UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_________________________

FORM 10-Q

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

FOR THE QUARTERLY PERIOD ENDED MARCH 31, ~~2021~~2022

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

_________________________

Commission File Number: 1-10551

OMNICOM GROUP INC.

(Exact name of registrant as specified in its charter)


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

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

Registrant’s telephone number, including area code: (212) 415-3600

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities Registered Pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbols	Name of each exchange on which registered
Common Stock, $0.15 Par Value	OMC	New York Stock Exchange
0.800% Senior Notes due 2027	OMC/27	New York Stock Exchange
1.400% Senior Notes due 2031	OMC/31	New York Stock Exchange
2.250% Senior Notes due 2033	OMC/33	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 ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ 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 the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☑

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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

_________________________

As of April ~~15, 2021,~~13, 2022, there were ~~215,080,771~~205,732,684 shares of Omnicom Group Inc. Common Stock outstanding.

OMNICOM GROUP INC.

QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED MARCH 31, ~~2021~~2022

TABLE OF CONTENTS


PART I.	FINANCIAL INFORMATION	Page
Item 1.	Financial Statements
	Consolidated Balance Sheets - March 31, ~~2021~~2022 and December 31, ~~2020~~2021	1
	Consolidated Statements of Income - Three Months Ended March 31, ~~2021~~2022 and ~~2020~~2021	2
	Consolidated Statements of Comprehensive Income - Three Months Ended March 31, ~~2021~~2022 and ~~2020~~2021	3
	Consolidated Statements of Equity - Three Months Ended March 31, ~~2021~~2022 and ~~2020~~2021	4


	Consolidated Statements of Cash Flows - Three Months Ended March 31, ~~2021~~2022 and ~~2020~~2021	5
	Notes to Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	24
Item 4.	Controls and Procedures	24
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	25
Item 1A.	Risk Factors	25
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	25
Item 6.	Exhibits	2526
SIGNATURES		2526

FORWARD-LOOKING STATEMENTS

Certain statements in this Quarterly Report on Form 10-Q constitute forward-looking statements, including statements within the meaning of the Private Securities Litigation Reform Act of 1995. In addition, from time to time, the Company or its representatives have made, or may make, forward-looking statements, orally or in writing. These statements may discuss goals, intentions and expectations as to future plans, trends, events, results of operations or financial ~~condition,~~position, or otherwise, based on current beliefs of the Company’s management as well as assumptions made by, and information currently available to, the Company’s management. Forward-looking statements may be accompanied by words such as “aim,” “anticipate,” “believe,” “plan,” “could,” “should,” “would,” “estimate,” “expect,” “forecast,” “future,” “guidance,” “intend,” “may,” “will,” ~~“possible”,~~“possible,” “potential,” “predict,” “project” or similar words, phrases or expressions. These forward-looking statements are subject to various risks and uncertainties, many of which are outside the Company’s control. Therefore, you should not place undue reliance on such statements. Factors that could cause actual results to differ materially from those in the forward-looking statements include: the impact of the war in Ukraine; adverse economic conditions, including those caused by the impact of the COVID-19 pandemic, severe and sustained inflation in countries that comprise our major markets, supply chain issues affecting the distribution of our clients’ products; international, national or local economic conditions that could adversely affect the Company or its clients; losses on media purchases and production costs incurred on behalf of clients; reductions in client spending, a slowdown in client payments and a deterioration or a disruption in the credit markets; the ability to attract new clients and retain existing clients in the manner anticipated; changes in client advertising, marketing and corporate communications requirements; failure to manage potential conflicts of interest between or among clients; unanticipated changes relating to competitive factors in the advertising, marketing and corporate communications industries; the ability to hire and retain key personnel; currency exchange rate fluctuations; reliance on information technology systems; changes in legislation or governmental regulations affecting the Company or its clients; risks associated with assumptions the Company makes in connection with its critical accounting estimates and legal proceedings; and the Company’s international operations, which are subject to the risks of currency repatriation restrictions, social or political conditions and regulatory environment. The foregoing list of factors is not exhaustive. You should carefully consider the foregoing factors and the other risks and uncertainties that may affect the Company’s business, including those described in Item 1A, “Risk Factors” and Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, ~~2020~~2021 and in ~~Item 1A, “Risk Factors” and~~ Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this report. Except as required under applicable law, the Company does not assume any obligation to update these forward-looking statements.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

OMNICOM GROUP INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In millions)

March 31, 2021 December 31, 2020
(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents $ 4,897.3 $ 5,600.5
Accounts receivable, net of allowance for doubtful accounts of $27.2 and $30.4 6,633.2 7,813.4
Work in process 1,138.7 1,101.2
Other current assets 1,062.9 1,075.0
Total Current Assets 13,732.1 15,590.1
Property and Equipment at cost, less accumulated depreciation of $1,155.7 and $1,156.7 564.2 585.2
Operating Lease Right-Of-Use Assets 1,176.5 1,223.4
Equity Method Investments 79.7 85.3
Goodwill 9,541.5 9,609.7
Intangible Assets, net of accumulated amortization of $824.2 and $817.2 280.8 298.5
Other Assets 239.5 255.0
TOTAL ASSETS $ 25,614.3 $ 27,647.2
LIABILITIES AND EQUITY
Current Liabilities:
Accounts payable $ 9,465.8 $ 11,513.0
Customer advances 1,278.0 1,361.3
Short-term debt 5.9 3.9
Taxes payable 276.3 244.5
Other current liabilities 2,445.9 2,402.4
Total Current Liabilities 13,471.9 15,525.1
Long-Term Liabilities 989.4 970.7
Long-Term Liability - Operating Leases 1,062.7 1,114.0
Long-Term Debt 5,754.4 5,807.3
Deferred Tax Liabilities 434.4 443.5
Commitments and Contingent Liabilities (Note 11) 0 0
Temporary Equity - Redeemable Noncontrolling Interests 209.8 209.7
Equity:
Shareholders’ Equity:
Preferred stock 0 0
Common stock 44.6 44.6
Additional paid-in capital 769.7 747.8
Retained earnings 8,327.5 8,190.6
Accumulated other comprehensive income (loss) (1,246.2) (1,213.8)
Treasury stock, at cost (4,684.4) (4,684.8)
Total Shareholders’ Equity 3,211.2 3,084.4
Noncontrolling interests 480.5 492.5
Total Equity 3,691.7 3,576.9
TOTAL LIABILITIES AND EQUITY $ 25,614.3 $ 27,647.2


	March 31, 2022		December 31, 2021
	(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents	$	3,925.5	$	5,316.8
Short-term investments	92.7		—
Accounts receivable, net of allowance for doubtful accounts of $21.0 and $21.7	7,071.6		8,472.5
Work in process	1,316.8		1,201.0
Other current assets	990.9		919.2
Total Current Assets	13,397.5		15,909.5
Property and Equipment at cost, less accumulated depreciation of $1,178.2 and $1,165.7	970.6		992.1
Operating Lease Right-Of-Use Assets	1,204.3		1,202.9
Equity Method Investments	77.6		76.3
Goodwill	9,951.9		9,738.6
Intangible Assets, net of accumulated amortization of $821.7 and $856.5	333.0		298.0
Other Assets	210.8		204.4
TOTAL ASSETS	$	26,145.7	$	28,421.8

LIABILITIES AND EQUITY
Current Liabilities:
Accounts payable	$	9,899.6	$	11,897.2
Customer advances	1,463.8		1,644.5

Short-term debt	12.4		9.6
Taxes payable	328.5		263.3
Other current liabilities	2,472.9		2,411.6
Total Current Liabilities	14,177.2		16,226.2
Long-Term Liabilities	960.0		961.5
Long-Term Liability - Operating Leases	950.1		952.1
Long-Term Debt	5,646.4		5,685.7
Deferred Tax Liabilities	458.1		477.3
Commitments and Contingent Liabilities (Note 11)	0		0
Temporary Equity - Redeemable Noncontrolling Interests	405.3		345.3
Equity:
Shareholders’ Equity:
Preferred stock	—		—
Common stock	44.6		44.6
Additional paid-in capital	584.5		622.0
Retained earnings	9,027.3		8,998.8
Accumulated other comprehensive income (loss)	(1,222.6)		(1,252.3)
Treasury stock, at cost	(5,434.1)		(5,142.9)
Total Shareholders’ Equity	2,999.7		3,270.2
Noncontrolling interests	548.9		503.5
Total Equity	3,548.6		3,773.7
TOTAL LIABILITIES AND EQUITY	$	26,145.7	$	28,421.8

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

OMNICOM GROUP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(In millions, except per share amounts)

Three Months Ended March 31,
2021 2020
Revenue $ 3,426.9 $ 3,406.9
Operating Expenses:
   Salary and service costs 2,545.0 2,533.3
   Occupancy and other costs 291.6 309.6
Cost of services 2,836.6 2,842.9
   Selling, general and administrative expenses 71.6 86.8
   Depreciation and amortization 53.3 57.0
2,961.5 2,986.7
Operating Profit 465.4 420.2
Interest Expense 53.8 58.5
Interest Income 6.3 12.7
Income Before Income Taxes and Income (Loss) From Equity Method Investments 417.9 374.4
Income Tax Expense 111.9 97.4
Income (Loss) From Equity Method Investments 0 (5.3)
Net Income 306.0 271.7
Net Income Attributed To Noncontrolling Interests 18.2 13.6
Net Income - Omnicom Group Inc. $ 287.8 $ 258.1
Net Income Per Share - Omnicom Group Inc.:
Basic $ 1.33 $ 1.19
Diluted $ 1.33 $ 1.19


	Three Months Ended March 31,
		2022		2021
Revenue		$	3,410.3	$	3,426.9
Operating Expenses:
Salary and service costs		2,491.8		2,545.0
Occupancy and other costs		300.2		291.6
Charges arising from the effects of the war in Ukraine		113.4		—

Cost of services		2,905.4		2,836.6
Selling, general and administrative expenses		96.7		71.6
Depreciation and amortization		55.2		53.3
		3,057.3		2,961.5
Operating Profit		353.0		465.4
Interest Expense		51.0		53.8
Interest Income		8.2		6.3
Income Before Income Taxes and Loss From Equity Method Investments		310.2		417.9
Income Tax Expense		115.5		111.9
Loss From Equity Method Investments		(0.1)		—
Net Income		194.6		306.0
Net Income Attributed To Noncontrolling Interests		20.8		18.2
Net Income - Omnicom Group Inc.		$	173.8	$	287.8
Net Income Per Share - Omnicom Group Inc.:
Basic		$0.83		$1.33
Diluted		$0.83		$1.33

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

OMNICOM GROUP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

(In millions)


		Three Months Ended March 31,						Three Months Ended March 31,
			2021		2020				2022		2021
Net Income	Net Income		$	306.0	$	271.7	Net Income		$	194.6	$	306.0
Other Comprehensive Income (Loss):	Other Comprehensive Income (Loss):						Other Comprehensive Income (Loss):
Cash flow hedge:	Cash flow hedge:						Cash flow hedge:

Amortization of loss included in interest expense	Amortization of loss included in interest expense		1.4		1.3		Amortization of loss included in interest expense		1.4		1.4
Income tax effect	Income tax effect		(0.4)		(0.4)		Income tax effect		(0.4)		(0.4)
			1.0		0.9				1.0		1.0
Defined benefit pension plans and postemployment arrangements:	Defined benefit pension plans and postemployment arrangements:						Defined benefit pension plans and postemployment arrangements:

Amortization of prior service cost	Amortization of prior service cost		1.2		1.3		Amortization of prior service cost		1.0		1.2
Amortization of actuarial losses	Amortization of actuarial losses		3.3		1.9		Amortization of actuarial losses		1.6		3.3
Income tax effect	Income tax effect		(1.8)		(1.0)		Income tax effect		(1.3)		(1.8)
			2.7		2.2				1.3		2.7

Foreign currency translation adjustment	Foreign currency translation adjustment		(46.9)		(371.1)		Foreign currency translation adjustment		28.1		(46.9)

Other Comprehensive Income (Loss)	Other Comprehensive Income (Loss)		(43.2)		(368.0)		Other Comprehensive Income (Loss)		30.4		(43.2)

Comprehensive Income (Loss)			262.8		(96.3)
Comprehensive Income (Loss) Attributed To Noncontrolling Interests			7.4		(23.7)
Comprehensive Income (Loss) - Omnicom Group Inc.			$	255.4	$	(72.6)
Comprehensive Income							Comprehensive Income		225.0		262.8
Comprehensive Income Attributed To Noncontrolling Interests							Comprehensive Income Attributed To Noncontrolling Interests		21.5		7.4
Comprehensive Income - Omnicom Group Inc.							Comprehensive Income - Omnicom Group Inc.		$	203.5	$	255.4

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

OMNICOM GROUP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EQUITY

(Unaudited)

(In millions, except per share amounts)

Three Months Ended March 31,
2021 2020
Common Stock, shares issued 297.2 297.2
Common Stock, par value $ 44.6 $ 44.6
Additional Paid-in Capital:
Beginning Balance 747.8 760.9
Net change in noncontrolling interests 1.0 (7.7)
Change in temporary equity (2.8) (8.2)
Share-based compensation 20.8 18.7
Stock issued, share-based compensation 2.9 (7.9)
Ending Balance 769.7 755.8
Retained Earnings:
Beginning Balance 8,190.6 7,806.3
Net income 287.8 258.1
Common stock dividends declared (150.9) (139.9)
Ending Balance 8,327.5 7,924.5
Accumulated Other Comprehensive Income (Loss):
Beginning Balance (1,213.8) (1,197.6)
Other comprehensive income (loss) (32.4) (330.7)
Ending Balance (1,246.2) (1,528.3)
Treasury Stock:
Beginning Balance (4,684.8) (4,560.3)
Stock issued, share-based compensation 1.1 11.3
Common stock repurchased (0.7) (200.0)
Ending Balance (4,684.4) (4,749.0)
Shareholders’ Equity 3,211.2 2,447.6
Noncontrolling Interests:
Beginning Balance 492.5 519.8
Net income 18.2 13.6
Other comprehensive income (loss) (10.8) (37.3)
Dividends to noncontrolling interests (13.6) (10.4)
Acquisition of noncontrolling interests (5.8) (8.7)
Ending Balance 480.5 477.0
Total Equity $ 3,691.7 $ 2,924.6
Dividends Declared Per Common Share $ 0.70 $ 0.65


	Three Months Ended March 31,
		2022		2021
Common Stock, shares issued		297.2		297.2
Common Stock, par value		$	44.6	$	44.6
Additional Paid-in Capital:
Beginning Balance		622.0		747.8
Net change in noncontrolling interests		(5.6)		1.0
Change in temporary equity		(57.8)		(2.8)
Share-based compensation		20.0		20.8
Stock issued, share-based compensation		5.9		2.9
Ending Balance		584.5		769.7
Retained Earnings:
Beginning Balance		8,998.8		8,190.6

Net income		173.8		287.8
Common stock dividends declared		(145.3)		(150.9)
Ending Balance		9,027.3		8,327.5
Accumulated Other Comprehensive Income (Loss):
Beginning Balance		(1,252.3)		(1,213.8)

