UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
 x☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2017
For the quarterly period ended June 30, 2020
or
 o☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number: 1-6686
ipglogo2018a04.jpg
THEINTERPUBLIC GROUP OF COMPANIES, INC.
(Exact name of registrant as specified in its charter)
Delaware 13-1024020
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification No.)

909 Third Avenue, New York, New York 10022
(Address of principal executive offices) (Zip Code)
(212)704-1200
(Registrant’s telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $0.10 per shareIPGThe New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý    No ¨


Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ý    No ¨


Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated Filer ý☒ Accelerated filerFiler ¨☐
Non-accelerated filerFiler ¨☐ Smaller reporting companyReporting Company ¨☐
(Do not check if a smaller reporting company)   Emerging growth companyGrowth Company ¨☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨☐


Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨☐    No ý


The number of shares of the registrant’s common stock outstanding as of October 16, 2017July 15, 2020 was 388,608,593.389,922,896.



INDEX
 Page
PART I. FINANCIAL INFORMATION
Item 1.
Financial Statements (Unaudited)
Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2020 and 2019
2
 
Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2017 and 2016
2
Consolidated Statements of Comprehensive Income for the Three and NineSix Months Ended SeptemberJune 30, 20172020 and 20162019
3
 
Consolidated Balance Sheets as of SeptemberJune 30, 20172020 and December 31, 20162019
4
 
Consolidated Statements of Cash Flows for the NineSix Months Ended SeptemberJune 30, 20172020 and 20162019
5
 
Consolidated Statements of Stockholders’ Equity for the NineThree and Six Months Ended SeptemberJune 30, 20172020 and 20162019
6
 
Notes to Consolidated Financial Statements
8
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
2024
Item 3.
Quantitative and Qualitative Disclosures about Market Risk
3344
Item 4.
Controls and Procedures
3344
   
PART II. OTHER INFORMATION
Item 1.
Legal Proceedings
3445
Item 1A.
Risk Factors
3445
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
3446
Item 5.
Other Information
3446
Item 6.
Exhibits
3546
INDEX TO EXHIBITS
3647
SIGNATURES
3748

INFORMATION REGARDING FORWARD-LOOKING DISCLOSURE
This quarterly report on Form 10-Q contains forward-looking statements. Statements in this report that are not historical facts, including statements about management’s beliefs and expectations, constitute forward-looking statements. Without limiting the generality of the foregoing, words such as “may,” “will,” “expect,” “believe,” “anticipate,” “intend,” “could,” “would,” “estimate,” “continue” or comparable terminology are intended to identify forward-looking statements. These statements are based on current plans, estimates and projections, and are subject to change based on a number of factors, including those outlined under Item 1A, Risk Factors, in our most recent annual report on Form 10-K.10-K and our quarterly reports on Form 10-Q. Forward-looking statements speak only as of the date they are made, and we undertake no obligation to update publicly any of them in light of new information or future events.
Forward-looking statements involve inherent risks and uncertainties. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. Such factors include, but are not limited to, the following:
potentialthe effects of a challenging economy for example, on the demand for our advertising and marketing services, on our clients’ financial condition and on our business or financial condition;
the outbreak of the novel coronavirus (COVID-19), including the measures to contain its spread, and the impact on the economy and demand for our services, which may precipitate or exacerbate other risks and uncertainties;
our ability to attract new clients and retain existing clients;
our ability to retain and attract key employees;
risks associated with assumptions we make in connection with our critical accounting estimates, including changes in assumptions associated with any effects of a weakened economy;
potential adverse effects if we are required to recognize impairment charges or other adverse accounting-related developments;
risks associated with the effects of global, national and regional economic and political conditions, including counterparty risks and fluctuations in economic growth rates, interest rates and currency exchange rates; and
developments from changes in the regulatory and legal environment for advertising and marketing and communications services companies around the world.world; and
failure to realize the anticipated benefits on the acquisition of the Acxiom business.
Investors should carefully consider these factors and the additional risk factors outlined in more detail under Item 1A, Risk Factors, in our most recent annual report on Form 10-K.10-K and our quarterly reports on Form 10-Q.


1

Table of Contents

PART I – FINANCIAL INFORMATION
Item 1.Financial Statements (Unaudited)
THE INTERPUBLIC GROUP OF COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in Millions, Except Per Share Amounts)
(Unaudited)
Three months ended
September 30,		 Nine months ended
September 30,		Three months ended
June 30,		 Six months ended
June 30,
2017 2016 2017 20162020 2019 2020 2019
REVENUE$1,902.6
 $1,922.2
 $5,541.4
 $5,582.1
REVENUE:       
Net revenue$1,853.4
 $2,125.9
 $3,825.5
 $4,130.7
Billable expenses172.3
 394.3
 560.0
 750.7
Total revenue2,025.7
 2,520.2
 4,385.5
 4,881.4
              
OPERATING EXPENSES:              
Salaries and related expenses1,227.6
 1,228.0
 3,742.3
 3,726.3
1,306.1
 1,381.2
 2,728.9
 2,802.3
Office and general expenses455.9
 486.2
 1,343.8
 1,400.5
Office and other direct expenses317.0
 387.3
 695.2
 776.5
Billable expenses172.3
 394.3
 560.0
 750.7
Cost of services1,795.4
 2,162.8
 3,984.1
 4,329.5
Selling, general and administrative expenses4.1
 18.1
 26.5
 59.5
Depreciation and amortization73.1
 73.0
 145.9
 144.1
Restructuring charges112.6
 2.1
 112.6
 33.9
Total operating expenses1,683.5
 1,714.2
 5,086.1
 5,126.8
1,985.2
 2,256.0
 4,269.1
 4,567.0
              
OPERATING INCOME219.1
 208.0
 455.3
 455.3
40.5
 264.2
 116.4
 314.4
              
EXPENSES AND OTHER INCOME:              
Interest expense(21.0) (21.7) (67.6) (68.8)(49.8) (51.6) (94.6) (101.4)
Interest income4.1
 4.7
 14.0
 16.1
5.9
 7.7
 16.6
 15.5
Other (expense) income, net(9.9) 5.3
 (24.5) (13.5)
Other expense, net(21.5) (3.8) (43.3) (10.7)
Total (expenses) and other income(26.8) (11.7) (78.1) (66.2)(65.4) (47.7) (121.3) (96.6)
              
Income before income taxes192.3
 196.3
 377.2
 389.1
(Loss) Income before income taxes(24.9) 216.5
 (4.9) 217.8
Provision for income taxes42.5
 63.8
 115.8
 91.9
19.0
 43.6
 36.2
 54.1
Income of consolidated companies149.8
 132.5
 261.4
 297.2
Equity in net (loss) income of unconsolidated affiliates(1.0) 0.2
 0.1
 (1.6)
NET INCOME148.8
 132.7
 261.5
 295.6
(Loss) Income of consolidated companies(43.9) 172.9
 (41.1) 163.7
Equity in net loss of unconsolidated affiliates0.0
 (0.1) (0.2) (0.4)
NET (LOSS) INCOME(43.9) 172.8
 (41.3) 163.3
Net (income) loss attributable to noncontrolling interests(2.6) (4.1) 0.9
 (4.7)(1.7) (3.3) 0.4
 (1.8)
NET INCOME AVAILABLE TO IPG COMMON STOCKHOLDERS$146.2
 $128.6
 $262.4
 $290.9
NET (LOSS) INCOME AVAILABLE TO IPG COMMON STOCKHOLDERS$(45.6) $169.5
 $(40.9) $161.5
              
Earnings per share available to IPG common stockholders:       
(Loss) Earnings per share available to IPG common stockholders:       
Basic$0.38
 $0.32
 $0.67
 $0.73
$(0.12) $0.44
 $(0.11) $0.42
Diluted$0.37
 $0.32
 $0.66
 $0.71
$(0.12) $0.43
 $(0.11) $0.41
              
Weighted-average number of common shares outstanding:              
Basic389.5
 397.7
 391.2
 399.5
389.4
 386.2
 388.5
 385.4
Diluted397.2
 407.9
 398.6
 408.8
389.4
 391.2
 388.5
 390.1
       
Dividends declared per common share$0.18
 $0.15
 $0.54
 $0.45
The accompanying notes are an integral part of these unaudited financial statements.


2

Table of Contents

THE INTERPUBLIC GROUP OF COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Amounts in Millions)
(Unaudited)
Three months ended
September 30,		 Nine months ended
September 30,		Three months ended
June 30,		 Six months ended
June 30,
2017 2016 2017 20162020 2019 2020 2019
NET INCOME$148.8
 $132.7
 $261.5
 $295.6
NET (LOSS) INCOME$(43.9) $172.8
 $(41.3) $163.3
              
OTHER COMPREHENSIVE INCOME (LOSS)              
Foreign currency translation:              
Foreign currency translation adjustments29.2
 4.4
 114.0
 43.5
42.8
 4.2
 (104.8) 12.5
Reclassification adjustments recognized in net income1.5
 (4.2) 1.8
 2.3
Reclassification adjustments recognized in net (loss) income3.3
 4.6
 (0.3) 5.8
30.7
 0.2
 115.8
 45.8
46.1
 8.8
 (105.1) 18.3
       
Available-for-sale securities:       
Changes in fair value of available-for-sale securities(0.1) 0.2
 0.0
 0.4
Recognition of previously unrealized gains in net income(0.7) (0.1) (0.7) (1.3)
Derivative instruments:       
Changes in fair value of derivative instruments(0.5) 0.0
 (0.9) 0.0
Recognition of previously unrealized losses in net (loss) income0.6
 0.6
 1.2
 1.2
Income tax effect0.1
 0.1
 0.1
 0.1
0.0
 (0.1) (0.1) (0.2)
(0.7) 0.2
 (0.6) (0.8)0.1
 0.5
 0.2
 1.0
       
Derivative instruments:       
Recognition of previously unrealized losses in net income0.5
 0.5
 1.6
 1.5
Income tax effect(0.2) (0.2) (0.6) (0.6)
0.3
 0.3
 1.0
 0.9
       
Defined benefit pension and other postretirement plans:              
Net actuarial gains (losses) for the period8.2
 (79.2) 9.0
 (78.4)
Amortization of unrecognized losses, transition obligation and prior service cost included in net income1.7
 1.2
 5.2
 3.7
Settlement and curtailment losses included in net income4.0
 0.1
 4.0
 0.3
Net actuarial gains for the period2.2
 0.7
 2.2
 0.7
Amortization of unrecognized losses, transition obligation and prior service cost included in net (loss) income1.8
 1.6
 3.7
 3.3
Other0.0
 0.0
 (0.6) 0.0
(0.1) 0.6
 (1.4) 0.3
Income tax effect(2.8) 13.0
 (3.4) 12.5
(0.9) (0.1) (1.2) (0.2)
11.1
 (64.9) 14.2
 (61.9)3.0
 2.8
 3.3
 4.1
       
Other comprehensive income (loss), net of tax41.4
 (64.2) 130.4
 (16.0)49.2
 12.1
 (101.6) 23.4
TOTAL COMPREHENSIVE INCOME190.2
 68.5
 391.9
 279.6
TOTAL COMPREHENSIVE INCOME (LOSS)5.3
 184.9
 (142.9) 186.7
Less: comprehensive income (loss) attributable to noncontrolling interests2.5
 5.4
 (0.3) 5.9
1.3
 3.6
 (2.9) 2.0
COMPREHENSIVE INCOME ATTRIBUTABLE TO IPG$187.7
 $63.1
 $392.2
 $273.7
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO IPG$4.0
 $181.3
 $(140.0) $184.7


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


3

Table of Contents

THE INTERPUBLIC GROUP OF COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Amounts in Millions)
(Unaudited)
September 30,
2017		 December 31,
2016		June 30,
2020		 December 31,
2019
ASSETS:      
Cash and cash equivalents$704.9
 $1,097.6
$1,085.4
 $1,192.2
Accounts receivable, net of allowance of $45.8 and $55.7, respectively3,696.1
 4,389.7
Expenditures billable to clients1,742.3
 1,518.1
Accounts receivable, net of allowance of $81.3 and $40.2, respectively3,146.6
 5,209.2
Accounts receivable, billable to clients1,463.7
 1,934.1
Assets held for sale8.3
 203.2
26.6
 22.8
Other current assets312.2
 229.4
492.0
 412.4
Total current assets6,463.8
 7,438.0
6,214.3
 8,770.7
Property and equipment, net of accumulated depreciation of $1,045.5
and $961.6, respectively		637.5
 622.0
Property and equipment, net of accumulated depreciation and amortization of $1,163.7 and $1,116.4, respectively717.8
 778.1
Deferred income taxes270.9
 220.3
287.7
 252.1
Goodwill3,799.9
 3,674.4
4,842.4
 4,894.4
Other intangible assets968.1
 1,014.3
Operating lease right-of-use assets1,435.8
 1,574.4
Other non-current assets544.0
 530.5
430.8
 467.9
TOTAL ASSETS$11,716.1
 $12,485.2
$14,896.9
 $17,751.9
      
LIABILITIES:      
Accounts payable$5,561.1
 $6,303.6
$4,328.1
 $7,205.4
Accrued liabilities550.7
 794.0
599.3
 742.8
Contract liabilities557.6
 585.6
Short-term borrowings511.8
 85.7
51.9
 52.4
Current portion of long-term debt301.9
 323.9
503.0
 502.0
Current portion of operating leases258.5
 267.2
Liabilities held for sale20.8
 198.8
68.1
 65.0
Total current liabilities6,946.3
 7,706.0
6,366.5
 9,420.4
Long-term debt1,285.0
 1,280.7
3,411.7
 2,771.9
Non-current operating leases1,347.7
 1,429.6
Deferred compensation457.2
 480.7
375.5
 425.0
Other non-current liabilities749.4
 708.3
749.2
 714.7
TOTAL LIABILITIES9,437.9
 10,175.7
12,250.6
 14,761.6
      
Redeemable noncontrolling interests (see Note 4)238.0
 252.8
Redeemable noncontrolling interests (see Note 5)155.2
 164.7
      
STOCKHOLDERS’ EQUITY:      
Common stock39.9
 39.4
38.9
 38.7
Additional paid-in capital1,235.7
 1,199.2
996.3
 977.3
Retained earnings1,849.8
 1,804.3
2,444.3
 2,689.9
Accumulated other comprehensive loss, net of tax(832.7) (962.5)(1,029.1) (930.0)
2,292.7
 2,080.4
Less: Treasury stock(279.3) (63.3)
Total IPG stockholders’ equity2,013.4
 2,017.1
2,450.4
 2,775.9
Noncontrolling interests26.8
 39.6
40.7
 49.7
TOTAL STOCKHOLDERS’ EQUITY2,040.2
 2,056.7
2,491.1
 2,825.6
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY$11,716.1
 $12,485.2
$14,896.9
 $17,751.9
 
The accompanying notes are an integral part of these unaudited financial statements.


4

Table of Contents

THE INTERPUBLIC GROUP OF COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in Millions)
(Unaudited)
Nine months ended
September 30,		Six months ended
June 30,
2017 20162020 2019
CASH FLOWS FROM OPERATING ACTIVITIES:      
Net income$261.5
 $295.6
Adjustments to reconcile net income to net cash used in operating activities:   
Depreciation and amortization of fixed assets and intangible assets124.5
 117.5
Net (loss) income$(41.3) $163.3
Adjustments to reconcile net (loss) income to net cash used in operating activities:   
Depreciation and amortization145.9
 144.1
Provision for uncollectible receivables9.5
 13.6
39.4
 6.7
Amortization of restricted stock and other non-cash compensation59.8
 59.0
35.8
 44.1
Net amortization of bond discounts and deferred financing costs4.2
 4.2
5.3
 4.6
Deferred income tax (benefit) provision(1.6) 2.6
Deferred income tax provision(21.1) (3.0)
Net losses on sales of businesses20.9
 16.1
43.2
 11.8
Non-cash restructuring charges67.6
 11.7
Other16.1
 29.8
11.6
 (1.0)
Changes in assets and liabilities, net of acquisitions and divestitures, providing (using) cash:      
Accounts receivable875.8
 666.3
1,871.2
 743.3
Expenditures billable to clients(165.9) (241.2)
Accounts receivable, billable to clients418.9
 (75.4)
Other current assets(48.2) (20.6)(75.0) (62.1)
Accounts payable(986.4) (688.4)(2,731.4) (676.9)
Accrued liabilities(287.8) (207.9)(109.4) (92.2)
Contract liabilities(10.8) 50.2
Other non-current assets and liabilities(21.4) (73.5)(14.1) (70.2)
Net cash used in operating activities(139.0) (26.9)
Net cash (used in) provided by operating activities(364.2) 199.0
CASH FLOWS FROM INVESTING ACTIVITIES:      
Capital expenditures(108.7) (114.5)(71.9) (80.1)
Acquisitions, net of cash acquired(22.6) (47.9)(2.5) (0.6)
Other investing activities(9.2) (5.1)(18.9) 2.8
Net cash used in investing activities(140.5) (167.5)(93.3) (77.9)
CASH FLOWS FROM FINANCING ACTIVITIES:      
Repurchases of common stock(216.0) (193.3)
Proceeds from long-term debt646.2
 0.0
Net increase in short-term borrowings2.5
 132.3
Exercise of stock options0.0
 0.6
Common stock dividends(211.2) (179.6)(199.2) (181.4)
Acquisition-related payments(49.1) (36.7)(32.3) (13.0)
Tax payments for employee shares withheld(38.4) (22.7)(21.8) (22.0)
Repayments of long-term debt(23.6) (1.1)
Distributions to noncontrolling interests(16.9) (10.8)(9.4) (8.1)
Net increase (decrease) in short-term borrowings429.9
 (33.9)
Exercise of stock options12.1
 10.2
Repayment of long-term debt(0.1) (100.1)
Other financing activities0.1
 1.0
(8.2) 0.0
Net cash used in financing activities(113.1) (466.9)
Net cash provided by (used in) financing activities377.7
 (191.7)
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash0.4
 50.7
(28.9) 10.3
Net decrease in cash, cash equivalents and restricted cash(392.2) (610.6)(108.7) (60.3)
Cash, cash equivalents and restricted cash at beginning of period1,100.2
 1,506.1
1,195.7
 677.2
Cash, cash equivalents and restricted cash at end of period$708.0
 $895.5
$1,087.0
 $616.9
The accompanying notes are an integral part of these unaudited financial statements.


5

Table of Contents

THE INTERPUBLIC GROUP OF COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Amounts in Millions)
(Unaudited)
 
 
Common Stock
 
Additional
Paid-In
Capital
 
Retained
Earnings
 
Accumulated 
Other
Comprehensive
Loss, Net of Tax
 
Total IPG
Stockholders’
Equity
 
Noncontrolling
Interests
 
Total
Stockholders’
Equity
 Shares Amount 
Balance at March 31, 2020389.5
 $38.9
 $981.2
 $2,591.1
 $(1,078.7) $2,532.5
 $42.7
 $2,575.2
Net (loss) income      (45.6)   (45.6) 1.7
 (43.9)
Other comprehensive income (loss)        49.6
 49.6
 (0.4) 49.2
Reclassifications related to redeemable noncontrolling interests            0.2
 0.2
Distributions to noncontrolling interests            (3.8) (3.8)
Change in redemption value of redeemable noncontrolling interests      —
   —
   —
Common stock dividends ($0.255 per share)      (101.2)   (101.2)   (101.2)
Stock-based compensation0.2
 0.1
 15.5
     15.6
   15.6
Exercise of stock options0.0
 0.0
 0.2
     0.2
   0.2
Shares withheld for taxes(0.1) (0.1) (0.6)     (0.7)   (0.7)
Other            0.3
 0.3
Balance at June 30, 2020389.6
 $38.9
 $996.3
 $2,444.3
 $(1,029.1) $2,450.4
 $40.7
 $2,491.1

 
 
Common Stock
 
Additional
Paid-In
Capital
 
Retained
Earnings
 
Accumulated 
Other
Comprehensive
Loss, Net of Tax
 
Treasury
Stock
 
Total IPG
Stockholders’
Equity
 
Noncontrolling
Interests
 
Total
Stockholders’
Equity
 Shares Amount 
Balance at December 31, 2016394.3
 $39.4
 $1,199.2
 $1,804.3
 $(962.5) $(63.3) $2,017.1
 $39.6
 $2,056.7
Net income      262.4
     262.4
 (0.9) 261.5
Other comprehensive income        129.8
   129.8
 0.6
 130.4
Reclassifications related to redeemable
    noncontrolling interests
            

 7.3
 7.3
Distributions to noncontrolling interests              (17.5) (17.5)
Change in redemption value of redeemable
    noncontrolling interests
      (4.6)     (4.6)   (4.6)
Repurchases of common stock          (216.0) (216.0)   (216.0)
Common stock dividends      (211.2)     (211.2)   (211.2)
Stock-based compensation5.6
 0.6
 62.9
       63.5
   63.5
Exercise of stock options1.1
 0.1
 12.1
       12.2
   12.2
Shares withheld for taxes(1.6) (0.2) (38.5)       (38.7)   (38.7)
Other      (1.1)     (1.1) (2.3) (3.4)
Balance at September 30, 2017399.4
 $39.9
 $1,235.7
 $1,849.8
 $(832.7) $(279.3) $2,013.4
 $26.8
 $2,040.2
 
 
Common Stock
 
Additional
Paid-In
Capital
 
Retained
Earnings
 
Accumulated 
Other
Comprehensive
Loss, Net of Tax
 
Total IPG
Stockholders’
Equity
 
Noncontrolling
Interests
 
Total
Stockholders’
Equity
 Shares Amount 
Balance at December 31, 2019387.0
 $38.7
 $977.3
 $2,689.9
 $(930.0) $2,775.9
 $49.7
 $2,825.6
Cumulative effect of accounting change
      (6.6)   (6.6)   (6.6)
Net loss      (40.9)   (40.9) (0.4) (41.3)
Other comprehensive loss        (99.1) (99.1) (2.5) (101.6)
Reclassifications related to redeemable noncontrolling interests            3.0
 3.0
Distributions to noncontrolling interests            (9.4) (9.4)
Change in redemption value of redeemable noncontrolling interests      3.1
   3.1
   3.1
Common stock dividends ($0.510 per share)      (201.2)   (201.2)   (201.2)
Stock-based compensation3.6
 0.4
 40.6
     41.0
   41.0
Exercise of stock options0.0
 0.0
 0.4
     0.4
   0.4
Shares withheld for taxes(1.0) (0.2) (22.0)     (22.2)   (22.2)
Other            0.3
 0.3
Balance at June 30, 2020389.6
 $38.9
 $996.3
 $2,444.3
 $(1,029.1) $2,450.4
 $40.7
 $2,491.1

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



6

Table of Contents

THE INTERPUBLIC GROUP OF COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY – (CONTINUED)
(Amounts in Millions)
(Unaudited)
 
 
Common Stock
 
Additional
Paid-In
Capital
 
Retained
Earnings
 
Accumulated 
Other
Comprehensive
Loss, Net of Tax
 
Total IPG
Stockholders’
Equity
 
Noncontrolling
Interests
 
Total
Stockholders’
Equity
 Shares Amount 
Balance at March 31, 2019386.2
 $38.6
 $903.3
 $2,303.1
 $(929.7) $2,315.3
 $39.3
 $2,354.6
Net income      169.5
   169.5
 3.3
 172.8
Other comprehensive income        11.8
 11.8
 0.3
 12.1
Reclassifications related to redeemable noncontrolling interests            (3.0) (3.0)
Distributions to noncontrolling interests            (5.6) (5.6)
Change in redemption value of redeemable noncontrolling interests    

 1.1
   1.1
   1.1
Common stock dividends ($0.235 per share)      (90.8)   (90.8)   (90.8)
Stock-based compensation0.2
 0.1
 18.3
     18.4
   18.4
Exercise of stock options0.1
 0.0
 0.0
     0.0
   0.0
Shares withheld for taxes(0.1) (0.1) (0.2)     (0.3)   (0.3)
Other    0.0
 (1.1)   (1.1) 0.2
 (0.9)
Balance at June 30, 2019386.4
 $38.6
 $921.4
 $2,381.8
 $(917.9) $2,423.9
 $34.5
 $2,458.4

