Document and Entity Information
Document and Entity Information (USD $) | |||
In Millions, except Share data | 12 Months Ended
Dec. 31, 2009 | Feb. 11, 2010
| Jun. 30, 2009
|
Document and Entity Information | |||
Document Type | 10-K | ||
Document Period End Date | 2009-12-31 | ||
Current Fiscal Year End Date | --12-31 | ||
Amendment Flag | false | ||
Entity Registrant Name | OMNICOM GROUP INC. | ||
Entity Central Index Key | 0000029989 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Public Float | $9,810 | ||
Entity Common Stock, Shares Outstanding | 310,448,000 |
CONSOLIDATED STATEMENTS OF INCO
CONSOLIDATED STATEMENTS OF INCOME (USD $) | |||
In Millions | 12 Months Ended
Dec. 31, 2009 | 12 Months Ended
Dec. 31, 2008 | 12 Months Ended
Dec. 31, 2007 |
REVENUE | 11720.7 | 13359.9 | $12,694 |
OPERATING EXPENSES | 10345.8 | 11670.5 | 11034.9 |
OPERATING INCOME | 1374.9 | 1689.4 | 1659.1 |
INTEREST EXPENSE | 122.2 | 124.6 | 106.9 |
INTEREST INCOME | 21.5 | 50.3 | 32.9 |
INCOME BEFORE INCOME TAXES AND INCOME FROM EQUITY METHOD INVESTMENTS | 1274.2 | 1615.1 | 1585.1 |
INCOME TAX EXPENSE | 433.6 | 542.7 | 536.9 |
INCOME FROM EQUITY METHOD INVESTMENTS | 30.8 | 42 | 38.4 |
Net Income | 871.4 | 1114.4 | 1086.6 |
LESS: NET INCOME ATTRIBUTED TO NONCONTROLLING INTERESTS | 78.4 | 114.1 | 110.9 |
NET INCOME - OMNICOM GROUP INC. | $793 | 1000.3 | 975.7 |
NET INCOME PER COMMON SHARE - OMNICOM GROUP INC.: | |||
Basic | 2.54 | 3.17 | 2.95 |
Diluted | 2.53 | 3.14 | 2.93 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS (USD $) | ||
In Millions | Dec. 31, 2009
| Dec. 31, 2008
|
CURRENT ASSETS: | ||
Cash and cash equivalents | $1,587 | 1097.3 |
Short-term investments at market | 7.8 | 15.1 |
Accounts receivable, net of allowance for doubtful accounts | 5574.1 | 5775.5 |
Work in process | 607.6 | 672 |
Other current assets | 1,012 | 1,005 |
Total Current Assets | 8788.5 | 8564.9 |
PROPERTY, PLANT AND EQUIPMENT, at cost, less accumulated depreciation | 677.3 | 719.6 |
INVESTMENTS IN AFFILIATES | 299.4 | 297.3 |
GOODWILL | 7641.2 | 7220.2 |
INTANGIBLE ASSETS, net of accumulated amortization | 220.8 | 221 |
DEFERRED TAX ASSETS | 40 | 45.2 |
OTHER ASSETS | 253.5 | 250.2 |
TOTAL ASSETS | 17920.7 | 17318.4 |
CURRENT LIABILITIES: | ||
Accounts payable | 7143.9 | 6881.2 |
Customer advances | 1059.3 | 1005.5 |
Current portion of long-term debt | 17.8 | 2.7 |
Short-term borrowings | 19.3 | 16.2 |
Taxes payable | 156.7 | 201.1 |
Other current liabilities | 1685.5 | 1647.5 |
Total Current Liabilities | 10082.5 | 9754.2 |
LONG-TERM DEBT | 1494.6 | 1012.8 |
CONVERTIBLE DEBT | 726 | 2041.5 |
OTHER LONG-TERM LIABILITIES | 462 | 444.4 |
LONG-TERM DEFERRED TAX LIABILITIES | 488.1 | 312.1 |
COMMITMENTS AND CONTINGENCIES | ||
TEMPORARY EQUITY - REDEEMABLE NONCONTROLLING INTERESTS | 214.7 | 0 |
Shareholders' Equity: | ||
Preferred stock | 0 | 0 |
Common stock | 59.6 | 59.6 |
Additional paid-in capital | 1408.2 | 1,629 |
Retained earnings | 6465.4 | 5859.6 |
Accumulated other comprehensive income (loss) | (8) | -247.3 |
Treasury stock, at cost | 3730.4 | 3778.1 |
Total shareholders' equity | 4194.8 | 3522.8 |
Noncontrolling Interests | 258 | 230.6 |
Total Equity | 4452.8 | 3753.4 |
TOTAL LIABILITIES AND EQUITY | 17920.7 | 17318.4 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | ||
In Millions | Dec. 31, 2009
| Dec. 31, 2008
|
CONSOLIDATED BALANCE SHEETS (Parenthetical) | ||
Allowance for doubtful accounts | 59.5 | 59.9 |
Accumulated depreciation | 1146.7 | 1031.1 |
Accumulated amortization of intangible assets | 316.1 | 278.4 |
Preferred stock, par value | $1 | $1 |
Preferred stock, shares authorized | 7.5 | 7.5 |
Preferred stock, shares issued | 0 | 0 |
Common stock, par value | 0.15 | 0.15 |
Common stock, shares authorized | 1,000 | 1,000 |
Common stock, shares issued | 397.2 | 397.2 |
Common stock, shares outstanding | 308.4 | 307.3 |
Treasury stock, shares | 88.8 | 89.9 |
CONSOLIDATED STATEMENTS OF EQUI
CONSOLIDATED STATEMENTS OF EQUITY AND COMPREHENSIVE INCOME (USD $) | ||||
In Millions, except Share data | 12 Months Ended
Dec. 31, 2009 | 12 Months Ended
Dec. 31, 2008 | 12 Months Ended
Dec. 31, 2007 | Dec. 31, 2006
|
Balance | 3753.4 | 4333.8 | 4070.1 | |
Net Income | 871.4 | 1114.4 | 1086.6 | |
Unrealized holding loss on securities, net of tax | -2.9 | (12) | ||
Foreign currency transaction and translation adjustments, net of tax | 249.5 | -665.5 | 177.1 | |
Defined benefit plans adjustment, net of tax | -2.1 | 11.1 | 0.7 | |
Comprehensive income | 1120.1 | 425.8 | 1,263 | |
Dividends to noncontrolling interests | -91.7 | -107.9 | -79.4 | |
Acquisition of noncontrolling interests | -32.7 | -7.1 | -1.8 | |
Increase in noncontrolling interests from business combinations | 38.4 | |||
Adoption of and changes in temporary equity | -210.3 | |||
Cumulative effect of adoption of FIN 48 | 1.3 | |||
Two-for-one stock split | 0 | |||
Common stock dividends declared | -187.2 | -189.7 | -189.3 | |
Share-based compensation | 78.6 | 59.3 | 68.7 | |
Stock issued, share-based compensation | -0.8 | 86 | 100.9 | |
Treasury stock acquired | (15) | -846.8 | -899.7 | |
Cancellation of shares | 0 | 0 | 0 | |
Balance | 4452.8 | 3753.4 | 4333.8 | 4070.1 |
Additional Paid-in Capital | ||||
Balance | 1,629 | 1,648 | 1690.6 | |
Acquisition of noncontrolling interests | -25.6 | |||
Adoption of and changes in temporary equity | -210.3 | |||
Two-for-one stock split | -29.8 | |||
Share-based compensation | 78.6 | 59.3 | 68.7 | |
Stock issued, share-based compensation | -63.5 | -78.2 | -80.2 | |