Other comprehensive income (loss)		29.7		(32.4)
Ending Balance		(1,222.6)		(1,246.2)
Treasury Stock:
Beginning Balance		(5,142.9)		(4,684.8)
Stock issued, share-based compensation		9.1		1.1
Common stock repurchased		(300.3)		(0.7)
Ending Balance		(5,434.1)		(4,684.4)
Shareholders’ Equity		2,999.7		3,211.2
Noncontrolling Interests:
Beginning Balance		503.5		492.5
Net income		20.8		18.2
Other comprehensive income (loss)		0.7		(10.8)
Dividends to noncontrolling interests		(14.0)		(13.6)
Net change in noncontrolling interests		(9.9)		(5.8)
Increase in noncontrolling interests from business combinations		47.8		—
Ending Balance		548.9		480.5

Total Equity		$	3,548.6	$	3,691.7

Dividends Declared Per Common Share		$0.70		$0.70

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

OMNICOM GROUP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In millions)

Three Months Ended March 31,
2021 2020
Cash Flows from Operating Activities:
Net income $ 306.0 $ 271.7
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization of right-of-use assets 33.4 36.2
Amortization of intangible assets 19.9 20.8
Amortization of net deferred gain on interest rate swaps (1.3) (4.1)
Share-based compensation 20.8 18.7
Other, net 3.8 18.7
Use of operating capital (843.5) (1,349.2)
Net Cash Used In Operating Activities (460.9) (987.2)
Cash Flows from Investing Activities:
Capital expenditures (12.4) (26.4)
Proceeds from disposition of subsidiaries and sale of investments 1.6 2.1
Net Cash Used In Investing Activities (10.8) (24.3)
Cash Flows from Financing Activities:
Proceeds from borrowings 0 594.0
Repayment of debt 0 (600.0)
Change in short-term debt 2.2 1.7
Dividends paid to common shareholders (140.1) (141.7)
Repurchases of common stock (0.7) (200.0)
Proceeds from stock plans 3.4 1.4
Acquisition of additional noncontrolling interests (2.2) (10.4)
Dividends paid to noncontrolling interest shareholders (13.6) (10.4)
Payment of contingent purchase price obligations (6.9) (1.4)
Other, net (17.8) (24.4)
Net Cash Used In Financing Activities (175.7) (391.2)
Effect of foreign exchange rate changes on cash and cash equivalents (55.8) (210.5)
Net Decrease in Cash and Cash Equivalents (703.2) (1,613.2)
Cash and Cash Equivalents at the Beginning of Period 5,600.5 4,305.7
Cash and Cash Equivalents at the End of Period $ 4,897.3 $ 2,692.5


	Three Months Ended March 31,
	2022		2021
Cash Flows from Operating Activities:
Net income	$	194.6	$	306.0
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization of right-of-use assets	35.8		33.4
Amortization of intangible assets	19.4		19.9
Amortization of net deferred gain on interest rate swaps	1.4		(1.3)
Share-based compensation	20.0		20.8
Non-cash charges related to the effects of the war in Ukraine	65.8		—



Other, net	2.7		3.8
Use of operating capital	(884.2)		(843.5)
Net Cash Used In Operating Activities	(544.5)		(460.9)
Cash Flows from Investing Activities:
Capital expenditures	(23.2)		(12.4)
Acquisition of businesses and interests in affiliates, net of cash acquired	(246.6)		—
Purchase of short-term investments	(92.7)		—
Other, net	0.7		1.6
Net Cash Used In Investing Activities	(361.8)		(10.8)
Cash Flows from Financing Activities:


Change in short-term debt	2.4		2.2
Dividends paid to common shareholders	(147.4)		(140.1)
Repurchases of common stock	(300.3)		(0.7)
Proceeds from stock plans	13.5		3.4
Acquisition of additional noncontrolling interests	(6.3)		(2.2)
Dividends paid to noncontrolling interest shareholders	(14.0)		(13.6)
Payment of contingent purchase price obligations	(6.0)		(6.9)
Other, net	(18.2)		(17.8)
Net Cash Used In Financing Activities	(476.3)		(175.7)
Effect of foreign exchange rate changes on cash and cash equivalents	(8.7)		(55.8)

Net Decrease in Cash and Cash Equivalents	(1,391.3)		(703.2)
Cash and Cash Equivalents at the Beginning of Period	5,316.8		5,600.5
Cash and Cash Equivalents at the End of Period	$	3,925.5	$	4,897.3

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

OMNICOM GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Presentation of Financial Statements

The terms “Omnicom,” “the Company,” “we,” “our” and “us” each refer to Omnicom Group Inc. and its subsidiaries, unless the context indicates otherwise. The accompanying unaudited consolidated financial statements were prepared in accordance with generally accepted accounting principles in the United States, or U.S. GAAP or GAAP, for interim financial information and Article 10 of Regulation S-X of the Securities and Exchange Commission. Accordingly, certain information and footnote disclosure have been condensed or omitted.

In our opinion, the accompanying unaudited consolidated financial statements reflect all adjustments, consisting of normal recurring accruals, considered necessary for a fair presentation, in all material respects, of the information contained herein. These unaudited consolidated financial statements should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, ~~2020,~~2021, or ~~2020~~2021 10-K. Results for the interim periods are not necessarily indicative of results that may be expected for the year.

Risks and Uncertainties ~~- Ongoing~~

Global economic challenges, including the impact of the war in Ukraine, the COVID-19 pandemic, rising inflation and supply-chain disruptions could cause economic uncertainty and volatility. The impact of these issues on our business will vary by geographic market and discipline. We monitor economic conditions closely, as well as client revenue levels and other factors. In response to reductions in revenue, we can take actions to align our cost structure with changes in client demand and manage our working capital. However, there can be no assurance as to the effectiveness of our efforts to mitigate any impact of the current and future adverse economic conditions, reductions in client revenue, changes in client creditworthiness and other developments.

Impact of the War in Ukraine

We have historically conducted operations in Russia and Ukraine through local agencies in which we hold a majority stake. The minority partners in these agencies are local management, which report to the applicable network management.

During the first quarter of 2022, the war in Ukraine required us to suspend our business operations in Ukraine. The war resulted in the imposition of sanctions by the United States, the United Kingdom, and the European Union, that affect the cross-border operations of businesses operating in Russia. In addition, Russian regulators have imposed currency restrictions and regulations that created uncertainty regarding our ability to recover our investment in our operations in Russia, as well as our ability to exercise control over the operations. Also, many multinational companies, including many of our large clients, ceased or suspended their operations in Russia. Therefore, the ability to continue operations in Russia without additional funding, which we will not provide, is uncertain. As a result, we have sold, or committed to dispose of, all of our businesses in Russia. Accordingly, we recorded pretax charges of $113.4 million in the first quarter of 2022, primarily consisting of the net investment in our Russian businesses, and also including charges related to the suspension of operations in Ukraine.

Impact of the COVID-19 Pandemic ~~on our Business~~- Update

~~We continued to experience the negative effect on the global economy from the COVID-19 pandemic~~Beginning in March 2020 and continuing through the first quarter of ~~2021. As~~2021, our business experienced the effects from reductions in client spending due to the economic impact related to the COVID-19 ~~pandemic did not negatively impact~~pandemic. While mixed by business and geography, the spending reductions impacted all our ~~major~~businesses and markets. Globally, the most impacted businesses were our Experiential discipline, especially in our event marketing businesses, and our Execution & Support discipline, primarily in field marketing. Most of our markets ~~until late~~began to improve in April 2021, and the improvement continued through the first quarter of ~~2020, the negative effects~~2022 as clients substantially increased their spending on our revenue continued until we completely cycled through the end of the first quarter of 2021. Although the impact was mixed by geography and discipline, revenue for the three months ended March 31, 2021 increased $20.0 million, or 0.6%, compared to the three months ended March 31, 2020. The increase in revenue primarily reflects the strengthening of certain foreign currencies, primarily the Euro and the British Pound, against the U.S. Dollar, substantially offset by a decrease in client spending attributable to the COVID-19 pandemic (see Note 2).

As long as the COVID-19 pandemic remains a public health threat, global economic conditions will continue to be volatile depending on several factors, including new information concerning the severity of the pandemic, government actions to mitigate the effects of the pandemic in the near-term, and the resulting impact on our clients' spending plans. We expect global economic performance and the performance of our businesses to vary by geography and discipline until the impact of the COVID-19 pandemic on the global economy subsidies. We will continue to assess the impact of the COVID-19 pandemic on our business and will respond accordingly.

~~Accounting Changes~~

~~On January 1, 2021, we adopted FASB ASU 2019-12,~~ ~~Income Taxes (Topic 740),~~ or ASU 2019-12, which, among other things, amended the rules for recognizing deferred taxes for investments, performing intra-period tax allocations and calculating income taxes in interim periods and reduced complexity in certain areas, including the accounting for transactions that result in a step-up in the tax basis of goodwill and allocating taxes to members of a consolidated group. The adoption of ASU 2019-12 did not have a material effect on our results of operations and financial position.services.

2. Revenue

Nature of our services

We provide an extensive range of advertising, marketing and corporate communications services through various client-centric networks that are organized to meet specific client objectives. Our ~~branded~~ networks and agencies ~~operate in all major markets and~~ provide a comprehensive range of services in the following fundamental disciplines: ~~advertising, customer relationship management, or CRM, public relations,~~Advertising & Media, Precision Marketing, Commerce & Brand Consulting, Experiential, Execution & Support, Public Relations and ~~healthcare.~~Healthcare. Advertising & Media includes creative services ~~as well as~~across digital and traditional media, strategic media planning and buying, and data analytics services. Precision Marketing includes digital and direct marketing, digital transformation and data and analytics. Commerce & Brand Consulting services include brand consulting, strategy and research, and retail ecommerce. Experiential marketing services include live and digital events and experience design and execution. Execution & Support includes field marketing, sales support, digital and physical merchandising and point-of-sale, as well as other specialized marketing and custom communications services. Public relations services include corporate communications, crisis management, public affairs, and media and media relations services. Healthcare includes advertising and media services to global healthcare clients. In an effort to better capture the expanding scope of our services, effective January 1, 2021, we realigned the classification of certain services primarily within our CRM Consumer Experience discipline. As a result, our CRM discipline has been reclassified into four categories: CRM Precision Marketing, which includes our precision marketing and digital/direct marketing agencies; CRM Commerce and Brand Consulting that is primarily comprised of Omnicom Commerce Group, including our shopper marketing businesses, and our Brand Consulting agencies; CRM Experiential, which includes our experiential marketing agencies and events businesses; and CRM Execution & Support, which includes field marketing, merchandising and point of sale, as well as other specialized marketing and custom communications services.pharmaceutical clients. At the core of all our services is the ability to create or develop a

client’s marketing or corporate communications message into content that can be delivered to a target audience across different communications mediums.

~~Reclassifications have been made to the prior period revenue by discipline information to conform to current period presentation.~~

Revenue by discipline was (in millions):

Three Months Ended March 31,
2021 2020
Advertising $ 2,003.7 $ 1,933.3
CRM Precision Marketing 269.5 232.0
CRM Commerce and Brand Consulting 214.5 220.9
CRM Experiential 88.4 131.3
CRM Execution & Support 246.6 273.7
Public Relations 317.5 333.7
Healthcare 286.7 282.0
$ 3,426.9 $ 3,406.9


	Three Months Ended March 31,
		2022		2021
Advertising & Media		$	1,769.4	$	2,003.7
Precision Marketing		336.1		269.5
Commerce & Brand Consulting		237.9		214.5
Experiential		142.5		88.4
Execution & Support		254.3		246.6
Public Relations		360.9		317.5
Healthcare		309.2		286.7
		$	3,410.3	$	3,426.9

Economic factors affecting our revenue

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

Revenue in our principal geographic markets was (in millions):

Three Months Ended March 31,
2021 2020
Americas:
North America $ 1,972.5 $ 1,997.3
Latin America 63.2 71.4
EMEA:
Europe 941.0 923.4
Middle East and Africa 50.2 55.5
Asia-Pacific 400.0 359.3
$ 3,426.9 $ 3,406.9


	Three Months Ended March 31,
		2022		2021
Americas:
North America		$	1,839.0	$	1,972.5
Latin America		67.7		63.2
EMEA:
Europe		992.0		941.0
Middle East and Africa		81.9		50.2
Asia-Pacific		429.7		400.0
		$	3,410.3	$	3,426.9

The Americas is comprised of North America, which includes the United States, Canada and Puerto Rico, and Latin America, which includes South America and Mexico. EMEA is comprised of Europe, the Middle East and Africa. Asia-Pacific includes Australia, Greater China, India, Japan, Korea, New Zealand, Singapore and other Asian countries. Revenue in the United States for the three months ended March 31, 2022 and 2021 ~~and 2020~~ was ~~$1,868.1~~$1,724.6 million and ~~$1,894.2~~$1,868.1 million, respectively.

Contract assets and liabilities

Work in process includes contract assets, unbilled fees and costs, and media and production costs. Contract liabilities primarily consist of customer advances. Work in process and contract liabilities were (in millions):

March 31, 2021 December 31, 2020 March 31, 2020
Work in process:
   Contract assets and unbilled fees and costs $ 626.0 $ 501.1 $ 783.7
   Media and production costs 512.7 600.1 529.5
$ 1,138.7 $ 1,101.2 $ 1,313.2
Contract liabilities:
   Customer advances $ 1,278.0 $ 1,361.3 $ 1,075.7


	March 31, 2022		December 31, 2021		March 31, 2021
Work in process:
Contract assets and unbilled fees and costs	$	662.5	$	469.9	$	626.0
Media and production costs	654.3		731.1		512.7
	$	1,316.8	$	1,201.0	$	1,138.7
Contract liabilities:
Customer advances	$	1,463.8	$	1,644.5	$	1,278.0

Work in process represents accrued costs incurred on behalf of customers, including media and production costs, and fees and other third-party costs that have not yet been billed. Media and production costs are billed during the production process in accordance with the terms of the client contract. Contract assets primarily include incentive fees, which are not material and will be billed to clients in accordance with the terms of the client contract. Substantially all unbilled fees and costs will be billed within the next 30 days. ~~The contract liability~~Contract liabilities primarily ~~represents~~represent advance billings to customers in accordance with the terms of the client contracts, primarily for the reimbursement of third-party costs that are generally incurred in the near term. NoThere were no impairment losses to the contract assets ~~were~~ recorded in the three months ended March 31, ~~2021~~2022 and ~~2020.~~

2021.