 Common Stock 
Additional
Paid-In
Capital
 
Retained
Earnings
 
Accumulated 
Other
Comprehensive
Loss, Net of Tax
 
Treasury
Stock
 
Total IPG
Stockholders’
Equity
 
Noncontrolling
Interests
 
Total
Stockholders’
Equity
 Shares Amount 
Balance at December 31, 2015404.4
 $40.4
 $1,404.1
 $1,437.6
 $(845.6) $(71.0) $1,965.5
 $36.3
 $2,001.8
Net income      290.9
     290.9
 4.7
 295.6
Other comprehensive (loss) income        (17.2)   (17.2) 1.2
 (16.0)
Reclassifications related to redeemable
    noncontrolling interests
              0.5
 0.5
Distributions to noncontrolling interests              (10.8) (10.8)
Change in redemption value of redeemable
    noncontrolling interests
      (1.3)     (1.3)   (1.3)
Repurchases of common stock          (193.3) (193.3)   (193.3)
Common stock dividends      (179.6)     (179.6)   (179.6)
Stock-based compensation3.5
 0.3
 88.2
       88.5
   88.5
Exercise of stock options1.2
 0.1
 10.2
       10.3
   10.3
Shares withheld for taxes(1.1) (0.1) (22.9)       (23.0)   (23.0)
Other    1.6
 (1.0)     0.6
 2.2
 2.8
Balance at September 30, 2016408.0
 $40.7
 $1,481.2
 $1,546.6
 $(862.8) $(264.3) $1,941.4
 $34.1
 $1,975.5
 Common Stock 
Additional
Paid-In
Capital
 
Retained
Earnings
 
Accumulated 
Other
Comprehensive
Loss, Net of Tax
 
Total IPG
Stockholders’
Equity
 
Noncontrolling
Interests
 
Total
Stockholders’
Equity
 Shares Amount 
Balance at December 31, 2018383.6
 $38.3
 $895.9
 $2,400.1
 $(941.1) $2,393.2
 $39.6
 $2,432.8
Cumulative effect of accounting change      2.2
   2.2
   2.2
Net income      161.5
   161.5
 1.8
 163.3
Other comprehensive income        23.2
 23.2
 0.2
 23.4
Reclassifications related to redeemable noncontrolling interests            (0.4) (0.4)
Distributions to noncontrolling interests            (8.1) (8.1)
Change in redemption value of redeemable noncontrolling interests    

 1.4
   1.4
   1.4
Common stock dividends ($0.470 per share)      (181.4)   (181.4)   (181.4)
Stock-based compensation3.6
 0.4
 48.1
     48.5
   48.5
Exercise of stock options0.1
 0.0
 0.6
     0.6
   0.6
Shares withheld for taxes(0.9) (0.1) (22.2)     (22.3)   (22.3)
Other    (1.0) (2.0)   (3.0) 1.4
 (1.6)
Balance at June 30, 2019386.4
 $38.6
 $921.4
 $2,381.8
 $(917.9) $2,423.9
 $34.5
 $2,458.4

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


7

Table of Contents

Notes to Consolidated Financial Statements
(Amounts in Millions, Except Per Share Amounts)
(Unaudited)
Note 1:  Basis of Presentation
The unaudited Consolidated Financial Statements have been prepared by The Interpublic Group of Companies, Inc. and its subsidiaries (the "Company," "IPG," "we," "us"“Company,” “IPG,” “we,” “us” or "our"“our”) in accordance with accounting principles generally accepted in the United States of America ("(“U.S. GAAP"GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (the "SEC"“SEC”) for reporting interim financial information on Form 10-Q. Accordingly, they do not include certain information and disclosures required for complete financial statements. The preparationeffects of the COVID-19 pandemic have negatively impacted and will likely continue to negatively impact our results of operations, cash flows and financial statements in conformity with U.S. GAAP requires us to make judgments,position. The Company’s Consolidated Financial Statements presented herein reflect the latest estimates and assumptions and estimatesmade by management that affect the reported amounts of assets and liabilities and related disclosures as of the date of the consolidated financial statements and reported amounts of revenue and disclosed. expenses during the reporting periods presented. The Company believes it has used reasonable estimates and assumptions to assess the fair values of goodwill, long-lived assets and indefinite-lived intangible assets; assessment of the annual effective tax rate; valuation of deferred income taxes and the allowance for doubtful accounts.
Actual results could differ from these estimates and assumptions. The consolidated results for interim periods are not necessarily indicative of results for the full year and should be read in conjunction with our 2016 Annual Report on Form 10-K.10-K for the year ended December 31, 2019 (the “2019 Annual Report”).
Cost of services is comprised of the expenses of our revenue-producing reportable segments, Integrated Agency Networks (“IAN”) and Constituency Management Group (“CMG”), including salaries and related expenses, office and other direct expenses and billable expenses, and includes an allocation of the centrally managed expenses of our Corporate and other group. Office and other direct expenses include rent expense, professional fees, certain expenses incurred by our staff in servicing our clients and other costs directly attributable to client engagements.
Selling, general and administrative expenses are primarily the unallocated expenses of our Corporate and other group, excluding depreciation and amortization.
Depreciation and amortization of fixed assets and intangible assets of the Company is disclosed as a separate operating expense.
Restructuring charges in the current period relate to the Company's implementation of restructuring actions to lower our operating expenses structurally and permanently relative to revenue and to accelerate the transformation of our business, as discussed further in Note 7. Restructuring charges mainly include severance and termination costs and lease impairments costs.
Segment information for the prior period has been recast to conform to the current-period presentation.
In the opinion of management, these unaudited Consolidated Financial Statements include all adjustments, consisting only of normal and recurring adjustments necessary for a fair statement of the information for each period contained therein. Certain reclassifications and immaterial revisions have been made to prior-period financial statements to conform to the current-period presentation.



8
Table of Contents
Notes to Consolidated Financial Statements – (continued)
(Amounts in Millions, Except Per Share Amounts)
(Unaudited)

Note 2:  Revenue
Disaggregation of Revenue
We have two reportable segments as of June 30, 2020: IAN and CMG, as further discussed in Note 11. IAN principally generates revenue from providing advertising and media services as well as a comprehensive array of global communications, marketing services and data management. CMG generates revenue from a comprehensive array of global public relations and communication services as well as providing events, sports and entertainment marketing, corporate and brand identity, and strategic marketing consulting.
Our agencies are located in over 100 countries, including every significant world market. Our geographic revenue breakdown is listed below.
 Three months ended
June 30,		 Six months ended
June 30,
Total revenue:2020 2019 2020 2019
United States$1,309.6
 $1,595.1
 $2,879.2
 $3,130.2
International:       
United Kingdom159.3
 209.8
 356.4
 416.0
Continental Europe164.2
 209.4
 334.0
 388.2
Asia Pacific200.4
 258.2
 411.8
 490.6
Latin America65.7
 101.8
 152.5
 191.1
Other126.5
 145.9
 251.6
 265.3
Total International716.1
 925.1
 1,506.3
 1,751.2
Total Consolidated$2,025.7
 $2,520.2
 $4,385.5
 $4,881.4
 Three months ended
June 30,		 Six months ended
June 30,
Net revenue:2020 2019 2020 2019
United States$1,227.2
 $1,337.7
 $2,547.2
 $2,651.8
International:       
United Kingdom147.2
 180.4
 312.9
 350.7
Continental Europe149.7
 183.3
 295.7
 340.1
Asia Pacific162.6
 205.1
 321.4
 383.1
Latin America62.3
 92.1
 141.6
 172.4
Other104.4
 127.3
 206.7
 232.6
Total International626.2
 788.2
 1,278.3
 1,478.9
Total Consolidated$1,853.4
 $2,125.9
 $3,825.5
 $4,130.7
IANThree months ended
June 30,		 Six months ended
June 30,
Total revenue:2020 2019 2020 2019
United States$1,078.9
 $1,206.8
 $2,272.2
 $2,406.9
International593.6
 752.8
 1,219.1
 1,414.9
Total IAN$1,672.5
 $1,959.6
 $3,491.3
 $3,821.8
        
Net revenue:       
United States$1,048.4
 $1,127.0
 $2,160.3
 $2,241.2
International537.3
 674.1
 1,089.9
 1,266.0
Total IAN$1,585.7
 $1,801.1
 $3,250.2
 $3,507.2


9
Table of Contents
Notes to Consolidated Financial Statements – (continued)
(Amounts in Millions, Except Per Share Amounts)
(Unaudited)

CMGThree months ended
June 30,		 Six months ended
June 30,
Total revenue:2020 2019 2020 2019
United States$230.7
 $388.3
 $607.0
 $723.3
International122.5
 172.3
 287.2
 336.3
Total CMG$353.2
 $560.6
 $894.2
 $1,059.6
        
Net revenue:       
United States$178.8
 $210.7
 $386.9
 $410.6
International88.9
 114.1
 188.4
 212.9
Total CMG$267.7
 $324.8
 $575.3
 $623.5

Contract Balances
The following table provides information about receivables, contract assets and contract liabilities from contracts with customers.
 June 30,
2020		 December 31,
2019
Accounts receivable, net of allowance of $81.3 and $40.2, respectively$3,146.6
 $5,209.2
Accounts receivable, billable to clients1,463.7
 1,934.1
Contract assets46.7
 63.0
Contract liabilities (deferred revenue)557.6
 585.6

Contract assets are primarily comprised of contract incentives that are generally satisfied annually under the terms of our contracts and are transferred to accounts receivable when the right to payment becomes unconditional. Contract liabilities relate to advance consideration received from customers under the terms of our contracts primarily related to reimbursements of third-party expenses, whether we act as principal or agent, and to a lesser extent, periodic retainer fees, both of which are generally recognized shortly after billing.
The majority of our contracts are for periods of one year or less with the exception of our data management contracts. For those contracts with a term of more than one year, we had approximately $696.0 of unsatisfied performance obligations as of June 30, 2020, which will be recognized as services are performed over the remaining contractual terms through 2026.


10
Table of Contents
Notes to Consolidated Financial Statements – (continued)
(Amounts in Millions, Except Per Share Amounts)
(Unaudited)

Note 2:3:  Debt and Credit Arrangements
Long-Term Debt
A summary of the carrying amounts and fair values of our long-term debt is listed below.
 
Effective
Interest Rate
 September 30,
2017		 December 31,
2016
Book
Value
 
Fair
Value 1
 
Book
Value
 
Fair
Value 1
2.25% Senior Notes due 2017 (less unamortized issuance costs of $0.1)2.30% $299.9
 $300.2
 $299.4
 $301.4
4.00% Senior Notes due 2022 (less unamortized discount and issuance costs of $1.4 and $1.1, respectively)4.13% 247.5
 258.5
 247.0
 258.4
3.75% Senior Notes due 2023 (less unamortized discount and issuance costs of $0.8 and $2.2, respectively)4.32% 497.0
 520.5
 496.6
 503.3
4.20% Senior Notes due 2024 (less unamortized discount and issuance costs of $0.7 and $2.7, respectively)4.24% 496.6
 527.0
 496.2
 511.6
Other notes payable and capitalized leases  45.9
 45.9
 65.4
 65.4
Total long-term debt  1,586.9
   1,604.6
  
Less: current portion  301.9
   323.9
  
Long-term debt, excluding current portion  $1,285.0
   $1,280.7
  
  
Effective
Interest Rate
 June 30,
2020		 December 31,
2019
 
 3.50% Senior Notes due 2020 (less unamortized discount and issuance costs of $0.1 and $0.4, respectively)3.89% $499.5
 $498.5
 3.75% Senior Notes due 2021 (less unamortized discount and issuance costs of $0.2 and $1.3, respectively)3.98% 498.5
 497.9
 4.00% Senior Notes due 2022 (less unamortized discount and issuance costs of $0.6 and $0.4, respectively)4.13% 249.0
 248.7
 3.75% Senior Notes due 2023 (less unamortized discount and issuance costs of $0.4 and $1.1, respectively)4.32% 498.5
 498.2
 4.20% Senior Notes due 2024 (less unamortized discount and issuance costs of $0.4 and $1.6, respectively)4.24% 498.0
 497.8
 4.65% Senior Notes due 2028 (less unamortized discount and issuance costs of $1.4 and $3.7, respectively)4.78% 494.9
 494.6
 4.75% Senior Notes due 2030 (less unamortized discount and issuance costs of $3.7 and $6.0, respectively)4.92% 640.3
 —
 5.40% Senior Notes due 2048 (less unamortized discount and issuance costs of $2.7 and $5.3, respectively)5.48% 492.0
 491.9
 Other notes payable and capitalized leases  44.0
 46.3
 Total long-term debt  3,914.7
 3,273.9
 Less: current portion  503.0
 502.0
 Long-term debt, excluding current portion  $3,411.7
 $2,771.9

As of June 30, 2020 and December 31, 2019, the estimated fair value of the Company's long-term debt was $4,299.4 and $3,565.5, respectively. Refer to Note 12 for details.
Debt Transactions
1See Note 11 for information on the fair value measurement of our long-term debt.
4.75% Senior Notes Due 2030
On March 30, 2020, we issued a total of $650.0 in aggregate principal amount of 4.75% senior unsecured notes (the “4.75% Senior Notes”) due March 30, 2030. Upon issuance, the 4.75% Senior Notes were reflected in our unaudited Consolidated Balance Sheets at $640.0, net of discount of $3.8 and net of capitalized debt issuance costs, including commissions and offering expenses of $6.2, both of which will be amortized in interest expense through the maturity date using the effective method. Interest is payable semi-annually in arrears on March 30th and September 30th of each year, commencing on September 30, 2020.
Consistent with our other outstanding debt securities, the newly issued 4.75% Senior Notes include covenants that, among other things, limit our liens and the liens of certain of our consolidated subsidiaries, but do not require us to maintain any financial ratios or specified levels of net worth or liquidity. We may redeem the 4.75% Senior Notes at any time in whole, or from time to time in part, in accordance with the provisions of the indenture, including the supplemental indenture, under which the 4.75% Senior Notes were issued. Additionally, upon the occurrence of a change of control repurchase event with respect to the 4.75% Senior Notes, each holder of the 4.75% Senior Notes has the right to require the Company to purchase that holder’s 4.75% Senior Notes at a price equal to 101% of the principal amount thereof, plus accrued and unpaid interest, unless the Company has exercised its option to redeem all the 4.75% Senior Notes.
Credit AgreementsArrangements
Credit Agreement
We maintain a committed corporate credit facility, originally dated as of July 18, 2008, which has been amended and restated from time to time (the "Credit Agreement"). We use our Credit Agreement to increase our financial flexibility, to provide letters of credit primarily to support obligations of our subsidiaries and to support our commercial paper program. The Credit Agreement is a revolving facility, expiring in October 2020,November 2024, under which amounts borrowed by us or any of our subsidiaries designated under the Credit Agreement may be repaid and reborrowed, subject to an aggregate lending limit of $1,000.0,$1,500.0, or the equivalent in

11
Table of Contents
Notes to Consolidated Financial Statements – (continued)
(Amounts in Millions, Except Per Share Amounts)
(Unaudited)

other specified currencies. The Company has the ability to increase the commitments under the Credit Agreement from time to time by an additional amount of up to $250.0, provided the Company receives commitments for such increases and satisfies certain other conditions. The aggregate available amount of letters of credit outstanding may decrease or increase, subject to a sublimit on letters of credit of $200.0,$50.0, or the equivalent in other specified currencies. Our obligations under the Credit Agreement are unsecured. As of SeptemberJune 30, 2017,2020, there were no0 borrowings under the Credit Agreement; however, we had $8.4$8.3 of letters of credit under the Credit Agreement, which reduced our total availability to $991.6.$1,491.7. We were in compliance with all of our covenants in the Credit Agreement as of SeptemberJune 30, 2017.2020.
364-Day Credit Facility
On October 25, 2017,March 27, 2020, we amendedentered into an agreement for a 364-day revolving credit facility (the "364-Day Credit Facility") that matures on March 26, 2021. The 364-Day Credit Facility is a revolving facility, under which amounts borrowed by us may be repaid and restatedreborrowed, subject to an aggregate lending limit of $500.0. The cost structure of the 364-Day Credit Agreement is based on the Company’s current credit ratings. The applicable margin for Base Rate Advances (as defined in the 364-Day Credit Facility) is 0.250%, the applicable margin for Eurodollar Rate Advances (as defined in the 364-Day Credit Facility) is 1.250%, and the facility fee payable on a lender’s revolving commitment is 0.250%. In addition, the 364-Day Credit Facility includes covenants that, among other things, (i) limit our liens and the liens of our consolidated subsidiaries, and (ii) limit subsidiary debt. The 364-Day Credit Agreement. See Note 14Facility also contains a financial covenant that requires us to maintain, on a consolidated basis as of the end of each fiscal quarter, a leverage ratio for further discussion.the four quarters then ended. The leverage ratio and other covenants set forth in the 364-Day Credit Facility are identical to the covenants contained in the Company’s existing Credit Agreement, which remains in full effect. As of June 30, 2020, there were 0 borrowings under the 364-Day Credit Facility, and we were in compliance with all of our covenants in the 364-Day Credit Facility.

8
TableUncommitted Lines of Contents
Notes to Consolidated Financial Statements – (continued)
(Amounts in Millions, Except Per Share Amounts)
(Unaudited)


Credit
We also have uncommitted lines of credit with various banks whichthat permit borrowings at variable interest rates and whichthat are primarily used to fund working capital needs. We have guaranteed the repayment of some of these borrowings made by certain subsidiaries. If we lose access to these credit lines, we would have to provide funding directly to some of our international operations. As of SeptemberJune 30, 2017,2020, the Company had uncommitted lines of credit in an aggregate amount of $916.8,$928.4, under which we had outstanding borrowings of $152.5$51.9 classified as short-term borrowings on our Consolidated Balance Sheet. The average amount outstanding during the thirdsecond quarter of 20172020 was $124.7,$76.4, with a weighted-average interest rate of approximately 3.1%3.7%.
Commercial Paper
In June 2017, theThe Company established a commercial paper program under which the Company wasis authorized to issue unsecured commercial paper up to a maximum aggregate amount outstanding at any time of $1,000.0.$1,500.0. Borrowings under the program are supported by the Credit Agreement described above. Proceeds of the commercial paper will beare used for working capital and general corporate purposes, including the repayment of maturing indebtedness and other short-term liquidity needs. The maturities of the commercial paper vary but may not exceed 397 days from the date of issue. As of SeptemberJune 30, 2017, the Company had outstanding2020, there was 0 commercial paper of $359.3 classified as short-term borrowings on our Consolidated Balance Sheet.outstanding. The average amount outstanding under the program during the thirdsecond quarter of 20172020 was $488.2,$365.7, with a weighted-average interest rate of 1.4%approximately 1.3% and a weighted-average maturity of fourteen12 days.
On October 25, 2017, the Company increased the maximum aggregate amount outstanding at any time under our commercial paper program from $1,000.0 to $1,500.0. See Note 14 for further discussion.


12
Note 3:  Earnings Per Share
The following sets forth basic and diluted earnings per common share available to IPG common stockholders.
 Three months ended
September 30,		 Nine months ended
September 30,
 2017 2016 2017 2016
Net income available to IPG common stockholders$146.2
 $128.6
 $262.4
 $290.9
        
Weighted-average number of common shares outstanding - basic389.5
 397.7
 391.2
 399.5
       Dilutive effect of stock options and restricted shares7.7
 10.2
 7.4
 9.3
Weighted-average number of common shares outstanding - diluted397.2
 407.9
 398.6
 408.8
        
Earnings per share available to IPG common stockholders:       
       Basic$0.38
 $0.32
 $0.67
 $0.73
       Diluted$0.37
 $0.32
 $0.66
 $0.71

Note 4:  Acquisitions
We continue to evaluate strategic opportunities to expand our industry expertise, strengthen our position in high-growth and key strategic geographical markets and industry sectors, advance our technological capabilities and improve our operational efficiency through both acquisitions and increased ownership interests in current investments. Our acquisitions typically provide for an initial payment at the time of closing and additional contingent purchase price payments based on the future performance of the acquired entity. We have entered into agreements that may require us to purchase additional equity interests in certain consolidated and unconsolidated subsidiaries. The amounts at which we record these transactions in our financial statements are based on estimates of the future financial performance of the acquired entity, the timing of the exercise of these rights, foreign currency exchange rates and other factors.
During the first nine months of 2017, we completed seven acquisitions, including a strategic communications agency based in the U.K., an independent creative agency based in the U.K., a retail branding and design firm based in the U.S., a content creation and marketing agency based in the Netherlands, an independent media agency and digital consultancy based in Finland, and an integrated marketing communications agency based in Canada. All seven of our acquisitions were included in the Integrated Agency Networks ("IAN") operating segment. During the first nine months of 2017, we recorded approximately $48.1 of goodwill and intangible assets related to our acquisitions.
During the first nine months of 2016, we completed nine acquisitions, including a product and service design consultancy based in the U.S., an integrated healthcare marketing communications agency based in the U.S., a content creation and digital agency with offices in the U.S. and the U.K., a mobile consultancy and application development agency based in the U.K., a

9
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Notes to Consolidated Financial Statements – (continued)
(Amounts in Millions, Except Per Share Amounts)
(Unaudited)



branded content production agency specializing in sportsNote 4: (Loss) Earnings Per Share
The following sets forth basic and entertainment based in Australia,diluted (loss) earnings per common share available to IPG common stockholders.
 Three months ended
June 30,		 Six Months Ended
June 30,
 2020 2019 2020 2019
Net (loss) income available to IPG common stockholders$(45.6) $169.5
 $(40.9) $161.5
        
Weighted-average number of common shares outstanding - basic389.4
 386.2
 388.5
 385.4
       Dilutive effect of stock options and restricted sharesN/A
 5.0
 N/A
 4.7
Weighted-average number of common shares outstanding - diluted389.4
 391.2
 388.5
 390.1
        
(Loss) earnings per share available to IPG common stockholders:       
       Basic$(0.12) $0.44
 $(0.11) $0.42
       Diluted$(0.12) $0.43
 $(0.11) $0.41

Weighted-average number of common shares outstanding and loss per share available to IPG common stockholders are equal on a full-service public relationsbasic and digital agency based in China, a search engine optimization and digital content marketing agency based indiluted basis for the U.K., a mobile focused digital agency based in the U.K. and a business consultancy services agency based in Australia. Of our nine acquisitions, three were included in the IAN operating segment, and six were includedmonths ended June 30, 2020, respectively, because our potentially dilutive securities are anti-dilutive as a result of the net loss available to IPG common stockholders. The potential dilutive effect of stock options and restricted shares on basic weighted-average number of common shares outstanding totaling 2.9 and 3.3 was excluded from the diluted loss per share calculation for the three and six months ended June 30, 2020, respectively.

Note 5:  Supplementary Data
Accrued Liabilities
The following table presents the components of accrued liabilities.
 June 30,
2020		 December 31,
2019
Salaries, benefits and related expenses$360.3
 $494.1
Acquisition obligations53.0
 45.7
Interest47.0
 38.8
Restructuring charges32.5
 1.6
Income taxes payable21.1
 43.2
Office and related expenses17.7
 26.9
Other67.7
 92.5
Total accrued liabilities$599.3
 $742.8



13
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Notes to Consolidated Financial Statements – (continued)
(Amounts in Millions, Except Per Share Amounts)
(Unaudited)

Other Expense, Net
Results of operations for the Constituency Management Group ("CMG") operating segment.three and six months ended June 30, 2020 and 2019 include certain items that are not directly associated with our revenue-producing operations.
 Three months ended
June 30,		 Six months ended
June 30,
 2020 2019 2020 2019
Net losses on sales of businesses$(19.9) $(3.2) $(43.2) $(11.8)
Other(1.6) (0.6) (0.1) 1.1
Total other expense, net$(21.5) $(3.8) $(43.3) $(10.7)

Net losses on sales of businesses – During the first ninethree and six months of 2016, we recorded approximately $147.9 of goodwill and intangible assetsended June 30, 2020, the amounts recognized were related to our acquisitions,sales of businesses and the classification of certain assets and liabilities, consisting primarily in CMG.
The results of operations of our acquired companies were included in our consolidated results from the closing date of each acquisition. Details of cash, paidas held for currentsale within our IAN and prior years' acquisitionsCMG reportable segments. During the three and six months ended June 30, 2019, the amounts recognized were related to sales of businesses and the classification of certain assets and liabilities, consisting primarily of accounts receivable and cash, as held for sale within our IAN reportable segment. The businesses held for sale primarily represent unprofitable, non-strategic agencies which are listed below.expected to be sold within the next twelve months.
 Nine months ended
September 30,
 2017 2016
Cost of investment: current-year acquisitions$28.1
 $61.0
Cost of investment: prior-year acquisitions50.0
 37.2
Less: net cash acquired(6.4) (13.6)
Total cost of investment71.7
 84.6
Operating payments 1
37.5
 18.7
Total cash paid for acquisitions 2
$109.2
 $103.3
Other – During the three and six months ended June 30, 2019, the amounts recognized were primarily related to a sale of an equity investment.

1Represents cash payments for amounts that have been recognized in operating expenses since the date of acquisition either relating to adjustments to estimates in excess of the initial value of contingent payments recorded or were contingent upon the future employment of the former owners of the acquired companies. Amounts are reflected in the operating section of the unaudited Consolidated Statements of Cash Flows.
2Of the total cash paid for acquisitions, $22.6 and $47.9 for the nine months ended September 30, 2017 and 2016, respectively, are classified under the investing section of the unaudited Consolidated Statements of Cash Flows, as acquisitions, net of cash acquired. These amounts relate to initial payments for new transactions. Of the total cash paid for acquisitions, $49.1 and $36.7 for the nine months ended September 30, 2017 and 2016, respectively, are classified under the financing section of the unaudited Consolidated Statements of Cash Flows as acquisition-related payments. These amounts relate to deferred payments and increases in our ownership interest for prior acquisitions.
Share Repurchase Program
On July 2, 2018, in connection with the announcement of the Acxiom acquisition, we announced that share repurchases will be suspended for a period of time in order to reduce the increased debt levels incurred in conjunction with the acquisition. As of June 30, 2020, $338.4, excluding fees, remains available for repurchase under the share repurchase programs authorized in previous years, which have no expiration date.