Cancellation of shares | -0.1 | -1.3 | ||
Balance | 1408.2 | 1,629 | 1,648 | 1690.6 |
Accumulated Other Comprehensive Income (Loss) | ||||
Balance | -247.3 | 430.7 | 267.9 | |
Unrealized holding loss on securities, net of tax | -2.9 | (12) | ||
Foreign currency transaction and translation adjustments, net of tax | 240.1 | -654.9 | 163.5 | |
Defined benefit plans adjustment, net of tax | -2.1 | 11.1 | 0.7 | |
Balance | (8) | -247.3 | 430.7 | 267.9 |
Common Stock | ||||
Balance | 59.6 | 59.6 | 29.8 | |
Balance, shares, | 397,223,078 | 397,225,082 | 198,627,227 | |
Two-for-one stock split, shares | 198,627,227 | |||
Two-for-one stock split | 29.8 | |||
Cancellation of shares, shares | (5,638) | (2,004) | (29,372) | |
Balance, shares, | 397,217,440 | 397,223,078 | 397,225,082 | 198,627,227 |
Balance | 59.6 | 59.6 | 59.6 | 29.8 |
Retained Earnings | ||||
Balance | 5859.6 | 5,049 | 4261.3 | |
Net Income | 793 | 1000.3 | 975.7 | |
Cumulative effect of adoption of FIN 48 | 1.3 | |||
Common stock dividends declared | -187.2 | -189.7 | -189.3 | |
Balance | 6465.4 | 5859.6 | 5,049 | 4261.3 |
Treasury Stock | ||||
Balance | -3778.1 | -3095.6 | -2378.3 | |
Stock issued, share-based compensation | 62.7 | 164.2 | 181.1 | |
Treasury stock acquired | (15) | -846.8 | -899.7 | |
Cancellation of shares | 0.1 | 1.3 | ||
Balance | -3730.4 | -3778.1 | -3095.6 | -2378.3 |
Total Shareholders' Equity | ||||
Balance | 3522.8 | 4091.7 | 3871.3 | |
Net Income | 793 | 1000.3 | 975.7 | |
Unrealized holding loss on securities, net of tax | -2.9 | (12) | ||
Foreign currency transaction and translation adjustments, net of tax | 240.1 | -654.9 | 163.5 | |
Defined benefit plans adjustment, net of tax | -2.1 | 11.1 | 0.7 | |
Comprehensive income | 1032.3 | 322.3 | 1138.5 | |
Dividends to noncontrolling interests | 0 | 0 | 0 | |
Acquisition of noncontrolling interests | -25.6 | |||
Adoption of and changes in temporary equity | -210.3 | |||
Cumulative effect of adoption of FIN 48 | 1.3 | |||
Common stock dividends declared | -187.2 | -189.7 | -189.3 | |
Share-based compensation | 78.6 | 59.3 | 68.7 | |
Stock issued, share-based compensation | -0.8 | 86 | 100.9 | |
Treasury stock acquired | (15) | -846.8 | -899.7 | |
Cancellation of shares | 0 | 0 | 0 | |
Balance | 4194.8 | 3522.8 | 4091.7 | 3871.3 |
Noncontrolling Interest | ||||
Balance | 230.6 | 242.1 | 198.8 | |
Net Income | 78.4 | 114.1 | 110.9 | |
Unrealized holding loss on securities, net of tax | 0 | 0 | ||
Foreign currency transaction and translation adjustments, net of tax | 9.4 | -10.6 | 13.6 | |
Defined benefit plans adjustment, net of tax | 0 | 0 | 0 | |
Comprehensive income | 87.8 | 103.5 | 124.5 | |
Dividends to noncontrolling interests | -91.7 | -107.9 | -79.4 | |
Acquisition of noncontrolling interests | -7.1 | -7.1 | -1.8 | |
Increase in noncontrolling interests from business combinations | 38.4 | |||
Adoption of and changes in temporary equity | 0 | |||
Cumulative effect of adoption of FIN 48 | 0 | |||
Two-for-one stock split | 0 | |||
Common stock dividends declared | 0 | 0 | 0 | |
Share-based compensation | 0 | 0 | 0 | |
Stock issued, share-based compensation | 0 | 0 | 0 | |
Treasury stock acquired | 0 | 0 | 0 | |
Cancellation of shares | 0 | 0 | 0 | |
Balance | $258 | 230.6 | 242.1 | 198.8 |
1_CONSOLIDATED STATEMENTS OF EQ
CONSOLIDATED STATEMENTS OF EQUITY AND COMPREHENSIVE INCOME (Parenthetical) (USD $) | |||
In Millions | 12 Months Ended
Dec. 31, 2009 | 12 Months Ended
Dec. 31, 2008 | 12 Months Ended
Dec. 31, 2007 |
CONSOLIDATED STATEMENTS OF EQUITY AND COMPREHENSIVE INCOME (Parenthetical) | |||
Unrealized holding loss on securities, tax | -1.9 | -7.9 | |
Foreign currency transaction and translation adjustments, tax | 134.3 | -358.2 | 96.8 |
Defined benefit plans adjustment, tax | 1.7 | -5.7 | -0.9 |
Common stock dividends declared per share | 0.6 | 0.6 | 0.6 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | |||
In Millions | 12 Months Ended
Dec. 31, 2009 | 12 Months Ended
Dec. 31, 2008 | 12 Months Ended
Dec. 31, 2007 |
Cash flows from operating activities: | |||
Net Income | 871.4 | 1114.4 | 1086.6 |
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | |||
Depreciation | 186.5 | 182.8 | 164.2 |
Amortization of intangible assets | 56.3 | 53.1 | 44.4 |
Income from equity method of investments, net of dividends received | -9.2 | -14.7 | (10) |
Provision for doubtful accounts | 24.9 | 26.5 | 21.2 |
Share-based compensation | 78.6 | 59.3 | 68.7 |
Remeasurement gain, equity interest in acquiree | -41.3 | 0 | 0 |
Excess tax benefit from share-based compensation | 0 | -12.9 | -17.2 |
Change in operating capital | 564.4 | -14.3 | 241.4 |
Net Cash Provided by Operating Activities | 1731.6 | 1394.2 | 1599.3 |
Cash flows from investing activities: | |||
Payments to acquire property, plant and equipment | -130.6 | -212.2 | (223) |
Payments to acquire businesses and interests in affiliates, net of cash acquired | -137.4 | -362.2 | -318.7 |
Payments to acquire investments | -3.2 | -13.1 | (42) |
Payments for settlement of net investment hedge | 0 | -50.8 | 0 |
Proceeds from sales of investments | 45.2 | 40.9 | 191.8 |
Net Cash Used in Investing Activities | (226) | -597.4 | -391.9 |
Cash flows from financing activities: | |||
Proceeds from (repayments of) short-term debt | 2.5 | 5.1 | -0.9 |
Proceeds from borrowings | 497.3 | 2.4 | 3.4 |
Repayments of convertible debt | -1315.5 | (2) | (2) |
Payments of dividends | -187.1 | (192) | -182.8 |