3. Net Income per Share

The computations of basic and diluted net income per share were (in millions, except per share amounts):

Three Months Ended March 31,
2021 2020
Net Income - Omnicom Group Inc. $ 287.8 $ 258.1
Weighted Average Shares:
Basic 215.6 216.6
Dilutive stock options and restricted shares 1.2 0.9
Diluted 216.8 217.5
Anti-dilutive stock options and restricted shares 0.7 0.9
Net Income per Share - Omnicom Group Inc.:
Basic $ 1.33 $ 1.19
Diluted $ 1.33 $ 1.19


	Three Months Ended March 31,
		2022		2021
Net Income - Omnicom Group Inc.		$	173.8	$	287.8


Weighted Average Shares:
Basic		208.3		215.6
Dilutive stock options and restricted shares		1.5		1.2
Diluted		209.8		216.8

Anti-dilutive stock options and restricted shares		0.5		0.7
Net Income per Share - Omnicom Group Inc.:
Basic		$0.83		$1.33
Diluted		$0.83		$1.33

4. Goodwill and Intangible Assets

Goodwill and intangible assets were (in millions):


	March 31, 2022						December 31, 2021
	Gross Carrying Value		Accumulated Amortization		Net Carrying Value		Gross Carrying Value		Accumulated Amortization		Net Carrying Value

Goodwill	$	10,466.6	$	(514.7)	$	9,951.9	$	10,259.6	$	(521.0)	$	9,738.6

Intangible assets:
Purchased and internally developed software	$	375.5	$	(314.6)	$	60.9	$	382.2	$	(318.7)	$	63.5
Customer related and other	779.2		(507.1)		272.1		772.3		(537.8)		234.5
	$	1,154.7	$	(821.7)	$	333.0	$	1,154.5	$	(856.5)	$	298.0

March 31, 2021 December 31, 2020
Gross
Carrying
Value Accumulated
Amortization Net
Carrying
Value Gross
Carrying
Value Accumulated
Amortization Net
Carrying
Value
Goodwill $ 10,068.3 $ (526.8) $ 9,541.5 $ 10,141.6 $ (531.9) $ 9,609.7
Intangible assets:
Purchased and internally developed software $ 378.8 $ (309.4) $ 69.4 $ 377.6 $ (307.0) $ 70.6
Customer related and other 726.2 (514.8) 211.4 738.1 (510.2) 227.9
$ 1,105.0 $ (824.2) $ 280.8 $ 1,115.7 $ (817.2) $ 298.5

Changes in goodwill were (in millions):


	Three Months Ended March 31,
	2022		2021
January 1	$	9,738.6	$	9,609.7
Acquisitions	215.2		—
Noncontrolling interests in acquired businesses	47.8		—

Dispositions	(19.4)		—
Foreign currency translation	(30.3)		(68.2)
March 31	$	9,951.9	$	9,541.5

Three Months Ended March 31,
2021 2020
January 1 $ 9,609.7 $ 9,440.5
Acquisitions 0 1.7
Dispositions 0 (0.1)
Foreign currency translation (68.2) (243.5)
March 31 $ 9,541.5 $ 9,198.6

We evaluated the effects of the war in Ukraine and the geopolitical events in the region on our forecasted consolidated operating performance and concluded that we do not have a trigger event that would result in an update of our evaluation of goodwill for impairment that we performed in June 2021. We will continue to monitor these ongoing geopolitical events and evaluate the impact, if any, on our goodwill impairment test, which will be performed in June 2022.

5. Debt

Credit Facilities

We ~~maintain~~have a $2.5 billion multi-currency revolving credit facility, or Credit Facility, that matures on February 14, 2025. WeIn addition, we have uncommitted credit lines aggregating ~~$1.0 billion~~$807.5 million and the ability to issue up to $2 billion of U.S. Dollar denominated commercial ~~paper.~~paper and issue up to the equivalent of $500 million in British Pounds or Euro under a Euro commercial paper program. These facilities provide additional liquidity sources for operating capital and general corporate purposes. Our $400 million 364-day revolving credit facility, or 364 Day Credit Facility, that we entered into to mitigate any potential impact on our liquidity from the COVID-19 pandemic expired on April 2, 2021 without being drawn. At March 31, ~~2021,~~2022, there were ~~0 outstanding commercial paper issuances or~~no borrowings under the ~~Credit Facility, the 364 Day~~ Credit Facility or the uncommitted credit ~~lines.~~lines, and there were no outstanding commercial paper issuances.

The Credit Facility contains ~~and,prior to its expiration, the 364 Day Credit Facility contained,~~ a financial covenant that requires us to maintain a Leverage Ratio of consolidated indebtedness to consolidated EBITDA (earnings before interest, taxes, depreciation, amortization and non-cash charges) of no more than ~~3.5~~3.0 times for the most recently ended 12-month period. We amended the Credit Facility and the 364 Day Credit Facility in October 2020 to increase the maximum Leverage Ratio to 4.0 times through December 31, 2021 for the Credit Agreement and to 4.0 times through the maturity of the 364 Day Credit Facility. At March 31, ~~2021,~~2022, we were in compliance with ~~these covenants~~this covenant as our Leverage Ratio was ~~2.8~~2.4 times. The Credit Facility does not limit our ability to declare or pay dividends or repurchase our common stock.

Short-Term Debt

~~Short-term debt at~~At March 31, ~~2021~~2022 and December 31, ~~2020~~2021, short-term debt of ~~$5.9~~$12.4 million and ~~$3.9~~$9.6 million, respectively, represented bank overdrafts and short-term borrowings primarily of our international subsidiaries. Due to the short-term nature of this debt, carrying value approximates fair value.

Long-Term Debt

Long-term debt was (in millions):


	March 31, 2022		December 31, 2021
3.65% Senior Notes due 2024	$	750.0	$	750.0
3.60% Senior Notes due 2026	1,400.0		1,400.0
€500 million 0.80% Senior Notes due 2027	554.7		568.6
2.45% Senior Notes due 2030	600.0		600.0
4.20% Senior Notes due 2030	600.0		600.0
€500 million 1.40% Senior Notes due 2031	554.7		568.6
2.60% Senior Notes due 2031	800.0		800.0
£325 million 2.25% Senior Notes due 2033	426.5		439.8

	5,685.9		5,727.0
Unamortized discount	(10.2)		(10.8)
Unamortized debt issuance costs	(30.4)		(31.8)
Unamortized deferred gain from settlement of interest rate swaps	1.1		1.3


	$	5,646.4	$	5,685.7

March 31, 2021 December 31, 2020
3.625% Senior Notes due 2022 $ 1,250.0 $ 1,250.0
3.65% Senior Notes due 2024 750.0 750.0
3.60% Senior Notes due 2026 1,400.0 1,400.0
€500 Million 0.80% Senior Notes due 2027 585.9 611.5
2.45% Senior Notes due 2030 600.0 600.0
4.20% Senior Notes due 2030 600.0 600.0
€500 Million 1.40% Senior Notes due 2031 585.9 611.5
5,771.8 5,823.0
Unamortized premium (discount), net (5.2) (5.1)
Unamortized debt issuance costs (25.6) (27.0)
Unamortized deferred gain from settlement of interest rate swaps 13.4 16.4
Long-term debt $ 5,754.4 $ 5,807.3

~~The~~Our 2.45% Senior Notes ~~and the~~due 2030, 4.20% Senior Notes due 2030 and 2.60% Senior Notes due 2031 are senior unsecured obligations of Omnicom that rank equal in right of payment with all existing and future unsecured senior indebtedness.

Omnicom and its wholly owned finance subsidiary, Omnicom Capital Inc., or OCI, are co-obligors under ~~the senior notes~~our 3.65% Senior Notes due ~~2022,~~ 2024 and 3.60% Senior Notes due 2026. These notes are a joint and several liability of Omnicom and OCI, and Omnicom unconditionally guarantees OCI’s obligations with respect to the notes. OCI provides funding for our operations by incurring debt and lending the proceeds to our operating subsidiaries. OCI’s assets primarily consist of cash and cash equivalents and intercompany loans made to our operating subsidiaries, and the related interest receivable. There are no restrictions on the ability of OCI or Omnicom to obtain funds from our subsidiaries through dividends, loans or advances. Such notes are senior unsecured obligations that rank equal in right of payment with all existing and future unsecured senior indebtedness.

Omnicom and OCI have, jointly and severally, fully and unconditionally guaranteed the obligations of Omnicom Finance Holdings plc, or ~~OFHP,~~OFH, a U.K.-based wholly owned subsidiary of Omnicom, with respect to the ~~Euro denominated notes~~€500 million 0.80% Senior Notes due 2027 and ~~2031. OFHP’s~~the €500 million 1.40% Senior Notes due 2031, collectively the Euro Notes. OFH’s assets consist of its investments in several wholly owned finance companies that function as treasury centers, ~~that~~which provide funding for various operating companies in Europe, Brazil, Australia and other countries in the Asia-Pacific region. The finance companies’ assets consist of cash and cash equivalents and intercompany loans that they make or have made to the operating companies in their respective regions and the related interest receivable. There are no restrictions on the ability of Omnicom, OCI or ~~OFHP~~OFH to obtain funds from their subsidiaries through dividends, loans or advances. The Euro ~~denominated notes~~Notes and the related guarantees are senior unsecured obligations that rank equal in right of payment with all existing and future unsecured senior indebtedness of ~~OFHP~~OFH and each of Omnicom and OCI, respectively.

Omnicom has fully and unconditionally guaranteed the obligations of Omnicom Capital Holdings plc, or OCH, a U.K.-based wholly owned subsidiary of Omnicom, with respect to the £325 million 2.25% Senior Notes due 2033, or the Sterling Notes. OCH’s assets consist of its investments in several wholly owned finance companies that function as treasury centers, which provide funding for various operating companies in EMEA, Australia and other countries in the Asia-Pacific region. The finance companies’ assets consist of cash and cash equivalents and intercompany loans that they make or have made to the operating companies in their respective regions and the related interest receivable. There are no restrictions on the ability of Omnicom or OCH to obtain funds from their subsidiaries through dividends, loans or advances. The Sterling Notes and the related guarantee are senior unsecured obligations that rank equal in right of payment with all existing and future unsecured senior indebtedness of OCH and Omnicom, respectively.

6. Segment Reporting

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

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

Revenue and long-lived assets and goodwill by geographic region were (in millions):

Americas EMEA Asia-Pacific
March 31, 2021
Revenue $ 2,035.7 $ 991.2 $ 400.0
Long-lived assets and goodwill 7,562.7 3,074.7 644.8
March 31, 2020
Revenue $ 2,068.7 $ 978.9 $ 359.3
Long-lived assets and goodwill 7,685.0 2,893.6 607.6


	Americas		EMEA		Asia-Pacific
March 31, 2022

Revenue - Three months ended	$	1,906.7	$	1,073.9	$	429.7
Long-lived assets and goodwill	7,896.2		3,532.6		698.0
March 31, 2021

Revenue - Three months ended	$	2,035.7	$	991.2	$	400.0
Long-lived assets and goodwill	7,562.7		3,074.7		644.8

7. Income Taxes

Our effective tax rate for the three months ended March 31, ~~2021~~2022 increased period-over-period to ~~26.8%~~37.2% from ~~26.0%~~26.8%. The higher effective tax rate for 2022 was predominantly the ~~first quarter~~result of ~~2020 reflects~~ the ~~recognition~~non-deductibility of ~~certain domestic~~the $113.4 million charges arising from the effects of the war in Ukraine, as well as an additional net charge of $4.8 million in connection with these charges. These charges were partially offset by the tax ~~credits.~~benefit arising from our share-based compensation awards.

At March 31, ~~2021,~~2022, our unrecognized tax benefits were ~~$181.2~~$163.5 million. Of this amount, approximately ~~$172.2~~$157.9 million would affect our effective tax rate upon resolution of the uncertain tax positions.

8. Pension and Other Postemployment Benefits

Defined Benefit Pension Plans

The components of net periodic benefit expense were (in millions):

Three Months Ended March 31,
2021 2020
Service cost $ 1.4 $ 2.0
Interest cost 0.8 1.3
Expected return on plan assets (0.2) (0.3)
Amortization of prior service cost 0.2 0.2
Amortization of actuarial losses 2.3 1.4
$ 4.5 $ 4.6


	Three Months Ended March 31,
	2022		2021
Service cost	$	0.8	$	1.4
Interest cost	1.0		0.8
Expected return on plan assets	(0.3)		(0.2)
Amortization of prior service cost	0.1		0.2
Amortization of actuarial losses	1.0		2.3
	$	2.6	$	4.5

We contributed $0.2 ~~million and $0.1~~ million to our defined benefit pension plans in each of the three months ended March 31, ~~2021~~2022 and ~~2020,~~2021, respectively.

Postemployment Arrangements

The components of net periodic benefit expense were (in millions):

Three Months Ended March 31,
2021 2020
Service cost $ 1.2 $ 1.2
Interest cost 0.5 0.9
Amortization of prior service cost 1.0 1.1
Amortization of actuarial losses 1.0 0.5
$ 3.7 $ 3.7

~~9. COVID-19 Repositioning Costs~~

~~In the second quarter of 2020, in response to the COVID-19 pandemic, we incurred repositioning costs to align our cost structure and reduce our workforce and facility requirements.~~

~~At March 31, 2021 the remaining liability for the COVID-19 repositioning costs was (in millions):~~


~~January 1, 2021~~	$	~~83.8~~
~~Payments~~	~~(15.7)~~

~~March 31, 2021~~	$	~~68.1~~

~~We expect that substantially all the remaining liability will be paid by the end of 2021.~~


	Three Months Ended March 31,
	2022		2021
Service cost	$	1.1	$	1.2
Interest cost	0.7		0.5
Amortization of prior service cost	0.9		1.0
Amortization of actuarial losses	0.6		1.0
	$	3.3	$	3.7

9. Charges Arising from the Effects of the War in Ukraine

As discussed in Note 1, in the first quarter of 2022, we recorded pretax charges arising from the effects of the war in Ukraine of $113.4 million, which included cash charges of $47.6 million, primarily consisting of the loss on the disposition of the net investment in our Russian businesses, as well as impairment and other non-cash charges related to the suspension of operations in Ukraine.