Redeemable Noncontrolling Interests
Many of our acquisitions include provisions under which the noncontrolling equity owners may require us to purchase additional interests in a subsidiary at their discretion. Redeemable noncontrolling interests are adjusted quarterly, if necessary, to their estimated redemption value, but not less than their initial fair value. Any adjustments to the redemption value impact retained earnings or additional paid in capital, except for foreign currency translation adjustments.
The following table presents changes in our redeemable noncontrolling interests.
 Six months ended
June 30,
 2020 2019
Balance at beginning of period$164.7
 $167.9
Change in related noncontrolling interests balance(3.1) 0.2
Changes in redemption value of redeemable noncontrolling interests:   
Additions0.0
 24.3
Redemptions(2.5) (3.1)
Redemption value adjustments(3.9) (1.0)
Balance at end of period$155.2
 $188.3

 Nine months ended
September 30,
 2017 2016
Balance at beginning of period$252.8
 $251.9
Change in related noncontrolling interests balance(9.5) (1.5)
Changes in redemption value of redeemable noncontrolling interests:   
Additions3.4
 6.8
Redemptions and other(18.5) (14.8)
Redemption value adjustments9.8
 4.5
Balance at end of period$238.0
 $246.9




1014
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Notes to Consolidated Financial Statements – (continued)
(Amounts in Millions, Except Per Share Amounts)
(Unaudited)



Note 5:  Supplementary Data6:  Income Taxes
Accrued Liabilities
The following table presentsFor the components of accrued liabilities.
 September 30,
2017		 December 31,
2016
Salaries, benefits and related expenses$341.3
 $499.0
Acquisition obligations53.2
 77.5
Office and related expenses48.8
 46.7
Interest17.0
 17.3
Other90.4
 153.5
Total accrued liabilities$550.7
 $794.0

Other (Expense) Income, Net
Results of operations for the three and nine months ended SeptemberJune 30, 2017 and 2016 include certain items that are not directly associated with2020, our revenue-producing operations.
 Three months ended
September 30,		 Nine months ended
September 30,
 2017 2016 2017 2016
Net (losses) gains on sales of businesses and investments$(6.2) $3.9
 $(18.3) $(14.6)
Other (expense) income, net(3.7) 1.4
 (6.2) 1.1
Total other (expense) income, net$(9.9) $5.3
 $(24.5) $(13.5)
Net (Losses) Gains on Sales of Businesses and Investments – During the three and nine months ended September 30, 2017, the amounts recognized are primarily related to sales of businesses and the classification of certain assets and liabilities, consisting primarily of accounts receivable and accounts payable, respectively, as held for sale within our IAN operating segment. During the three and nine months ended September 30, 2016, the amounts recognized are primarily related to sales of businesses within our IAN operating segment.

Share Repurchase Program
In February 2017, our Board of Directors (the "Board") authorized a new share repurchase program to repurchase from time to time up to $300.0, excluding fees, of our common stock (the "2017 Share Repurchase Program"), which was in addition to the remaining amount available to be repurchased from the $300.0 authorization made by the Board in February 2016 (the "2016 Share Repurchase Program").
We may effect such repurchases through open market purchases, trading plans established in accordance with SEC rules, derivative transactions or other means. We expect to continue to repurchase our common stock in future periods, although the timing and amount of the repurchases will depend on market conditions and other funding requirements.
The following table presents our share repurchase activity under our share repurchase programs for the nine months ended September 30, 2017 and 2016.
 Nine months ended
September 30,
 2017 2016
Number of shares repurchased9.4
 8.5
Aggregate cost, including fees$216.0
 $193.3
Average price per share, including fees$22.92
 $22.69
We fully utilized the 2016 Share Repurchase Program during the third quarter of 2017. As of September 30, 2017, $239.5, excluding fees, remains available for repurchase under the 2017 Share Repurchase Program. The 2017 Share Repurchase Program has no expiration date.


11
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Notes to Consolidated Financial Statements – (continued)
(Amounts in Millions, Except Per Share Amounts)
(Unaudited)


Note 6:  Income Taxes
For the three and nine months ended September 30, 2017, our effective income tax rates of 22.1% and 30.7%, respectively, were positivelyprovision was negatively impacted by a benefit of $31.2 related to foreign tax credits from distributions of unremitted earnings, partially offset by losses in certain foreign jurisdictions where we receivereceived no tax benefit due to 100% valuation allowances, and by net losses on sales of businesses and the classification of certain assets as held for sale for which we received no tax benefit and by tax expense associated with the change to our assertion regarding the permanent reinvestment of undistributed earnings attributable to certain foreign subsidiaries.
For the six months ended June 30, 2020, our income tax provision was negatively impacted by the same factors noted for the three months ended June 30, 2020 in addition to net losses on sales of businesses and the classification of certain assets as held for sale, for which we received minimal tax benefit.
On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was enacted and signed into law. The CARES Act includes several provisions for corporations including increasing the amount of deductible interest, allowing companies to carryback certain net operating losses (“NOLs”) and increasing the amount of NOLs that corporations can use to offset income. The CARES Act did not receive a full tax benefit. For the nine months ended September 30, 2017,materially affect our effectivequarter or year-to-date income tax rateprovision, deferred tax assets and liabilities, or related taxes payable. We are currently assessing the future implications of these provisions within the CARES Act on our Consolidated Financial Statements, but do not expect the impact to be material.
In the second quarter of 2020, in response to changes in non-US tax law, a decision was positively impacted by excessmade to change our indefinite reinvestment assertion on a $110.0 of undistributed foreign earnings of specific subsidiaries. We recorded $10.0 of income tax benefits on employee share-based payments, the majority of which is typically recognized in the first quarter duecosts associated with this change to the timing of the vesting of awards.our assertion.
We have various tax years under examination by tax authorities in various countries, and in various states, such as New York, in which we have significant business operations. It is not yet known whether these examinations will, in the aggregate, result in our paying additional taxes. We believe our tax reserves are adequate in relation to the potential for additional assessments in each of the jurisdictions in which we are subject to taxation. We regularly assess the likelihood of additional tax assessments in those jurisdictions and, if necessary, adjust our reserves as additional information or events require.
With respect to all tax years open to examination by U.S. federal, various state and local, and non-U.S. tax authorities, we currently anticipate that total unrecognized tax benefits will decrease by an amount between $25.0$180.0 and $35.0$190.0 in the next twelve months, a portion of which will affect our effective income tax rate, primarily as a result of the settlement of tax examinations and the lapsing of statutes of limitations.
We are effectively settled with respect to U.S. federal income tax audits through 2012, with the exception of 2009. With limited exceptions, we are no longer subject to state and local income tax audits for years prior to 20072013 or non-U.S. income tax audits for years prior to 2006.2009.



15
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Notes to Consolidated Financial Statements – (continued)
(Amounts in Millions, Except Per Share Amounts)
(Unaudited)

Note 7:  Restructuring Charges
The components of restructuring charges for 2020 and 2019 restructuring plans are listed below.
 Three months ended
June 30,		 Six months ended
June 30,
 2020 2019 2020 2019
Severance and termination costs$44.6
 $2.1
 $44.6
 $22.0
Lease impairment costs65.7
 0.0
 65.7
 11.9
Other restructuring costs2.3
 0.0
 2.3
 0.0
Total restructuring charges$112.6
 $2.1
 $112.6
 $33.9

2020 Restructuring Plan
In the second quarter of 2020, the Company took restructuring actions to lower our operating expenses structurally and permanently relative to revenue and to accelerate the transformation of our business (the “2020 Plan”). Most of these actions are based on our recent experience and learning in the COVID-19 pandemic and a resulting review of our operations, which continues, to address certain operating expenses such as occupancy expense and salaries and related expenses.
Net restructuring charges were comprised of $68.8 at IAN and $36.7 at CMG for the three and six months ended June 30, 2020, which include non-cash lease impairment costs of $35.8 at IAN and $26.8 at CMG. Restructuring actions under the 2020 Plan were identified and initiated during the second quarter of 2020, with additional actions expected during the third and fourth quarters and all actions to be substantially complete by the end of the fourth quarter of 2020.
During the first half of 2020, severance and termination costs related to a planned reduction in workforce of 694 employees. The employee groups affected include executive, regional and account management as well as administrative, creative and media production personnel.
Lease impairment costs, which relate to the office spaces that were vacated as part of the 2020 Plan, included impairments of operating lease right-of-use assets and associated leasehold improvements, furniture and asset retirement obligations. Lease impairments were calculated based on estimated fair values using market participant assumptions including forecasted net discounted cash flows related to the operating lease right-of-use assets.
A summary of the restructuring activities related to the 2020 Plan is as follows:
 2020 Plan
 Restructuring Expense Non-Cash Items Cash Payments Liability at June 30, 2020
Severance and termination costs$44.6
 $0.7
 $10.1
 $33.8
Lease impairment costs65.7
 65.7
 0.0
 0.0
Other2.3
 1.2
 1.1
 0.0
Total$112.6
 $67.6
 $11.2
 $33.8

2019 Restructuring Plan
In the first quarter of 2019, the Company implemented a cost initiative (the “2019 Plan”) to better align our cost structure with our revenue primarily related to specific client losses occurring in 2018. All restructuring actions were identified and initiated by the end of the first quarter of 2019, with all actions substantially completed by the end of the second quarter of 2019, and there have not been any restructuring adjustments.

Note 7:8:  Incentive Compensation Plans
We issue stock-based compensation and cash awards to our employees under a planvarious plans established by the Compensation and Leadership Talent Committee of the Board of Directors (the “Compensation Committee”"Compensation Committee") and approved by our shareholders.
stockholders. We issued the following stock-based awards under the 20142019 Performance Incentive Plan (the "2014"2019 PIP") during the ninesix months ended SeptemberJune 30, 2017.2020.

16
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Notes to Consolidated Financial Statements – (continued)
(Amounts in Millions, Except Per Share Amounts)
(Unaudited)
 Awards 
Weighted-average
grant-date fair value
(per award)
Stock-settled awards0.8
 $24.20
Performance-based awards4.8
 $20.06
Total stock-based compensation awards5.6
  

 Awards 
Weighted-average
grant-date fair value
(per award)
Restricted stock (shares or units)2.2
 $20.76
Performance-based stock (shares)2.3
 $18.70
Total stock-based compensation awards4.5
 


During the ninesix months ended SeptemberJune 30, 2017,2020, the Compensation Committee granted performance cash awards under the 2019 PIP and restricted cash awards under the 2014 PIP2009 Restricted Cash Plan with a total annual target value of $54.3$43.3 and $2.8,$35.2, respectively. Cash awards are expensed over the vesting period, which is typically three years.years for performance cash awards and two years or three years for restricted cash awards.


Note 8:9:  Accumulated Other Comprehensive Loss, Net of Tax
The following tables present the changes in accumulated other comprehensive loss, net of tax, by component.
 
Foreign Currency
Translation Adjustments
 
Derivative
Instruments
 Defined Benefit Pension and Other Postretirement Plans Total
Balance as of December 31, 2019$(697.7) $(3.5) $(228.8) $(930.0)
Other comprehensive (loss) income before reclassifications(102.3) (0.9) 0.4
 (102.8)
Amount reclassified from accumulated other comprehensive loss, net of tax(0.3) 1.1
 2.9
 3.7
Balance as of June 30, 2020$(800.3) $(3.3) $(225.5) $(1,029.1)
 
Foreign Currency
Translation Adjustments
 
Available-for-Sale
Securities
 
Derivative
Instruments
 Defined Benefit Pension and Other Postretirement Plans Total
Balance as of December 31, 2016$(716.7) $0.6
 $(8.4) $(238.0) $(962.5)
Other comprehensive income before reclassifications113.4
 0.0
 0.0
 6.3
 119.7
Amount reclassified from accumulated other comprehensive loss, net of tax1.8
 (0.6) 1.0
 7.9
 10.1
Balance as of September 30, 2017$(601.5) $0.0
 $(7.4) $(223.8) $(832.7)


12
 
Foreign Currency
Translation Adjustments
 
Derivative
Instruments
 Defined Benefit Pension and Other Postretirement Plans Total
Balance as of December 31, 2018$(716.4) $(5.3) $(219.4) $(941.1)
Other comprehensive income before reclassifications12.3
 0.0
 1.5
 13.8
Amount reclassified from accumulated other comprehensive loss, net of tax5.8
 1.0
 2.6
 9.4
Balance as of June 30, 2019$(698.3) $(4.3) $(215.3) $(917.9)

Amounts reclassified from accumulated other comprehensive loss, net of tax, for the three and six months ended June 30, 2020 and 2019 are as follows:
 Three months ended
June 30,		 Six months ended
June 30,		 Affected Line Item in the Consolidated Statements of Operations
 2020 2019 2020 2019 
Foreign currency translation adjustments$3.3
 $4.6
 $(0.3) $5.8
 Other expense, net
Losses on derivative instruments0.6
 0.6
 1.2
 1.2
 Interest expense
Amortization of defined benefit pension and postretirement plan items1.8
 1.6
 3.7
 3.3
 Other expense, net
Tax effect(0.4) (0.4) (0.9) (0.9) Provision for income taxes
Total amount reclassified from accumulated other comprehensive loss, net of tax$5.3
 $6.4
 $3.7
 $9.4
  


17
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Notes to Consolidated Financial Statements – (continued)
(Amounts in Millions, Except Per Share Amounts)
(Unaudited)



 
Foreign Currency
Translation Adjustments
 
Available-for-Sale
Securities
 
Derivative
Instruments
 Defined Benefit Pension and Other Postretirement Plans Total
Balance as of December 31, 2015$(665.6) $1.3
 $(9.6) $(171.7) $(845.6)
Other comprehensive income before reclassifications42.3
 0.4
 0.0
 (65.0) (22.3)
Amount reclassified from accumulated other comprehensive loss, net of tax2.3
 (1.2) 0.9
 3.1
 5.1
Balance as of September 30, 2016$(621.0) $0.5
 $(8.7) $(233.6) $(862.8)
Amounts reclassified from accumulated other comprehensive loss, net of tax, for the three and nine months ended September 30, 2017 and 2016 are as follows:
 Three months ended
September 30,		 Nine months ended
September 30,		 Affected Line Item in the Consolidated Statements of Operations
 2017 2016 2017 2016 
Foreign currency translation adjustments 1
$1.5
 $(4.2) $1.8
 $2.3
 Other (expense) income, net
Gains on available-for-sale securities(0.7) (0.1) (0.7) (1.3) Other (expense) income, net
Losses on derivative instruments0.5
 0.5
 1.6
 1.5
 Interest expense
Amortization of defined benefit pension and postretirement plan items5.7
 1.3
 9.2
 4.0
 Other (expense) income, net
Tax effect(0.6) (0.4) (1.8) (1.4) Provision for income taxes
Total amount reclassified from accumulated other comprehensive loss, net of tax$6.4
 $(2.9) $10.1
 $5.1
  
1These foreign currency translation adjustments are primarily a result of the sales of businesses.
Note 9:10:  Employee Benefits
We have a defined benefit pension plan that covers certain U.S. employees (the “Domestic Pension Plan”). We also have numerous funded and unfunded plans outside the U.S. The Interpublic Limited Pension Plan in the U.K. is a defined benefit plan and is our most material foreign pension plan in terms of the benefit obligation and plan assets. Some of our domestic and foreign subsidiaries provide postretirement health benefits and life insurance to eligible employees and, in certain cases, their dependents. The domestic postretirement benefit plan is our most material postretirement benefit plan in terms of the benefit obligation. Certain immaterial foreign pension and postretirement benefit plans have been excluded from the table below.
The components of net periodic cost for the Domestic Pension Plan, the significant foreign pension plans and the domestic postretirement benefit plan are listed below.
 Domestic Pension Plan Foreign Pension Plans Domestic Postretirement Benefit Plan
Three Months Ended June 30,2020 2019 2020 2019 2020 2019
Service cost$0.0
 $0.0
 $1.1
 $1.1
 $0.0
 $0.0
Interest cost0.9
 1.2
 2.3
 3.1
 0.2
 0.3
Expected return on plan assets(1.4) (1.4) (4.6) (4.4) 0.0
 0.0
Amortization of:           
Prior service cost (credit)0.0
 0.0
 0.1
 0.1
 0.0
 (0.1)
Unrecognized actuarial losses0.4
 0.4
 1.3
 1.2
 0.0
 0.0
Net periodic cost$(0.1) $0.2
 $0.2
 $1.1
 $0.2
 $0.2

 Domestic Pension Plan Foreign Pension Plans Domestic Postretirement Benefit Plan
Three months ended September 30,2017 2016 2017 2016 2017 2016
Service cost$0.0
 $0.0
 $1.0
 $2.4
 $0.0
 $0.0
Interest cost1.3
 1.4
 3.4
 4.1
 0.3
 0.4
Expected return on plan assets(1.5) (1.5) (4.5) (4.9) 0.0
 0.0
Settlements and curtailments0.0
 0.0
 4.0
 0.1
 0.0
 0.0
Amortization of:           
Prior service cost (credit)0.0
 0.0
 0.1
 0.1
 (0.1) (0.1)
Unrecognized actuarial losses0.3
 0.3
 1.4
 0.9
 0.0
 0.0
Net periodic cost$0.1
 $0.2
 $5.4
 $2.7
 $0.2
 $0.3


13
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Notes to Consolidated Financial Statements – (continued)
(Amounts in Millions, Except Per Share Amounts)
(Unaudited)



Domestic Pension Plan Foreign Pension Plans Domestic Postretirement Benefit PlanDomestic Pension Plan Foreign Pension Plans Domestic Postretirement Benefit Plan
Nine months ended September 30,2017 2016 2017 2016 2017 2016
Six Months Ended June 30,2020 2019 2020 2019 2020 2019
Service cost$0.0
 $0.0
 $2.9
 $7.3
 $0.0
 $0.0
$0.0
 $0.0
 $2.3
 $2.3
 $0.0
 $0.0
Interest cost3.8
 4.4
 10.0
 13.3
 0.9
 1.1
1.9
 2.4
 4.6
 6.3
 0.4
 0.6
Expected return on plan assets(4.6) (4.9) (13.2) (15.5) 0.0
 0.0
(2.8) (2.9) (9.3) (8.8) 0.0
 0.0
Settlements and curtailments0.0
 0.0
 4.0
 0.3
 0.0
 0.0
Amortization of:                      
Prior service cost (credit)0.0
 0.0
 0.1
 0.1
 (0.1) (0.1)0.0
 0.0
 0.1
 0.1
 0.0
 (0.1)
Unrecognized actuarial losses1.1
 1.0
 4.1
 2.7
 0.0
 0.0
0.8
 0.9
 2.7
 2.4
 0.1
 0.0
Net periodic cost$0.3
 $0.5
 $7.9
 $8.2
 $0.8
 $1.0
$(0.1) $0.4
 $0.4
 $2.3
 $0.5
 $0.5
The components of net periodic cost other than the service cost component are included in the line item “Other (expense) income,expense, net” in the Consolidated Statements of Operations.
During the ninesix months ended SeptemberJune 30, 2017,2020, we contributed $2.3$1.3 and $13.0$8.6 of cash to our domestic and foreign pension plans, respectively. For the remainder of 2017,2020, we expect to contribute approximately $0.3$2.0 and $5.0$9.0 of cash to our domestic and foreign pension plans, respectively.




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Notes to Consolidated Financial Statements – (continued)
(Amounts in Millions, Except Per Share Amounts)
(Unaudited)



Note 10:11:  Segment Information
As of SeptemberJune 30, 2017,2020, we have two reportable segments: IAN and CMG. IAN is comprised of McCann Worldgroup, Foote,FCB (Foote, Cone & Belding ("FCB")Belding), MullenLowe Group, Media, Data Services and Tech, which includes IPG Mediabrands, Acxiom and Kinesso, our digital specialist agencies and our domestic integrated agencies. CMG is comprised of a number of our specialist marketing services offerings.offerings including Weber Shandwick, DeVries, Golin, FutureBrand, Jack Morton and Octagon Worldwide. We also report results for the “Corporate and other” group. TheWe continue to evaluate our financial reporting structure, and the profitability measure, employed by our chief operating decision maker for allocating resources to operating divisions and assessing operating division performance, is segment operating income (loss). Segment information is presented consistently with the basis described in our 2016 Annual Report on Form 10-K.
EBITA. Summarized financial information concerning our reportable segments is shown in the following tables.table.
Three months ended
September 30,		 Nine months ended
September 30,		Three months ended
June 30,		 Six months ended
June 30,
2017 2016 2017 20162020 2019 2020 2019
Revenue:       
Total revenue:       
IAN$1,520.2
 $1,503.2
 $4,465.6
 $4,453.3
$1,672.5
 $1,959.6
 $3,491.3
 $3,821.8
CMG382.4
 419.0
 1,075.8
 1,128.8
353.2
 560.6
 894.2
 1,059.6
Total$1,902.6
 $1,922.2
 $5,541.4
 $5,582.1
$2,025.7
 $2,520.2
 $4,385.5
 $4,881.4
              
Segment operating income (loss):       
Net revenue:       
IAN$1,585.7
 $1,801.1
 $3,250.2
 $3,507.2
CMG267.7
 324.8
 575.3
 623.5
Total$1,853.4
 $2,125.9
 $3,825.5
 $4,130.7
       
Segment EBITA 1:
       
IAN$183.9
 $184.1
 $402.1
 $424.1
$100.4
 $262.4
 $199.4
 $378.4
CMG50.1
 54.8
 127.4
 125.2
(26.3) 42.9
 (4.0) 43.3
Corporate and other(14.9) (30.9) (74.2) (94.0)(11.8) (19.8) (35.9) (64.4)
Total219.1
 208.0
 455.3
 455.3
$62.3
 $285.5
 $159.5
 $357.3
              
Interest expense(21.0) (21.7) (67.6) (68.8)
Interest income4.1
 4.7
 14.0
 16.1
Other (expense) income, net(9.9) 5.3
 (24.5) (13.5)
Income before income taxes$192.3
 $196.3
 $377.2
 $389.1
Amortization of acquired intangibles:       
IAN$20.8
 $20.2
 $41.0
 $40.7
CMG1.0
 1.1
 2.1
 2.2
Corporate and other0.0
 0.0
 0.0
 0.0
Total$21.8
 $21.3
 $43.1
 $42.9
              
Depreciation and amortization of property and equipment and intangible assets:       
Depreciation and amortization 2:
       
IAN$30.7
 $29.1
 $90.8
 $85.9
$45.3
 $44.9
 $90.0
 $87.0
CMG4.6
 4.9
 15.2
 14.6
5.4
 5.2
 10.5
 10.0
Corporate and other6.9
 5.7
 18.5
 17.0
0.6
 1.6
 2.3
 4.2
Total$42.2
 $39.7
 $124.5
 $117.5
$51.3
 $51.7
 $102.8
 $101.2
              
Capital expenditures:              
IAN$29.3
 $39.7
 $77.9
 $86.9
$19.8
 $35.9
 $53.5
 $62.4
CMG6.2
 4.7
 12.9
 8.4
1.3
 2.9
 2.9
 3.9
Corporate and other4.3
 7.1
 17.9
 19.2
6.2
 8.5
 15.5
 13.8
Total$39.8
 $51.5
 $108.7
 $114.5
$27.3
 $47.3
 $71.9
 $80.1
       
September 30,
2017		 December 31,
2016		    
Total assets:       
IAN$10,257.7
 $10,660.0
    
CMG1,433.4
 1,428.3
    
Corporate and other25.0
 396.9
    
Total$11,716.1
 $12,485.2
    


15
1 Adjusted EBITA is calculated as net (loss) income available to IPG common stockholders before provision for incomes taxes, total (expenses) and other income, equity in net loss of unconsolidated affiliates, net (income) loss attributable to noncontrolling interests and amortization of acquired intangibles.
2 Excludes amortization of acquired intangibles.