Payments for repurchase of common stock | (15) | -846.8 | -899.7 |
Proceeds from stock plans | 18.6 | 86 | 100.9 |
Payments to noncontrolling interests | -20.8 | -82.6 | -48.6 |
Excess tax benefit on share-based compensation | 0 | 12.9 | 17.2 |
Other, net | (108) | -119.4 | -76.8 |
Net Cash Used in Financing Activities | (1,128) | -1136.4 | -1089.3 |
Effect of exchange rate changes on cash and cash equivalents | 112.1 | -356.3 | -64.4 |
Net Increase (Decrease) in Cash and Cash Equivalents | 489.7 | -695.9 | 53.7 |
Cash and Cash Equivalents at Beginning of Year | 1097.3 | 1793.2 | 1739.5 |
Cash and Cash Equivalents at End of Year | $1,587 | 1097.3 | 1793.2 |
Presentation of Financial State
Presentation of Financial Statements | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Presentation of Financial Statements [Abstract] | |
Presentation of Financial Statements | 1. Presentation of Financial Statements The terms Omnicom, we, our and us each refer to Omnicom Group Inc. and our subsidiaries, unless the context indicates otherwise. The accompanying consolidated financial statements are prepared in conformity with generally accepted accounting principles in the United States of America (U.S. GAAP). Intercompany balances and transactions have been eliminated. The preparation of financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. In January 2009, the SEC adopted a final rule requiring filers to adopt Extensible Business Reporting Language (XBRL) as the internet standard for providing financial information to the SEC. Under the rule, large accelerated filers are required to furnish their basic financial statements for the period ending after June 15, 2009 to the SEC in XBRL format. XBRL uses a standard taxonomy of predefined data labels for financial statement captions. We adapted our financial statement presentation to the current XBRL taxonomy. As a result, the titles of certain captions in our basic financial statements have changed and certain prior period amounts have been reclassified to conform to the current period presentation. On July 1, 2009, we adopted the FASB Accounting Standards Codification (Codification). The Codification does not alter current U.S. GAAP, but it integrated existing accounting standards with other authoritative guidance. The Codification provides a single source of authoritative U.S. GAAP for nongovernmental entities and supersedes all other previously issued non-SEC accounting and reporting guidance. SEC rules and interpretive releases under the federal securities laws are also sources of authoritative U.S. GAAP for SEC registrants. The adoption of the Codification did not have any effect on our results of operations or financial position. All prior references to U.S. GAAP have been revised to conform to the Codification. Updates to the Codification are issued in the form of Accounting Standards Updates (ASU). |
New Accounting Pronouncements
New Accounting Pronouncements | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
New Accounting Pronouncements [Abstract] | |
New Accounting Pronouncements | 2. New Accounting Pronouncements New Accounting Pronouncements Retrospective Adoption As of January 1, 2009, we retrospectively adopted revisions to U.S. GAAP included in the following Codification Topics: Codification Topic 810, Consolidation; Codification Topic 260, Earnings per Share; and Codification Topic 470, Debt. All prior periods and amounts presented in the consolidated financial statements and related notes have been retrospectively adjusted in accordance with the revisions. As a result of the adoption of the revisions to Codification Topic 810, we reclassified $230.6 million of minority interest at December 31, 2008 to noncontrolling interests within the equity section of our consolidated balance sheets. We also modified the format of our consolidated statements of income, equity and comprehensive income and cash flows to conform to the disclosure requirements of the revisions. Codification Topic 260 provides that all outstanding unvested share-based payments that contain rights to non-forfeitable dividends participate in the undistributed earnings with the common shareholders and are therefore participating securities. Companies with participating securities are required to apply the two-class method in calculating basic and diluted earnings per share. On adoption of the revisions, we retrospectively restated basic and diluted Net Income per Common Share Omnicom Group Inc. for each period presented. Codification Topic 470 provides that issuers of instruments that fall within its scope should separately account for the liability and equity components of those instruments by allocating the proceeds at the date of issuance of the instrument between the liability component and the embedded conversion option (the equity component) by first determining the carrying amount of the liability. Our outstanding convertible notes came under the scope of the revisions to Codification Topic 470 when they were amended in 2004. Each convertible note has substantive rights to unilaterally put the convertible notes for redemption on certain specified dates. To calculate the fair value of the liability, we estimated the expected life of each series of our convertible debt and computed the fair value of the liability excluding the embedded conversion option and giving effect to other substantive features such as put and call options. Since our convertible debt was issued at par (no discount) and by its terms does not pay a coupon interest rate, the holder has no economic incentive to hold our convertible debt, and unless a non-contractual supplemental interest payment is offered by us, the holder would exercise his or her put right at the first opportunity. Accordingly, for the purposes of applying the revisions, the expected lives of our convertible notes from the date of amendment in 2004 to the first respective put date were assumed to be 1.2 years, 1 year and 1.6 years for our 2031, 2032 and 2033 Notes, respectively. On adoption of the revisions, we would have recorded additional interest expense, net of income taxes, in years 2004, 2005 and 2006 totaling $28.5 million. This amount represents the fair value of embedded conversion |
