			(288.9		)	(281.6		)
Reclassification from accumulated other comprehensive income (loss)	4.0			0.3			11.8			—			16.1
December 31, 2018	$	(22.3	)	$	—		$	(69.3	)	$	(1,136.9	)	$	(1,228.5	)



2018	Level 1		Level 2		Level 3		Total
Assets:
Cash and cash equivalents	$	3,652.4					$	3,652.4
Short-term investments	5.5						5.5
Marketable equity investments	1.5						1.5
Liabilities:
Interest rate and foreign currency derivatives			$	52.9			$	52.9
Contingent purchase price obligations					$	146.5	146.5
2017
Assets:
Cash and cash equivalents	$	3,796.0					$	3,796.0
Short-term investments	0.4						0.4
Marketable equity investments	1.4						1.4
Foreign currency derivatives			$	1.0			1.0
Liabilities:
Interest rate and foreign currency derivatives			$	39.5			$	39.5
Contingent purchase price obligations					$	215.6	215.6



	2018				2017
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Assets:
Cash and cash equivalents	$	3,652.4	$	3,652.4	$	3,796.0	$	3,796.0
Short-term investments	5.5		5.5		0.4		0.4
Marketable equity investments	1.5		1.5		1.4		1.4
Non-marketable equity investments	11.8		11.8		14.4		14.4
Foreign currency derivatives	—		—		1.0		1.0
Liabilities:
Short-term debt	$	8.1	$	8.1	$	11.8	$	11.8
Interest rate and foreign currency derivatives	52.9		52.9		39.5		39.5
Contingent purchase price obligations	146.5		146.5		215.6		215.6
Long-term debt, including current portion	4,883.7		4,821.3		4,912.9		5,056.9



	Quarter
	First		Second		Third		Fourth
Revenue
2018	$	3,629.6	$	3,859.6	$	3,714.3	$	4,086.7
2017	3,587.4		3,790.1		3,719.5		4,176.6
Operating Expenses
2018	3,207.9		3,277.3		3,212.0		3,459.5
2017	3,171.7		3,218.6		3,249.3		3,550.1
Operating Profit
2018	421.7		582.3		502.3		627.2
2017	415.7		571.5		470.2		626.5
Net Income - Omnicom Group Inc.
2018	264.1		364.2		298.9		399.2
2017	241.8		328.6		263.6		254.4
Net Income Per Share Omnicom Group Inc. - Basic
2018	1.15		1.61		1.33		1.78
2017	1.03		1.41		1.14		1.10
Net Income Per Share Omnicom Group Inc. - Diluted
2018	1.14		1.60		1.32		1.77
2017	1.02		1.40		1.13		1.09