19
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Notes to Consolidated Financial Statements – (continued)
(Amounts in Millions, Except Per Share Amounts)
(Unaudited)



 June 30,
2020		 December 31,
2019
Total assets:   
IAN$12,667.1
 $15,155.2
CMG1,528.2
 1,725.5
Corporate and other701.6
 871.2
Total$14,896.9
 $17,751.9

The following table presents the reconciliation of segment EBITA to Income before income taxes.
 Three months ended
June 30,		 Six months ended
June 30,
 2020 2019 2020 2019
IAN EBITA$100.4
 $262.4
 $199.4
 $378.4
CMG EBITA(26.3) 42.9
 (4.0) 43.3
Corporate and other EBITA(11.8) (19.8) (35.9) (64.4)
Less: consolidated amortization of acquired intangibles21.8
 21.3
 43.1
 42.9
Operating income40.5
 264.2
 116.4
 314.4
Total (expenses) and other income(65.4) (47.7) (121.3) (96.6)
(Loss) Income before income taxes$(24.9) $216.5
 $(4.9) $217.8


Note 11:12:  Fair Value Measurements
Authoritative guidance for fair value measurements establishes a fair value hierarchy which requires us to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. There are three levels of inputs that may be used to measure fair value:
Level 1 Unadjusted quoted prices in active markets for identical assets or liabilities. An active market for the asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.
  
Level 2 Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
   
Level 3 Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
Financial Instruments that are Measured at Fair Value on a Recurring Basis
We primarily apply the market approach to determine the fair value of financial instruments that are measured at fair value on a recurring basis. There were no changes to our valuation techniques used to determine the fair value of financial instruments during the ninesix months ended SeptemberJune 30, 2017.2020. The following tables present information about our financial instruments measured at fair value on a recurring basis as of SeptemberJune 30, 20172020 and December 31, 2016,2019, and indicate the fair value hierarchy of the valuation techniques utilized to determine such fair value.

 September 30, 2017 Balance Sheet Classification
 Level 1 Level 2 Level 3 Total 
Assets         
Cash equivalents$153.2
 $0.0
 $0.0
 $153.2
 Cash and cash equivalents
Short-term marketable securities0.1
 0.0
 0.0
 0.1
 Other current assets
Long-term investments0.4
 0.0
 0.0
 0.4
 Other non-current assets
Total$153.7
 $0.0
 $0.0
 $153.7
  
          
As a percentage of total assets1.3% 0.0% 0.0% 1.3%  
          
Liabilities         
Contingent acquisition obligations 1
$0.0
 $0.0
 $164.2
 $164.2
  
          
 December 31, 2016 Balance Sheet Classification
 Level 1 Level 2 Level 3 Total 
Assets         
Cash equivalents$440.8
 $0.0
 $0.0
 $440.8
 Cash and cash equivalents
Short-term marketable securities3.0
 0.0
 0.0
 3.0
 Other current assets
Long-term investments0.4
 0.0
 0.0
 0.4
 Other non-current assets
Total$444.2
 $0.0
 $0.0
 $444.2
  
          
As a percentage of total assets3.6% 0.0% 0.0% 3.6%  
          
Liabilities         
Contingent acquisition obligations 1
$0.0
 $0.0
 $205.4
 $205.4
  
20
Table of Contents
Notes to Consolidated Financial Statements – (continued)
(Amounts in Millions, Except Per Share Amounts)
(Unaudited)

 June 30, 2020 Balance Sheet Classification
 Level 1 Level 2 Level 3 Total 
Assets         
Cash equivalents$690.2
 $0.0
 $0.0
 $690.2
 Cash and cash equivalents
Liabilities         
Contingent acquisition obligations 1
$0.0
 $0.0
 $96.5
 $96.5
 Accrued liabilities and Other non-current liabilities
          
 December 31, 2019 Balance Sheet Classification
 Level 1 Level 2 Level 3 Total 
Assets         
Cash equivalents$786.0
 $0.0
 $0.0
 $786.0
 Cash and cash equivalents
Liabilities         
Contingent acquisition obligations 1
$0.0
 $0.0
 $114.1
 $114.1
 Accrued liabilities and Other non-current liabilities
 

1Contingent acquisition obligations includes deferred acquisition payments and unconditional obligations to purchase additional noncontrolling equity shares of consolidated subsidiaries. Fair value measurement of the obligations is based upon actual and projected operating performance targets as specified in the related agreements. The decrease in this balance of $41.2$17.6 from December 31, 20162019 to SeptemberJune 30, 20172020 is primarily due to acquisition payments, of $91.4, partially offset by acquisitionsvaluation adjustments, an increase in deferred acquisition payments and exercised optionsexercises of $38.2.put options. The amounts payable within the next twelve months are classified in accrued liabilities; any amounts payable thereafter are classified in other non-current liabilities.

16
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Notes to Consolidated Financial Statements – (continued)
(Amounts in Millions, Except Per Share Amounts)
(Unaudited)


Financial Instruments that are not Measured at Fair Value on a Recurring Basis
The following table presents information about our financial instruments that are not measured at fair value on a recurring basis as of SeptemberJune 30, 20172020 and December 31, 2016,2019, and indicates the fair value hierarchy of the valuation techniques utilized to determine such fair value.
 June 30, 2020 December 31, 2019
 Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
Total long-term debt$0.0
 $4,254.0
 $45.4
 $4,299.4
 $0.0
 $3,520.0
 $45.5
 $3,565.5

 September 30, 2017 December 31, 2016
 Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
Total long-term debt$0.0
 $1,606.2
 $45.9
 $1,652.1
 $0.0
 $1,574.7
 $65.4
 $1,640.1
Our long-term debt is comprised of senior notes and other notes payable. The fair value of our senior notes, which are traded over-the-counter, is based on quoted prices for such securities, but for which fair value can also be derived from inputsin markets that are readily observable.not active. Therefore, these senior notes are classified as Level 2 within the fair value hierarchy.2. Our other notes payable are not actively traded, and their fair value is not solely derived from readily observable inputs. Thus, theThe fair value of our other notes payable is determined based on a discounted cash flow model and other proprietary valuation methods, and therefore areis classified as Level 3 within the fair value hierarchy.3. See Note 23 for further information on our long-term debt.
Non-financial Assets and Liabilities that are Measured at Fair Value on a Recurring Basis
Certain non-financial assets and liabilities are measured atThe discount rates used as significant unobservable inputs in the Level 3 fair value on a recurring basis, primarily accrued restructuring charges.measurements of our contingent acquisition obligations and long-term debt as of June 30, 2020 ranged from 2.0% to 5.0% and 0.5% to 3.5%, respectively.
Non-financial Assets and Liabilities that are Measured at Fair Value on a Nonrecurring Basis
Certain non-financial assets and liabilities are measured at fair value on a nonrecurring basis, primarily goodwill (Level 3), intangible assets, and property and equipment. Accordingly, these assets are not measured and adjusted to fair value on an ongoing basis but are subject to periodic evaluations for potential impairment.

During the second quarter of 2020, recent economic developments related to the COVID-19 pandemic contributed to declines in our most recent forecasted financial results. We evaluated our reporting units including the impact of these declines, restructuring actions taken in the second quarter of 2020 and other reporting unit specific factors, and concluded that this constituted a goodwill triggering event for one reporting unit, requiring us to evaluate its goodwill for impairment. Based on the results of a quantitative interim impairment test, we concluded that the reporting unit’s goodwill was not impaired as of June 30, 2020, because the fair value of the reporting unit was in excess of its carrying value.


21
Table of Contents
Notes to Consolidated Financial Statements – (continued)
(Amounts in Millions, Except Per Share Amounts)
(Unaudited)

Note 12:13:  Commitments and Contingencies
Guarantees
As discussed in our 2019 Annual Report, we have guaranteed certain obligations of our subsidiaries relating principally to operating leases, uncommitted lines of credit and cash pooling arrangements. As of June 30, 2020 and December 31, 2019, the amount of parent company guarantees on lease obligations was $684.0 and $739.1, respectively, the amount of parent company guarantees relating to uncommitted lines of credit was $270.9 and $293.8, respectively, and the amount of parent company guarantees related to daylight overdrafts, primarily utilized to manage intra-day overdrafts due to timing of transactions under cash pooling arrangements without resulting in incremental borrowings, was $207.0 and $207.7, respectively.
Legal Matters
We are involved in various legal proceedings, and subject to investigations, inspections, audits, inquiries and similar actions by governmental authorities, arising in the normal course of business. The types of allegations that arise in connection with such legal proceedings may vary in nature, but can include claims related to contract, employment, tax and intellectual property matters. We evaluate all cases each reporting period and record liabilities for losses from legal proceedings when we determine that it is probable that the outcome in a legal proceeding will be unfavorable and the amount, or potential range, of loss can be reasonably estimated. In certain cases, we cannot reasonably estimate the potential loss because, for example, the litigation is in its early stages. While any outcome related to litigation or such governmental proceedings in which we are involved cannot be predicted with certainty, management believes that the outcome of these matters, individually and in the aggregate, will not have a material adverse effect on our financial condition, results of operations or cash flows.
As previously disclosed, on April 10, 2015, a federal judge in Brazil authorized the search of the records of an agency's offices in São Paulo and Brasilia, in connection with an ongoing investigation by Brazilian authorities involving payments potentially connected to local government contracts. The Company had previously investigated the matter and taken a number of remedial and disciplinary actions. The Company is in the process of concluding a settlement related to these matters with government agencies.
The Company confirmed that one of its standalone domestic agencies has been contacted by the Department of Justice Antitrust Division for documents regarding video production practices and is cooperating with the government.
Guarantees
As discussed in our 2016 Annual Report on Form 10-K, we have guaranteed certain obligations of our subsidiaries relating principally to operating leases and uncommitted lines of credit of certain subsidiaries. The amount of parent company guarantees on lease obligations was $827.8 and $857.3 as of September 30, 2017 and December 31, 2016, respectively, and the amount of parent company guarantees primarily relating to uncommitted lines of credit was $413.8 and $395.6 as of September 30, 2017 and December 31, 2016, respectively.


17
Table of Contents
Notes to Consolidated Financial Statements – (continued)
(Amounts in Millions, Except Per Share Amounts)
(Unaudited)


Note 13:14:  Recent Accounting Standards
Accounting pronouncements not listed below were assessed and determined to be not applicable or are expected to have minimal impact on our Consolidated Financial Statements.
Derivatives and Hedging
In August 2017, the Financial Accounting Standards Board (the "FASB") issued amended guidance on hedge accounting which expands an entity’s ability to hedge non-financial and financial risk components and aligns the recognition and presentation of the effects of the hedging instrument and the hedged item in the financial statements. The new guidance also eliminates the requirement to separately measure and report hedge ineffectiveness. This amended guidance is effective beginning January 1, 2019, with early adoption permitted. We are currently assessing the impact the adoption of the amended guidance will have on our Consolidated Financial Statements.
Pensions
In March 2017, the FASB issued amended guidance which requires presentation of all net periodic pension and postretirement benefit costs, other than service costs, in non-operating expenses in the Consolidated Statement of Operations. We have early adopted this amended guidance retrospectively as of the quarter ended March 31, 2017 using the practical expedient, which permits the use of amounts disclosed in our Employee Benefits note for prior comparative periods as the estimation basis for applying the retrospective presentation requirements. This resulted in the reclassification of a portion of postretirement costs from "Salaries and related expenses" to "Other (expense) income, net" in the amount of $4.8 and $0.8 for the three months ended September 30, 2017 and 2016, respectively, and $6.4 and $2.4 for the nine months ended September 30, 2017 and 2016, respectively.
Restricted Cash
In November 2016, the FASB issued amended guidance which requires that the Consolidated Statement of Cash Flows present the change during the period in the total cash, cash equivalents and amounts generally described as restricted cash or restricted cash equivalents. We have early adopted this amended guidance retrospectively as of the quarter ended March 31, 2017. The Consolidated Statements of Cash Flows for the nine months ended September 30, 2017 and 2016 now include restricted cash balances of $2.5 and $3.2, respectively, in the beginning-of-period totals and $3.1 and $3.9, respectively, in the end-of-period totals.
Financial Instrument Credit Losses
In June 2016, the FASBFinancial Accounting Standards Board ("FASB") issued amended guidance on the accounting for credit losses on certain types of financial instruments, including trade receivables. The new model uses a forward-looking expected loss method, as opposed to the incurred loss method in current U.S. GAAP, which will generally result in earlier recognition of allowances for losses. We adopted this standard using the modified retrospective approach with an effective date of January 1, 2020. The adoption of this amended guidance did not have a material impact on our Consolidated Financial Statements.
Fair Value Measurement Disclosures
In August 2018, the FASB issued amended disclosure requirements for fair value measurements by removing, modifying and adding certain disclosures. This amended guidance was effective beginning January 1, 2020. The adoption of this guidance did not have a material impact on our Consolidated Financial Statements.
Income Taxes
In December 2019, the FASB issued amended guidance to simplify the accounting for income taxes by removing certain exceptions and amending certain sections of existing guidance under ASC 740. This amended guidance is effective beginning January 1, 2020,2021 with early adoption permitted as early as January 1, 2019.2020. We are currently assessing the impact the adoption of the amended guidance will have on our Consolidated Financial Statements.
Leases
In February 2016,
Note 15:  Subsequent Events
Credit Agreement Amendments
On July 28, 2020, we entered into Amendment No. 1 to the FASB issued amended guidance on lease accounting which requires an entityCredit Agreement and Amendment No. 1 to recognize a right-of-use assetthe 364-Day Credit Facility (together, the “Amendments”). The Amendments increased the maximum leverage ratio covenant to 4.25x in the case of the 364-Day Credit Facility and, a corresponding lease liability on its balance sheetin the case of the Credit Agreement, to (i) 4.25x through the quarter ended June 30, 2021, and (ii) 3.50x thereafter. Amendment No. 1 to the Credit Agreement also increased the Applicable Margin (as defined in the Credit Agreement) for virtually all of its leases with a term of more than 12 months, including those classified as operating leases. Bothany borrowings we make under the asset and liability will initially be measuredCredit Agreement if our long-term public debt ratings are BB+/Ba1 or below at the present valuetime of borrowing. We have the option to terminate Amendment No. 1 to the Credit Agreement at any time, provided that at the time we deliver a termination notice the leverage ratio as of the future minimum lease payments,end of the most recently ended fiscal quarter did not exceed 3.50x. The Credit Agreement reverts to its original terms on June 30, 2021, or following any such early termination, whichever is earlier. We paid amendment fees of $2.0 in connection with the asset being subject to adjustments such as initial direct costs. Consistent with current U.S. GAAP, the presentation of expenses and cash flows will depend primarily on the classification of the lease as either a finance or an operating lease. The new standard also requires additional quantitative and qualitative disclosures regarding the amount, timing and uncertainty of cash flows arising from leases in order to provide additional information about the nature of an organization’s leasing activities. This amended guidance, which will be effective beginning January 1, 2019, requires modified retrospective application, with early adoption permitted. We expect the adoption of this amended guidance to have a significant impact on our Consolidated Balance Sheets but not on our Consolidated Statements of Operations.Amendments.
Fair Value Measurements
In January 2016, the FASB issued amended guidance which updates the fair value presentation requirements for certain financial instruments. Equity investments with readily determinable fair values, other than those accounted for using the equity method of accounting, will be measured at fair value with changes recorded through current earnings rather than other comprehensive income. This amended guidance will be effective for us beginning January 1, 2018, and is required to be adopted prospectively with a cumulative-effect adjustment recorded on our Consolidated Balance Sheets, if applicable. We do not expect the adoption of this amended guidance to have a significant impact on our Consolidated Financial Statements.


1822
Table of Contents
Notes to Consolidated Financial Statements – (continued)
(Amounts in Millions, Except Per Share Amounts)
(Unaudited)



Tax Examination Settlement
On July 29, 2020, the Internal Revenue Recognition
In May 2014,Service notified the FASB issued amended guidance on revenue recognition which requires an entityCompany that the U.S. Federal income tax examination of years 2006 through 2016 has been finalized and effectively settled. As a result, we expect to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods and services. We expect to adopt the standard, which is effective January 1, 2018, using the full retrospective method. The standard impacts the timingincome tax benefit of revenue recognition between quarters, primarily as a result of estimating variable consideration. We have determined that the standard will result in an increaseapproximately $135.0 in the numberthird quarter of performance obligations within certain of our contractual arrangements. The standard will also result in an increase in third party costs being included in revenue, primarily in connection with our events businesses, which will have no impact on operating income or net income. Additionally, we continue to evaluate the disclosures that may be required.2020.



23
Note 14:  Subsequent Events
Table of Contents
On October 25, 2017, we amended and restated our Credit Agreement, which was most recently amended and restated on October 20, 2015. The amendment increases the revolving commitments under the Credit Agreement from $1,000.0 to $1,500.0 and extends the Credit Agreement's expiration to October 25, 2022. The Credit Agreement is a revolving facility, under which amounts borrowed by us or any of our subsidiaries designated under the Credit Agreement may be repaid and reborrowed. The cost structure, financial covenants and the ability to increase the commitments under the Credit Agreement from time to time by an additional amount of up to $250.0 remain unchanged by the amendment.
On October 25, 2017, the Company increased the maximum aggregate amount outstanding at any time under our commercial paper program from $1,000.0 to $1,500.0. Borrowings under the program continue to be supported by the Credit Agreement, and the proceeds of which will be used for working capital and general corporate purposes, including the repayment of maturing indebtedness and other short-term liquidity needs.


Management’s Discussion and Analysis of Financial Condition and Results of Operations
(Amounts in Millions, Except Per Share Amounts)
(Unaudited)


Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following Management’s Discussion and Analysis of Financial Condition and Results of Operations ("(“MD&A"&A”) is intended to help you understand The Interpublic Group of Companies, Inc. and its subsidiaries (the "Company," "IPG," "we," "us"“Company,” “IPG,” “we,” “us” or "our"“our”). MD&A should be read in conjunction with our unaudited Consolidated Financial Statements and the accompanying notes included in this report and our 2016Annual Report on Form 10-K for the year ended December 31, 2019 (the “2019 Annual Report”), as well as our other reports and filings with the Securities and Exchange Commission (the "SEC"“SEC”). Our 2019 Annual Report includes additional information about our significant accounting policies and practices as well as details about the most significant risks and uncertainties associated with our financial and operating results. Our MD&A includes the following sections:
EXECUTIVE SUMMARY provides a discussion about our strategic outlook, factors influencing our business and an overview of our results of operations.
RESULTS OF OPERATIONS provides an analysis of the consolidated and segment results of operations for the periods presented.
LIQUIDITY AND CAPITAL RESOURCES provides an overview of our cash flows, funding requirements, financing and sources of funds, and debt credit ratings.
CRITICAL ACCOUNTING ESTIMATES provides an update to the discussion in our 20162019 Annual Report on Form 10-K of our accounting policies that require critical judgment, assumptions and estimates.
RECENT ACCOUNTING STANDARDS, by reference to Note 1314 to the unaudited Consolidated Financial Statements, provides a discussion of certain accounting standards that have been recently adopted or that have not yet been required to be implemented and may be applicable to our future operations.

NON-GAAP FINANCIAL MEASURE, provides a reconciliation of non-GAAP financial measure with the most directly comparable generally accepted accounting principles in the United States (“U.S. GAAP”) financial measures and sets forth the reasons we believe that presentation of the non-GAAP financial measure contained therein provides useful information to investors regarding our results of operations and financial condition.

EXECUTIVE SUMMARY
In March 2020, the World Health Organization categorized the novel coronavirus (COVID-19) as a pandemic, and it continues to spread extensively throughout the United States and the rest of the world with different geographical locations impacted more than others. The outbreak of COVID-19 and public and private sector measures to reduce its transmission, such as forced business closures and limits on operations, the imposition of social distancing and orders to work-from-home, stay-at-home and shelter-in-place, have adversely impacted our business and demand for our services. Businesses have adjusted, reduced or suspended operating activities, which has negatively impacted the markets we serve. We continue to believe that our focus on our strategic strengths, which include talent, our differentiated go-to-market strategy, data management capabilities, and the relevance of our offerings, position us well to navigate a rapidly changing marketplace. The effects of the COVID-19 pandemic have negatively impacted and will likely continue to negatively impact our results of operations, cash flows and financial position; however, the extent of the impact will vary depending on the duration and severity of the economic and operational impacts of COVID-19.
We have taken steps to protect the safety of our employees, and to support their working arrangements, with a majority of our worldwide workforce continuing to work from home. We believe we have had significant success in maintaining and continuing to advance the quality of our services notwithstanding extensive changes required by the pandemic. With respect to managing costs, we have multiple initiatives underway to align our expenses with changes in revenue. The steps we have taken across our agencies and corporate group include deferred merit increases, freezes on hiring and temporary labor, major cuts in non-essential spending, staff reductions, furloughs in markets where that option is available and salary reductions, including voluntary salary reductions for our senior corporate management team.
In the second quarter of 2020, the Company took restructuring actions to lower our operating expenses structurally and permanently relative to revenue and to accelerate the transformation of our business (the “2020 Plan”). Most of these actions are based on our recent experience and learning in the COVID-19 pandemic and a resulting review of our operations, which continues, to address certain operating expenses such as occupancy expense and salaries and related expenses. Notably, we foresee a greater role for work-from-home in a hybrid office-home model to deliver and support our services in a post-COVID world. In addition, we remain committed to and have intensified our efforts around cash flow discipline, including the identification of significant capital expenditures that can be deferred, and working capital management.
We began to see the effects of COVID-19 on client spending throughout the first and second quarters, first in the Asia Pacific region in the first quarter and subsequently in the U.S., Europe and other markets beginning in March and continuing throughout

24
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Management’s Discussion and Analysis of Financial Condition and Results of Operations - (continued)
(Amounts in Millions, Except Per Share Amounts)
(Unaudited)


the second quarter. Growth in our retail and healthcare sector clients was offset by broad-based declines across most other sectors due to economic conditions, with the greatest declines in our experiential and events businesses. We expect continued negative impacts on our third-quarter results as clients continue to respond to the current economic conditions by reducing their marketing budgets, which will affect the demand for our services. See Item 1A, Risk Factors, in this Quarterly Report on Form 10-Q.
We have also taken steps to strengthen our financial position during this period of heightened uncertainty. As discussed in more detail below under “Liquidity and Capital Resources,” on March 30, 2020, we issued $650.0 aggregate principal amount of 4.75% senior unsecured notes due 2030 (the “4.75% Senior Notes”) and on March 27, 2020, we entered into a new $500.0 364-day revolving credit facility. We believe these steps will further enhance our financial resources as we navigate the period ahead.
Results for the three and six months ended June 30, 2020, are not indicative of the results that may be expected for the fiscal year ending December 31, 2020. The Consolidated Financial Statements and MD&A presented herein reflect the latest estimates and assumptions made by us that affect the reported amounts of assets and liabilities and related disclosures as of the date of the consolidated financial statements and reported amounts of revenue and expenses during the reporting periods presented. We believe we have used reasonable estimates and assumptions to assess the fair values of the Company’s goodwill, long-lived assets and indefinite-lived intangible assets; assessment of the annual effective tax rate; valuation of deferred income taxes and the allowance for doubtful accounts. If actual market conditions vary significantly from those currently projected, these estimates and assumptions could materially change resulting in adjustments to the carrying values of our assets and liabilities.
We are one of the world’s premier global advertising and marketing services companies. Our companies specialize in consumer advertising, digital marketing, media planning and buying, public relations, and specialized communications disciplines.disciplines and data management. Our agencies create customized marketing programs for clients that range in scale from large global marketers to regional and local clients. Comprehensive global services are critical to effectively serve our multinational and local clients in markets throughout the world as they seek to build brands, increase sales of their products and services, and gain market share.
We operate in a media landscape that continues to evolve at a rapid pace. Media channels continue to fragment, and clients face an increasingly complex consumer environment. To stay ahead of these challenges and to achieve our objectives, we have made and continue to make investments in creative, strategic and strategictechnology talent in areas including fast-growth digital marketing channels, high-growth geographic regions and strategic world markets. We consistently review opportunities within our Company to enhance our operations through mergersacquisitions and strategic alliances as well as through the development ofand internal programs that encourage intra-company collaboration. As appropriate, we also develop relationships with technology and emerging media companies that are building leading-edge marketing tools that complement our agencies'agencies’ skill sets and capabilities.
Our financial goals include competitive organic net revenue growth and operatingexpansion of Adjusted EBITA margin, expansion,as defined and discussed within the Non-GAAP Financial Measure section of this MD&A, which we expect will further strengthen our balance sheet and total liquidity and increase value to our shareholders. Accordingly, we remain focused on meeting the evolving needs of our clients while concurrently managing our cost structure. We continually seek greater efficiency in the delivery of our services, focusing on more effective resource utilization, including the productivity of our employees, real estate, information technology and shared services, such as finance, human resources and legal. The improvements we have made and continue to make in our financial reporting and business information systems in recent years allow us more timely and actionable insights from our global operations. Our disciplined approach to our balance sheet and liquidity provides us with a solid financial foundation and financial flexibility to manage and grow our business. We believe that our strategy and execution position us to meet our financial goals and to deliver long-term shareholder value.
The following tables present a summary of financial performance for the three and nine months ended September 30, 2017 and 2016.
 Three months ended
September 30, 2017		 Nine months ended
September 30, 2017
% Increase/(Decrease)Total Organic Total Organic
Revenue(1.0)% 0.5 % (0.7)% 1.1 %
Salaries and related expenses0.0 % 1.3 % 0.4 % 2.4 %
Office and general expenses(6.2)% (3.3)% (4.0)% (1.3)%

Management’s Discussion and Analysis of Financial Condition and Results of Operations - (continued)
(Amounts in Millions, Except Per Share Amounts)
(Unaudited)


 Three months ended
September 30,		 Nine months ended
September 30,
 2017 2016 2017 2016
Operating margin11.5% 10.8% 8.2% 8.2%
Expenses as % of revenue:       
Salaries and related expenses64.5% 63.9% 67.5% 66.8%
Office and general expenses24.0% 25.3% 24.3% 25.1%
        
Net income available to IPG common stockholders$146.2
 $128.6
 $262.4
 $290.9
        
Earnings per share available to IPG common stockholders:       
Basic$0.38
 $0.32
 $0.67
 $0.73
Diluted$0.37
 $0.32
 $0.66
 $0.71
When we analyze period-to-period changes in our operating performance, we determine the portion of the change that is attributable to changes in foreign currency rates and the net effect of acquisitions and divestitures, and the remainder we call organic change, which indicates how our underlying business performed. TheWe exclude the impact of billable expenses in analyzing our operating performance metrics that we useas the fluctuations from period to evaluate our results includeperiod are not indicative of the organic change in revenue, salaries and related expenses, and office and general expenses, and the components of operating expenses expressed as a percentage of total consolidated revenue. Additionally, in certainperformance of our discussions we analyze revenue by geographic regionunderlying businesses and also by business sector, in which we focushave no impact on our top 100 clients, which typically constitute approximately 55% to 60% of our annual consolidated revenues.operating income or net income.
The change in our operating performance attributable to changes in foreign currency rates is determined by converting the prior-period reported results using the current-period exchange rates and comparing these prior-period adjusted amounts to the prior-period reported results. Although the U.S. Dollar is our reporting currency, a substantial portion of our revenues and expenses are generated in foreign currencies. Therefore, our reported results are affected by fluctuations in the currencies in which we conduct our international businesses. Our exposure is mitigated as the majority of our revenues and expenses in any given market are generally denominated in the same currency. Both positive and negative currency fluctuations against the U.S. Dollar affect our consolidated results of operations, and the magnitude of the foreign currency impact to our operations related to each geographic region depends on the significance and operating performance of the region. The foreign currencycurrencies that most adversely impacted our results during the first nine monthshalf of 2017 was2020 were the Brazilian Real, British Pound Sterling, partially offset by the Brazilian Real.Euro, Argentine Peso and Australian Dollar.