Significant Accounting Policies
Significant Accounting Policies | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Significant Accounting Policies [Abstract] | |
Significant Accounting Policies | 3. Significant Accounting Policies Revenue Recognition. We recognize revenue in accordance with Codification Topic 605, Revenue Recognition and applicable SEC Staff Accounting Bulletins. Substantially all of our revenue is derived from fees for services or a rate per hour, or equivalent basis, and revenue is realized when the service is performed in accordance with terms of each client arrangement, upon completion of the earnings process and when collection is reasonably assured. We record revenue net of sales, use and value added taxes. Certain of our businesses earn a portion of their revenue as commissions based upon performance in accordance with client arrangements. These principles are the foundation of our revenue recognition policy and apply to all client arrangements in each of our service disciplines traditional media advertising, customer relationship management, public relations and specialty communications. Because the services that we provide across each of our disciplines are similar and delivered to clients in similar ways, all of the key elements set forth above apply to client arrangements in each of our four disciplines. In the majority of our businesses, we act as an agent and record revenue equal to the net amount retained when the fee or commission is earned. Although we may bear credit risk in respect of these activities, the arrangements with our clients are such that we act as an agent on their behalf. In these cases, costs incurred with external suppliers are excluded from our revenue. In accordance with certain arrangements, we act as principal and we contract directly with suppliers for media payments and third-party production costs and are responsible for payment. In connection with these arrangements, revenue is recorded at the gross amount billed since revenue has been earned for the sale of goods or services. A small portion of our contractual arrangements with clients includes performance incentive provisions designed to link a portion of our revenue to our performance relative to both quantitative and qualitative goals. We recognize this portion of revenue when specific quantitative goals are achieved, or when our performance against qualitative goals is determined by our clients. Work in Process. Work in process consists principally of costs incurred on behalf of clients when providing advertising, marketing and corporate communications services to clients. Such amounts are invoiced to clients at various times over the course of the production process. Cash and Cash Equivalents. Our cash equivalents are primarily comprised of investments in overnight interest-bearing deposits, commercial paper and money market instruments and other short-term investments with original maturity dates of three months or less at the time of purchase. Short-Term Investments. Short-term investments consist principally of time deposits with financial institutions that we expect to convert into cash in our current operating cycle, generally within one year. Therefore, they are classified as current assets. Short-term investments are carried at cost, which approximates fair value. Available-for-Sale Securities. |
Business Combinations
Business Combinations | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Business Combinations [Abstract] | |
Business Combinations | 4. Business Combinations During 2009, we completed four acquisitions of new subsidiaries and made additional investments in companies in which we had an existing minority ownership interest. Total additions to goodwill for these transactions was $76.6 million. In addition, we made or accrued contingent purchase price payments of $133.2 million, which were included in goodwill. Approximately $44.8 million of the goodwill recorded in these acquisitions is expected to be deductible for income tax purposes. Further, we also acquired additional equity in certain of our majority owned subsidiaries. In accordance with Codification Topic 810, these transactions are accounted for as equity transactions and no additional goodwill was recorded. None of the transactions referred to above were material to our results of operations or financial position. Valuation of these acquired companies was based on a number of factors, including specialized know-how, reputation, geographic coverage, competitive position and service offerings. Our acquisition strategy has been focused on acquiring the expertise of an assembled workforce in order to continue to build upon the core capabilities of our various strategic