Omnicom Group
SECOND QUARTER 2008 RESULTS
Investor Presentation
July 22, 2008
Exhibit 99.2
1
The following materials have been prepared for use in the July 22, 2008 conference call on Omnicom’s results of operations for the period
ended June 30, 2008. The call will be archived on the Internet at http://www.omnicomgroup.com/financialwebcasts.
Forward-Looking Statements
Certain of the statements in this document constitute forward-looking statements within the meaning of the Private Securities Litigation Act of
1995. These statements relate to future events or future financial performance and involve known and unknown risks and other factors that may
cause our actual or our industry’s results, levels of activity or achievement to be materially different from those expressed or implied by any
forward-looking statements. These risks and uncertainties include, but are not limited to, our future financial condition and results of operations,
changes in general economic conditions, competitive factors, changes in client communication requirements, the hiring and retention of human
resources and our international operations, which are subject to the risks of currency fluctuations and exchange controls. In some cases,
forward-looking statements can be identified by terminology such as “may,” “will,” “could,” “would,” “should,” “expect,” “plan,” “anticipate,” “intend,”
“believe,” “estimate,” “predict,” “potential” or “continue” or the negative of those terms or other comparable terminology. These statements are
present expectations. Actual events or results may differ materially. We undertake no obligation to update or revise any forward-looking
statement, except as required by law.
Other Information
All dollar amounts are in millions except for EPS. The financial information contained in this document has not been audited, although some of it
has been derived from Omnicom’s historical financial statements, including its audited financial statements. In addition, industry, operational and
other non-financial data contained in this document have been derived from sources we believe to be reliable, but we have not independently
verified such information, and we do not, nor does any other person, assume responsibility for the accuracy or completeness of that information.
The inclusion of information in this presentation does not mean that such information is material or that disclosure of such information is
required.
2
2008 vs. 2007 P&L Summary
2008
2007
%
2008
2007
%
Revenue
3,476.9
$
3,126.1
$
11.2%
6,672.3
$
5,966.7
$
11.8%
Operating Profit
516.8
461.6
12.0%
867.6
777.1
11.6%
% Margin
14.9%
14.8%
13.0%
13.0%
Net Interest Expense
18.7
22.2
29.7
40.5
Profit Before Tax
498.1
439.4
13.4%
837.9
736.6
13.8%
% Margin
14.3%
14.1%
12.6%
12.3%
Taxes
167.2
148.8
282.4
249.3
% Tax Rate
33.6%
33.9%
33.7%
33.8%
Profit After Tax
330.9
290.6
13.9%
555.5
487.3
14.0%
Equity in Affiliates
11.0
12.5
19.1
17.7
Minority Interest
(34.9)
(26.4)
(59.0)
(45.3)
Net Income
307.0
$
276.7
$
11.0%
515.6
$
459.7
$
12.2%
Second Quarter
Year to Date
3
2008 vs. 2007 Earnings Per Share
Earnings per Share:
Basic
Diluted
Growth Rate, Diluted
Weighted Average Shares (millions):
Basic
Diluted
Dividend Declared Per Share
$ 0.97
0.96
14.3
317.5
320.8
$0.150
2007
2008
Second Quarter
$ 0.85
0.84
325.8
330.8
$0.150
$ 1.62
1.61
16.7
317.9
321.1
$0.300
2007
2008
Year to Date
$ 1.40
1.38
328.4
333.5
$0.275
%
%
4
2008 Total Revenue Growth
(a)
To calculate the FX impact, we first convert the current period’s local currency revenue using the average exchange rates from the equivalent prior period to arrive
at constant currency revenue. The FX impact equals the difference between the current period revenue in U.S. dollars and the current period revenue in constant
currency.
(b)
Acquisition revenue is the aggregate of the applicable prior period revenue of the acquired businesses. Netted against this number is the revenue of any business
included in the prior period reported revenue that was disposed of subsequent to the prior period.