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Management’s Discussion and Analysis of Financial Condition and Results of Operations - (continued)
(Amounts in Millions, Except Per Share Amounts)
(Unaudited)


For purposes of analyzing changes in our operating performance attributable to the net effect of acquisitions and divestitures, transactions are treated as if they occurred on the first day of the quarter during which the transaction occurred. During the past few years, we have acquired companies that we believe will enhance our offerings and disposed of businesses that are not consistent with our strategic plan. See Note 4
The metrics that we use to evaluate our financial performance include organic change in net revenue as well as the Consolidatedchange in certain operating expenses, and the components thereof, expressed as a percentage of consolidated net revenue, as well as Adjusted EBITA. These metrics are also used by management to assess the financial performance of our reportable segments, Integrated Agency Networks (“IAN”) and Constituency Management Group (“CMG”). In certain of our discussions, we analyze net revenue by geographic region and by business sector, in which we focus on our top 100 clients, which typically constitute approximately 55% to 60% of our annual consolidated net revenues.
The following table presents a summary of our financial performance for the three and six months ended June 30, 2020 and 2019.
 Three months ended
June 30,		   Six months ended
June 30,		  
Statement of Operations Data2020 2019 
% Increase/
(Decrease)
 2020 2019 
% Increase/
(Decrease)
REVENUE:    

      
Net revenue$1,853.4
 $2,125.9
 (12.8)% $3,825.5
 $4,130.7
 (7.4)%
Billable expenses172.3
 394.3
 (56.3)% 560.0
 750.7
 (25.4)%
Total revenue$2,025.7
 $2,520.2
 (19.6)% $4,385.5
 $4,881.4
 (10.2)%
            
OPERATING INCOME$40.5
 $264.2
 (84.7)% $116.4
 $314.4
 (63.0)%
            
Adjusted EBITA 1
$62.3
 $285.5
 (78.2)% $159.5
 $357.3
 (55.4)%
            
NET (LOSS) INCOME AVAILABLE TO IPG COMMON STOCKHOLDERS$(45.6) $169.5
   $(40.9) $161.5
  
            
Earnings per share available to IPG common stockholders:           
Basic$(0.12) $0.44
   $(0.11) $0.42
  
Diluted$(0.12) $0.43
   $(0.11) $0.41
  
            
Operating Ratios           
Organic change in net revenue(9.9)% 3.0%   (5.0)% 4.6%  
            
Operating margin on net revenue2.2 % 12.4%   3.0 % 7.6%  
Operating margin on total revenue2.0 % 10.5%   2.7 % 6.4%  
            
Adjusted EBITA margin on net revenue 1
3.4 % 13.4%   4.2 % 8.6%  
            
Expenses as a % of net revenue:           
Salaries and related expenses70.5 % 65.0%   71.3 % 67.8%  
Office and other direct expenses17.1 % 18.2%   18.2 % 18.8%  
Selling, general and administrative expenses0.2 % 0.8%   0.7 % 1.4%  
Depreciation and amortization3.9 % 3.4%   3.8 % 3.5%  
Restructuring charges 2
6.1 % 0.1%   2.9 % 0.8%  

26
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Management’s Discussion and Analysis of Financial Condition and Results of Operations - (continued)
(Amounts in Millions, Except Per Share Amounts)
(Unaudited)


1
Adjusted EBITA is a financial measure that is not defined by U.S. GAAP. Adjusted EBITA is calculated as net income available to IPG common stockholders before provision for incomes taxes, total (expenses) and other income, equity in net income (loss) of unconsolidated affiliates, net income attributable to noncontrolling interests and amortization of acquired intangibles. Refer to the “Non-GAAP Financial Measure” section of this MD&A for additional information and for a reconciliation to U.S. GAAP measures.
2
Results include restructuring charges of $112.6 for the three and six months ended June 30, 2020 and $2.1 and $33.9 for the three and six months ended June 30, 2019, respectively. See “Restructuring Charges” in this MD&A and Note 7 to the Consolidated Financial Statements for further information.
Our organic net revenue decrease of 9.9% for additional information on acquisitions.the second quarter of 2020 was primarily attributable to lower spending from existing clients as well as net client losses in the auto and transportation, financial services and consumer goods sectors, partially offset by a combination of net client wins and net higher spending from existing clients in the healthcare and retail sectors. During the second quarter of 2020, our Adjusted EBITA margin decreased to 3.4% from 13.4% in the prior-year period as the decrease in net revenue, discussed below in the “Results of Operations” section, exceeded the overall decrease in our operating expense, excluding billable expenses and amortization of acquired intangibles.

Our organic net revenue decrease of 5.0% for the first half of 2020 was primarily attributable to lower spending from existing clients and net client losses in the auto and transportation, government and consumer goods sectors, partially offset by a combination of net client wins and net higher spending from existing clients in the healthcare and retail sectors. During the first half of 2020, our Adjusted EBITA margin decreased to 4.2% from 8.6% in the prior-year period as the decrease in net revenue, discussed below in the “Results of Operations” section, exceeded the overall decrease in our operating expense, excluding billable expenses and amortization of acquired intangibles.


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Management’s Discussion and Analysis of Financial Condition and Results of Operations - (continued)
(Amounts in Millions, Except Per Share Amounts)
(Unaudited)


RESULTS OF OPERATIONS
Consolidated Results of Operations – Three and NineSix Months Ended SeptemberJune 30, 20172020 Compared to Three and NineSix Months Ended SeptemberJune 30, 20162019
REVENUENet Revenue
OurIn a typical year (pre-pandemic), our net revenue is directly impacted by the retention and spending levels of existing clients and by our ability to win new clients. Most of our expenses are recognized ratably throughout the year and are therefore less seasonal than revenue. Our net revenue is typically lowest in the first quarter and highest in the fourth quarter, reflecting the seasonal spending of our clients, incentives earned at year end on various contracts and project work completed that is typically recognizedclients.
   Components of Change   Change
 Three months ended
June 30, 2019
Foreign
Currency
 
Net
Acquisitions/
(Divestitures)
 Organic Three months ended
June 30, 2020		Organic Total
Consolidated$2,125.9
 $(44.8) $(17.8) $(209.9) $1,853.4
 (9.9)% (12.8)%
Domestic1,337.7
 —
 (4.1) (106.4) 1,227.2
 (8.0)% (8.3)%
International788.2
 (44.8) (13.7) (103.5) 626.2
 (13.1)% (20.6)%
United Kingdom180.4
 (7.5) 0.5
 (26.2) 147.2
 (14.5)% (18.4)%
Continental Europe183.3
 (5.6) (7.7) (20.3) 149.7
 (11.1)% (18.3)%
Asia Pacific205.1
 (8.0) (5.8) (28.7) 162.6
 (14.0)% (20.7)%
Latin America92.1
 (19.5) (0.7) (9.6) 62.3
 (10.4)% (32.4)%
Other127.3
 (4.2) 0.0
 (18.7) 104.4
 (14.7)% (18.0)%
The organic decrease during the fourth quarter. Insecond quarter of 2020 in our domestic market was primarily driven by the eventsrevenue declines at our digital specialist agencies, media businesses and sports and event marketing business, revenues can fluctuatebusinesses, primarily due to sports and events cancellations. In our international markets, the timingorganic decrease was driven by the revenue declines at our advertising businesses, primarily in the United Kingdom and Asia Pacific regions, media businesses, primarily in Continental Europe, and public relations agencies, primarily in the Asia Pacific region.
   Components of Change   Change
 Six months ended
June 30, 2019
Foreign
Currency
 
Net
Acquisitions/
(Divestitures)
 Organic Six months ended
June 30, 2020		Organic Total
Consolidated$4,130.7
 $(65.4) $(35.3) $(204.5) $3,825.5
 (5.0)% (7.4)%
Domestic2,651.8
 —
 (8.1) (96.5) 2,547.2
 (3.6)% (3.9)%
International1,478.9
 (65.4) (27.2) (108.0) 1,278.3
 (7.3)% (13.6)%
United Kingdom350.7
 (9.1) 0.5
 (29.2) 312.9
 (8.3)% (10.8)%
Continental Europe340.1
 (10.7) (15.3) (18.4) 295.7
 (5.4)% (13.1)%
Asia Pacific383.1
 (12.0) (11.5) (38.2) 321.4
 (10.0)% (16.1)%
Latin America172.4
 (29.1) (0.7) (1.0) 141.6
 (0.6)% (17.9)%
Other232.6
 (4.5) (0.2) (21.2) 206.7
 (9.1)% (11.1)%
The organic decrease during the first half of completed projects, as2020 in our domestic market was primarily driven by the revenue is typically recognized whendeclines at our digital specialist agencies, media businesses and sports and event marketing businesses, primarily due to sports and events cancellations, partially offset by growth at our advertising businesses. In our international markets, the project is complete. When we act as principalorganic decrease was driven by the factors similar to those noted above for these projects, we record the gross amount billedsecond quarter of 2020.
Refer to the client assegment discussion later in this MD&A for information on changes in net revenue and the related costs are incurred as pass-through costs in office and general expenses.by segment.


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Management’s Discussion and Analysis of Financial Condition and Results of Operations - (continued)
(Amounts in Millions, Except Per Share Amounts)
(Unaudited)




Salaries and Related Expenses
   Components of Change   Change
 Three months ended
September 30, 2016
Foreign
Currency
 
Net
Acquisitions/
(Divestitures)
 Organic Three months ended
September 30, 2017		Organic Total
Consolidated$1,922.2
 $7.7
 $(37.2) $9.9
 $1,902.6
 0.5 % (1.0)%
Domestic1,165.9
 0.0
 (25.0) 15.1
 1,156.0
 1.3 % (0.8)%
International756.3
 7.7
 (12.2) (5.2) 746.6
 (0.7)% (1.3)%
United Kingdom174.0
 (4.3) 1.4
 5.3
 176.4
 3.0 % 1.4 %
Continental Europe147.6
 6.4
 (4.0) 0.6
 150.6
 0.4 % 2.0 %
Asia Pacific217.9
 0.8
 (0.2) (4.6) 213.9
 (2.1)% (1.8)%
Latin America103.6
 2.4
 (10.4) (10.3) 85.3
 (9.9)% (17.7)%
Other113.2
 2.4
 1.0
 3.8
 120.4
 3.4 % 6.4 %
 Three months ended
June 30,		   Six months ended
June 30,		  
 2020 2019 % Increase/
(Decrease)		 2020 2019 % Increase/
(Decrease)
Salaries and related expenses$1,306.1
 $1,381.2
 (5.4)% $2,728.9
 $2,802.3
 (2.6)%
            
As a % of net revenue:           
Salaries and related expenses70.5% 65.0%   71.3% 67.8%  
Base salaries, benefits and tax59.2% 54.9%   60.4% 57.1%  
Incentive expense4.1% 4.2%   3.9% 4.5%  
Severance expense3.0% 0.5%   2.1% 0.7%  
Temporary help3.1% 4.1%   3.8% 4.1%  
All other salaries and related expenses1.1% 1.3%   1.1% 1.4%  
DuringSalaries and related expenses decreased by 5.4% compared to net revenue decline of 12.8% during the thirdsecond quarter of 2017, our revenue decreased by $19.6, or 1.0%,2020 as compared to the third quarter of 2016, comprised of an organic revenue increase of $9.9, or 0.5% and a favorable foreign currency rate impact of $7.7, offset by the effect of net divestitures of $37.2. Our organic revenue increase was primarily attributable to growth within the healthcare sector, offset by decreases in the technology and telecom sector.prior-year period. The organic revenue increase in our domestic market was mainly driven by our media and advertising businesses, partially offset by declines within our digital specialist agencies and a decrease in pass-through revenue related to certain projects where we acted as principal that decreased in size or did not recur in our events businesses during the third quarter of 2017, the impact of which is also reflected as a comparable reduction in office and general expenses. In our international markets, the organic revenue decrease was primarily attributable to decreases at our advertising businesses in Latin America, most notably in Brazil, and the Asia Pacific region, partially offset by growth across all regions at our media businesses as well as growth at our advertising businesses in the United Kingdom.
   Components of Change   Change
 Nine months ended
September 30, 2016
Foreign
Currency
 
Net
Acquisitions/
(Divestitures)
 Organic Nine months ended
September 30, 2017		Organic Total
Consolidated$5,582.1
 $(30.7) $(73.8) $63.8
 $5,541.4
 1.1 % (0.7)%
Domestic3,426.2
 0.0
 (52.5) 54.6
 3,428.3
 1.6 % 0.1 %
International2,155.9
 (30.7) (21.3) 9.2
 2,113.1
 0.4 % (2.0)%
United Kingdom495.3
 (44.5) 12.5
 8.5
 471.8
 1.7 % (4.7)%
Continental Europe468.1
 (3.9) (13.3) 6.1
 457.0
 1.3 % (2.4)%
Asia Pacific617.7
 (0.7) 2.4
 (12.0) 607.4
 (1.9)% (1.7)%
Latin America255.7
 14.3
 (24.6) (7.9) 237.5
 (3.1)% (7.1)%
Other319.1
 4.1
 1.7
 14.5
 339.4
 4.5 % 6.4 %
During the first nine months of 2017, our revenue decreased by $40.7, or 0.7%, compared to the first nine months of 2016, comprised of an organic revenue increase of $63.8, or 1.1%, offset by the effect of net divestitures of $73.8 and an adverse foreign currency rate impact of $30.7. Our organic revenue increase was primarily attributable to growth within the healthcare sector, offset by decreases in the technology and telecom sector. The organic increase in our domestic market was mainly driven by our media and advertising businesses, offset by weakness in our events and branding businesses. In our international markets, the organic revenue increase was primarily driven by growth across all regions at our media businessesreductions in base salaries, benefits and our advertising businessestax and lower temporary help expenses in response to the United Kingdom,declines in net revenue, which were primarily due to the effects of the COVID-19 pandemic on economic conditions, in addition to lower incentive expense. The cumulative decreases were partially offset by increased severance expense.
Salaries and related expenses decreased by 2.6% compared to net revenue decline of 7.4% during the first half of 2020 as compared to the prior-year period, primarily driven by factors similar to those noted above for the second quarter of 2020.
Office and Other Direct Expenses
 Three months ended
June 30,		   Six months ended
June 30,		  
 2020 2019 % Increase/
(Decrease)		 2020 2019 % Increase/
(Decrease)
Office and other direct expenses$317.0
 $387.3
 (18.2)% $695.2
 $776.5
 (10.5)%
            
As a % of net revenue:           
Office and other direct expenses17.1% 18.2%   18.2% 18.8%  
Occupancy expense6.6% 6.5%   6.6% 6.5%  
All other office and other direct expenses 1
10.5% 11.7%   11.6% 12.3%  
1Includes client service costs, non-pass through production expenses, travel and entertainment, professional fees, spending to support new business activity, telecommunications, office supplies, bad debt expense, adjustments to contingent acquisition obligations, foreign currency losses (gains) and other expenses.
Office and other direct expenses decreased by 18.2% compared to net revenue decline of 12.8% during the second quarter of 2020 as compared to the prior-year period. The decrease in office and other direct expenses was mainly due to decreases at our advertising businesses in travel and entertainment expenses and new business and promotion expenses as well as lower occupancy expense, partially offset by an increase in bad debt expense and a year-over-year change in contingent acquisition obligations.
Office and other direct expenses decreased by 10.5% compared to net revenue decline of 7.4% during the Asia Pacificfirst half of 2020 as compared to the prior-year period. The decrease in office and Latin America regions and our events businesses inother direct expenses was mainly due to factors similar to those noted above for the United Kingdom, primarilysecond quarter of 2020 as well as a resultreduction in professional consulting fees.
Selling, General and Administrative Expenses
Selling, general and administrative expenses (“SG&A”) are primarily the unallocated expenses of certain projects where we no longer actour Corporate and other group, as principal.
Refer todetailed further in the segment discussion later in this MD&A, for information on changes inexcluding depreciation and amortization. For the three and six months ended June 30, 2020, SG&A as a percentage of net revenue by segment.decreased as compared to the prior-year period, primarily


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Management’s Discussion and Analysis of Financial Condition and Results of Operations - (continued)
(Amounts in Millions, Except Per Share Amounts)
(Unaudited)




OPERATING EXPENSESattributable to a decrease in employee insurance expense, resulting from fewer insurance claims with elective procedures and routine care being delayed in 2020 as well as a decrease in travel and entertainment expenses.
Depreciation and Amortization
 Three months ended
September 30,		 Nine months ended
September 30,
 2017 2016 2017 2016
Salaries and related expenses$1,227.6
 $1,228.0
 $3,742.3
 $3,726.3
Office and general expenses455.9
 486.2
 1,343.8
 1,400.5
Total operating expenses$1,683.5
 $1,714.2
 $5,086.1
 $5,126.8
Operating income$219.1
 $208.0
 $455.3
 $455.3
InDuring the thirdsecond quarter of 2017, total operating2020, depreciation and amortization expenses decreased 1.8%, compared to our revenue decrease of 1.0%, from the third quarter of 2016, resulting in operating margin expansion to 11.5% from 10.8%. In the first nine months of 2017, total operating expenses decreased 0.8%, compared to our revenue decrease of 0.7%, from the first nine months of 2016, resulting in an operating margin of 8.2%, which remainsremained relatively flat as compared to the prior-year period.
Salaries During the first half of 2020, depreciation and Related Expenses
   Components of Change   Change
 2016
Foreign
Currency
 
Net
Acquisitions/
(Divestitures)
 Organic 2017Organic Total
Three months ended September 30,$1,228.0
 $4.6
 $(21.0) $16.0
 $1,227.6
 1.3% 0.0 %
Nine months ended September 30,3,726.3
 (24.6) (49.4) 90.0
 3,742.3
 2.4% 0.4 %
Salaries and relatedamortization expenses in the third quarter of 2017 decreased by $0.4 compared to the third quarter of 2016, comprised of an organic increase of $16.0 and an adverse foreign currency rate impact of $4.6, offset by the effect of net divestitures of $21.0. The organic increase was primarily attributable to an increase in base salaries, benefits and tax, partially offset by lower incentive expense. Our staff cost ratio, defined as salaries and related expenses as a percentage of total consolidated revenue,slightly increased in the third quarter of 2017 to 64.5% from 63.9%, when compared to the prior-year period.
SalariesRestructuring Charges
The components of restructuring charges for 2020 and 2019 restructuring plans are listed below.
 Three months ended
June 30,		 Six months ended
June 30,
 2020 2019 2020 2019
Severance and termination costs$44.6
 $2.1
 $44.6
 $22.0
Lease impairment costs65.7
 0.0
 65.7
 11.9
Other restructuring costs2.3
 0.0
 2.3
 0.0
Total restructuring charges$112.6
 $2.1
 $112.6
 $33.9
2020 Restructuring Plan
In the second quarter of 2020, the Company took restructuring actions to lower our operating expenses structurally and permanently relative to revenue and to accelerate the transformation of our business (the “2020 Plan”). Most of these actions are based on our recent experience and learning in the COVID-19 pandemic and a resulting review of our operations, which continues, to address certain operating expenses such as occupancy expense and salaries and related expenses inexpenses.
Net restructuring charges were comprised of $68.8 at IAN and $36.7 at CMG for the three and six months ended June 30, 2020, which include non-cash lease impairment costs of $35.8 at IAN and $26.8 at CMG. Restructuring actions under the 2020 Plan were identified and initiated during the second quarter of 2020, with additional actions expected during the third and fourth quarters and all actions to be substantially complete by the end of the fourth quarter of 2020.
During the first nine monthshalf of 2017 increased by $16.0 compared2020, severance and termination costs related to the first nine monthsa planned reduction in workforce of 2016, comprised of an organic increase of $90.0, partially offset by the effect of net divestitures of $49.4694 employees. The employee groups affected include executive, regional and a favorable foreign currency rate impact of $24.6. The organic increase was primarily driven by factors similar to those noted above for the third quarter of 2017,account management as well as lower acquisition-related contractual compensation,administrative, creative and media production personnel.
Lease impairment costs, which relate to the office spaces that were vacated as part of the 2020 Plan, included impairments of operating lease right-of-use assets and associated leasehold improvements, furniture and asset retirement obligations. Lease impairments were calculated based on estimated fair values using market participant assumptions including forecasted net discounted cash flows related to the operating lease right-of-use assets.
A summary of the restructuring activities related to the 2020 Plan is classified within all otheras follows:
 2020 Plan
 Restructuring Expense Non-Cash Items Cash Payments Liability at June 30, 2020
Severance and termination costs$44.6
 $0.7
 $10.1
 $33.8
Lease impairment costs65.7
 65.7
 0.0
 0.0
Other2.3
 1.2
 1.1
 0.0
Total$112.6
 $67.6
 $11.2
 $33.8
The resulting restructuring charges of $112.6 in the second quarter of 2020, to reduce our ongoing expenses such as occupancy expense and salaries and related expenses, reflects the breadth of our review. These actions reduce our global real estate footprint by approximately 5% or 500,000 square feet and, further, address selected levels of management and staffing with severance costs for 694 employees. Of the total charge in the table below. Our staffsecond quarter, $67.6 or 60%, is non-cash, mainly representing the write-off of right-of-use assets of operating leases. We expect to realize approximately $80 to $90 of annualized cost ratio increased insavings associated with the first nine monthsactions taken during the second quarter of 2017 to 67.5% from 66.8% when compared to the prior-year period.2020.
The following table details our staff cost ratio.
30
 Three months ended
September 30,		 Nine months ended
September 30,
 2017 2016 2017 2016
Salaries and related expenses64.5% 63.9% 67.5% 66.8%
Base salaries, benefits and tax55.7% 53.5% 57.3% 55.6%
Incentive expense2.0% 3.7% 3.1% 3.8%
Severance expense0.8% 0.7% 1.0% 1.0%
Temporary help3.8% 3.9% 3.9% 3.9%
All other salaries and related expenses2.2% 2.1% 2.2% 2.5%
Table of Contents


Management’s Discussion and Analysis of Financial Condition and Results of Operations - (continued)
(Amounts in Millions, Except Per Share Amounts)
(Unaudited)




Office and General Expenses
   Components of Change   Change
 2016
Foreign
Currency
 
Net
Acquisitions/
(Divestitures)
 Organic 2017Organic Total
Three months ended September 30,$486.2
 $(0.2) $(13.9) $(16.2) $455.9
 (3.3)% (6.2)%
Nine months ended September 30,1,400.5
 (10.8) (27.9) (18.0) 1,343.8
 (1.3)% (4.0)%
Office and general expensesAs part of our continuing review, we also anticipate that we will take additional actions in the thirdsecond half of this year, primarily related to further occupancy and salaries-related reductions. We are currently evaluating cost reduction actions for the remainder of 2020, which may result in additional charges between approximately $90 to $110. The additional charges should be primarily non-cash, although the amount and type of additional actions will be dependent on market conditions over the remainder of the year. Our restructuring actions are designed to structurally lower our cost base in the future.
2019 Restructuring Plan
In the first quarter of 2017 decreased2019, the Company implemented a cost initiative (the "2019 Plan") to better align our cost structure with our revenue primarily related to specific client losses occurring in 2018. All restructuring actions were identified and initiated by $30.3 compared to the thirdend of the first quarter of 2016, comprised2019, with all actions substantially completed by the end of an organic decrease of $16.2, the effect of net divestitures of $13.9 and a favorable foreign currency rate impact of $0.2. The organic decrease was attributable to lower production expenses related to pass-through costs, which are also reflected in revenue, partially offset by higher occupancy costs. Our office and general expense ratio, defined as office and general expenses as a percentage of total consolidated revenue, decreased in the thirdsecond quarter of 2017 to 24.0% from 25.3%, when compared to the prior-year period.2019 and there have not been any restructuring adjustments.
Office and general expenses in the first nine months of 2017 decreased by $56.7 compared to the first nine months of 2016, comprised of an organic decrease of $18.0, the effect of net divestitures of $27.9 and a favorable foreign currency rate impact of $10.8. The organic decrease was primarily driven by factors similar to those noted above for the third quarter of 2017, as well as decreases in adjustments to contingent acquisition obligations, as compared to the prior year. Our office and general expense ratio decreased in the first nine months of 2017 to 24.3% from 25.1%, when compared to the prior-year period.
The following table details our office and general expense ratio.
 Three months ended
September 30,		 Nine months ended
September 30,
 2017 2016 2017 2016
Office and general expenses24.0% 25.3% 24.3% 25.1%
Professional fees1.4% 1.4% 1.6% 1.5%
Occupancy expense (excluding depreciation and amortization)6.9% 6.6% 7.0% 6.8%
Travel & entertainment, office supplies and telecommunications2.8% 2.8% 3.1% 3.2%
All other office and general expenses 1
12.9% 14.5% 12.6% 13.6%
1Includes production expenses and, to a lesser extent, depreciation and amortization, bad debt expense, adjustments to contingent acquisition obligations, foreign currency losses (gains), spending to support new business activity, net restructuring and other reorganization-related charges (reversals), long-lived asset impairments and other expenses.