10. Supplemental Cash Flow Data

The change in operating capital was (in millions):


	Three Months Ended March 31,
	2022		2021
(Increase) decrease in accounts receivable	$	1,142.2	$	1,095.5
(Increase) decrease in work in process and other current assets	(248.1)		(55.3)
Increase (decrease) in accounts payable	(1,755.4)		(1,953.8)
Increase (decrease) in customer advances, taxes payable and other current liabilities	12.2		63.0
Change in other assets and liabilities, net	(35.1)		7.1
Increase (decrease) in operating capital	$	(884.2)	$	(843.5)

Income taxes paid	$	49.9	$	42.7
Interest paid	$	14.1	$	5.3

Three Months Ended March 31,
2021 2020
(Increase) decrease in accounts receivable $ 1,095.5 $ 876.6
(Increase) decrease in work in process and other current assets (55.3) (115.0)
Increase (decrease) in accounts payable (1,953.8) (2,084.9)
Increase (decrease) in customer advances, taxes payable and other current liabilities 63.0 (14.1)
Change in other assets and liabilities, net 7.1 (11.8)
Increase (decrease) $ (843.5) $ (1,349.2)
Income taxes paid $ 42.7 $ 50.5
Interest paid $ 5.3 $ 31.2

~~Supplemental non-cash information related to leases was~~Non-cash increase in lease liabilities (in millions):

Three Months Ended March 31,
2021 2020
Net increase in lease liability:
Operating leases $ 38.7 $ 72.0
Finance leases $ 11.7 $ 8.5


	Three Months Ended March 31,
	2022		2021
Operating leases	$	76.3	$	38.7
Finance leases	$	17.0	$	11.7

11. Commitments and Contingent Liabilities

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

12. Accumulated Other Comprehensive Income (Loss)

Changes in accumulated other comprehensive income (loss), net of income taxes were (in millions):


	Cash Flow Hedge		Defined Benefit Pension Plans and Postemployment Arrangements		Foreign Currency Translation		Total
	Three Months Ended March 31, 2022
January 1	$	(16.1)	$	(90.4)	$	(1,145.8)	$	(1,252.3)
Other comprehensive income (loss) before reclassifications	—		—		27.4		27.4
Reclassification from accumulated other comprehensive income (loss)	1.0		1.3		—		2.3
March 31	$	(15.1)	$	(89.1)	$	(1,118.4)	$	(1,222.6)

Cash
Flow
Hedge Defined Benefit Pension Plans and Postemployment Arrangements Foreign
Currency Translation Total
Three Months Ended March 31, 2021
January 1 $ (20.1) $ (123.2) $ (1,070.5) $ (1,213.8)
Other comprehensive income (loss) before reclassifications 0 0 (36.1) (36.1)
Reclassification from accumulated other comprehensive income (loss) 1.0 2.7 0 3.7
March 31 $ (19.1) $ (120.5) $ (1,106.6) $ (1,246.2)

Three Months Ended March 31, 2020
January 1 $ (24.0) $ (112.1) $ (1,061.5) $ (1,197.6)
Other comprehensive income (loss) before reclassifications 0 0 (333.8) (333.8)
Reclassification from accumulated other comprehensive income (loss) 0.9 2.2 0 3.1
March 31 $ (23.1) $ (109.9) $ (1,395.3) $ (1,528.3)


	Three Months Ended March 31, 2021
January 1	$	(20.1)	$	(123.2)	$	(1,070.5)	$	(1,213.8)

Other comprehensive income (loss) before reclassifications	—		—		(36.1)		(36.1)
Reclassification from accumulated other comprehensive income (loss)	1.0		2.7		—		3.7
March 31	$	(19.1)	$	(120.5)	$	(1,106.6)	$	(1,246.2)

13. Fair Value

Financial assets and liabilities measured at fair value on a recurring basis were (in millions):


	March 31, 2022
	Level 1		Level 2		Level 3		Total
Assets:
Cash and cash equivalents	$	3,925.5					$	3,925.5
Short-term investments			$	92.7			92.7
Marketable equity investments	0.9						0.9

Liabilities:

Contingent purchase price obligations					$	160.6	$	160.6


		March 31, 2021									December 31, 2021
		Level 1		Level 2		Level 3		Total			Level 1		Level 2		Level 3		Total
Assets:	Assets:									Assets:
Cash and cash equivalents	Cash and cash equivalents	$	4,897.3					$	4,897.3	Cash and cash equivalents	$	5,316.8					$	5,316.8

Marketable equity investments	Marketable equity investments	1.4						1.4		Marketable equity investments	1.1						1.1
Foreign currency derivatives				$	0.5			0.5
Foreign currency derivative instruments										Foreign currency derivative instruments			$	0.3			0.3
Liabilities:	Liabilities:									Liabilities:
Foreign currency derivatives	Foreign currency derivatives			$	0.5			$	0.5	Foreign currency derivatives			$	0.1			$	0.1
Contingent purchase price obligations	Contingent purchase price obligations					$	67.7	67.7		Contingent purchase price obligations					$	167.1	167.1

December 31, 2020
Level 1 Level 2 Level 3 Total
Assets:
Cash and cash equivalents $ 5,600.5 $ 5,600.5
Marketable equity investments 1.6 1.6
Foreign currency derivative instruments $ 0.6 0.6
Liabilities:
Foreign currency derivatives 0.3 0.3
Contingent purchase price obligations $ 71.9 71.9

Changes in contingent purchase price obligations were (in millions):


	Three Months Ended March 31,
	2022		2021
January 1	$	167.1	$	71.9
Acquisitions	0.5		1.3
Revaluation and interest	0.2		0.4
Payments	(6.0)		(5.4)
Foreign currency translation	(1.2)		(0.5)
March 31	$	160.6	$	67.7

Three Months Ended March 31,
2021 2020
January 1 $ 71.9 $ 107.7
Acquisitions 1.3 8.1
Revaluation and interest 0.4 0.6
Payments (5.4) 0
Foreign currency translation (0.5) (2.8)
March 31 $ 67.7 $ 113.6

The carrying amount and fair value of our financial assets and liabilities were (in millions):


	March 31, 2022				December 31, 2021
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Assets:
Cash and cash equivalents	$	3,925.5	$	3,925.5	$	5,316.8	$	5,316.8
Short-term investments	92.7		92.7		—		—
Marketable equity securities	0.9		0.9		1.1		1.1
Non-marketable equity securities	5.6		5.6		6.5		6.5
Foreign currency derivatives	—		—		0.3		0.3
Liabilities:
Short-term debt	$	12.4	$	12.4	$	9.6	$	9.6
Foreign currency derivatives	—		—		0.1		0.1
Contingent purchase price obligations	160.6		160.6		167.1		167.1
Long-term debt	5,646.4		5,561.3		5,685.7		6,011.6

March 31, 2021 December 31, 2020
Carrying
Amount Fair
Value Carrying
Amount Fair
Value
Assets:
Cash and cash equivalents $ 4,897.3 $ 4,897.3 $ 5,600.5 $ 5,600.5
Marketable equity securities 1.4 1.4 1.6 1.6
Non-marketable equity securities 6.9 6.9 8.9 8.9
Foreign currency derivatives 0.5 0.5 0.6 0.6
Liabilities:
Short-term debt $ 5.9 $ 5.9 $ 3.9 $ 3.9
Foreign currency derivatives 0.5 0.5 0.3 0.3
Contingent purchase price obligations 67.7 67.7 71.9 71.9
Long-term debt, including current portion 5,754.4 6,143.1 5,807.3 6,380.6

Short-term investments of $92.7 million at March 31, 2022 represent time deposits maturing at various dates within the year. These investments are classified as held-to-maturity securities because we have the positive intent and ability to hold until maturity. Held-to-maturity securities are carried at amortized cost, which approximates fair value. Fair value is based on observable interest rates for similar securities.

The estimated fair value of the foreign currency derivatives is determined using model-derived valuations, taking into consideration foreign currency rates and counterparty credit risk. The estimated fair value of the contingent purchase price obligations is calculated in accordance with the terms of each acquisition agreement and is discounted. The fair value of debt is based on quoted market prices.

14. New Accounting Standards

In October 2021, the FASB issued ASU 2021-08, Accounting for Contract Assets and Contract Liabilities From Contracts With Customers, or ASU 2021-08, that requires acquiring companies to apply ASC 606 to recognize and measure contract assets and contract liabilities from contracts with customers acquired in a business combination consistent with those recorded by the acquiring company. ASU 2021-08 is effective January 1, 2023, and early adoption is permitted. Contracts with customers in the advertising and marketing business are typically short duration contracts. To the extent we acquire companies in the advertising and marketing communications business, we do not expect this standard to have a material impact on our results of operations or financial position.

15. Subsequent Events

We have evaluated events subsequent to the balance sheet date and determined that there have not been any events that have occurred that would require additional adjustments to or disclosures in these consolidated financial statements.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

EXECUTIVE SUMMARY

Risks and Uncertainties

Impact of the ~~COVID-19 Pandemic on our Business~~War in Ukraine

We ~~continued~~have historically conducted operations in Russia and Ukraine through local agencies in which we hold a majority stake. The minority partners in these agencies are local management, which report to ~~experience~~ the ~~negative effect on~~applicable network management.

During the ~~global economy from~~first quarter of 2022, the ~~COVID-19 pandemic~~war in Ukraine required us to suspend our business operations in Ukraine. The war resulted in the imposition of sanctions by the United States, the United Kingdom, and the European Union, that affect the cross-border operations of businesses operating in Russia. In addition, Russian regulators have imposed currency restrictions and regulations that created uncertainty regarding our ability to recover our investment in our operations in Russia, as well as our ability to exercise control over the operations. Also, many multinational companies, including many of our large clients, ceased or suspended their operations in Russia. Therefore, the ability to continue operations in Russia without additional funding, which we will not provide, is uncertain. As a result, we have sold, or committed to dispose of, all of our businesses in Russia. Accordingly, we recorded pretax charges of $113.4 million in the first quarter of 2022, primarily consisting of the net investment in our Russian businesses, and also including charges related to the suspension of operations in Ukraine.

We evaluated the effects of the war in Ukraine and the geopolitical events in the region on our forecasted consolidated operating performance and concluded that we do not have a trigger event that would result in an update of our evaluation of goodwill for impairment that we performed in June 2021. AsWe will continue to monitor these ongoing geopolitical events, evaluate available options to seek to mitigate further risk of loss and continue to evaluate the impact, if any, on our goodwill impairment test, which will be performed in June 2022.

Impact of COVID-19 ~~pandemic did not negatively impact our major markets until late~~Pandemic - Update

Beginning in March 2020 and continuing through the first quarter of ~~2020,~~2021, our business experienced the ~~negative~~ effects onfrom reductions in client spending due to the economic impact related to the COVID-19 pandemic. While mixed by business and geography, the spending reductions impacted all our ~~revenue~~businesses and markets. Globally, the most impacted businesses were our Experiential discipline, especially in our event marketing businesses, and our Execution & Support discipline, primarily in field marketing. Most of our markets began to improve year in April 2021, and the improvement continued ~~until we completely cycled~~ through ~~the end of~~ the first quarter of ~~2021. Although the impact was mixed by geography and discipline, revenue~~2022 as clients substantially increased their spending on our services.

Results of Operations

Revenue for the three months ended March 31, ~~2021 increased $20.0~~2022 decreased $16.6 million, or ~~0.6%~~0.5%, compared to the three months ended March 31, ~~2020.~~2021. Organic growth increased revenue $408.0 million, or 11.9%, primarily reflecting increased client spending in all our disciplines and across all our geographic regions compared to the prior year period. The increase in organic revenue ~~primarily reflects the strengthening of certain foreign currencies, primarily the Euro and the British Pound, against the U.S. Dollar, substantially~~was offset by ~~a decrease~~the reduction in ~~client spending attributable to~~acquisition revenue, net of disposition revenue of $339.6 million, or 9.9%, reflecting dispositions in the COVID-19 pandemic. However, the impact from the COVID-19 pandemic on the global economy appears to be moderating in several of our markets, and we expect to achieve positive organic revenue growth beginningAdvertising & Media discipline in the second quarter ~~and for the current year.~~

~~As long as the COVID-19 pandemic remains a public health threat, global economic conditions will continue to be volatile depending on several factors, including new information concerning the severity~~ of ~~the pandemic, government actions to mitigate the effects of the pandemic in the near-term,~~2021, and the ~~resulting impact on our clients' spending plans. We expect global economic performance and the performance of our businesses to vary by geography and discipline until the~~negative impact of ~~the COVID-19 pandemic on the global economy subsides. We will continue to assess the impact~~changes in foreign currency exchange rates of ~~the COVID-19 pandemic on our business and will respond accordingly.~~

~~Results of Operations for the Quarter Ended March 31, 2021~~$85.0 million, or 2.5%.

We are a strategic holding company providing advertising, marketing and corporate communications services to clients through our branded networks and agencies around the world. On a global, pan-regional and local basis, our ~~branded~~ networks and agencies ~~operate in all major markets and~~ provide a comprehensive range of services in the following fundamental disciplines: ~~advertising, customer relationship management, or CRM, public relations,~~Advertising & Media, Precision Marketing, Commerce & Brand Consulting, Experiential, Execution & Support, Public Relations and ~~healthcare.~~Healthcare. Advertising ~~includes~~& Media include creative services ~~as well as~~across digital and traditional media, and strategic media planning and buying and data analytics services. Precision Marketing includes digital and direct marketing, digital transformation and data and analytics. Commerce & Brand Consulting services include brand consulting, strategy and research and retail ecommerce. Experiential marketing services include live and digital events and experience design and execution. Execution & Support includes field marketing, sales support, digital and physical merchandising and point-of-sale, as well as other specialized marketing and custom communications services. Public relations services include corporate communications, crisis management, public affairs and media and media relations services. Healthcare includes advertising and media services to global healthcare clients. In an effort to better capture the expanding scope of our services, effective January 1, 2021, we realigned the classification of certain services primarily within our CRM Consumer Experience discipline. As a result, our CRM discipline has been reclassified into four categories: CRM Precision Marketing, which includes our precision marketing and digital/direct marketing agencies; CRM Commerce and Brand Consulting that is primarily comprised of Omnicom Commerce Group, including our shopper marketing businesses, and our Brand Consulting agencies; CRM Experiential, which includes our experiential marketing agencies and events businesses; and CRM Execution & Support, which includes field marketing, merchandising and point of sale, as well as other specialized marketing and custom communications services.pharmaceutical clients. Our business model was built and continues to evolve around our clients. While our networks and agencies operate under different names and frame their ideas in different disciplines, we organize our services around our clients. Our fundamental business principle is that our clients’ specific marketing requirements are the central focus of how we structure our service offerings and allocate our resources. This ~~client-centric~~client-

centric business model requires that multiple agencies within Omnicom collaborate in formal and informal virtual client networks utilizing our key client matrix organization structure. This collaboration allows us to cut across our internal organizational structures to execute our clients’ marketing requirements in a consistent and comprehensive manner. We use our client-centric approach to grow our business by expanding our service offerings to existing clients, moving into new markets and obtaining new clients. In addition, we pursue selective acquisitions of complementary companies with strong entrepreneurial management teams that typically currently serve or could serve our existing clients.

As a leading global advertising, marketing and corporate communications company, we operate in all major markets and have a large and diverse client base. For the twelve months ended March 31, 2021, our largest client accounted for 3.3% of our revenue and our 100 largest clients, which represent many of the world's major marketers, accounted for approximately 54% of our revenue. Our business is spread across a number of industry sectors with no one industry comprising more than 16% of our revenue for the three months ended March 31, 2021. Although our revenue is generally balanced between the United States and international markets, and we have a large and diverse client base, we are not immune to general economic downturns.

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

Global economic conditions have a direct impact on our business and financial performance. Adverse global or regional economic conditions, such as those arising from the COVID-19 pandemic, pose a risk that our clients may reduce, postpone or cancel spending on advertising, marketing and corporate communications services, which would reduce the demand for our

~~services. Revenue is typically lower in the first and third quarters and higher in the second and fourth quarters, reflecting client spending patterns during the year and additional project work that usually occurs in the fourth quarter.~~

Beginning in March 2020 and continuing through the first quarter of 2021, our business experienced the effects from reductions in client spending due to the impact related to the COVID-19 pandemic. While mixed by business and geography, the spending reductions impacted all our businesses and markets. Globally, the most significantly impacted businesses were our CRM Experiential discipline, especially in our event marketing businesses, and our CRM Execution & Support discipline, primarily in field marketing. The economic and fiscal issues, including the impact related to the COVID-19 pandemic, facing the countries we operate in can be expected to continue to cause economic uncertainty and volatility; however, the impact on our business varies by country. We monitor economic conditions closely, as well as client revenue levels and other factors. In response to reductions in revenue, we can take actions to align our cost structure with changes in client demand and manage our working capital. However, there can be no assurance as to the effectiveness of our efforts to mitigate any impact of the current and future adverse economic conditions, reductions in client revenue, changes in client creditworthiness and other developments.