business platforms through the expansion of their geographic area and/or their service capabilities to better serve our clients. Consistent with our acquisition strategy and past practice, most acquisitions completed in 2009 included an initial payment at the time of closing and provide for future additional contingent purchase price payments. Contingent payments for these transactions, as well as certain acquisitions completed in prior years, are derived using the performance of the acquired entity and are based on pre-determined formulas. Contingent purchase price obligations for acquisitions completed prior to January 1, 2009 are accrued when the contingency is resolved and payment is certain. Contingent purchase price obligations related to acquisitions completed subsequent to December 31, 2008 are recorded as liabilities at fair value and are remeasured at each reporting period and changes in fair value are recorded in results of operations. For each of our acquisitions, we undertake a detailed review to identify other intangible assets and a valuation is performed for all such identified assets. We use several market participant measurements to determine fair value. This approach includes consideration of similar and recent transactions, as well as utilizing discounted expected cash flow methodologies and when available and as appropriate, we use comparative market multiples to supplement our analysis. Like most service businesses, a substantial portion of the intangible asset value that we acquire is the specialized know-how of the workforce, which is treated as part of goodwill and is not required to be valued separately. The majority of the value of the identifiable intangible assets that we acquire is derived from customer relationships, including the related customer contracts, as well as trade names. In executing our acquisition strategy, one of the primary drivers in identifying and executing a specific transaction is the existence |
Intangible Assets
Intangible Assets | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Intangible Assets [Abstract] | |
Intangible Assets | 5. Intangible Assets The components of our intangible assets at December 31, 2009 and 2008 were as follows: (Dollars in millions) 2009 2008 Gross Carrying Value Net Carrying Value Gross Carrying Value Net Carrying Value Accumulated Amortization Accumulated Amortization Intangible assets subject to impairment tests: Goodwill $ 8,231.6 $ 590.4 $ 7,641.2 $ 7,787.8 $ 567.6 $ 7,220.2 Other identifiable intangible assets subject to amortization: Purchased and internally developed software $ 266.2 $ 202.7 $ 63.5 $ 254.8 $ 191.5 $ 63.3 Customer related and other 270.7 113.4 157.3 244.6 86.9 157.7 Total $ 536.9 $ 316.1 $ 220.8 $ 499.4 $ 278.4 $ 221.0 The following table presents the changes in the carrying amount of goodwill at December 31, 2009 and 2008 (dollars in millions): 2009 2008 Balance at January 1 $ 7,220.2 $ 7,318.5 Goodwill related to acquisitions during the year 246.7 358.2 Goodwill related to dispositions during the year (11.3 ) (2.1 ) Foreign exchange 185.6 (454.4 ) Gross goodwill at December 31 7,641.2 7,220.2 Accumulated impairment losses Net goodwill at December 31 $ 7,641.2 $ 7,220.2 In connection with the adoption of Codification Topic 805 on January 1, 2009, goodwill related to acquisitions completed during 2009 includes $36.9 million related to goodwill associated with noncontrolling interests. |
Debt
Debt | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Debt [Abstract] | |
Debt | 6. Debt Lines of Credit: We have a $2.5 billion credit facility that expires on June 23, 2011. We have the ability to classify outstanding borrowings, if any, under our credit facility as long-term debt. At December 31, 2009 and 2008, our committed and uncommitted lines of credit, including our $2.5 billion credit facility, aggregated $2,900.4 million and $2,870.1 million, respectively. The unused portion of these credit lines was $2,863.3 million and $2,853.9 million at December 31, 2009 and 2008, respectively. Our $2.5 billion credit facility provides back-up liquidity in the event any of our convertible notes are put back to us, as well as support for our commercial paper issuances. The gross amount of borrowings and repayments under the credit facility during 2009 was $21.6 billion, with an average term of 12.4 days. During 2008, the amount of gross borrowings and repayments under the credit facility were $13.4 billion with an average term of 15 days. The gross amount of commercial paper issued and redeemed under our commercial paper program during 2009 was $12.7 billion, with an average term of 5.2 days. During 2008, $14.7 billion of commercial paper was issued and redeemed with an average term of 4.4 days. Depending on market conditions at the time, we either issue commercial paper or borrow under our credit facility or our uncommitted lines of credit to manage our short-term cash requirements primarily related to changes in our day-to-day working capital requirements. As of December 31, 2009 and 2008, we had no commercial paper issuances or borrowings outstanding under our credit facility. Our credit facility is provided by a bank syndicate that includes large global banks such as Citibank, JPMorgan Chase, HSBC, RBS, Deutsche Bank, Bank of America, Societe Generale and BBVA. We also include large regional banks in the U.S. such as US Bancorp, Northern Trust, PNC and Wells Fargo. Additionally, we include banks that have a