EXPENSES AND OTHER INCOME
Three months ended
September 30,		 Nine months ended
September 30,		Three months ended
June 30,		 Six months ended
June 30,
2017 2016 2017 20162020 2019 2020 2019
Cash interest on debt obligations$(21.0) $(19.5) $(60.1) $(59.8)$(48.5) $(49.4) $(91.9) $(95.0)
Non-cash interest0.0
 (2.2) (7.5) (9.0)(1.3) (2.2) (2.7) (6.4)
Interest expense(21.0) (21.7) (67.6) (68.8)(49.8) (51.6) (94.6) (101.4)
Interest income4.1
 4.7
 14.0
 16.1
5.9
 7.7
 16.6
 15.5
Net interest expense(16.9) (17.0) (53.6) (52.7)(43.9) (43.9) (78.0) (85.9)
Other (expense) income, net(9.9) 5.3
 (24.5) (13.5)
Other expense, net(21.5) (3.8) (43.3) (10.7)
Total (expenses) and other income$(26.8) $(11.7) $(78.1) $(66.2)$(65.4) $(47.7) $(121.3) $(96.6)
Other Expense, Net Interest Expense
ForResults of operations for the ninethree and six months ended SeptemberJune 30, 2017, net interest expense increased by $0.92020 and 2019 include certain items that are not directly associated with our revenue-producing operations.
 Three months ended
June 30,		 Six months ended
June 30,
 2020 2019 2020 2019
Net losses on sales of businesses$(19.9) $(3.2) $(43.2) $(11.8)
Other(1.6) (0.6) (0.1) 1.1
Total other expense, net$(21.5) $(3.8) $(43.3) $(10.7)
Net losses on sales of businesses – During the three and six months ended June 30, 2020, the amounts recognized were related to sales of businesses and the classification of certain assets and liabilities, consisting primarily of cash, as comparedheld for sale within our IAN and CMG reportable segments. During the three and six months ended June 30, 2019, the amounts recognized were related to prior-year period,sales of businesses and the classification of certain assets and liabilities, consisting primarily dueof accounts receivable and cash, as held for sale within our IAN reportable segment. The businesses held for sale primarily represent unprofitable, non-strategic agencies which are expected to lower interest income from our international markets, partially offset bybe sold within the next twelve months.
Other – During the three and six months ended June 30, 2019, the amounts recognized were primarily related to a decrease in non-cash interest expense from revaluationssale of mandatorily redeemable noncontrolling interests.an equity investment.



31
Table of Contents

Management’s Discussion and Analysis of Financial Condition and Results of Operations - (continued)
(Amounts in Millions, Except Per Share Amounts)
(Unaudited)



Other (Expense) Income, Net
Results of operations for the three and nine months ended September 30, 2017 and 2016 include certain items that are not directly associated with our revenue-producing operations.
 Three months ended
September 30,		 Nine months ended
September 30,
 2017 2016 2017 2016
Net (losses) gains on sales of businesses and investments$(6.2) $3.9
 $(18.3) $(14.6)
Other (expense) income, net(3.7) 1.4
 (6.2) 1.1
Total other (expense) income, net$(9.9) $5.3
 $(24.5) $(13.5)
Net (Losses) Gains on Sales of Businesses and Investments – During the three and nine months ended September 30, 2017, the amounts recognized are primarily related to sales of businesses and the classification of certain assets and liabilities, consisting primarily of accounts receivable and accounts payable, respectively, as held for sale within our Integrated Agency Networks ("IAN") operating segment. During the three and nine months ended September 30, 2016, the amounts recognized are primarily related to sales of businesses within our IAN segment.


INCOME TAXES
 Three months ended
September 30,		 Nine months ended
September 30,
 2017 2016 2017 2016
Income before income taxes$192.3
 $196.3
 $377.2
 $389.1
Provision for income taxes$42.5
 $63.8
 $115.8
 $91.9
Effective income tax rate22.1% 32.5% 30.7% 23.6%
 Three months ended
June 30,		 Six months ended
June 30,
 2020 2019 2020 2019
(Loss) Income before income taxes$(24.9) $216.5
 $(4.9) $217.8
Provision for income taxes$19.0
 $43.6
 $36.2
 $54.1
Our tax rates are affected by many factors, including our worldwide earnings from various countries, changes in legislation and tax characteristics of our income. For the three months ended June 30, 2020, our income tax provision was negatively impacted by losses in certain foreign jurisdictions where we received no tax benefit due to 100% valuation allowances, by net losses on sales of businesses and the classification of certain assets as held for sale for which we received no tax benefit and by tax expense associated with the change to our assertion regarding the permanent reinvestment of undistributed earnings attributable to certain foreign subsidiaries.
For the six months ended June 30, 2020, our income tax provision was negatively impacted by the same factors noted for the three months ended June 30, 2020 in addition to net losses on sales of businesses and the classification of certain assets as held for sale, for which we received minimal tax benefit.
On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was enacted and signed into law. The CARES Act includes several provisions for corporations including increasing the amount of deductible interest, allowing companies to carryback certain net operating losses (“NOLs”) and increasing the amount of NOLs that corporations can use to offset income. The CARES Act did not materially affect our quarter or year-to-date income tax provision, deferred tax assets and liabilities, or related taxes payable. We are currently assessing the future implications of these provisions within the CARES Act on our Consolidated Financial Statements, but do not expect the impact to be material.  
In the second quarter of 2020, in response to changes in non-US tax law, a decision was made to change our indefinite reinvestment assertion on a $110.0 of undistributed foreign earnings of specific subsidiaries. We recorded $10.0 of income tax costs associated with this change to our assertion.
For the three and ninesix months ended SeptemberJune 30, 2017,2019, our effective income tax rates of 22.1% and 30.7%, respectively, wereprovision was positively impacted by a benefitthe settlement of $31.2 related to foreignstate income tax credits from distributions of unremitted earnings,audits, partially offset by losses in certain foreign jurisdictions where we receive no tax benefit due to 100% valuation allowances, and bynet losses on sales of businesses and the classification of certain assets as held for sale, for which we did not receive a full tax benefit. For
On July 29, 2020, the nine months ended September 30, 2017, our effectiveInternal Revenue Service notified the Company that the U.S. Federal income tax rate was positively impacted by excessexamination of years 2006 through 2016 has been finalized and effectively settled. As a result, we expect to recognize an income tax benefits on employee share-based payments, the majoritybenefit of which is typically recognizedapproximately $135.0 in the firstthird quarter due to the timing of the vesting of awards.2020.
For the nine months ended September 30, 2016, our effective income tax rate of 23.6% was positively impacted by the settlement of 2011 and 2012 income tax audits which included the recognition of certain previously unrecognized tax benefits of $23.4, the reversal of valuation allowances of $12.2 as a consequence of the disposition of certain businesses in Continental Europe, excess tax benefits on employee share-based payments and the recognition of previously unrecognized tax benefits as a result of a lapse in statute of limitations. The positive impacts to our tax rates were partially offset by losses in certain foreign jurisdictions where we receive no tax benefit due to 100% valuation allowances and by losses on sales of businesses for which we did not receive a full tax benefit.


(LOSS) EARNINGS PER SHARE
Basic earningsloss per share available to IPG common stockholders for the three and ninesix months ended SeptemberJune 30, 2017 were $0.382020 was $0.12 and $0.67,$0.11, respectively, compared to $0.32earnings per share of $0.44 and $0.73$0.42 for the three and ninesix months ended SeptemberJune 30, 2016,2019, respectively. Diluted loss per share available to IPG common stockholders for the three and six months ended June 30, 2020was $0.12 and $0.11, respectively, compared to diluted earnings per share of $0.43 and $0.41 for the three and six months ended June 30, 2019, respectively.
Basic and diluted loss per share for the three and nine months ended SeptemberJune 30, 2017 were $0.37 and $0.66, respectively, compared to $0.32 and $0.71 for the three and nine months ended September 30, 2016, respectively.
For the three and nine months ended September 30, 2017, net income available to IPG common stockholders2020 included $31.2 related to foreign tax credits from distributions of unremitted earnings, resulting in a positivenegative impact of $0.08 on basic and diluted earnings per share for both periods. For$0.05 from the three and nine months ended September 30, 2017,amortization of acquired intangibles, a negative impact of $0.22 from restructuring charges, a negative impact of $0.05 from net income available to IPG common stockholders included net losses of $7.0 and $19.2, respectively, on sales of businesses and the classification of certain assets as held for sale, resulting inand a negative impactsimpact of $0.02 and $0.05, respectively, to basic$0.03 from a discrete tax item.
Basic and diluted earningsloss per share.share for the six months ended June 30, 2020 included a negative impact of $0.09 from the amortization of acquired intangibles, a negative impact of $0.22 from restructuring charges, a negative impact of $0.11 from net losses on sales of businesses and the classification of certain assets as held for sale, and a negative impact of $0.03 from a discrete tax item.


32
Table of Contents

Management’s Discussion and Analysis of Financial Condition and Results of Operations - (continued)
(Amounts in Millions, Except Per Share Amounts)
(Unaudited)




ForBasic and diluted earnings per share for the ninethree months ended SeptemberJune 30, 2016,2019 included a negative impact of $0.04 from the amortization of acquired intangibles, a negative impact of $0.02 from net income available to IPG common stockholders included the recognition of certain previously unrecognized tax benefits totaling $23.4, losses of $15.7, net of tax, on sales of businesses in our international markets,and the classification of certain assets as held for sale and a benefitpositive impact of $12.2$0.04 from a tax benefit related to the reversalsconclusion and settlement of valuation allowances as a consequencetax examinations of the sales of businesses, resulting in impacts of $0.06, ($0.04) and $0.03, respectively, to basicprevious years.
Basic and diluted earnings per share.share for the six months ended June 30, 2019 included a negative impact of $0.09 from the amortization of acquired intangibles, a negative impact of $0.06 from first-quarter restructuring charges, a negative impact of $0.04 from net losses on sales of businesses and the classification of certain assets as held for sale and a positive impact of $0.04 from a tax benefit related to the conclusion and settlement of tax examinations of previous years.


Segment Results of Operations – Three and NineSix Months Ended SeptemberJune 30, 20172020 Compared to Three and NineSix Months Ended SeptemberJune 30, 20162019
As discussed in Note 1011 to the unaudited Consolidated Financial Statements, we have two reportable segments as of SeptemberJune 30, 2017:2020: IAN and Constituency Management Group ("CMG").CMG. We also report results for the "Corporate“Corporate and other"other” group. Segment information for the prior period has been recast to conform to the current-period presentation.
IAN
REVENUENet Revenue
  Components of Change   Change  Components of Change   Change
Three months ended
September 30, 2016
Foreign
Currency
 
Net
Acquisitions/
(Divestitures)
 Organic Three months ended
September 30, 2017		Organic TotalThree months ended
June 30, 2019
Foreign
Currency
 
Net
Acquisitions/
(Divestitures)
 Organic Three months ended
June 30, 2020		Organic Total
Consolidated$1,503.2
 $8.7
 $(22.4) $30.7
 $1,520.2
 2.0 % 1.1%$1,801.1
 $(40.0) $(16.2) $(159.2) $1,585.7
 (8.8)% (12.0)%
Domestic893.8
 0.0
 (17.4) 31.6
 908.0
 3.5 % 1.6%1,127.0
 0.0
 (3.3) (75.3) 1,048.4
 (6.7)% (7.0)%
International609.4
 8.7
 (5.0) (0.9) 612.2
 (0.1)% 0.5%674.1
 (40.0) (12.9) (83.9) 537.3
 (12.4)% (20.3)%
DuringThe organic decrease during the thirdsecond quarter of 2017, IAN revenue increased by $17.0 compared2020 was mainly attributable to lower spending from existing clients, primarily related to the third quarter of 2016, comprised of an organic revenue increase of $30.7COVID-19 pandemic, and a favorable foreign currency rate impact of $8.7,net client losses. The lower spending and net client losses were in the auto and transportation, financial services and consumer goods sectors, partially offset by the effect of net divestitures of $22.4. The organic revenue increase was primarily attributable to growth withinclient wins and net higher spending from existing clients in the healthcare sector, partially offset by decreases in the financial services and technology and telecomretail sectors. The organic revenue increasedecrease during the second quarter of 2020 in our domestic market was mainlyprimarily driven by our media and advertising businesses, partially offset by a decline withinthe revenue declines at our digital specialist agencies.agencies and media businesses. In our international markets, the slight organic revenue decrease was primarily attributable to decreasesdriven by the revenue declines at our advertising businesses, in Latin America, most notably in Brazil, and the Asia Pacific region, as well as a decline in our digital specialist agenciesprimarily in the United Kingdom and Asia Pacific regions, and media businesses, primarily in the Continental Europe.
   Components of Change   Change
 Six months ended
June 30, 2019
Foreign
Currency
 
Net
Acquisitions/
(Divestitures)
 Organic Six months ended
June 30, 2020		Organic Total
Consolidated$3,507.2
 $(58.6) $(33.6) $(164.8) $3,250.2
 (4.7)% (7.3)%
Domestic2,241.2
 0.0
 (7.3) (73.6) 2,160.3
 (3.3)% (3.6)%
International1,266.0
 (58.6) (26.3) (91.2) 1,089.9
 (7.2)% (13.9)%
The organic decrease during the first half of 2020 was mainly attributable to lower spending from existing clients, primarily related to the COVID-19 pandemic and net client losses. The lower spending and net client losses were in the auto and transportation, government and consumer goods sectors, partially offset by growth across all regions at our media businesses as well as growth at our advertising businessesnet client wins and net higher spending from existing clients in the United Kingdom.
   Components of Change   Change
 Nine months ended
September 30, 2016
Foreign
Currency
 
Net
Acquisitions/
(Divestitures)
 Organic Nine months ended
September 30, 2017		Organic Total
Consolidated$4,453.3
 $(15.9) $(49.1) $77.3
 $4,465.6
 1.7% 0.3 %
Domestic2,675.9
 0.0
 (36.0) 67.7
 2,707.6
 2.5% 1.2 %
International1,777.4
 (15.9) (13.1) 9.6
 1,758.0
 0.5% (1.1)%
During the first nine months of 2017, IAN revenue increased by $12.3 compared to the first nine months of 2016, comprised of an organic revenue increase of $77.3, partially offset by the effect of net divestitures of $49.1healthcare and an adverse foreign currency rate impact of $15.9. The organic revenue increase was primarily attributable to growth within the healthcare sector, partially offset by decreases in the financial services and technology and telecomretail sectors. The organic revenue increasedecrease during the first half of 2020 in our domestic market was primarily driven by growth across all disciplines, most notablythe revenue declines at our digital specialist agencies and media andbusinesses, partially offset by growth at our advertising businesses. In our international markets, the organic increasedecrease was primarily driven by growth at our media businesses across all regions, most notably in Canada within our Other region and in Latin America, as well as our advertising businesses in the United Kingdom, partially offset by decreases at our advertising businesses infactors similar to those noted above for the Asia Pacific and Latin America regions.second quarter of 2020.
SEGMENT OPERATING INCOME
 Three months ended
September 30,		   Nine months ended
September 30,		  
 2017 2016 Change 2017 2016 Change
Segment operating income$183.9
 $184.1
 (0.1)% $402.1
 $424.1
 (5.2)%
Operating margin12.1% 12.2%   9.0% 9.5%  
33
Table of Contents


Management’s Discussion and Analysis of Financial Condition and Results of Operations - (continued)
(Amounts in Millions, Except Per Share Amounts)
(Unaudited)




Operating incomeSegment EBITA
 Three months ended
June 30,		   Six months ended
June 30,		  
 2020 2019 Change 2020 2019 Change
Segment EBITA 1
$100.4
 $262.4
 (61.7)% $199.4
 $378.4
 (47.3)%
Segment EBITA margin on net revenue 1
6.3% 14.6%   6.1% 10.8%  
1
Segment EBITA and Segment EBITA margin on net revenue include $68.8 of restructuring charges in the second quarter and first half of 2020 and $2.0 and $27.6 of restructuring charges in the second quarter and first half of 2019, respectively. See “Restructuring Charges” in this MD&A and Note 7 to the unaudited Consolidated Financial Statements for further information.
Segment EBITA margin decreased during the thirdsecond quarter of 20172020 when compared to the third quarter of 2016, due to an increaseprior-year period, as the decrease in net revenue of $17.0, as discussed above, and a12.0% exceeded the overall decrease in officethe operating expenses, including restructuring charges and generalexcluding billable expenses and amortization of $5.9, offset by an increase in salaries and related expenses of $23.1. The increase in salaries and related expenses was primarily due to an increase in base salaries, benefits and tax, partially offset by lower incentive expense.acquired intangibles. The decrease in office and general expenses was attributable to lower production expenses related to pass-through costs, which are also reflected in revenue, and lower bad debt expense, partially offset by higher occupancy costs.
Operating income decreased during the first nine months of 2017 when compared to the first nine months of 2016, comprised of an increase in revenue of $12.3, as discussed above, and a decrease in office and general expenses of $18.1, offset by an increase in salaries and related expenses of $52.4. The increase in salaries and related expenses was primarily driven by reductions in base salaries, benefits and tax and lower temporary help expenses in response to the declines in net revenue, primarily due to the effects of the COVID-19 pandemic on economic conditions, in addition to lower incentive expense. The cumulative decreases were partially offset by increased severance expense. The decrease in office and other direct expenses was primarily driven by decreases in travel and entertainment expenses and new business and promotion expenses as well as lower occupancy expense, partially offset by an increase in bad debt expense and a year-over-year change in contingent acquisition obligations. During the second quarter of 2020, segment EBITA included restructuring charges of $68.8 compared to restructuring charges of $2.0 during the second quarter of 2019.
Segment EBITA margin decreased during the first half of 2020 when compared to the prior-year period, as the decrease in net revenue of 7.3% exceeded the overall decrease in the operating expenses, including restructuring charges and excluding billable expenses and amortization of acquired intangibles. The decrease in salaries and related expenses and office and other direct expenses were mainly due to factors similar to those noted above for the thirdsecond quarter of 2017, partially offset by2020 as well as a reduction in professional consulting fees. During the first half of 2020, segment EBITA included restructuring charges of $68.8, compared to restructuring charges of $27.6 during the first half of 2019.
Depreciation and amortization, excluding amortization of acquired intangibles, as a percentage of net revenue was 2.9% and 2.8% during the second quarter and first half of 2020, respectively, which increased compared to the prior-year period.
CMG
Net Revenue
   Components of Change   Change
 Three months ended
June 30, 2019
Foreign
Currency
 
Net
Acquisitions/
(Divestitures)
 Organic Three months ended
June 30, 2020		Organic Total
Consolidated$324.8
 $(4.8) $(1.6) $(50.7) $267.7
 (15.6)% (17.6)%
Domestic210.7
 0.0
 (0.8) (31.1) 178.8
 (14.8)% (15.1)%
International114.1
 (4.8) (0.8) (19.6) 88.9
 (17.2)% (22.1)%
The organic decrease during the second quarter of 2020 was mainly attributable to lower acquisition-related contractual compensation.spending from existing clients, primarily related to the COVID-19 pandemic. The lower spending was in the auto and transportation and technology and telecom sectors. The organic decrease during the second quarter of 2020 in office and general expensesour domestic market was primarily driven by factors similar to those noted above for the third quarter of 2017.
CMG
REVENUE
   Components of Change   Change
 Three months ended
September 30, 2016
Foreign
Currency
 
Net
Acquisitions/
(Divestitures)
 Organic Three months ended
September 30, 2017		Organic Total
Consolidated$419.0
 $(1.0) $(14.8) $(20.8) $382.4
 (5.0)% (8.7)%
Domestic272.1
 0.0
 (7.6) (16.5) 248.0
 (6.1)% (8.9)%
International146.9
 (1.0) (7.2) (4.3) 134.4
 (2.9)% (8.5)%
During the third quarter of 2017, CMG revenue decreased by $36.6 compared to the third quarter of 2016, due to an organic revenue decrease of $20.8, the effect of net divestitures of $14.8 and an adverse foreign currency rate impact of $1.0. The organic revenue decreases in our domestic and international markets were primarily driven by a decrease in pass-through revenue related to certain projects where we acted as principal that decreased in size or did not recur in our events businesses during the third quarter of 2017, the impact of which is also reflected as a comparable reduction in office and general expenses.
   Components of Change   Change
 Nine months ended
September 30, 2016
Foreign
Currency
 
Net
Acquisitions/
(Divestitures)
 Organic Nine months ended
September 30, 2017		Organic Total
Consolidated$1,128.8
 $(14.8) $(24.7) $(13.5) $1,075.8
 (1.2)% (4.7)%
Domestic750.3
 0.0
 (16.5) (13.1) 720.7
 (1.7)% (3.9)%
International378.5
 (14.8) (8.2) (0.4) 355.1
 (0.1)% (6.2)%
During the first nine months of 2017, CMG revenue decreased by $53.0 compared to the first nine months of 2016, comprised of an organic revenue decrease of $13.5, the effect of net divestitures of $24.7 and an adverse foreign currency rate impact of $14.8. The organic revenue decreases in our domestic and international markets were primarily driven by factors similar to those noted above for the third quarter of 2017, partially offset by growthdeclines at our sports and event marketing businesses, in all regions.
SEGMENT OPERATING INCOME
 Three months ended
September 30,		   Nine months ended
September 30,		  
 2017 2016 Change 2017 2016 Change
Segment operating income$50.1
 $54.8
 (8.6)% $127.4
 $125.2
 1.8%
Operating margin13.1% 13.1%   11.8% 11.1%  
Operating income decreased during the third quarter of 2017 when compared to the third quarter of 2016, comprised of a decrease in revenue of $36.6, as discussed above, a decrease in office and general expenses of $21.0 and a decrease in salaries and related expenses of $10.9. The decrease in office and general expenses was primarily due to lower production expenses related to pass-through costs, which are also reflectedsports and events cancellations. In our international markets, the organic decrease was driven by the revenue declines at our public relations agencies, primarily in revenue, as well as decreases in adjustments to contingent acquisition obligations, as compared to the prior year. The decrease in salaries and related expenses was primarily due to net divestituresAsia Pacific region.