General business trends impact our business and industry. On balance, we believe that these effects are generally positive. These trends include integrating traditional and non-traditional marketing channels, as well as utilizing new communications technologies and emerging digital platforms, and clients increasingly expanding the focus of their brand strategies from national markets to pan-regional and global markets. As clients increase their demands for marketing effectiveness and efficiency, many of them have made it a practice to consolidate their business within one or a small number of service providers in the pursuit of a single engagement covering all consumer touch points. We have structured our business around these trends. While the current economic environment caused many clients to reduce spending for our services, certain trends such as increased spending on digital marketing platforms, and our key client matrix organization structure approach to collaboration and integration of our services and solutions provide a competitive advantage to our business. We expect this advantage to continue over the medium and long term.

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

We continually evaluate our portfolio of businesses to identify areas for investment and acquisition opportunities, as well as to identify non-strategic or underperforming businesses for disposition.

As a leading global advertising, marketing and corporate communications company, we operate in all major markets and have a large and diverse client base. For the twelve months ended March 31, 2022, our largest client accounted for 3.3% of our revenue and our 100 largest clients, which represent many of the world's major marketers, accounted for approximately 51.8% of our revenue. Our clients operate in virtually every sector of the global economy with no one industry representing more than 16% of our revenue for the three months ended March 31, 2022. Although our revenue is generally balanced between the United States and international markets, and we have a large and diverse client base, we are not immune to general economic downturns.

Global economic conditions have a direct impact on our business and financial performance. Adverse global or regional economic conditions, such as those arising from the war in Ukraine, the COVID-19 pandemic, severe and sustained inflation in countries that comprise our major markets and client supply chain issues, pose a risk that our clients may reduce, postpone or cancel spending on advertising, marketing and corporate communications services, which would reduce the demand for our services. Revenue is typically lower in the first and third quarters and higher in the second and fourth quarters, reflecting client spending patterns during the year and additional project work that usually occurs in the fourth quarter.

General marketing communications trends impact our business and industry and, on balance, we believe that these effects are generally positive. These trends include integrating traditional and non-traditional marketing channels, as well as utilizing new communications technologies and emerging digital platforms, and clients increasingly expanding the focus of their brand strategies from national markets to pan-regional and global markets. As clients increase their demands for marketing effectiveness and efficiency, many of them have made it a practice to consolidate their business within one or a small number of service providers in the pursuit of a single engagement covering all consumer touch points. We have structured our business around these trends. Certain trends such as increased spending on digital marketing platforms, and our key client matrix organization structure approach to collaboration and integration of our services and solutions provide a competitive advantage to our business, and we expect this advantage to continue over the medium and long term.

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

Revenue for the quarter ended March 31, ~~2021 increased $20.0~~2022 decreased $16.6 million, or ~~0.6%~~0.5%, compared to the ~~quarter ended March 31, 2020.~~prior year quarter. Organic growth increased revenue $408.0 million, or 11.9%. Changes in foreign exchange rates ~~increased~~reduced revenue ~~2.8%~~$85.0 million, or 2.5%, and acquisition revenue, net of disposition revenue, reduced revenue ~~0.4% and negative organic growth decreased~~$339.6 million, or 9.9%. The reduction in acquisition revenue, ~~1.8% as all our markets were negatively impacted by~~net of disposition revenue, primarily due to dispositions in the ~~COVID-19 pandemic.~~Advertising & Media discipline in the second quarter of 2021. The change in revenue across our principal regional markets ~~were:~~was: North America decreased ~~$24.8~~$133.5 million, or 6.8%, Europe increased ~~$17.6~~$51.0 million, or 5.4%, Asia-Pacific increased ~~$40.7~~$29.7 million, or 7.4%, and Latin America ~~decreased $8.2 million.~~increased $4.5 million, or 7.1%. In North America, anthe increase in organic revenue across all our disciplines, especially in our ~~advertising discipline, which was lead by our media businesses,~~Advertising & Media and ~~CRM~~ Precision Marketing ~~discipline~~disciplines, was offset by a ~~decline~~reduction in acquisition revenue, net of disposition revenue, primarily due to dispositions in the Advertising & Media discipline. In Europe, organic revenue ~~primarily~~increased in our CRM Experiential business. In Europe, the increase in revenue from the strengthening of the Euro and the British Pound against the U.S. Dollar and an increase in organic revenue in our CRM Precision Marketing discipline, offset a decline in organic revenue in most other businesses due to the impact of the COVID-19 pandemic in our major markets in the region. In Latin America, growth in Mexico and other countries in the region was offset by the impact of the COVID-19 pandemic and the continuing unstable economic and political conditions in Brazil, resulting in negative organic growth in the region. Additionally, the weakening of the Brazilian Real against the U.S. Dollar further contributed to the reduction in revenue in the region. In Asia-Pacific, revenue increased from the strengthening of substantially all ~~currencies~~countries and in the region, organic growth in Australia and China and a mixed performance by other countries in the region as the economies in the region began to rebound from the COVID-19 pandemic. The change in revenue in the first quarter of 2021 compared to the first quarter of 2020, in our fundamentalall disciplines, ~~was: advertising increased $70.4 million, CRM Precision Marketing increased $37.5 million, CRM Commerce and Brand Consulting decreased~~especially

~~$6.4~~our Advertising & Media discipline, which was led by our media business, and our Experiential discipline, as it continues to recover from the impact of the pandemic. The increase in organic revenue was partially offset by the strengthening of the U.S. Dollar against the British Pound and the Euro. In Latin America, revenue increased due to organic growth in most countries in the region, especially Brazil and Colombia, which was partially offset by negative performance in Mexico. The strengthening of the U.S. Dollar against most currencies in the region partially offset the increase in organic growth. In Asia-Pacific, revenue increased due to strong organic revenue growth in all our major markets in the region, particularly Australia, Greater China and India, and in all disciplines. The strengthening of the U.S. Dollar against substantially all currencies in the region partially offset the increase in organic revenue in the region. The change in revenue in the first quarter of 2022 compared to the first quarter of 2021 in our fundamental disciplines was: Advertising & Media decreased $234.3 million, ~~CRM~~Precision Marketing increased $66.6 million, Commerce & Brand Consulting increased $23.4 million, Experiential ~~decreased $42.9~~increased $54.1 million, ~~CRM~~ Execution & Support ~~decreased $27.1~~increased $7.7 million, ~~public relations decreased $16.2~~Public Relations increased $43.4 million and ~~healthcare~~Healthcare increased ~~$4.7~~$22.5 million.

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

~~SG&A~~Operating expenses for the quarter ended March 31, 2022 increased $95.8 million, or 3.2%, period-over-period. Operating expenses reflect pretax charges arising from the effects of the war in Ukraine of $113.4 million. Salary and service costs, which tend to fluctuate with changes in revenue, decreased $53.2 million, or 2.1%, compared to the quarter ended March 31, 2021, reflecting an increase in salary and related service costs of $145.4 million, offset by a decrease in third-party service costs of $198.6 million. The increase in salary and related service costs primarily resulted from the increase in organic revenue, and an increase in headcount as well as an increase in travel and related costs, partially offset by the weakening of most foreign currencies, especially the British Pound and Euro, against the U.S. Dollar. Third-party service costs, which fluctuate with changes in revenue, decreased during the quarter primarily due to dispositions in the Advertising & Media discipline in the second quarter of 2021. Occupancy and other costs, which are less directly linked to changes in revenue than salary and service costs, increased $8.6 million, or 2.9%, period-over-period, primarily due to an increase in ~~substantially all categories.~~ office and other costs resulting from the return of our workforce to the office. For the quarter ended March 31, 2022 compared to the prior year period, operating profit decreased $112.4 million to $353.0 million, operating margin decreased to 10.4% from 13.6%, and EBITA margin decreased to 10.9% from 14.2%, primarily as a result of the charges arising from the effects of the war in Ukraine of $113.4 million, which reduced both operating margin and EBITA margin by 3.3%.

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

~~For the quarter ended March 31, 2021, salary and service costs, which tend to fluctuate with changes in revenue,~~ SG&A expenses increased ~~$11.7 million, or 0.5%, compared to the quarter ended March 31, 2020. Salary and related service costs in the quarter ended March 31, 2021 increased $6.8 million, or 0.4%,~~ period-over-period primarily reflecting an increase arising from the strengthening of certain foreign currencies, primarily the British Pound and Euro, against the U.S. Dollar. In addition, certain businesses that experienced organic revenue growth in the quarterdue to increased ~~their headcount.~~ T~~hird-party service costs, which are included in salary and service~~third-party marketing costs and include expenses incurred with third-party vendors primarily when we act as a principal when performing services for our clients, increased $4.9 million, or 0.6%, period-over-period also reflecting an increase arising from the strengthening of certain foreign currencies, primarily the British Pound and Euro, against the U.S. Dollar. Occupancy and other costs, which are less directly linked to changes in revenue than salary and service costs, decreased $18.0 million, or 5.8%, in the first quarter of 2021 compared to the first quarter of 2020, reflecting the actions we took in the second quarter of 2020 to align our cost structure. Operating profit increased $45.2 million to $465.4 million. Operating margin increased to 13.6% from 12.3%, and EBITA margin increased to 14.2% from 12.9%, period-over-period. The increases in operating profit, operating margin and EBITA margin reflect the impact of the positive effect of the actions taken in the second quarter of 2020 to align our cost structure in response to the COVID-19 pandemic and reduced travel and office expenses resulting from the remote working environment.professional fees.

Net interest expense in the first quarter of ~~2021 increased $1.7~~2022 decreased $4.7 million period-over-period to ~~$47.5~~$42.8 million. Interest expense on debt in the first quarter of ~~2021~~2022 decreased ~~$5.9~~$0.9 million to ~~$47.9~~$47.0 million, primarily ~~reflecting~~as a ~~reduction in interest expense~~result of the benefit from ~~our refinancing activity at lower interest rates in the first quarter of 2020 and higher interest expense in the prior year period arising from a loss of $7.7 million on~~ the early redemption in May 2021 of all the ~~remaining $600 million~~outstanding $1.25 billion principal amount of ~~the 4.45%~~3.625% Senior Notes due ~~2020,~~2022, or ~~2020~~2022 Notes, ~~in the first quarter of 2020. This decrease~~which was partially offset by ~~an increase in the interest expense from~~ the issuance of ~~the 4.20%~~$800 million 2.60% Senior Notes due ~~2030,~~2031, or ~~4.20%~~the 2031 Notes, in ~~April 2020.~~May 2021 and the issuance of £325 million 2.25% Senior Notes due 2033, or the Sterling Notes, in November 2021. Interest income in the first quarter of ~~2021 decreased~~2022 increased ~~$6.4~~$1.9 million period-over-period to ~~$6.3 million, primarily due to lower rates.~~$8.2 million.

Our effective tax rate for the three months ~~of 2021 was in line with our expectations for the year and~~ended March 31, 2022 increased period-over-period to ~~26.8%~~37.2% from ~~26.0%~~26.8%. The ~~recognition~~higher effective tax rate for 2022 was predominantly the result of ~~certain domestic~~the non-deductibility of the $113.4 million charges arising from the effects of the war in Ukraine, as well as an additional net charge of $4.8 million in connection with these charges. These charges were partially offset by the tax ~~credits~~benefit arising from our share-based compensation awards. We expect our tax rate for the remainder of the year to approximate 26.5%, similar to the rate for this quarter after adjusting for the charges arising for the effect of the war in Ukraine.

Net income - Omnicom Group Inc. in the first quarter of ~~2020 had~~2022 decreased $114.0 million to $173.8 million from $287.8 million in the ~~effect~~first quarter of ~~decreasing our effective tax rate for~~2021. The period-over-period decrease is due to the ~~three months of 2020.~~

~~Net~~factors described above. Diluted net income per share - Omnicom Group Inc. for the first quarter of ~~2021~~2022 was ~~$287.8 million~~$0.83, as compared to ~~$258.1 million in the first quarter of 2020. The period-over-period increase is due to the factors described above. Diluted income per share - Omnicom Group Inc. was~~ $1.33 in the first quarter of ~~2021 compared to $1.19 in the first quarter of 2020.~~2021. The period-over-period change was due to the factors described ~~above.~~above, as well as the impact of the reduction in our weighted average common shares outstanding resulting from the resumption of repurchases of our common stock during the quarter, net of shares issued for restricted stock awards, stock option exercises and the employee stock purchase plan. The impact of the after-tax charges arising from the effects of the war in Ukraine reduced net income - Omnicom Group Inc. in the first quarter of 2021 by $118.2 million and diluted net income per share - Omnicom Group Inc. by $0.56 per share.

RESULTS OF OPERATIONS - First Quarter ~~2021~~2022 Compared to First Quarter ~~2020~~2021 (in millions):

2021 2020
Revenue $ 3,426.9 $ 3,406.9
Operating Expenses:
Salary and service costs 2,545.0 2,533.3
Occupancy and other costs 291.6 309.6
Cost of services 2,836.6 2,842.9
Selling, general and administrative expenses 71.6 86.8
Depreciation and amortization 53.3 57.0
2,961.5 2,986.7
Operating Profit 465.4 420.2
Operating Margin % 13.6 % 12.3 %
Interest Expense 53.8 58.5
Interest Income 6.3 12.7
Income Before Income Taxes and Income (Loss) From Equity Method Investments 417.9 374.4
Income Tax Expense 111.9 97.4
Income (Loss) From Equity Method Investments — (5.3)
Net Income 306.0 271.7
Net Income Attributed To Noncontrolling Interests 18.2 13.6
Net Income - Omnicom Group Inc. $ 287.8 $ 258.1


	2022			2021
Revenue	$	3,410.3		$	3,426.9
Operating Expenses:
Salary and service costs	2,491.8			2,545.0
Occupancy and other costs	300.2			291.6
Charges arising from the effects of the war in Ukraine	113.4			—

Cost of services	2,905.4			2,836.6
Selling, general and administrative expenses	96.7			71.6
Depreciation and amortization	55.2			53.3
	3,057.3			2,961.5
Operating Profit	353.0			465.4
Operating Margin %	10.4		%	13.6		%
Interest Expense	51.0			53.8
Interest Income	8.2			6.3
Income Before Income Taxes and Loss From Equity Method Investments	310.2			417.9
Income Tax Expense	115.5			111.9
Loss From Equity Method Investments	(0.1)			—
Net Income	194.6			306.0
Net Income Attributed To Noncontrolling Interests	20.8			18.2
Net Income - Omnicom Group Inc.	$	173.8		$	287.8

Non-GAAP Financial Measures

We use EBITA and EBITA Margin as additional operating performance measures that exclude the non-cash amortization expense of intangible assets, which primarily consists of amortization of intangible assets arising from acquisitions. We define EBITA as earnings before interest, taxes and amortization of intangible assets, and EBITA Margin as EBITA divided by revenue. EBITA and EBITA Margin are non-GAAP financial measures. We believe that EBITA and EBITA Margin are useful measures for investors to evaluate the performance of our business. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information presented in compliance with U.S. GAAP. Non-GAAP financial measures reported by us may not be comparable to similarly titled amounts reported by other companies.