major presence in countries where we conduct business such as BNP Paribas in France, Sumitomo in Japan, Intesa San Paolo in Italy, Scotia in Canada and ANZ in Australia. Several banks that were in our bank syndicate merged with other global financial institutions. Additionally, during the recent credit crisis several banks in our bank syndicate received capital infusions from their central governments. In the event that a bank in our syndicate were to default on its obligation to fund its commitment under our credit facility or cease to exist and there was no successor entity, the credit facility provides that the remaining banks in the syndicate would only be required to fund advances requested under the credit facility on a pro rata basis up to their total commitment and the portion of the credit facility provided by the defaulting bank would not be available to us. The credit facilities contain financial covenants limiting the ratio of total consolidated indebtedness to total consolidated EBITDA (for purposes of these covenants EBITDA is defined as earnings before interest, taxes, depreciation and amortization) to no more than 3.0 times. In addition, we are required to maintain a minimum ratio of EBIT |
Segment Reporting
Segment Reporting | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Segment Reporting [Abstract] | |
Segment Reporting | 7. Segment Reporting Our wholly and partially owned agencies operate within the advertising, marketing and corporate communications services industry. These agencies are organized into agency networks, virtual client networks, regional reporting units and operating groups. Consistent with the fundamentals of our business strategy, our agencies serve similar clients, in similar industries, and in many cases the same clients across a variety of geographic regions. In addition, our agency networks have similar economic characteristics and similar long-term operating margins, as the main economic components of each agency are the salary and service costs associated with providing professional services, the office and general costs associated with office space and occupancy, and the provision of technology requirements which are generally limited to personal computers, servers and off-the-shelf software. Therefore, given these similarities, we aggregate our operating segments, which are our five agency networks, into one reporting segment. A summary of our revenue and long-lived assets and goodwill by geographic area for the years then ended, and at December 31, 2009, 2008 and 2007 is presented below (dollars in millions): Americas EMEA Asia/Australia 2009 Revenue $ 6,855.0 $ 4,076.5 $ 789.2 Long-Lived Assets and Goodwill 5,642.3 2,549.0 127.2 2008 Revenue $ 7,644.7 $ 4,869.5 $ 845.7 Long-Lived Assets and Goodwill 5,468.5 2,352.1 119.2 2007 Revenue $ 7,392.8 $ 4,543.7 $ 757.5 Long-Lived Assets and Goodwill 5,262.7 2,638.5 123.9 The Americas is primarily comprised of the U.S., Canada and Latin American countries. EMEA is primarily comprised of various Euro currency countries, the United Kingdom, the Middle-East and Africa and other European countries that have not adopted the European Union Monetary standard. Asia/Australia is primarily comprised of China, Japan, Korea, Singapore, Australia and other Asian countries. |
Cost Method Investments
Cost Method Investments | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Cost Method Investments [Abstract] | |
Cost Method Investments | 8. Cost Method Investments Our cost method investments are primarily comprised of equity interests of less than 20% in various privately held companies. The cost method is used when we own less than a 20% equity interest and do not exercise significant influence over the operating and financial policies of the investee. The total carrying value of our cost method investments was $27.3 million and $36.5 million at December 31, 2009 and 2008, respectively and are included in other assets in our consolidated balance sheets. |
Equity Method Investments
Equity Method Investments | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Equity Method Investments [Abstract] | |
Equity Method Investments | 9. Equity Method Investments We have investments in privately held unconsolidated affiliated companies accounted for under the equity method. The affiliated companies offer marketing and corporate communications services similar to those offered by our operating companies. The equity method is used when we own less than 50% of the common stock but exercise significant influence over the operating and financial policies of the affiliate. Our total equity investments did not exceed 1.7% of our total assets, our proportionate share of our affiliates total assets did not exceed 2.9% of our total assets, and individually and in the aggregate, our proportionate share of our affiliates income before income taxes did not exceed 4.5% of our total income before income taxes. Accordingly, summarized financial information of our affiliates is not required to be disclosed as these affiliates are not material to our financial position or results of operations. For the years ended December 31, 2009, 2008 and 2007, our equity interest in the net income of these affiliated companies was $30.8 million, $42.0 million and $38.4 million, respectively. Our equity interest in the net assets of these affiliated companies was $156.9 million and $162.0 million at December 31, 2009 and 2008, respectively. Owners of interests in