34
Table of non-strategic businesses.Contents


Management’s Discussion and Analysis of Financial Condition and Results of Operations - (continued)
(Amounts in Millions, Except Per Share Amounts)
(Unaudited)




Operating income increased
   Components of Change   Change
 Six months ended
June 30, 2019
Foreign
Currency
 
Net
Acquisitions/
(Divestitures)
 Organic Six months ended
June 30, 2020		Organic Total
Consolidated$623.5
 $(6.8) $(1.7) $(39.7) $575.3
 (6.4)% (7.7)%
Domestic410.6
 0.0
 (0.8) (22.9) 386.9
 (5.6)% (5.8)%
International212.9
 (6.8) (0.9) (16.8) 188.4
 (7.9)% (11.5)%
The organic decrease during the first nine monthshalf of 2017 when compared2020 was mainly attributable to lower spending from existing clients, primarily related to the COVID-19 pandemic. The lower spending was in the auto and transportation and technology and telecom sectors, partially offset by a combination of net client wins and net higher spending from existing clients in the healthcare sector. The organic decreases during the first nine monthshalf of 2016, comprised of a decrease2020 in revenue of $53.0, as discussed above, a decrease in officeour domestic and general expenses of $35.0 and a decrease in salaries and related expenses of $20.2. The decreases in office and general and salaries and related expensesinternational market were primarily driven by the factors similar to those noted above for the thirdsecond quarter of 2017.2020.
Segment EBITA
 Three months ended
June 30,		   Six months ended
June 30,		  
 2020 2019 Change 2020 2019 Change
Segment EBITA 1
$(26.3) $42.9
 >(100)% $(4.0) $43.3
 >(100)%
Segment EBITA margin on net revenue 1
(9.8)% 13.2%   (0.7)% 6.9%  
1
Segment EBITA and Segment EBITA margin on net revenue include $36.7 of restructuring charges in the second quarter and first half of 2020 and $5.6 of restructuring charges in the first half of 2019. See “Restructuring Charges” in this MD&A and Note 7 to the unaudited Consolidated Financial Statements for further information.
Segment EBITA margin decreased during the second quarter of 2020 when compared to the prior-year period, as net revenue decreased 17.6% while operating expenses, including restructuring charges and excluding billable expenses and amortization of acquired intangibles, increased. The decrease in salaries and related expenses was primarily driven by reductions in base salaries, benefits and tax and lower temporary help expenses in response to the declines in net revenue, primarily due to the impact of the COVID-19 on economic conditions, in addition to lower incentive expense. The cumulative decreases were partially offset by increased severance expense. The decrease in office and other direct expenses was primarily driven by decreases in travel and entertainment expenses and new business and promotion expenses as well as lower occupancy expense, partially offset by a year-over-year change in contingent acquisition obligations. During the second quarter of 2020, segment EBITA included restructuring charges of $36.7.
Segment EBITA margin decreased during the first half of 2020 when compared to the prior-year period, as net revenue decreased 17.6% while operating expenses, including restructuring charges and excluding billable expenses and amortization of acquired intangibles, relatively remained flat. The decreases in salaries and related expenses and office and other direct expenses were mainly due to factors similar to those noted above for the second quarter of 2020. During the first half of 2020, segment EBITA included restructuring charges of $36.7 compared to the restructuring charges of $5.6 during the first half of 2019.
Depreciation and amortization, excluding amortization of acquired intangibles, as a percentage of net revenue slightly increased during the second quarter and first half of 2020 as compared to the prior-year period.
CORPORATE AND OTHER
Certain corporateCorporate and other charges are reported as separate line items within total segment operating income (loss)is primarily comprised of selling, general and includeadministrative expenses including corporate office expenses as well as shared service center and certain other centrally managed expenses that are not fully allocated to operating divisions. Salaries and related expenses includedivisions; salaries, long-term incentives, annual bonuses and other miscellaneous benefits for corporate office employees. Office and general expenses primarily includeemployees; professional fees related to internal control compliance, financial statement audits and legal, information technology and other consulting services that are engaged and managed through the corporate office. Officeoffice; and general expenses also include rental expense and depreciation of leasehold improvements for properties occupied by corporate office employees. A portion of centrally managed expenses areis allocated to operating divisions based on a formula that uses the planned revenues of each of the operating units. Amounts allocated also include specific charges for information technology-related projects, which are allocated based on utilization.
Corporate and other expenses decreased by $8.0 to $11.8 during the thirdsecond quarter of 20172020 and by $16.0$28.5 to $14.9$35.9 during the first half of 2020 compared to the third quarterprior-year period, primarily attributable to a decrease in employee insurance expense, resulting from fewer insurance claims with elective procedures and routine care being delayed in 2020 as well as a decrease in travel and

35
Table of 2016, primarily due to lower incentive expense.Contents

Management’s Discussion and Analysis of Financial Condition and Results of Operations - (continued)
(Amounts in Millions, Except Per Share Amounts)
(Unaudited)


entertainment expenses. During the second quarter and first nine monthshalf of 2017, corporate2020, Corporate and other expenses decreased by $19.8 to $74.2 compared toexpense includes $7.1 of restructuring charges, and during the first nine monthshalf of 2016, also primarily due to lower incentive expense.2019, Corporate and other expense includes $0.7 of restructuring charges.


LIQUIDITY AND CAPITAL RESOURCES
CASH FLOW OVERVIEW
The following tables summarize key financial data relating to our liquidity, capital resources and uses of capital.
 Nine months ended
September 30,
Cash Flow Data2017 2016
Net income, adjusted to reconcile to net cash used in operating activities 1
$494.9
 $538.4
Net cash used in working capital 2
(612.5) (491.8)
Changes in other non-current assets and liabilities using cash(21.4) (73.5)
Net cash used in operating activities$(139.0) $(26.9)
Net cash used in investing activities$(140.5) $(167.5)
Net cash used in financing activities$(113.1) $(466.9)
 Six months ended
June 30,
Cash Flow Data2020 2019
Net (loss) income, adjusted to reconcile to net cash used in operating activities 1
$286.4
 $382.3
Net cash used in working capital 2
(636.5) (113.1)
Changes in other assets and liabilities using cash(14.1) (70.2)
Net cash (used in) provided by operating activities$(364.2) $199.0
Net cash used in investing activities(93.3) (77.9)
Net cash provided by (used in) financing activities377.7
 (191.7)
 
1Reflects net (loss) income adjusted primarily for depreciation and amortization of fixed assets and intangible assets, provision for uncollectible receivables, amortization of restricted stock and other non-cash compensation, net losses on sales of businesses, non-cash restructuring charges and deferred income taxes.
2Reflects changes in accounts receivable, expenditures billable to clients, other current assets, accounts payable, accrued liabilities and accruedcontract liabilities.
Operating Activities
Net cash used in operating activities during the first nine months of 2017 was $139.0, which was an increase of $112.1 as compared to the first nine months of 2016 driven by higher use of cash in working capital. Working capital in the first nine months of 2016 benefited from the spending patterns of our clients compared to the first nine months of 2017. Due to the seasonality of our business, we typically use cash from working capital in the first nine months of a year, with the largest impact in the first quarter, and generate cash from working capital in the fourth quarter, of a year. Thedriven by the seasonally strong media spending by our clients. Quarterly and annual working capital use inresults are impacted by the first nine monthsfluctuating annual media spending budgets of 2017 was primarily attributable to our clients as well as their changing media businesses.spending patterns throughout each year across various countries.
The timing of media buying on behalf of our clients across various countries affects our working capital and operating cash flow and can be volatile. In most of our businesses, our agencies enter into commitments to pay production and media costs on behalf of clients. To the extent possible, we pay production and media charges after we have received funds from our clients. The amounts involved, which substantially exceed our revenues, and primarily affect the level of accounts receivable, expenditures billable to clients, accounts payable, accrued liabilities and accruedcontract liabilities. Our assets include both cash received and accounts receivable from clients for these pass-through arrangements, while our liabilities include amounts owed on behalf of clients to media and production suppliers.

Management’s Discussion and Analysis of Financial Condition and Results of Operations - (continued)
(Amounts in Millions, Except Per Share Amounts)
(Unaudited)


Our accrued liabilities are also affected by the timing of certain other payments. For example, while annual cash incentive awards are accrued throughout the year, they are generally paid during the first quarter of the subsequent year.
Net cash used in operating activities during the first half of 2020 was $364.2, which was an increase of $563.2 as compared to the first half of 2019, primarily as a result of an increase in working capital usage of $523.4. Working capital was impacted by the spending levels of our clients and was primarily attributable to our media business.
Investing Activities
Net cash used in investing activities during the first nine monthshalf of 20172020 was $93.3, which was an increase of $15.4 as compared to the first half of 2019, primarily due to an increase in cash sold from dispositions during the first half of 2020, partially offset by a decrease in capital expenditures, which consisted primarily of decreases in computer hardware and lease-related costs. The payments for capital expenditures were $71.9 and $80.1 in the first half of $108.7, related mostly to leasehold improvements2020 and computer hardware and software.2019, respectively.
Financing Activities
Net cash used inprovided by financing activities during the first nine monthshalf of 20172020 was primarily driven by the repurchasenet proceeds of 9.4 shares$646.2 from the issuance of our common stock for an aggregate cost of $216.0, including fees, and4.75% Senior Notes, partially offset by the payment of common stock dividends of $211.2, partially offset by a net increase$199.2.

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Table of Contents

Management’s Discussion and Analysis of Financial Condition and Results of Operations - (continued)
(Amounts in short-term borrowings of $429.9.Millions, Except Per Share Amounts)
(Unaudited)


Foreign Exchange Rate Changes
The effect of foreign exchange rate changes on cash, cash equivalents and restricted cash included in the unaudited Consolidated Statements of Cash Flows resulted in a net increasedecrease of $0.4$28.9 during the first nine monthshalf of 2017.
Balance Sheet DataSeptember 30,
2017		 December 31,
2016		 September 30,
2016
Cash, cash equivalents and marketable securities$705.0
 $1,100.6
 $894.6
      
Short-term borrowings$511.8
 $85.7
 $107.8
Current portion of long-term debt301.9
 323.9
 24.5
Long-term debt1,285.0
 1,280.7
 1,583.3
Total debt$2,098.7
 $1,690.3
 $1,715.6
2020. The decrease was primarily a result of the U.S. Dollar being stronger than several foreign currencies, including the South African Rand, Mexican Peso, Indian Rupee, Brazilian Real, Chilean Peso, and Canadian Dollar as of June 30, 2020 as compared to December 31, 2019.
LIQUIDITY OUTLOOK
We expect our cash flow from operations and existing cash and cash equivalents to be sufficient to meet our anticipated operating requirements at a minimum for the next twelve months. We also have a commercial paper program, a committed corporate credit facility, a 364-day credit facility and uncommitted lines of credit and a commercial paper program available to support our operating needs. Borrowings under our commercial paper program are supported by our committed corporate credit agreement. We continue to maintain a disciplined approach to managing liquidity, with flexibility over significant uses of cash, including our capital expenditures, cash used for new acquisitions, our common stock repurchase program and our common stock dividends.
From time to time, we evaluate market conditions and financing alternatives for opportunities to raise additional funds or otherwise improve our liquidity profile, enhance our financial flexibility and manage market risk. Our ability to access the capital markets depends on a number of factors, which include those specific to us, such as our credit ratings, and those related to the financial markets, such as the amount or terms of available credit. ThereParticularly in light of the current market conditions, there can be no guarantee that we would be able to access new sources of liquidity, or continue to access existing sources of liquidity, on commercially reasonable terms, or at all.
Funding Requirements
Our most significant funding requirements include our operations, non-cancelable operating lease obligations, capital expenditures, acquisitions, common stock dividends, taxes, and debt service. Additionally, we may be required to make payments to minority shareholders in certain subsidiaries if they exercise their options to sell us their equity interests.
Notable funding requirements include:
Debt service – Our 3.50% Senior Notes in aggregate principal amount of $500.0 mature on October 1, 2020. We expect to use available cash, which may include cash proceeds from the offering of our 4.75% Senior Notes as well as credit available under our commercial paper and short-term debt lines as needed to fund the principal repayment. As of SeptemberJune 30, 2017,2020, we had outstanding short-term borrowings of $511.8$51.9 primarily from our commercial paper program and uncommitted lines of credit used primarily to fund seasonalshort-term working capital needs. Our 2.25% Senior Notes in aggregate principal amount of $300.0 mature on November 15, 2017, and we expect to use proceeds from the issuance of commercial paper to repay the outstanding 2.25% Senior Notes upon maturity. The remainder of our debt is primarily long-term, with maturities scheduled from 2021 through 2024.

Management’s Discussion and Analysis2048. On March 30, 2020, we issued $650.0 in aggregate principal amount of Financial Condition and Results of Operations - (continued)
(Amounts in Millions, Except Per Share Amounts)
(Unaudited)


our 4.75% Senior Notes.
Acquisitions – We paid cash of $21.7,$2.5, net of cash acquired of $6.4,$2.5, for acquisitions completed in the first nine monthshalf of 2017.2020. We also paid $0.9 in up-front payments and $86.6 in deferred payments of $34.8 for prior acquisitions as well as ownership increases in our consolidated subsidiaries.acquisitions. In addition to potential cash expenditures for new acquisitions, we expect to pay approximately $54.0$53.0 over the next twelve months related to prior acquisitions. We may also be required to pay approximately $32.0$29.0 related to put options held by minority shareholders, if exercised, over the next twelve months. We will continue to evaluate strategic opportunities to grow and continue to strengthen our market position, particularly in our digital and marketing services offerings, and to expand our presence in high-growth and key strategic world markets.
Dividends – In the first nine monthshalf of 2017,2020, we paid threea quarterly cash dividendsdividend of $0.18$0.255 per share on our common stock, which corresponded to an aggregate dividend payment of $211.2.$199.2. Assuming we continue to pay a quarterly dividend of $0.18$0.255 per share, and there is no significant change in the number of outstanding shares as of SeptemberJune 30, 2017,2020, we would expect to pay approximately $280.0$397.0 over the next twelve months. Whether to declare and the amount of any such future dividend is at the discretion of our Board of Directors and will depend upon factors such as our earnings, financial position and cash requirements.
Restructuring – In the first half of 2020, we paid cash of $11.2 for restructuring costs related to our 2020 Plan designed to lower our operating expenses structurally and permanently relative to revenue and to accelerate the transformation of our business. As of June 30, 2020, our remaining liability related to restructuring actions was $33.8. Most of our restructuring actions are based on our recent experience and learning in the COVID-19 pandemic and a resulting review of our operations, which continues, to address certain operating expenses such as occupancy expense and salaries and related expenses.

37
Table of Contents

Management’s Discussion and Analysis of Financial Condition and Results of Operations - (continued)
(Amounts in Millions, Except Per Share Amounts)
(Unaudited)


Share Repurchase Program
In February 2017, our BoardOn July 2, 2018, in connection with the announcement of Directors (the "Board") authorizedthe Acxiom acquisition, we announced that share repurchases will be suspended for a new share repurchase programperiod of time in order to repurchase from time to time up to $300.0, excluding fees, of our common stock ("reduce the 2017 Share Repurchase Program"), which wasincreased debt levels incurred in addition toconjunction with the remaining amount available to be repurchased from the $300.0 authorization made by the Board in February 2016 ("the 2016 Share Repurchase Program"). We fully utilized the 2016 Share Repurchase Program during the third quarter of 2017.acquisition. As of SeptemberJune 30, 2017, $239.5,2020, $338.4, excluding fees, remains available for repurchase under the 2017 Share Repurchase Program. The 2017 Share Repurchase Program hasshare repurchase programs authorized in previous years, which have no expiration date.
We may effect such repurchases through open market purchases, trading plans established in accordance with SEC rules, derivative transactions or other means. We expect to continue to repurchase our common stock in future periods, although the timing and amount of the repurchases will depend on market conditions and other funding requirements.
FINANCING AND SOURCES OF FUNDS
Substantially all of our operating cash flow is generated by our agencies. Our cash balances are held in numerous jurisdictions throughout the world, including at the holding company level. Below is a summary of our sources of liquidity.
Credit AgreementsArrangements
We maintain a committed corporate credit facility, originally dated as of July 18, 2008, which has been amended and restated from time to time (the "Credit Agreement"“Credit Agreement”). The Credit Agreement is a revolving facility, under which amounts borrowed by us or any of our subsidiaries designated under the Credit Agreement may be repaid and reborrowed, subject to an aggregate lending limit. On October 25, 2017, we amended and restated the Credit Agreement, increasing the revolving commitments under the Credit Agreement from $1,000.0 to $1,500.0, or the equivalent in other specified currencies, and extending the Credit Agreement's expiration to October 25, 2022. See Note 14 to the unaudited Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for further information.
We use our Credit Agreement to increase our financial flexibility, to provide letters of credit primarily to support obligations of our subsidiaries and to support our commercial paper program. The Credit Agreement is a revolving facility, expiring in November 2024, under which amounts borrowed by us or any of our subsidiaries designated under the Credit Agreement may be repaid and reborrowed, subject to an aggregate lending limit of $1,500.0, or the equivalent in other currencies. The Company has the ability to increase the commitments under the Credit Agreement from time to time by an additional amount of up to $250.0, provided the Company receives commitments for such increases and satisfies certain other conditions. The aggregate available amount of letters of credit outstanding may decrease or increase, subject to a sublimit on letters of credit of $200.0,$50.0, or the equivalent in other specified currencies. Our obligations under the Credit Agreement are unsecured. As of SeptemberJune 30, 2017,2020, there were no borrowings under the Credit Agreement; however, we had $8.4$8.3 of letters of credit under the Credit Agreement, which reduced our total availability to $991.6.$1,491.7.
On March 27, 2020, we entered into an agreement for a 364-day revolving credit facility (the “364-Day Credit Facility”) that matures on March 26, 2021. The 364-Day Credit Facility is a revolving facility, under which amounts borrowed by us may be repaid and reborrowed, subject to an aggregate lending limit of $500.0. The cost structure of the 364-Day Credit Agreement is based on our current credit ratings. The applicable margin for Base Rate Advances (as defined in the 364-Day Credit Facility) is 0.250%, the applicable margin for Eurodollar Rate Advances (as defined in the 364-Day Credit Facility) is 1.250%, and the facility fee payable on a lender’s revolving commitment is 0.250%. In addition, the 364-Day Credit Facility includes covenants that, among other things, (i) limit our liens and the liens of our consolidated subsidiaries, and (ii) limit subsidiary debt. The 364-Day Credit Facility also contains a financial covenant that requires us to maintain, on a consolidated basis as of the end of each fiscal quarter, a leverage ratio for the four quarters then ended. The leverage ratio and other covenants set forth in the 364-Day Credit Facility are identical to the covenants contained in the Company’s existing Credit Agreement, which remains in full effect. As of June 30, 2020, there were no borrowings under the 364-Day Credit Facility.
We were in compliance with all of our covenants in both the Credit Agreement and the 364-Day Credit Facility as of SeptemberJune 30, 2017.2020. The financial covenantscovenant in the Credit Agreement requireand the 364-Day Credit Facility requires that we maintain, as of the end of each fiscal quarter, a certain financial measuresleverage ratio for the four quarters then ended. The table below sets forth the financial covenant in effect as of June 30, 2020.


38
Table of Contents

Management’s Discussion and Analysis of Financial Condition and Results of Operations - (continued)
(Amounts in Millions, Except Per Share Amounts)
(Unaudited)



The table below sets forth the financial covenants in effect as of September 30, 2017.
  Four Quarters Ended   Four Quarters Ended
Financial Covenants September 30, 2017 EBITDA Reconciliation September 30, 2017
Interest coverage ratio (not less than) 1
 5.00x Operating income $941.0
Actual interest coverage ratio 18.05x Add:  
Leverage ratio (not greater than) 1
 3.50x Depreciation and amortization 253.6
Actual leverage ratio 1.76x 
EBITDA 1
 $1,194.6
  
Four Quarters
Ended
   
Four Quarters
Ended
Financial Covenant June 30, 2020 Credit Agreement EBITDA Reconciliation June 30, 2020
Leverage ratio (not greater than) 1
 3.75x Net income available to IPG common stockholders $453.6
Actual leverage ratio 3.01x 
Non-operating adjustments 2
 434.4
    Operating income 888.0
    Add:  
    Depreciation and amortization 376.3
    Other non-cash charges reducing operating income 53.9
    
Credit Agreement EBITDA 1
 $1,318.2
 
1The interest coverage ratio is defined as EBITDA, as defined in the Credit Agreement, to net interest expense for the four quarters then ended. The leverage ratio is defined as debt as of the last day of such fiscal quarter to EBITDA (as defined in the Credit Agreement and the 364-Day Credit Facility) for the four quarters then ended.
2Includes adjustments of the following items from our consolidated statement of operations: provision for income taxes, total (expenses) and other income, equity in net loss of unconsolidated affiliates, and net loss attributable to noncontrolling interests.
On July 28, 2020, we entered into Amendment No. 1 to the Credit Agreement and Amendment No. 1 to the 364-Day Credit Facility (together, the “Amendments”). The Amendments increased the maximum leverage ratio covenant to 4.25x in the case of the 364-Day Credit Facility and, in the case of the Credit Agreement, to (i) 4.25x through the quarter ended June 30, 2021, and (ii) 3.50x thereafter. See Note 15 to the unaudited Consolidated Financial Statements for further information on the Amendments.
Uncommitted Lines of Credit
We also have uncommitted lines of credit with various banks whichthat permit borrowings at variable interest rates and whichthat are primarily used to fund working capital needs. We have guaranteed the repayment of some of these borrowings made by certain subsidiaries. If we lose access to these credit lines, we would have to provide funding directly to some of our international operations. As of SeptemberJune 30, 2017,2020, the Company had uncommitted lines of credit in an aggregate amount of $916.8,$928.4, under which we had outstanding borrowings of $152.5$51.9 classified as short-term borrowings on our Consolidated Balance Sheet. The average amount outstanding during the thirdsecond quarter of 20172020 was $124.7,$76.4, with a weighted-average interest rate of approximately 3.1%3.7%.
Commercial Paper
In June 2017, theThe Company established a commercial paper program under which the Company wasis authorized to issue unsecured commercial paper up to a maximum aggregate amount outstanding at any time of $1,000.0. On October 25, 2017, the Company increased the maximum aggregate amount outstanding at any time under our commercial paper program to $1,500.0. Borrowings under the program are supported by the Credit Agreement described above. Proceeds of the commercial paper will beare used for working capital and general corporate purposes, including the repayment of maturing indebtedness as described above, and other short-term liquidity needs. The maturities of the commercial paper vary but may not exceed 397 days from the date of issue. As of SeptemberJune 30, 2017, the Company had outstanding2020, there was no commercial paper of $359.3outstanding classified as short-term borrowings on our Consolidated Balance Sheet. The average amount outstanding under the program during the thirdsecond quarter of 20172020 was $488.2,$365.7, with a weighted-average interest rate of 1.4%1.3% and a weighted-average maturity of fourteentwelve days. See Note 14 to the unaudited Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for further information.
Cash Pooling
We aggregate our domestic cash position on a daily basis. Outside the United States, we use cash pooling arrangements with banks to help manage our liquidity requirements. In these pooling arrangements, several IPG agencies agree with a single bank that the cash balances of any of the agencies with the bank will be subject to a full right of set-off against amounts that other agencies owe the bank, and the bank provides for overdrafts as long as the net balance for all the agencies does not exceed an agreed-upon level. Typically, each agency pays interest on outstanding overdrafts and receives interest on cash balances. Our unaudited Consolidated Balance Sheets reflect cash, net of bank overdrafts, under all of our pooling arrangements, and as of SeptemberJune 30, 2017,2020, the amount netted was $1,567.0.$2,537.5.


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Management’s Discussion and Analysis of Financial Condition and Results of Operations - (continued)
(Amounts in Millions, Except Per Share Amounts)
(Unaudited)




DEBT CREDIT RATINGS
Our debt credit ratings as of October 16, 2017July 15, 2020, are listed below.
 Moody’s Investors Service S&P Global Ratings Fitch Ratings
Short-term ratingP-2 A-2 F2
Long-term ratingBaa2 BBB BBBBBB+
OutlookStableNegative StableNegative PositiveNegative
We are rated investment-grade by Moody's Investors Service, S&P Global Ratings and Fitch Ratings. On June 8, 2017, we received from the credit rating agencies the short-term credit ratings, described above, with respect to our commercial paper. The most recent update to our long-term credit ratings occurred in April 2017 when S&P Global Ratings upgraded our rating from BBB- to BBB with a Stable outlook. A credit rating is not a recommendation to buy, sell or hold securities and may be subject to revision or withdrawal at any time by the assigning credit rating agency. The rating of each credit rating agency should be evaluated independently of any other rating. Credit ratings could have an impact on liquidity, either adverse or favorable, because, among other things, they could affect funding costs in or the ability to access, the capital markets or otherwise. For example, our Credit Agreement fees and borrowing rates are based on a long-term credit ratings grid.grid, and our access to the commercial paper market is contingent on our maintenance of sufficient short-term debt ratings.