(c)
Organic revenue is calculated by subtracting both the acquisition revenue and the FX impact from total revenue growth.
$
%
$
%
Prior Period Revenue
3,126.1
$
5,966.7
$
Foreign Exchange (FX) Impact (a)
162.9
5.2%
308.5
5.2%
Acquisition Revenue (b)
38.0
1.2%
65.9
1.1%
Organic Revenue (c)
149.9
4.8%
331.2
5.6%
Current Period Revenue
3,476.9
$
11.2%
6,672.3
$
11.8%
Second Quarter
Year to Date
5
Second Quarter
Year to Date
Advertising
43.3%
PR
9.7%
CRM
37.2%
Specialty
9.8%
Advertising
43.1%
PR
9.6%
CRM
37.8%
Specialty
9.5%
(a) “Growth” is the year-over-year increase or decrease from the prior period.
2008 Revenue By Discipline
Pie Chart
$ Mix
% Growth
(a)
$ Mix
% Growth
(a)
Advertising
1,499.9
9.8%
####
Advertising
2,891.2
11.5%
CRM
1,313.8
17.2%
####
CRM
2,481.3
16.1%
PR
333.4
3.7%
9.6%
PR
648.4
5.3%
Specialty
329.8
4.1%
9.5%
Specialty
651.4
4.9%
6
Second Quarter
2008 Revenue By Geography
United
States
51.1%
UK
10.3%
Euro
Markets
22.5%
Other
16.1%
Year to Date
United
States
50.4%
UK
9.9%
Euro
Markets
23.0%
Other
16.7%
(a) “Growth” is the year-over-year increase or decrease from the prior period.
$ Mix
$ Growth
(a)
$ Mix
$ Growth
(a)
United States
1,751.3
$
91.6
$
United States
3,412.5
$
209.0
$
Organic
71.7
Organic
175.1
Acquisition
19.9
Acquisition
33.9
International
1,725.6
$
259.2
$
International
3,259.8
$
496.6
$
Organic
78.2
Organic
156.1
Acquisition
18.1
Acquisition
32.0
FX
162.9
FX
308.5
$ Mix
% Growth
(a)
$ Mix
% Growth
(a)
United States
1,751.3
$
5.5%
United States
3,412.5
$
6.5%
Euro Currency Markets
798.6
19.6%
Euro Currency Markets
1,499.6
20.6%
United Kingdom
345.9
-0.4%
United Kingdom
688.9
2.3%
Other
581.1
28.8%
Other
1,071.3
26.5%
7
Cash Flow – GAAP Presentation (condensed)
2008
2007
Net Income
515.6
$
459.7
$
Stock-Based Compensation Expense
27.8
36.2
Depreciation and Amortization
115.7
98.3
Other Non-Cash Items to Reconcile to Net Cash Provided by Operations
58.6
43.4
Other Changes in Working Capital
(799.6)
(670.6)
Excess Tax Benefit on Stock Compensation
(9.6)
(14.5)
Net Cash Used by Operations
(91.5)
(47.5)
Capital Expenditures
(92.7)
(101.2)
Acquisitions
(210.1)
(143.9)
Other Investing Activities, net
(0.2)
141.3
Net Cash Used by Investing Activities
(303.0)
(103.8)
Dividends
(97.3)
(84.2)
Stock Repurchases
(407.8)
(756.8)
Share Transactions Under Employee Stock Plans
63.7
66.3
Excess Tax Benefit on Stock Compensation
9.6
14.5
Other Financing Activities
(48.0)
(43.0)
Net Cash Used by Financing Activities
(479.8)
(803.2)
Effect of exchange rate changes on cash and cash equivalents
(3.1)
(12.6)
Net Decrease in Cash and Cash Equivalents
(877.4)
$
(967.1)
$
6 Months Ended June 30,
8
Current Credit Picture
(a) “Operating Income (EBIT)” and “Net Interest Expense” calculations shown are the latest twelve month (“LTM”) figures for the periods specified.