certain of our affiliated companies have the right in certain circumstances to require us to purchase additional ownership interests at fair value as defined in the applicable agreements. The intent of the parties is to approximate fair value at the time of redemption by using a multiple of earnings, which is consistent with generally accepted valuation practices used by market participants in our industry. The terms of these rights vary for each arrangement and the ultimate amount payable in the future also varies based upon the future earnings of the affiliated companies, changes in the applicable foreign currency exchange rates and, if exercised, the timing of the exercise of these rights. Upon the exercise by a majority shareholder of the redemption right provided for in the shareholders agreement of one of our affiliate investments in the Middle East, we acquired a controlling interest in the affiliate in the fourth quarter of 2009. Our investment was previously accounted for under the equity method. Upon the purchase of these shares, in accordance with Codification Topic 805, we recorded a gain of $41.3 million in results of operations to reflect the remeasurement at fair value of our investment held prior to the purchase. The purchase price for the additional 41% interest was negotiated at fair value in an arms-length transaction. The difference between the fair value of our shares and the carrying value of our investment held prior to the acquisition resulted in the remeasurement gain. In addition, we performed a valuation of the business and confirmed the fair value used to determine the remeasurement gain. We used the following valuation methodologies to confirm the fair value: the income approach which utilized discounted expected future cash flows and comparative market participant multiples of EBITDA (earnings before int |
Share-Based Compensation Plans
Share-Based Compensation Plans | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Share-Based Compensation Plans [Absract] | |
Share-Based Compensation Plans | 10. Share-Based Compensation Plans Our equity incentive compensation plan adopted in 2007 (2007 Incentive Award Plan) reserved 37.0 million shares of our common stock for options, restricted stock and other awards. The 2007 Incentive Award Plan also permits forfeited shares that were issued as restricted stock awards and option grants under the current and prior award plans to be reissued. Under the 2007 Incentive Award Plan, the exercise price of options awarded may not be less than 100% of the market price of the stock at the date of grant and the option term cannot be longer than ten years from the date of grant. The terms of each award and the times at which each award is exercisable are determined by the Compensation Committee of the Board of Directors. It is anticipated that the full vesting period for awards will generally be three years. Generally our option grants become exercisable 30% on each of the first two anniversary dates of the grant date with the final 40% becoming exercisable three years from the grant date. As a result of the adoption of the 2007 Incentive Award Plan in 2007, no new awards may be granted under our prior award plans. Our current and prior award plans do not permit the holder of an award to elect cash settlement under any circumstances. Total pre-tax share-based employee compensation cost for the years ended December 31, 2009, 2008 and 2007, was $78.6 million, $59.3 million and $68.7 million, respectively. At December 31, 2009, total unamortized share-based compensation at that will be expensed over the next five years was $180.8 million. Stock Options: Options included under all incentive compensation plans, all of which were approved by our shareholders, for the past three years are: 2009 2008 2007 Shares Weighted Average Exercise Price Shares Weighted Average Exercise Price Shares Weighted Average Exercise Price Shares under option, beginning of year 23,398,301 $ 36.87 21,711,535 $ 38.26 23,881,610 $ 37.44 Options granted under 2007 Incentive Award Plan 22,620,000 23.73 3,520,000 25.48 120,000 52.83 Options exercised (545,586 ) 31.18 (1,630,734 ) 30.40 (2,097,251 ) 29.43 Options forfeited / repurchased (4,640,000 ) 39.52 (202,500 ) 40.57 (192,824 ) 41.63 Shares under option, end of year 40,832,715 $ 29.37 23,398,301 $ 36.87 21,711,535 $ 38.26 Options exercisable at year-end 16,325,715 $ 37.46 19,794,301 $ 38.82 21,591,535 $ 38.18 The following table summarizes the information above about options outstanding and options exercisable at December 31, 2009: Options Outstanding Options Exercisable Range of Exercise Prices (in dollars) Shares Weighted Average Remaining Contractual Life Weighted Average Exercise Price Shares Weighted Average Exercise Price $39.16 1,564,000 1 year $ 39.16 1,564,000 $ 39.16 31.18 to 43.58 11,713,411 1-2 years 36.77 |
Income Taxes
Income Taxes | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Income Taxes [Abstract] | |