CRITICAL ACCOUNTING ESTIMATES
Our significant accounting policies are described in Note 1 to the Consolidated Financial Statements for the year ended December 31, 20162019, included in our 20162019 Annual Report on Form 10-K.Report. As summarized in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, in our 2019 Annual Report, we believe that certain of these policies are critical because they are important to the presentation of our financial condition and results of operations, and they require management’s most difficult, subjective or complex judgments, often as a result of the need to estimate the effect of matters that are inherently uncertain. These critical estimates relate to revenue recognition, income taxes, goodwill and other intangible assets, and pension and postretirement benefits. We base our estimates on historical experience and various other factors that we believe to be relevant under the circumstances. Estimation methodologies are applied consistently from year to year, and there have been no significant changes in the application of critical accounting estimates since December 31, 2016.2019, other than as noted below. Actual results may differ from these estimates under different assumptions or conditions.
Goodwill
We review goodwill for impairment annually as of October 1st each year, or whenever events or significant changes in circumstances indicate that the carrying value may not be recoverable. We evaluate the recoverability of goodwill at a reporting unit level.
During the second quarter of 2020, recent economic developments related to the COVID-19 pandemic contributed to declines in our most recent forecasted financial results. We evaluated our reporting units including the impact of these declines, restructuring actions taken in the second quarter of 2020 and other reporting unit specific factors, and concluded that these factors constituted a goodwill triggering event for one reporting unit, requiring us to evaluate its goodwill for impairment. The fair value of the reporting unit for which we performed the quantitative interim impairment test was estimated using a combination of the income approach, which incorporates the use of the discounted cash flow method, and the market approach, which incorporates the use of earnings and revenue multiples based on market data. We generally applied an equal weighting to the income and market approaches for our analysis. For the income approach, we used projections, which require the use of significant estimates and assumptions specific to the reporting unit as well as those based on general economic conditions. Factors specific to the reporting unit include revenue growth, profit margins, terminal value growth rates, capital expenditures projections, assumed tax rates, discount rates and other assumptions deemed reasonable by management. For the market approach, we used judgment in identifying the relevant comparable-company market multiples.
The discount rate used for the reporting unit is influenced by general market conditions as well as factors specific to the reporting unit. For the interim impairment test of goodwill, the discount rate we used for our reporting unit tested was 13.0%, and the terminal value growth rate was 3.0%. The terminal value growth rate represents the expected long-term growth rate for our industry, which incorporates the type of services each reporting unit provides as well as the global economy. The revenue growth rates utilized in the interim impairment test for our reporting unit were between 6.0% and 8.0%. Factors influencing the revenue growth rates include the nature of the services the reporting unit provides for its clients, the geographic locations in which the reporting unit conducts business and the maturity of the reporting unit. We believe that the estimates and assumptions we made are reasonable, but they are susceptible to change from period to period. Actual results of operations, cash flows and other factors will likely differ from the estimates used in our valuation, and it is possible that differences and changes could be material. A

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Management’s Discussion and Analysis of Financial Condition and Results of Operations - (continued)
(Amounts in Millions, Except Per Share Amounts)
(Unaudited)


deterioration in profitability, adverse market conditions, significant client losses, changes in spending levels of our existing clients or a different economic outlook than currently estimated by management could have a significant impact on the estimated fair value of our reporting unit and could result in an impairment charge in the future.
We also performed a sensitivity analysis to detail the impact that changes in assumptions may have on the outcome of the first step of the impairment test. Our sensitivity analysis provides a range of fair value for the reporting unit, where the low end of the range increases discount rates by 0.5%, and the high end of the range decreases discount rates by 0.5%. We use the average of our fair values for purposes of our comparison between carrying value and fair value for the quantitative impairment test.
The table below displays the midpoint of the fair value range for the reporting unit tested in the interim impairment test, indicating that the fair value exceeded the carrying value for the reporting unit by greater than 10%.
  Q2 2020 Interim Impairment Test
Reporting Unit Goodwill as of 6/30/2020 Fair value exceeds carrying value by:
A $209.1
 > 10%
Based on the analysis described above, for the reporting unit for which we performed the quantitative interim impairment test of goodwill, we concluded that our goodwill was not impaired as of June 30, 2020, because the fair value of the reporting unit was in excess of its net book value.
The impact of COVID-19 on our forecasts also remains uncertain and increases the subjectivity that will be involved in evaluating our goodwill for potential impairments going forward. If the future were to differ adversely from these assumptions, the estimated fair value may decline and result in non-cash charges against our earnings.
We also considered the potential for goodwill impairment of our other reporting units. Our review of our other reporting units did not indicate an impairment triggering event as of June 30, 2020.
RECENT ACCOUNTING STANDARDS
See Note 1314 to the unaudited Consolidated Financial Statements for further information on certain accounting standards that have been recently adopted or that have not yet been required to be implemented and may be applicable to our future operations.


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Management’s Discussion and Analysis of Financial Condition and Results of Operations - (continued)
(Amounts in Millions, Except Per Share Amounts)
(Unaudited)


NON-GAAP FINANCIAL MEASURE
This MD&A includes both financial measures in accordance with U.S. GAAP, as well as a non-GAAP financial measure. The non-GAAP financial measure represents Net Income Available to IPG Common Stockholders before Provision for Income Taxes, Total (Expenses) and Other Income, Equity in Net Loss of Unconsolidated Affiliates, Net Loss Attributable to Noncontrolling Interests and Amortization of Acquired Intangibles, which we refer to as “Adjusted EBITA”.
Adjusted EBITA should be viewed as supplemental to, and not as an alternative for Net (Loss) Income Available to IPG Common Stockholders calculated in accordance with U.S. GAAP (“net income”) or operating income calculated in accordance with U.S. GAAP (“operating income”). This section also includes reconciliation of this non-GAAP financial measure to the most directly comparable U.S. GAAP financial measures, as presented below.
Adjusted EBITA is used by our management as an additional measure of our Company’s performance for purposes of business decision-making, including developing budgets, managing expenditures, and evaluating potential acquisitions or divestitures. Period-to-period comparisons of Adjusted EBITA help our management identify additional trends in our Company’s financial results that may not be shown solely by period-to-period comparisons of net income or operating income. In addition, we use Adjusted EBITA in the incentive compensation programs applicable to some of our employees in order to evaluate our Company’s performance. Our management recognizes that Adjusted EBITA has inherent limitations because of the excluded items, particularly those items that are recurring in nature. Management also reviews operating income and net income as well as the specific items that are excluded from Adjusted EBITA, but included in net income or operating income, as well as trends in those items. The amounts of those items are set forth, for the applicable periods, in the reconciliation of Adjusted EBITA to net income that accompany our disclosure documents containing non-GAAP financial measures, including the reconciliations contained in this MD&A.
We believe that the presentation of Adjusted EBITA is useful to investors in their analysis of our results for reasons similar to the reasons why our management finds it useful and because it helps facilitate investor understanding of decisions made by management in light of the performance metrics used in making those decisions. In addition, as more fully described below, we believe that providing Adjusted EBITA, together with a reconciliation of this non-GAAP financial measure to net income, helps investors make comparisons between our Company and other companies that may have different capital structures, different effective income tax rates and tax attributes, different capitalized asset values and/or different forms of employee compensation. However, Adjusted EBITA is intended to provide a supplemental way of comparing our Company with other public companies and is not intended as a substitute for comparisons based on net income or operating income. In making any comparisons to other companies, investors need to be aware that companies may use different non-GAAP measures to evaluate their financial performance. Investors should pay close attention to the specific definition being used and to the reconciliation between such measures and the corresponding U.S. GAAP measures provided by each company under the applicable rules of the SEC.
The following is an explanation of the items excluded by us from Adjusted EBITA but included in net loss:
•
Total (Expense) and Other Income, Provision for Income Taxes, Equity in Net Loss of Unconsolidated Affiliates and Net Loss Attributable to Noncontrolling Interests. We exclude these items (i) because these items are not directly attributable to the performance of our business operations and, accordingly, their exclusion assists management and investors in making period-to-period comparisons of operating performance and (ii) to assist management and investors in making comparisons to companies with different capital structures. Investors should note that these items will recur in future periods.

•
Amortization of Acquired Intangibles. Amortization of acquired intangibles is a non-cash expense relating to intangible assets arising from acquisitions that are expensed on a straight-line basis over the estimated useful life of the related assets. We exclude amortization of acquired intangibles because we believe that (i) the amount of such expenses in any specific period may not directly correlate to the underlying performance of our business operations and (ii) such expenses can vary significantly between periods as a result of new acquisitions and full amortization of previously acquired intangible assets. Accordingly, we believe that this exclusion assists management and investors in making period-to-period comparisons of operating performance. Investors should note that the use of intangible assets contributed to revenue in the periods presented and will contribute to future revenue generation and should also note that such expense may recur in future periods.

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Management’s Discussion and Analysis of Financial Condition and Results of Operations - (continued)
(Amounts in Millions, Except Per Share Amounts)
(Unaudited)


The following table presents the reconciliation of Net (Loss) Income Available to IPG Common Stockholders to Adjusted EBITA for the second quarter and first half of 2020 and 2019.
 Three months ended
June 30,		 Six months ended
June 30,
 2020 2019 2020 2019
Net Revenue$1,853.4
 $2,125.9
 $3,825.5
 $4,130.7
        
Adjusted EBITA Reconciliation:       
Net (Loss) Income Available to IPG Common Stockholders 1
$(45.6) $169.5
 $(40.9) $161.5
        
Add Back:       
Provision for income taxes19.0
 43.6
 36.2
 54.1
Subtract:       
Total (expenses) and other income(65.4) (47.7) (121.3) (96.6)
Equity in net loss of unconsolidated affiliates0.0
 (0.1) (0.2) (0.4)
Net (income) loss attributable to noncontrolling interests(1.7) (3.3) 0.4
 (1.8)
Operating Income 1
40.5
 264.2
 116.4
 314.4
Add Back:       
Amortization of acquired intangibles21.8
 21.3
 43.1
 42.9
Adjusted EBITA 1
$62.3
 $285.5
 $159.5
 $357.3
Adjusted EBITA Margin on Net Revenue 1
3.4% 13.4% 4.2% 8.6%
1
Calculations include restructuring charges of $112.6 for the three and six months ended June 30, 2020 and $2.1 and $33.9 for the three and six months ended June 30, 2019, respectively. See “Restructuring Charges” in this MD&A and Note 7 to the Consolidated Financial Statements for further information.


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Item 3.Quantitative and Qualitative Disclosures about Market Risk
In the normal course of business, we are exposed to market risks related to interest rates, foreign currency rates and certain balance sheet items. From time to time, we use derivative instruments, pursuant to established guidelines and policies, to manage some portion of these risks. Derivative instruments utilized in our hedging activities are viewed as risk management tools and are not used for trading or speculative purposes. There has been no significant change in our exposure to market risk during the thirdsecond quarter of 2017.2020. Our exposure to market risk for changes in interest rates primarily relates to the fair market value and cash flows of our debt obligations. As of SeptemberJune 30, 2017,2020, and December 31, 2016,2019, approximately 77%98% and 93%97%, respectively, of our debt obligations bore fixed interest rates. We have, from time to time, used interest rate swaps for risk management purposes to manage our exposure to changes in interest rates. We do not have any interest rate swaps outstanding as of September 30, 2017. For further discussion of our exposure to market risk, refer to Item 7A, Quantitative and Qualitative Disclosures About Market Risk, in our 20162019 Annual Report on Form 10-K.Report.


Item 4.Controls and Procedures
Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of SeptemberJune 30, 2017,2020, the Company’s disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosures.
There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives.
Changes in Internal Control Over Financial Reporting
There has been no change in internal control over financial reporting in the quarter ended SeptemberJune 30, 2017,2020, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.



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PART II – OTHER INFORMATION
Item 1.Legal Proceedings
Information about our legal proceedings is set forth in Note 1213 to the unaudited Consolidated Financial Statements included in this Quarterly Report on Form 10-Q.


Item 1A.Risk Factors
In addition to the third quarter of 2017, there have been no material changesother information set forth in this report, you should carefully consider the risk factors we have previously discloseddiscussed in Item 1A, Risk Factors, in our 20162019 Annual Report, on Form 10-K.10-K (the “2019 Annual Report”) which could materially affect our business, financial condition or future results. The risks described in our 2019 Annual Report are not the only risks facing the Company. For example, these risks now include the impacts from the novel coronavirus (“COVID-19”) outbreak on the Company’s business, financial condition and results of operations. Additional risks and uncertainties not currently known to the Company or that it currently deems to be immaterial also may materially adversely affect the Company’s business, financial condition and/or operating results. The risk factors included in our 2019 Annual Report should be read in conjunction with the updated risks described below.

The COVID-19 outbreak has adversely impacted our business, financial condition and results of operations, and the extent of the continuing impact is highly uncertain and cannot be predicted.
The global spread of COVID-19 has created significant worldwide operational volatility, uncertainty and disruption. The COVID-19 pandemic has adversely impacted our business, financial condition and results of operations, and the extent of the continuing impact will depend on numerous evolving factors, which are highly uncertain, rapidly changing and cannot be predicted, including:
the duration, severity and scope of the outbreak;
governmental, business and individual actions that have been and continue to be taken in response to the outbreak, including travel restrictions, quarantines, social distancing, work-at-home, stay-at-home and shelter-in-place orders and shut-downs;
the impact of the outbreak on the financial markets and economic activity generally;
the effect of the outbreak on our clients and other business partners;
our ability to access usual sources of liquidity on reasonable terms;
our ability to comply with the financial covenant in our Credit Agreement if the material economic downturn results in increased indebtedness or substantially lower EBITDA;
potential goodwill or impairment charges;
our ability to achieve the benefits of the 2020 restructuring plan and other cost-saving initiatives;
increased cybersecurity risks as a result of remote working conditions;
our ability during the outbreak to provide our services, including the health and wellbeing of our employees; and
the ability of our clients to pay for our services during and following the outbreak.
The COVID-19 outbreak has significantly increased financial and economic volatility and uncertainty. The continued downturn in the economy has had, and we expect will continue to have, a negative impact on many of our clients. Some clients have responded to the current economic and financial conditions by reducing their marketing budgets, thereby decreasing the market and demand for our services. In addition, many businesses have adjusted, reduced or suspended operating activities, which has negatively impacted the markets we serve. All of the foregoing has impacted, and will likely continue to impact, our business, financial condition, results of operations and forward-looking expectations.
Furthermore, modified processes, procedures and controls have been required to respond to the changes in our business environment, as the vast majority of our employees have continued to work from home and many onsite locations remain closed. The significant increase in remote working of our employees may exacerbate certain risks to our business, including the increased demand for information technology resources, increased risk of malicious technology-related events, such as cyberattacks and phishing attacks, and increased risk of improper dissemination of personal, proprietary or confidential information.
The potential effects of COVID-19 could also heighten the risks disclosed in many of our risk factors that are included in Part I, Item 1A, Risk Factors, in our 2019 Annual Report, including as a result of, but not limited to, the factors described above. Because the COVID-19 situation is unprecedented, complex and continually evolving, the other potential impacts to our risk factors that are described in our 2019 Annual Report are uncertain. See Item 1A, Risk Factors, in our 2019 Annual Report.


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Item 2.Unregistered Sales of Equity Securities and Use of Proceeds
(c)The following table provides information regarding our purchases of our equity securities during the period from JulyApril 1, 20172020 to SeptemberJune 30, 2017:2020:
 
Total Number of
Shares (or Units)
Purchased 1
 
Average Price Paid
per Share (or Unit) 2
 
Total Number of Shares (or Units) Purchased as Part of
Publicly Announced
Plans or Programs 3
 
Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs 3
July 1 - 311,045,347
 $24.76
 1,033,613
 $314,797,836
August 1 - 312,336,046
 $20.98
 2,334,077
 $265,832,070
September 1 - 301,288,700
 $20.42
 1,288,700
 $239,522,615
Total4,670,093
 $21.67
 4,656,390
  
 
Total Number of Shares (or Units) Purchased 1
 
Average Price Paid
per Share (or Unit) 2
 
Total Number of Shares (or Units) Purchased as Part of
Publicly Announced
Plans or Programs 3
 
Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs 3
April 1 - 3025,573
 $17.40
 —
 $338,421,933
May 1 - 319,558
 $16.90
 —
 $338,421,933
June 1 - 303,253
 $16.81
 —
 $338,421,933
Total38,384
 $17.22
 —
  
 
1IncludedThe total number of shares of our common stock, par value $0.10 per share, purchased were withheld under the terms of grants under employee stock-based compensation plans to offset tax withholding obligations that arose upon vesting and release of restricted shares (the “Withheld Shares”). We repurchased 11,734 Withheld Shares in July 2017, 1,969 Withheld Shares in August 2017 and no Withheld Shares in September 2017, for a total of 13,703 Withheld Shares during the three-month period.
2The average price per share for each of the months in the fiscal quarter and for the three monththree-month period was calculated by dividing (a) the sum for the applicable period of the aggregate value of the tax withholding obligations and the aggregate amount we paid for shares acquired under our share repurchase programs, described in Note 5 to the unaudited Consolidated Financial Statements, by (b) the sum of the number of Withheld Shares and the number of shares acquired in our share repurchase programs.Shares.
3OnIn February 10, 2017, we announced that ourthe Company's Board of Directors had approved(the “Board”) authorized a new share repurchase program to repurchase from time to time up to $300.0 million, excluding fees, of our common stock (the “2017 Share Repurchase Program”). In February 2018, the Board authorized a share repurchase program to repurchase from time to time up to $300.0 million, excluding fees, of our common stock, which was in addition to any amounts available on existing authorizations.remaining under the 2017 Share Repurchase Program. On July 2, 2018, in connection with the announcement of the Acxiom acquisition, we announced that share repurchases will be suspended for a period of time in order to reduce the increased debt levels incurred in conjunction with the acquisition, and no shares were repurchased pursuant to the share repurchase programs in the periods reflected. There isare no expiration datedates associated with the share repurchase programs.


Item 5.Other Information
(a) On October 25, 2017, The Interpublic Group of Companies, Inc. (the “Company”)July 28, 2020, we entered into an amendmentAmendment No. 1 to the Amended and restatement (the “Amendment”) of the Company’s credit agreement originallyRestated Credit Agreement, dated as of July 18, 2008,November 1, 2019, among the Company, the lenders and agents named therein and Citibank, N.A., as amendedadministrative agent (the “Credit Agreement”), and restatedAmendment No. 1 to the 364-Day Credit Facility, dated as of April 23, 2010,March 27, 2020, among the Company, the lenders and agents named therein and Citibank, N.A., as further amendedadministrative agent (the “364-Day Credit Facility”) (together, the “Amendments”). The Amendments increased the maximum leverage ratio covenant to 4.25x in the case of the 364-Day Credit Facility and, restated asin the case of May 31, 2011, as further amended as of November 6, 2012, as further amended and restated as of December 12, 2013 and as further amended and restated as of October 20, 2015 (as further amended and restated pursuant to the Amendment, the “Credit Agreement”). Under the Amendment, among other things, the revolving commitments under the Credit Agreement, have been increased from $1 billion to $1.5 billion,(i) 4.25x through the quarter ended June 30, 2021, and the maturity date was extended(ii) 3.50x thereafter. Amendment No. 1 to October 25, 2022. The Company continues to have the ability to increase the commitments under the Credit Agreement from time to time by an additional amount of up to $250 million, providedalso increased the Company receives commitments for such increases and satisfies certain other conditions.
The cost structure under the Amendment has not changed. Based on the Company’s current credit ratings, the applicable margin for Eurocurrency Rate borrowingsApplicable Margin (as defined in the Credit Agreement) is 1.100%, and the facility fee payable on a lender’s revolving commitment is 0.150%.
In addition to other usual and customary covenants,for any borrowings we make under the Credit Agreement contains two financial covenants, bothif our long-term public debt ratings are BB+/Ba1 or below at the time of which remainborrowing. We have the same. Underoption to terminate Amendment No. 1 to the Credit Agreement at any time, provided that at the Company is required to maintain,time we deliver a termination notice the leverage ratio as of the end of eachthe most recently ended fiscal quarter: (i) an interest coverage ratioquarter did not exceed 3.50x. The Credit Agreement reverts to its original terms on June 30, 2021, or following any such early termination, whichever is earlier. We paid amendment fees of not less than 5.00 to 1.00 for the period of four fiscal quarters then ended; and (ii) a leverage ratio of not more than 3.50 to 1.00 for the period of four fiscal quarters then ended. The leverage ratio may be changed to not more than 4.00

to 1, at the election of the Company, for four consecutive fiscal quarters, beginning$2.0 million in connection with the fiscal quarter in which there is an occurrence of one or more acquisitions with an aggregate purchase price of at least $200,000,000.Amendments.
From time to time, one or more of the lenders under the Credit Agreement and certain of their respective affiliates have provided, and may in the future provide, investment banking and other financial advisory services to the Company and its affiliates, for which such lender or its affiliate has received or will receive payment of customary fees and expenses.
The foregoing description is qualified in its entirety by reference to the Credit Agreement, attached hereto as Exhibit 10(i)(1), which is incorporated herein by reference.
(b) As previously disclosed in a Current Report on Form 8-K filed on June 8, 2017, the Company established a commercial paper program (the “Program”), under which the Company may issue unsecured commercial paper notes (the “Notes”) on a private placement basis. On October 25, 2017, the Company increased the amount of Notes that it may issue from time to time under the Program to an aggregate amount not to exceed $1.5 billion outstanding at any time. Under the Program, the Company may issue Notes from time to time, and proceeds of the Notes will be used for working capital and general corporate purposes, including the repayment of maturing indebtedness and other short-term liquidity needs. Citibank, N.A. is acting issuing and paying agent under the Program. Each of the commercial paper dealers will act as a dealer under the Program (each a “Dealer” and, collectively, the “Dealers”) pursuant to the terms and conditions of a commercial paper dealer agreement entered into between the Company and each Dealer (the “Dealer Agreements”). Each Dealer Agreement contains customary representations, warranties, covenants and indemnification provisions. From time to time, one or more of the Dealers and certain of their respective affiliates have provided, and may in the future provide, commercial banking, investment banking and other financial advisory services to the Company and its affiliates for which such Dealer has received or will receive customary fees and expenses. The Notes have not been and will not be registered under the Securities Act of 1933, as amended (the “Securities Act”), or any state securities laws, and may not be offered and sold except in compliance with an applicable exemption from the registration requirements of the Securities Act and any applicable state securities laws.
The information contained in this Report on Form 10-Q shall not constitute an offer to sell or the solicitation of an offer to purchase any Notes, nor shall there be any sale of the Notes in any jurisdiction in which such offer, solicitation or sale would be unlawful.
The maturities of the Notes will vary but may not exceed 397 days from the date of issue. The Notes will be sold under customary terms in the commercial paper market and will be issued at a discount from par, or, alternatively, will be issued at par and bear varying interest rates on a fixed or floating basis.


Item 6.Exhibits
All exhibits required pursuant to Item 601 of Regulation S-K to be filed as part of this report or incorporated herein by reference to other documents, are listed in the Index to Exhibits below.



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INDEX TO EXHIBITS
Exhibit No. Description
   
10(i)(1)10.1
 
Employment Agreement, made as of January 1, 2020, entered into on July 29, 2020, between the Company and Ellen Johnson.

10.2
Amendment No. 1, dated as of July 28, 2020, to the Amended and Restated Credit Agreement, dated as of July 18, 2008, as amendedNovember 1, 2019, among the Company, the lenders and restated as of April 23, 2010, as further amended and restated as of May 31, 2011, as further amended as of November 6, 2012, as further amended and restated as of December 12, 2013, as further amended and restated as of October 20, 2015 and as further amended and restated as of October 25, 2017 among The Interpublic Group of Companies, Inc., the lendersagents named therein and Citibank, N.A., as administrative agent.
   
10(iii)(A)(1)10.3
 The Interpublic Executive Severance Plan, amendedAmendment No. 1, dated as of July 28, 2020, to the 364-Day Credit Facility, dated as of March 27, 2020, among the Company, the lenders and restated, effective August 16, 2017.agents named therein and Citibank, N.A., as administrative agent.
   
12.1
Computation of Ratios of Earnings to Fixed Charges.
31.1
 Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended.
   
31.2
 Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended.
   
32
 Certification of the Chief Executive Officer and the Chief Financial Officer furnished pursuant to 18 U.S.C. Section 1350 and Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended.
   
101 Interactive Data File, for the period ended SeptemberJune 30, 2017.2020. The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document.
104Cover Page Interactive Data File. The cover page XBRL tags are embedded within the inline XBRL document and are included in Exhibit 101.


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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
   
 THE INTERPUBLIC GROUP OF COMPANIES, INC.
   
 By
/s/ Michael I. Roth
  
Michael I. Roth
Chairman and Chief Executive Officer
Date: October 26, 2017July 31, 2020
 
   
   
 By
/s/ Christopher F. Carroll
  
Christopher F. Carroll
Senior Vice President, Controller and
Chief Accounting Officer
(Principal Accounting Officer)
Date: October 26, 2017July 31, 2020


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