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

2021 2020
Net Income - Omnicom Group Inc. $ 287.8 $ 258.1
Net Income Attributed To Noncontrolling Interests 18.2 13.6
Net Income 306.0 271.7
Income (Loss) From Equity Method Investments — (5.3)
Income Tax Expense 111.9 97.4
Income Before Income (Loss) Taxes and Income From Equity Method Investments 417.9 374.4
Interest Expense 53.8 58.5
Interest Income 6.3 12.7
Operating Profit 465.4 420.2
Add back: Amortization of intangible assets 19.9 20.8
Earnings before interest, taxes and amortization of intangible assets (“EBITA”) $ 485.3 $ 441.0
Revenue $ 3,426.9 $ 3,406.9
EBITA $ 485.3 $ 441.0
EBITA Margin % 14.2 % 12.9 %


	2022			2021
Net Income - Omnicom Group Inc.	$	173.8		$	287.8
Net Income Attributed To Noncontrolling Interests	20.8			18.2
Net Income	194.6			306.0
Loss From Equity Method Investments	(0.1)			—
Income Tax Expense	115.5			111.9
Income Before Income Taxes and Loss From Equity Method Investments	310.2			417.9
Interest Expense	51.0			53.8
Interest Income	8.2			6.3
Operating Profit	353.0			465.4
Add back: Amortization of intangible assets	19.4			19.9
Earnings before interest, taxes and amortization of intangible assets (“EBITA”)	$	372.4		$	485.3

Revenue	$	3,410.3		$	3,426.9
EBITA	$	372.4		$	485.3
EBITA Margin %	10.9		%	14.2		%

Revenue

Revenue for the quarter ended March 31, ~~2021 increased $20.0~~2022 decreased $16.6 million, or ~~0.6%~~0.5%, compared to the ~~quarter ended March 31, 2020.~~prior year quarter. Organic growth increased revenue $408.0 million, or 11.9%. Changes in foreign exchange rates ~~increased~~reduced revenue ~~2.8%~~$85.0 million, or 2.5%, and acquisition revenue, net of disposition revenue, reduced revenue ~~0.4% and negative organic growth decreased~~$339.6 million, or 9.9%. The reduction in acquisition revenue, ~~1.8% as all our markets were negatively impacted by~~net of disposition revenue, primarily due to dispositions in the ~~COVID-19 pandemic.~~Advertising & Media discipline in the second quarter of 2021. The change in revenue across our principal regional markets ~~were:~~was: North America decreased ~~$24.8~~$133.5 million, or 6.8%, Europe increased ~~$17.6~~$51.0 million, or 5.4%, Asia-Pacific increased ~~$40.7~~$29.7 million, or 7.4%, and Latin America ~~decreased $8.2 million.~~increased $4.5 million, or 7.1%. In North America, anthe increase in organic revenue across all our disciplines, especially in our ~~advertising discipline, which was lead by our media businesses,~~Advertising & Media and ~~CRM~~ Precision Marketing ~~discipline~~disciplines, was offset by a ~~decline~~reduction in acquisition revenue, net of disposition revenue, primarily due to dispositions in the Advertising & Media discipline. In Europe, organic revenue increased in substantially all countries and in all disciplines, especially our Advertising & Media discipline, which was led by our media business, and our Experiential discipline, as it continues to recover from the impact of the pandemic. The increase in organic revenue ~~primarily in our CRM Experiential business. In Europe, the increase in revenue from~~was partially offset by the strengthening of the ~~Euro and~~U.S. Dollar against the British Pound ~~against~~and the Euro. In Latin America, revenue increased due to organic growth in most countries in the region, especially Brazil and Colombia, which was partially offset by negative performance in Mexico. The strengthening of the U.S. Dollar ~~and an~~against most currencies in the region partially offset the increase in organic growth. In Asia-Pacific, revenue ~~in our CRM Precision Marketing discipline, offset a decline in~~increased due to strong organic revenue growth in ~~most other businesses due to the impact of the COVID-19 pandemic in~~all our major markets in the ~~region. In Latin America, growth~~region, particularly Australia, Greater China and India, and in ~~Mexico and other countries in the region was offset by the impact~~all disciplines. The strengthening of the COVID-19 pandemic and the continuing unstable economic and political conditions in Brazil, resulting in negative organic growth in the region. Additionally, the weakening of the Brazilian Real against the U.S. Dollar ~~further contributed to the reduction in revenue in the region. In Asia-Pacific, revenue increased from the strengthening of~~against substantially all currencies in the region partially offset the increase in organic ~~growth in Australia and China and a mixed performance by other countries~~revenue in the ~~region as the economies~~region. The change in revenue in the ~~region began~~first quarter of 2022 compared to ~~rebound from~~ the ~~COVID-19 pandemic.~~first quarter of 2021 in our fundamental disciplines was: Advertising & Media decreased $234.3 million, Precision Marketing increased $66.6 million, Commerce & Brand Consulting increased $23.4 million, Experiential increased $54.1 million, Execution & Support increased $7.7 million, Public Relations increased $43.4 million and Healthcare increased $22.5 million.

The components of revenue change for the first quarter of ~~2021~~2022 in the United States (“Domestic”) and the remainder of the world (“International”) were (in millions):

Total Domestic International
$ % $ % $ %
March 31, 2020 $ 3,406.9 $ 1,894.2 $ 1,512.7
Components of revenue change:
Foreign exchange rate impact 95.7 2.8 % — — % 95.7 6.3 %
Acquisition revenue, net of disposition revenue (15.1) (0.4) % (7.9) (0.4) % (7.2) (0.5) %
Organic growth (60.6) (1.8) % (18.2) (1.0) % (42.4) (2.8) %
March 31, 2021 $ 3,426.9 0.6 % $ 1,868.1 (1.4) % $ 1,558.8 3.0 %


	Total				Domestic				International
	$		%		$		%		$		%
March 31, 2021	$	3,426.9			$	1,868.1			$	1,558.8
Components of revenue change:
Foreign exchange rate impact	(85.0)		(2.5)	%	—		—	%	(85.0)		(5.5)	%
Acquisition revenue, net of disposition revenue	(339.6)		(9.9)	%	(341.6)		(18.3)	%	2.0		0.1	%
Organic growth	408.0		11.9	%	198.1		10.6	%	209.9		13.5	%
March 31, 2022	$	3,410.3	(0.5)	%	$	1,724.6	(7.7)	%	$	1,685.7	8.1	%

The components and percentages are calculated as follows:

•Foreign exchange rate impact is calculated by translating the current period’s local currency revenue using the prior period average exchange rates to derive current period constant currency revenue (in this case ~~$3,331.2~~$3,495.3 million for the Total column). The foreign exchange impact is the difference between the current period revenue in U.S. Dollars and the current period constant currency revenue ($~~3,426.9~~3,410.3 million less ~~$3,331.2~~$3,495.3 million for the Total column).

•Acquisition revenue is calculated as if the acquisition occurred twelve months prior to the acquisition date by aggregating the comparable prior period revenue of acquisitions through the acquisition date. As a result, acquisition revenue excludes the positive or negative difference between our current period revenue subsequent to the acquisition date and the comparable prior period revenue and the positive or negative growth after the acquisition is attributed to organic growth. Disposition revenue is calculated as if the disposition occurred twelve months prior to the disposition date by aggregating the comparable prior period revenue of dispositions through the disposition date. The acquisition revenue and disposition revenue amounts are netted in the table.

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

•The percentage change is calculated by dividing the individual component amount by the prior period revenue base of that component ($~~3,406.9~~3,426.9 million for the Total column).

Changes in the value of foreign currencies against the U.S. Dollar affect our results of operations and financial position. For the most part, because the revenue and expense of our foreign operations are both denominated in the same local currency, the economic impact on operating margin is minimized. Assuming exchange rates at April 15, ~~2021~~2022 remain unchanged, we expect the impact of changes in foreign exchange rates to ~~increase~~reduce revenue ~~between 3.5%~~for the full year by approximately 2% to 2.5%. In addition, based on acquisition and ~~4.0%~~disposition activity to date, including the disposition of our businesses in Russia (see Note 1 to the unaudited consolidated financial statements), we expect the effect of net acquisitions and dispositions to reduce revenue for the second quarter of ~~2021,~~2022 and ~~by approximately 2.0%~~ for the full ~~year.~~year by approximately 6.5% and 4.5%, respectively.

Revenue and organic growth in our ~~principal regional~~geographic markets were (in millions):

Three Months Ended March 31,
2021 2020 $ Change % Organic Growth
Americas:
North America $ 1,972.5 $ 1,997.3 $ (24.8) (1.1) %
Latin America 63.2 71.4 (8.2) (2.4) %
EMEA:
Europe 941.0 923.4 17.6 (4.4) %
Middle East and Africa 50.2 55.5 (5.3) (10.2) %
Asia-Pacific 400.0 359.3 40.7 2.5 %
$ 3,426.9 $ 3,406.9 $ 20.0 (1.8) %


	Three Months Ended March 31,
	2022		2021		$ Change		% Organic Growth
Americas:
North America	$	1,839.0	$	1,972.5	$	(133.5)	10.6	%
Latin America	67.7		63.2		4.5		9.3	%
EMEA:
Europe	992.0		941.0		51.0		12.5	%
Middle East and Africa	81.9		50.2		31.7		63.8	%
Asia-Pacific	429.7		400.0		29.7		11.1	%
	$	3,410.3	$	3,426.9	$	(16.6)	11.9	%

Revenue in Europe, which includes our primary markets of the United Kingdom, or the U.K., and the Euro Zone, increased ~~$17.6~~$51.0 million for the first quarter of ~~2021.~~2022. Revenue in the U.K., representing ~~10.4%~~11.4% of consolidated revenue, increased ~~$11.5~~$32.2 million. Revenue in Continental Europe, which comprises the Euro Zone and the other European countries, representing ~~17.1%~~17.7% of consolidated revenue, increased ~~$6.1~~$18.8 million. The increase in revenue in Europe is due to strong organic growth in all disciplines and substantially all countries, partially offset by the strengthening of the U.S. Dollar against the British Pound and ~~Euro against~~ the U.S. Dollar and organic growth in our CRM Precision Marketing discipline, substantially offset by negative organic growth in most other businesses in the region attributable to the impact of the COVID-19 pandemic.Euro.

In the normal course of business, our agencies both gain and lose business from clients each year due to a variety of factors. ~~The reduction in spending by existing clients resulting from the COVID-19 pandemic offset the benefit of gains of new business in the first quarter of 2021.~~ Under our client-centric approach, we seek to broaden our relationships with all of our clients. For both the twelve months ended March 31, ~~2021~~2022 and ~~2020,~~2021, our largest client represented 3.3% ~~and 3.0%~~ of ~~revenue, respectively.~~revenue. Our ten largest and 100 largest clients represented 21.1% and 51.8% of revenue for the twelve months ended March 31, 2022, respectively, and 21.5% and 54.2% of revenue for the twelve months ended March 31, 2021, ~~respectively, and 19.5% and 50.0% of revenue for the for the twelve months ended March 31, 2020,~~ respectively.

To monitor the changing needs of our clients and to further expand the scope of our services to key clients, we monitor revenue across a broad range of disciplines and group them into the following categories: advertising, CRM, public relations and healthcare. In an effort to better capture the expanding scope of our services, effective January 1, 2021, we realigned the classification of certain services primarily within our CRM Consumer Experience discipline. As a result, our CRM discipline has been reclassified into four categories: CRMAdvertising & Media, Precision Marketing, ~~which includes our precision marketing and digital/direct marketing agencies; CRM~~ Commerce ~~and~~& Brand Consulting, ~~that is primarily comprised of Omnicom Commerce Group, including our shopper marketing businesses, and our Brand Consulting agencies; CRM~~ Experiential, ~~which includes our experiential marketing agencies and events businesses; and CRM~~ Execution & Support, ~~which includes field marketing, merchandising~~Public Relations and ~~point of sale, as well as other specialized marketing and custom communications services.~~Healthcare.

Our business experienced the effects from client spending reductions related to the COVID-19 pandemic. The impact varied by discipline and market. The most significantly impacted businesses were our CRM Experiential discipline, especially in our event marketing businesses, and our CRM Execution & Support discipline, primarily in our field marketing businesses. Revenue and organic growth by discipline were (in millions):

Three Months Ended March 31,
2021 2020 2021 vs. 2020
$ % of
Revenue $ % of
Revenue $ Change % Organic Growth
Advertising $ 2,003.7 58.5 % $ 1,933.3 56.7 % $ 70.4 1.2 %
CRM Precision Marketing 269.5 7.8 % 232.0 6.8 % 37.5 7.2 %
CRM Commerce and Brand Consulting 214.5 6.2 % 220.9 6.5 % (6.4) (4.2) %
CRM Experiential 88.4 2.6 % 131.3 3.9 % (42.9) (33.2) %
CRM Execution & Support 246.6 7.2 % 273.7 8.0 % (27.1) (13.3) %
Public Relations 317.5 9.3 % 333.7 9.8 % (16.2) (3.5) %
Healthcare 286.7 8.4 % 282.0 8.3 % 4.7 — %
$ 3,426.9 $ 3,406.9 $ 20.0 (1.8) %


	Three Months Ended March 31,
	2022				2021				2022 vs. 2021
	$		% of Revenue		$		% of Revenue		$ Change		% Organic Growth
Advertising & Media	$	1,769.4	51.9	%	$	2,003.7	58.5	%	$	(234.3)	9.1	%
Precision Marketing	336.1		9.8	%	269.5		7.8	%	66.6		20.3	%
Commerce & Brand Consulting	237.9		7.0	%	214.5		6.2	%	23.4		13.8	%
Experiential	142.5		4.2	%	88.4		2.6	%	54.1		68.0	%
Execution & Support	254.3		7.4	%	246.6		7.2	%	7.7		6.3	%
Public Relations	360.9		10.6	%	317.5		9.3	%	43.4		14.0	%
Healthcare	309.2		9.1	%	286.7		8.4	%	22.5		7.7	%
	$	3,410.3			$	3,426.9			$	(16.6)	11.9	%

We provide services to clients that operate in various industry sectors. Revenue by sector was:

Three Months Ended March 31,
2021 2020
Food and Beverage 14 % 14 %
Consumer Products 8 % 7 %
Pharmaceuticals and Healthcare 15 % 14 %
Financial Services 7 % 8 %
Technology 9 % 8 %
Auto 10 % 11 %
Travel and Entertainment 10 % 9 %
Telecommunications 5 % 6 %
Retail 7 % 7 %
Services 2 % 2 %
Oil, Gas and Utilities 1 % 2 %
Not-for-Profit 1 % 1 %
Government 3 % 2 %
Education 1 % 1 %
Other 7 % 8 %
100 % 100 %