Although our bank agreements reference EBITDA, we have used EBIT for this presentation because EBITDA is a non-GAAP measure.
2008
2007
Operating Income (EBIT)
(a)
$
1,750
$
1,559
Net Interest Expense
(a)
$
63.3
$
91.4
EBIT / Net Interest
27.6
x
17.1
x
Net Debt / EBIT
1.2
x
1.4
x
Debt:
Bank Loans (Due Less Than 1 Year)
$
23
$
11
CP Issued Under $2.5B - 5 Year Revolver Due 6/23/11
-
-
Convertible Notes Due 2/7/31
847
847
Convertible Notes Due 7/31/32
727
727
Convertible Notes Due 6/15/33
-
-
Convertible Notes Due 7/1/38
468
467
10 Year Notes Due 4/15/16
996
996
Other Debt
20
19
Total Debt
$
3,081
$
3,067
Cash and Short Term Investments
959
821
Net Debt
$
2,122
$
2,246
LTM Ended June 30,
9
Current Liquidity Picture
(a)
Credit facility expires June 23, 2011.
(b)
Represents uncommitted facilities in the U.S., U.K. and Canada as of June 30, 2008. These amounts are excluded
from our available liquidity for purposes of this presentation.
Total Amount
Of Facility
Outstanding
Available
Committed Facilities
5 Year Revolver
(a)
2,500
$
-
$
2,500
$
Other Committed Credit Facilities
23
23
-
Total Committed Facilities
2,523
23
2,500
Uncommitted Facilities
(b)
598
-
-
(b)
Total Credit Facilities
3,121
$
23
$
2,500
$
Cash and Short Term Investments
959
Total Liquidity Available
3,459
$
As of June 30, 2008
10
Acquisitions Summary
11
Acquisition Related Expenditures
Note: See appendix for subsidiary acquisition profiles.
Includes acquisitions of a majority interest in agencies resulting in their consolidation.
Includes acquisitions of additional equity interests in existing affiliate agencies resulting in their majority ownership and consolidation.
Includes acquisitions of less than a majority interest in agencies in which Omnicom did not have a prior equity interest and the acquisition
of additional interests in existing affiliated agencies that did not result in majority ownership.
Includes the acquisition of additional equity interests in already consolidated subsidiary agencies.
Includes additional consideration paid for acquisitions completed in prior periods.
(a)
(b)
(c)
(d)
(e)
New Subsidiary Acquisitions
(a)
53
$
Affiliates to Subsidiaries
(b)
-
Affiliates
(c)
9
Existing Subsidiaries
(d)
57
Earn-outs
(e)
109
Total Acquisition Expenditures
228
$
6 Months YTD 2008
12
Potential Earn-out Obligations
The following is a calculation of future earn-out obligations as of
June 30, 2008, assuming that the underlying acquired agencies
continue to perform at their current levels: (a)
(a)
The ultimate payments will vary as they are dependent on future events and changes in FX rates.
2008
2009
2010
2011
Thereafter
Total
75
$
104
$
82
$
28
$
23
$
312
$
13
Potential Obligations
(a) The ultimate payments will vary as they are dependent on future events and changes in FX rates.
In conjunction with certain transactions, Omnicom has agreed to
acquire (at the sellers’ option) additional equity interests. If these rights
are exercised, there would likely be an increase in our net income as a
result of our increased ownership and the reduction of minority interest
expense. The following is a calculation of these potential future
obligations (as of June 30, 2008), assuming these underlying acquired
agencies continue to perform at their current levels: (a)
Currently
Exercisable
Not Currently
Exercisable
Total
Subsidiary Agencies
186
$
86
$
272
$
Affiliated Agencies
56
6
62
Total
242
$
92
$
334
$
14
Second Quarter Acquisitions
Sterling Brands
Sterling Brands is a leading brand consultancy specializing in brand
strategy and design. Specific services offered include brand
positioning, strategic research, innovation, design planning, brand
identity and packaging design.
Sterling Brands is based in New York and San Francisco.