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


	Three Months Ended March 31,
	2022		2021
Pharmaceuticals and Healthcare	15	%	15	%
Food and Beverage	14	%	14	%
Technology	11	%	9	%
Auto	10	%	10	%
Consumer Products	8	%	8	%
Financial Services	7	%	7	%
Travel and Entertainment	6	%	10	%
Retail	7	%	7	%
Telecommunications	5	%	5	%
Government	3	%	3	%
Services	2	%	2	%
Oil, Gas and Utilities	2	%	1	%
Not-for-Profit	1	%	1	%
Education	1	%	1	%
Other	8	%	7	%
	100	%	100	%

Operating Expenses

Operating expenses were (in millions):


	Three Months Ended March 31,
	2022				2021				2022 vs. 2021
	$		% of Revenue		$		% of Revenue		$ Change		% Change
Revenue	$	3,410.3			$	3,426.9			$	(16.6)	(0.5)	%
Operating Expenses:
Salary and service costs:
Salary and related service costs	1,794.6		52.6	%	1,649.2		48.1	%	145.4		8.8	%
Third-party service costs	697.2		20.4	%	895.8		26.1	%	(198.6)		(22.2)	%
	2,491.8		73.1	%	2,545.0		74.3	%	(53.2)		(2.1)	%
Occupancy and other costs	300.2		8.8	%	291.6		8.5	%	8.6		2.9	%
Charges arising from the effects of the war in Ukraine	113.4		3.3	%	—		—	%	113.4		—	%


Cost of services	2,905.4				2,836.6				68.8		2.4	%
Selling, general and administrative expenses	96.7		2.8	%	71.6		2.1	%	25.1		35.1	%
Depreciation and amortization	55.2		1.6	%	53.3		1.6	%	1.9		3.6	%
	3,057.3		89.6	%	2,961.5		86.4	%	95.8		3.2	%
Operating Profit	$	353.0	10.4	%	$	465.4	13.6	%	$	(112.4)	(24.2)	%

Three Months Ended March 31,
2021 2020 2021 vs. 2020
$ % of
Revenue $ % of
Revenue $
Change %
Change
Revenue $ 3,426.9 $ 3,406.9 $ 20.0 0.6 %
Operating Expenses:
Salary and service costs:
Salary and related service costs 1,649.2 48.1 % 1,642.4 48.2 % 6.8 0.4 %
Third-party service costs 895.8 26.1 % 890.9 26.1 % 4.9 0.6 %
2,545.0 74.3 % 2,533.3 74.4 % 11.7 0.5 %
Occupancy and other costs 291.6 8.5 % 309.6 9.1 % (18.0) (5.8) %
Cost of services 2,836.6 2,842.9 (6.3) (0.2) %
Selling, general and administrative expenses 71.6 2.1 % 86.8 2.5 % (15.2) (17.5) %
Depreciation and amortization 53.3 1.6 % 57.0 1.7 % (3.7) (6.5) %
2,961.5 86.4 % 2,986.7 87.7 % (25.2) (0.8) %
Operating Profit $ 465.4 13.6 % $ 420.2 12.3 % $ 45.2 10.8 %

~~For~~Operating expenses for the quarter ended March 31, ~~2021, salary~~2022 increased $95.8 million, or 3.2%, period-over-period. Operating expenses reflect pretax charges arising from the effects of the war in Ukraine of $113.4 million. Salary and service costs, which tend to fluctuate with changes in revenue, ~~increased $11.7~~decreased $53.2 million, or ~~0.5%~~2.1%, compared to the quarter ended March 31, ~~2020. Salary~~2021, reflecting an increase in salary and related service costs of $145.4 million, offset by a decrease in third-party service costs of $198.6 million. The increase in salary and related service costs primarily resulted from the ~~quarter ended March 31, 2021 increased $6.8 million, or 0.4%, period-over-period, primarily reflecting~~increase in organic revenue, and an increase ~~arising from~~in headcount as well as an increase in travel and related costs, partially offset by the ~~strengthening~~weakening of ~~certain~~most foreign currencies, ~~primarily~~especially the British Pound and Euro, against the U.S. Dollar. ~~In addition, certain businesses that experienced organic revenue growth in the quarter increased their headcount.~~ T~~hird-party~~Third-party service costs, which ~~are included~~fluctuate with changes in ~~salary and service costs and include expenses incurred with third-party vendors~~revenue, decreased during the quarter primarily ~~when we act as a principal when performing services for our clients, increased $4.9 million, or 0.6%, period-over-period also reflecting an increase arising from~~due to dispositions in the ~~strengthening~~Advertising & Media discipline in the second quarter of ~~certain foreign currencies, primarily the British Pound and Euro, against the U.S. Dollar.~~2021. Occupancy and other costs, which are less directly linked to changes in revenue than salary and service costs, ~~decreased $18.0~~increased $8.6 million, or ~~5.8%~~2.9%, period-over-period, primarily due to an increase in office and other costs resulting from the ~~first~~return of our workforce to the office. For the quarter ~~of 2021~~ended March 31, 2022 compared to the ~~first quarter of 2020, reflecting the actions we took in the second quarter of 2020 to align our cost structure. Operating~~prior year period, operating profit ~~increased $45.2~~decreased $112.4 million to ~~$465.4 million. Operating~~$353.0 million, operating margin ~~increased~~decreased to ~~13.6%~~10.4% from ~~12.3%~~13.6%, and EBITA margin ~~increased~~decreased to ~~14.2%~~10.9% from ~~12.9%~~14.2%, ~~period-over-period. The increases~~primarily as a result of the charges arising from the effects of the war in Ukraine of $113.4 million, which reduced both operating ~~profit, operating~~margin and EBITA margin by 3.3%.

margin and EBITA margin reflect the impact of the positive effect of the actions taken in the second quarter of 2020 to align our cost structure in response to the COVID-19 pandemic and reduced travel and office expenses resulting from the remote working environment.

Net Interest Expense

Net interest expense in the first quarter of ~~2021 increased $1.7~~2022 decreased $4.7 million period-over-period to ~~$47.5~~$42.8 million. Interest expense on debt in the first quarter of ~~2021~~2022 decreased ~~$5.9~~$0.9 million to ~~$47.9~~$47.0 million primarily ~~reflecting~~as a ~~reduction in interest expense~~result of the benefit from ~~our refinancing activity at lower interest rates in the first quarter of 2020 and higher interest expense in the prior year period arising from a loss of $7.7 million on~~ the early redemption in May 2021 of all the ~~remaining $600 million principal amount of the 4.45% Senior~~outstanding 2022 Notes, ~~due 2020, or 2020 Notes, in the first quarter of 2020. This decrease~~which was partially offset by ~~an increase in the interest expense from~~ the issuance of the ~~4.20% Senior Notes due 2030, or 4.20%~~2031 Notes in ~~April 2020.~~May 2021 and the issuance of the Sterling Notes in November 2021. Interest income in the first quarter of ~~2021 decreased~~2022 increased ~~$6.4~~$1.9 million period-over-period to ~~$6.3 million, primarily due to lower rates.~~$8.2 million.

Income Taxes

Our effective tax rate for the three months ~~of 2021 was in line with our expectations for the year and~~ended March 31, 2022 increased period-over-period to ~~26.8%~~37.2% from ~~26.0%~~26.8%. The ~~recognition of certain domestic tax credits in the first quarter of 2020 had the effect of decreasing our~~higher effective tax rate for 2022 was predominantly the ~~three months~~result of ~~2020.~~the non-deductibility of the $113.4 million charges arising from the effects of the war in Ukraine, as well as an additional net charge of $4.8 million in connection with these charges. These charges were partially offset by the tax benefit arising from our share-based compensation awards. We expect our tax rate for the remainder of the year to approximate 26.5%, similar to the rate for the this quarter after adjusting for the charges arising for the effect of the war in Ukraine.

Net Income and Net Income Per Share - Omnicom Group Inc.

Net income - Omnicom Group Inc. ~~for~~in the first quarter of ~~2021 was~~2022 decreased $114.0 million to $173.8 million from $287.8 ~~million as compared to $258.1~~ million in the first quarter of ~~2020.~~2021. The period-over-period ~~increase~~decrease is due to the factors described above. Diluted net income per share - Omnicom Group Inc. for the first quarter of 2022 was $0.83, as compared to $1.33 in the first quarter of ~~2021 compared to $1.19 in the first quarter of 2020.~~2021. The period-over-period change was due to the factors described ~~above.~~above, as well as the impact of the reduction in our weighted average common shares outstanding resulting from the resumption of repurchases of our common stock during the quarter, net of shares issued for restricted stock awards, stock option exercises and the employee stock purchase plan. The impact of the after-tax charges arising from the effects of the war in Ukraine reduced net income - Omnicom Group Inc. in the first quarter of 2021 by $118.2 million and diluted net income per share - Omnicom Group Inc. by $0.56 per share.

CRITICAL ACCOUNTING POLICIES

For a more complete understanding of our accounting policies, the unaudited consolidated financial statements and the related Management’s Discussion and Analysis of Financial Condition and Results of Operations, readers are encouraged to consider this information together with ~~Note 1 to the unaudited consolidated financial statements regarding the impact of the COVID-19 pandemic and with~~ our discussion of our critical accounting policies under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our ~~2020~~2021 10-K.

NEW ACCOUNTING STANDARDS

Note 114 to the unaudited consolidated financial statements provides information regarding new accounting standards.

LIQUIDITY AND CAPITAL RESOURCES

Cash Sources and Requirements

Our primary short-term liquidity sources are our operating cash flow and cash and cash equivalents. Additional liquidity sources include our $2.5 billion multi-currency revolving credit facility, or Credit Facility, maturing on February 14, 2025, uncommitted credit lines aggregating ~~$1.0 billion, and~~$807.5 million, the ability to issue up to $2 billion of U.S. Dollar denominated commercial paper and issue up to the equivalent of $500 million in British Pounds or Euro under a Euro commercial paper program and access to the capital markets. Our liquidity funds our non-discretionary cash requirements and our discretionary spending.

In the second quarter of 2020, we took steps to strengthen our liquidity and financial position that were intended to mitigate any potential impact of the COVID-19 pandemic on our liquidity. Among other things, we issued $600 million 4.20% Senior Notes due 2030, entered into a $400 million 364-day revolving credit facility, or 364 Day Credit Facility, and suspended our share repurchase activity. The 364 Day Credit facility expired on April 2, 2021 without being drawn, and we anticipate resuming our share repurchase activity at some point in 2021 assuming the effects of the COVID-19 pandemic continue to stabilize in the economies in our major markets.

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

Working capital is our principal non-discretionary funding requirement. Our typical working capital cycle results in a short-term funding requirement that normally peaks during the second quarter of the year due to the timing of payments for incentive compensation, income taxes and contingent purchase price obligations. In addition, we have contractual obligations related to our long-term debt (principal and interest payments), recurring business operations, primarily related to lease obligations, and contingent purchase price obligations (earn-outs) from acquisitions. Our principal discretionary cash spending includes dividend payments to common shareholders, capital expenditures, strategic acquisitions and repurchases of our common stock. Our typical working capital cycle results in a short-term borrowing requirement that normally peaks during the second quarter of the year due to the timing of payments for incentive compensation, income taxes and contingent purchase price obligations.

Cash and cash equivalents decreased ~~$703.2~~$1,391.3 million from December 31, ~~2020.~~2021. During the first three months of ~~2021,~~2022, we used ~~$460.9~~$544.5 million of cash in operating activities, which included the use for operating capital of ~~$843.5~~$884.2 million, primarily related to our typical working capital requirement during the ~~period and the impact of foreign exchange rate changes, as compared to the prior year~~ period. Our discretionary spending for the first three months of ~~2021~~2022 was ~~$172.5~~$822.3 million as compared to ~~$387.0~~$172.5 million for the first three months of ~~2020.~~2021. Discretionary spending for the first three months of ~~2021~~2022 is comprised ~~of:~~of capital expenditures of ~~$12.4 million;~~$23.2 million, dividends paid to common shareholders of ~~$140.1 million;~~$147.4 million, dividends paid to shareholders of noncontrolling interests of ~~$13.6 million;~~$14.0 million, repurchases of our common stock, net of proceeds from stock option exercises and related tax benefits and common stock sold to our employee stock purchase plan, of ~~$2.7 million;~~$286.8 million, and net acquisition payments, including payment of contingent purchase price obligations and acquisition of additional shares of noncontrolling interests ~~net~~ of ~~cash acquired, of $9.1~~$258.9 million. In addition, ~~the~~we purchased short-term investments of $92.7 million, which reduced our cash and cash equivalents but had no impact on our liquidity. The impact of foreign exchange rate changes reduced cash and cash equivalents by ~~$55.8~~$8.7 million.

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

Cash Management

Our regional treasury centers in North America, Europe and Asia manage our cash and liquidity. Each day, operations with excess funds invest those funds with their regional treasury center. Likewise, operations that require funds borrow from their regional treasury center. Treasury centers with excess cash invest on a short-term basis with third parties, generally with maturities ranging from overnight to less than 90 days. During the quarter, we purchased $92.7 million of short-term investments that mature at various times during the year. Certain treasury centers have notional pooling arrangements that are used to manage their cash and set-off foreign exchange imbalances. The arrangements require each treasury center to have its own notional pool account and to maintain a notional positive account balance. Additionally, under the terms of the arrangement, set-off of foreign exchange positions are limited to the long and short positions within their own account. To the extent that our treasury centers require liquidity, they have the ability to issue up to a total of $2 billion of U.S. Dollar-denominated commercial paper and issue up to the equivalent of $500 million in British Pounds or Euro under a Euro commercial paper program, or borrow under the Credit Facility or the uncommitted credit lines. This process enables us to manage our debt more efficiently and utilize our cash more effectively, as well as manage our risk to foreign exchange rate imbalances. In countries where we either do not conduct treasury operations or it is not feasible for one of our treasury centers to fund net borrowing requirements on an intercompany basis, we arrange for local currency uncommitted credit lines. We have a policy governing counterparty credit risk with financial institutions that hold our cash and cash equivalents and we have deposit limits for each institution. In countries where we conduct treasury operations, generally the counterparties are either branches or subsidiaries of institutions that are party to the Credit Facility. These institutions generally have credit ratings equal to or better than our credit ratings. In countries where we do not conduct treasury operations, all cash and cash equivalents are held by counterparties that meet specific minimum credit ~~standards~~standards.

At March 31, ~~2021,~~2022, our foreign subsidiaries held approximately ~~$2.0~~$1.8 billion of our total cash and cash equivalents of ~~$4.9~~$3.9 billion. Most of the cash is available to us, net of any foreign withholding taxes payable upon repatriation to the United States.

At March 31, ~~2021,~~2022, our net debt position, which we define as total debt, including short-term debt, less cash and cash equivalents and short-term investments increased ~~$863.0~~$1,262.1 million ~~as compared~~ to ~~$210.7~~$1,640.6 million atfrom December 31, ~~2020.~~2021. The increase in net debt primarily resulted from the use of cash of ~~$843.5~~$884.2 million for operating capital principally related to our typical working capital requirements during the ~~period. In addition, the impact~~period, acquisition payments of ~~foreign exchange rate changes decreased cash~~$246.6 million and ~~cash equivalents by $55.8 million, as compared to December 31, 2020. Net debt decreased $1.5 billion from $2.4 billion at March 31, 2020 due to conservative management~~repurchases of our ~~cash during the COVID-19 pandemic, including the suspension~~common stock of ~~share buybacks.~~$300.3 million.

The components of net debt were (in millions):

March 31, 2021 December 31, 2020 March 31, 2020
Short-term debt $ 5.9 $ 3.9 $ 10.9
Long-term debt, including current portion 5,754.4 5,807.3 5,093.4
Total debt 5,760.3 5,811.2 5,104.3
Less: Cash and cash equivalents and short-term investments 4,897.3 5,600.5 2,694.1
Net debt $ 863.0 $ 210.7 $ 2,410.2


	March 31, 2022		December 31, 2021		March 31, 2021
Short-term debt	$	12.4	$	9.6	$	5.9
Long-term debt	5,646.4		5,685.7		5,754.4
Total debt	5,658.8		5,695.3		5,760.3
Less: Cash and cash equivalents	3,925.5		5,316.8		4,897.3
Less: Short-term investments	92.7		—		—
Net debt	$	1,640.6	$	378.5	$	863.0

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

Debt Instruments and Related Covenants

proceeds to our operating subsidiaries. OCI’s assets primarily consist of cash and cash equivalents and intercompany loans made to our operating subsidiaries, and the related interest receivable. There are no restrictions on the ability of OCI or Omnicom to obtain funds from our subsidiaries through dividends, loans or advances. Such notes are senior unsecured obligations that rank equal in right of payment with all existing and future unsecured senior indebtedness.

Omnicom and OCI have, jointly and severally, fully and unconditionally guaranteed ~~OFHP’s~~the obligations of Omnicom Finance Holdings plc, or OFH, a U.K.-based wholly owned subsidiary of Omnicom, with respect to the ~~Euro denominated notes~~ €500 million 0.80% Senior Notes

due 2027 and ~~2031. OFHP’s~~the €500 million 1.40% Senior Notes due 2031, collectively the Euro Notes. OFH’s assets consist of its investments in several wholly owned finance companies that function as treasury centers, ~~that~~which provide funding for various operating companies in Europe, Brazil, Australia and other countries in the Asia-Pacific region. The finance companies’ assets consist of cash and cash equivalents and intercompany loans that they make or have made to the operating companies in their respective regions and the related interest receivable. There are no restrictions on the ability of Omnicom, OCI or ~~OFHP~~OFH to obtain funds from their subsidiaries through dividends, loans or advances. The Euro ~~denominated notes~~Notes and the related guarantees are senior unsecured obligations that rank equal in right of payment with all existing and future unsecured senior indebtedness of ~~OFHP~~OFH and each of Omnicom and OCI, respectively.

The Credit Facility contains ~~and,prior to its expiration, the 364 Day Credit Facility contained,~~ a financial covenant that requires us to maintain a Leverage Ratio of consolidated indebtedness to consolidated EBITDA (earnings before interest, taxes, depreciation, amortization and non-cash charges) of no more than ~~3.5~~3.0 times for the most recently ended 12-month period. On October 26, 2020, we amended the Credit Facility and the 364 Day Credit Facility to provide additional flexibility with respect to the Leverage Ratio covenant. The amendments increase the maximum Leverage Ratio to 4.0 times through December 31, 2021 for the Credit Agreement and to 4.0 times through the maturity of the 364 Day Credit Facility. At March 31, ~~2021,~~2022, we were in compliance with ~~these covenants~~this covenant as our Leverage Ratio was ~~2.8~~2.4 times. The Credit Facility does not limit our ability to declare or pay dividends or repurchase our common stock.

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

At March 31, ~~2021,~~2022, our long-term and short-term debt was rated BBB+ and A2 by S&P and Baa1 and P2 by Moody's. Our access to the commercial paper market and the cost of these borrowings are affected by market conditions and our credit ratings. ~~Our~~The long-term debt indentures and the Credit Facility do not contain provisions that require acceleration of cash payments in the event of a downgrade in our credit ratings.

Credit Markets and Availability of Credit

In light of the uncertainty of future economic conditions, we will continue to take actions available to us to respond to changing economic conditions, and we will continue to ~~actively~~ manage our discretionary expenditures. We will continue to monitor and manage the level of credit made available to our clients. We believe that these actions, in addition to the availability of our Credit Facility, are sufficient to fund our near-term working capital needs and our discretionary spending. ~~For additional information about our credit facilities, see~~ Note 5 to the unaudited consolidated financial ~~statements.~~statements provides information regarding our Credit Facility.

We have typically funded our day-to-day liquidity by issuing commercial paper. Beginning in the third quarter of 2020 and continuing through the first quarter of ~~2021,~~2022, we substantially reduced our commercial paper issuances as compared to ~~the~~ prior ~~year periods~~years primarily as a result of our cash management during the ~~issuance of~~recovery from the ~~4.20% Notes in April 2020.~~pandemic. Additional liquidity sources include our Credit Facility orand the uncommitted credit lines. AtWe did not issue commercial paper in each of the three months ended March 31, ~~2021, there were no commercial paper issuances during the quarter or borrowings under the Credit Facility or the uncommitted credit lines.~~

~~Commercial paper activity was (dollars in millions):~~

Three Months Ended March 31,
2021 2020
Average amount outstanding during the quarter $ — $ 64.4
Maximum amount outstanding during the quarter $ — $ 361.7
Average days outstanding — 1.9
Weighted average interest rate — % 1.64 %
2022 and 2021.

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

CREDIT RISK

We provide advertising, marketing and corporate communications services to several thousand clients that operate in nearly every sector of the global economy and we grant credit to qualified clients in the normal course of business. Due to the diversified nature of our client base, we do not believe that we are exposed to a concentration of credit risk as our largest client represented 3.3% of revenue for both the twelve months ended March 31, ~~2021.~~2022. However, during periods of economic downturn, the credit profiles of our clients could change.

In the normal course of business, our agencies enter into contractual commitments with media providers and production companies on behalf of our clients at levels that can substantially exceed the revenue from our services. These commitments are

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

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

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

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

Our ~~2020~~2021 10-K provides a detailed discussion of the market risks affecting our operations. No material change has occurred in our market risks since the disclosure contained in our ~~2020~~2021 10-K.

ITEM 4. CONTROLS AND PROCEDURES

We maintain disclosure controls and procedures designed to ensure that information required to be disclosed in reports we file with the SEC is recorded, processed, summarized and reported within applicable time periods. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports we file or submit under the Securities Exchange Act of 1934, as amended, or the Exchange Act, is accumulated and communicated to management, including our Chief Executive Officer, or CEO, and Chief Financial Officer, or CFO, as appropriate to allow timely decisions regarding required disclosure. Management, including our CEO and CFO, conducted an evaluation of the effectiveness of our disclosure controls and procedures as of March 31, ~~2021.~~2022. Based on that evaluation, our CEO and CFO concluded that, as of March 31, ~~2021,~~2022, our disclosure controls and procedures are effective to ensure that decisions can be made timely with respect to required disclosures, as well as ensuring that the recording, processing, summarization and reporting of information required to be included in our Quarterly Report on Form 10-Q for the quarter ended March 31, ~~2021~~2022 are appropriate.

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). Management, with the participation of our CEO, CFO and our agencies, conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on that evaluation, our CEO and CFO concluded that our internal control over financial reporting was effective as of March 31, ~~2021.~~2022. There have not been any changes in our internal control over financial reporting during our most recent fiscal quarter that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

KPMG LLP, an independent registered public accounting firm that audited our consolidated financial statements included in our ~~2020~~2021 10-K, has issued an attestation report on Omnicom’s internal control over financial reporting as of December 31, ~~2020,~~2021, dated February ~~18, 2021.~~9, 2022.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

Item 1A. Risk Factors

~~There~~Except as described below, there have been no material changes to the risk factors disclosed in Item 1A in our ~~2020~~2021 10-K.

The war in Ukraine has negatively impacted our business, results of operations and financial position, and could adversely impact our business, results of operations and financial position in the future.

During the first quarter of 2022, the war in Ukraine required us to suspend our business operations in Ukraine. The war resulted in the imposition of sanctions by the United States, the United Kingdom and the European Union that affect the cross-border operations of businesses operating in Russia. In addition, Russian regulators imposed currency restrictions and regulations that created uncertainty regarding our ability to recover our investment in our operations in Russia, as well as our ability to exercise control over the operations. Also, many multinational companies, including many of our large clients, ceased or suspended their operations in Russia. Therefore, the ability to continue operations in Russia without additional funding, which we will not provide, is uncertain. As a result, we have sold, or committed to dispose of, all of our businesses in Russia.

The war in Ukraine is ongoing and its duration is uncertain. We cannot predict the outcome of the war in Ukraine or its impact on the broader region, as the conflict and related government actions are evolving and are beyond our control. The extent and duration of the military action, sanctions and resulting market disruptions, which may include increased energy costs and further supply chain disruptions, could be significant and could adversely impact our business, results of operations and financial position in the future. Our clients’ businesses, results or operations and financial positions could also be adversely impacted by the war in Ukraine, which could impact client spending.

A period of sustained inflation across all the major markets in which we operate could result in higher operating costs.

Our principal operating expenses are salary and service costs and occupancy and related expenses. Inflationary pressures typically result in increases to our operating expenses. While we would take actions, wherever possible, to reduce the impact of the effects of inflation; in cases of sustained inflation across several of our major markets it becomes increasingly difficult to effectively control the increase to our costs. In addition, the effects of inflation on consumers budgets could result in the reduction of our clients’ spending plans on the marketing and communication services we provide them. If we are unable to increase our fees or take other actions to mitigate the effect of the resulting higher costs, our profitability and financial position could be negatively impacted.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Common stock repurchases during the three months ended March 31, ~~2021, all of which related to withholdings to satisfy tax obligations related to vesting of restricted stock awards and stock option exercises,~~2022 were:

Period Total Number of
Shares Purchased Average Price Paid
Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number
of Shares that May
Yet Be Purchased Under the Plans or Programs
January 1 - January 31, 2021 — $ — — —
February 1 - February 28, 2021 6,116 66.25 — —
March 1 - March 31, 2021 3,308 76.66 — —
9,424 $ 69.90 — —


Period	Total Number of Shares Purchased	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
January 1 - January 31, 2022	371,754	$	73.87	—	—
February 1 - February 28, 2022	948,732	84.48		—	—
March 1 - March 31, 2022	2,370,666	81.28		—	—
	3,691,152	$	81.36	—	—

During the three months ended March 31, ~~2021,~~2022, we purchased 3,586,873 shares of our common stock in the open market for general corporate purposes, and we withheld ~~9,424~~104,279 shares from employees to satisfy estimated statutory income tax obligations related to the vesting of restricted stock awards. ~~We did not purchase any shares of our common stock in the open market.~~ The value of the common stock withheld was based on the closing price of our common stock on the applicable exercise and vesting dates. ~~There were no unregistered sales of equity securities during the three months ended March 31, 2021.~~

Item 6. Exhibits







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

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.


		OMNICOM GROUP INC.
Date:	April 20, ~~2021~~2022	/s/ PHILIP J. ANGELASTRO
		Philip J. Angelastro Executive Vice President and Chief Financial Officer (Principal Financial Officer and Authorized Signatory)

2526


	March 31, 2021		December 31, 2020
	(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents	$	4,897.3	$	5,600.5

Accounts receivable, net of allowance for doubtful accounts of $27.2 and $30.4	6,633.2		7,813.4
Work in process	1,138.7		1,101.2
Other current assets	1,062.9		1,075.0
Total Current Assets	13,732.1		15,590.1
Property and Equipment at cost, less accumulated depreciation of $1,155.7 and $1,156.7	564.2		585.2
Operating Lease Right-Of-Use Assets	1,176.5		1,223.4
Equity Method Investments	79.7		85.3
Goodwill	9,541.5		9,609.7
Intangible Assets, net of accumulated amortization of $824.2 and $817.2	280.8		298.5
Other Assets	239.5		255.0
TOTAL ASSETS	$	25,614.3	$	27,647.2

LIABILITIES AND EQUITY
Current Liabilities:
Accounts payable	$	9,465.8	$	11,513.0
Customer advances	1,278.0		1,361.3

Short-term debt	5.9		3.9
Taxes payable	276.3		244.5
Other current liabilities	2,445.9		2,402.4
Total Current Liabilities	13,471.9		15,525.1
Long-Term Liabilities	989.4		970.7
Long-Term Liability - Operating Leases	1,062.7		1,114.0
Long-Term Debt	5,754.4		5,807.3
Deferred Tax Liabilities	434.4		443.5
Commitments and Contingent Liabilities (Note 11)	0		0
Temporary Equity - Redeemable Noncontrolling Interests	209.8		209.7
Equity:
Shareholders’ Equity:
Preferred stock	0		0
Common stock	44.6		44.6
Additional paid-in capital	769.7		747.8
Retained earnings	8,327.5		8,190.6
Accumulated other comprehensive income (loss)	(1,246.2)		(1,213.8)
Treasury stock, at cost	(4,684.4)		(4,684.8)
Total Shareholders’ Equity	3,211.2		3,084.4
Noncontrolling interests	480.5		492.5
Total Equity	3,691.7		3,576.9
TOTAL LIABILITIES AND EQUITY	$	25,614.3	$	27,647.2


	March 31, 2021		December 31, 2020		March 31, 2020
Work in process:
Contract assets and unbilled fees and costs	$	626.0	$	501.1	$	783.7
Media and production costs	512.7		600.1		529.5
	$	1,138.7	$	1,101.2	$	1,313.2
Contract liabilities:
Customer advances	$	1,278.0	$	1,361.3	$	1,075.7


	March 31, 2021		December 31, 2020
3.625% Senior Notes due 2022	$	1,250.0	$	1,250.0
3.65% Senior Notes due 2024	750.0		750.0
3.60% Senior Notes due 2026	1,400.0		1,400.0
€500 Million 0.80% Senior Notes due 2027	585.9		611.5
2.45% Senior Notes due 2030	600.0		600.0
4.20% Senior Notes due 2030	600.0		600.0
€500 Million 1.40% Senior Notes due 2031	585.9		611.5

	5,771.8		5,823.0
Unamortized premium (discount), net	(5.2)		(5.1)
Unamortized debt issuance costs	(25.6)		(27.0)
Unamortized deferred gain from settlement of interest rate swaps	13.4		16.4


Long-term debt	$	5,754.4	$	5,807.3


	Three Months Ended March 31, 2020
January 1	$	(24.0)	$	(112.1)	$	(1,061.5)	$	(1,197.6)

Other comprehensive income (loss) before reclassifications	0		0		(333.8)		(333.8)
Reclassification from accumulated other comprehensive income (loss)	0.9		2.2		0		3.1
March 31	$	(23.1)	$	(109.9)	$	(1,395.3)	$	(1,528.3)