Income Taxes | 11. Income Taxes We file a consolidated U.S. income tax return and tax returns in various state and local jurisdictions. Our subsidiaries also file tax returns in various foreign jurisdictions. The principal foreign jurisdictions include the United Kingdom, France and Germany. The Internal Revenue Service (IRS) has completed its examination of our federal tax returns through 2004 and has commenced an examination of our federal tax returns from 2005 through 2007. In addition, our subsidiaries tax returns in the United Kingdom, France and Germany have been examined through 2001, 2004 and 2000, respectively. Income before income taxes and income tax expense for the three years ended December 31, 2009 is as follows: (Dollars in millions) 2009 2008 2007 Income before income taxes: Domestic $ 598.8 $ 751.9 $ 736.2 International 675.4 863.2 848.9 $ 1,274.2 $ 1,615.1 $ 1,585.1 Income tax expense: Current: Federal $ 58.2 $ 101.6 $ 133.8 State and local 11.8 16.1 12.0 International 198.5 224.0 234.1 268.5 341.7 379.9 Deferred: Federal 146.9 161.6 131.4 State and local 14.2 22.0 7.6 International 4.0 17.4 18.0 Total Deferred 165.1 201.0 157.0 $ 433.6 $ 542.7 $ 536.9 Our effective income tax rate varied from the statutory federal income tax rate as a result of the following factors: 2009 2008 2007 Statutory federal income tax rate 35.0 % 35.0 % 35.0 % State and local taxes on income, net of federal income tax benefit 1.3 1.5 0.8 International subsidiaries tax rate differentials (2.7 ) (3.7 ) (2.8 ) Other 0.4 0.8 0.9 Effective rate 34.0 % 33.6 % 33.9 % Included in income tax expense is $3.8 million, $0.7 million and $2.8 million of interest, net of tax benefit and penalties related to tax positions taken on our tax returns for the years ended December 31, 2009, 2008 and 2007, respectively. At December 31, 2009 and 2008, the combined amount of accrued interest and penalties related to tax positions taken on our tax returns was $15.6 million and $10.4 million, respectively. Deferred tax assets and liabilities at December 31, 2009 and 2008 consisted of the following (dollars in millions): 2009 2008 Deferred tax assets: Compensation and severance $ 261.5 $ 296.6 Tax loss and credit carryforwards 181.7 215.8 Basis differences arising from acquisitions 32.7 36.7 Basis differences from short-term assets and liabilities 35.1 37.4 Basis differences arising from investments 8.4 10.0 Other 3.4 35.1 Total deferred tax assets 522.8 631.6 Valuation allowance (67.8 ) (64.1 ) Total deferred tax assets net of valuation allowance $ 455.0 $ 567.5 D |
Pension and Other Postretiremen
Pension and Other Postretirement Plans | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Pension and Other Postretirement Plans [Abstract] | |
Pension and Other Postretirement Plans | 12. Pension and Other Postemployment Benefits Defined Contribution Plans: Our domestic and international subsidiaries provide retirement benefits for their employees primarily through defined contribution plans. Company contributions to the plans, which are determined by the boards of directors of the subsidiaries, vary by subsidiary and have generally been in amounts up to the maximum percentage of total eligible compensation of participating employees that is deductible for income tax purposes. Expenses related to the Companys contributions to these plans were $75.7 million in 2009, $96.7 million in 2008 and $99.8 million in 2007. Defined Benefit Pension Plans Overview: Certain of our subsidiaries sponsor noncontributory defined benefit pension plans, including two pension plans related to our U.S. businesses and twenty-seven pension plans related to our non-U.S. businesses. These plans provide benefits to employees based on formulas recognizing length of service and earnings. The U.S. pension plans cover approximately 1,500 participants and have been closed to new participants. The non-U.S. pension plans cover approximately 4,900 participants, are not covered by ERISA and include plans required by local requirements. In addition, we have a Senior Executive Restrictive Covenant and Retention Plan (the Retention Plan) for certain executive officers of Omnicom selected to participate by the Compensation Committee of the Board of Directors. The Retention Plan was adopted to secure non-competition, non-solicitation, non-disparagement and ongoing consulting services from such executive officers, and to strengthen the retention aspect of executive officer compensation. The Retention Plan provides for annual payments to its participants or to their beneficiaries upon termination following at least seven years of service with Omnicom or its subsidiaries. A participants annual benefit is payable for the 15 consecutive calendar years following termination, but in no event prior to age 55 and is equal to the lesser of (i) the participants final average pay times an applicable percentage, which is based upon the executives years of service as an executive officer, not to exceed 35% or (ii) $1.25 million. The assets, liabilities and expense associated with these plans are not material to our results of operations or financial position. Postemployment Arrangements Overview: We have executive retirement agreements under which benefits will be paid to participants or to their beneficiaries over periods up to 10 years beginning after cessation of full-time employment. In addition, certain of our subsidiaries have individual deferred compensation arrangements with certain executives that provide for payments over varying terms upon retirement, cessation of employment or death. The cost related to these arrangements is accrued during the employees service period. Defined Benefit Pension Plans: The components of net periodic benefit cost for our defined benefit pension plans for the three years ended December 31, 2009 are as follows (dollars in millions): 2009 2008 2007 Service cost $ 4.4 $ 7. |
Supplemental Data
Supplemental Data | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Supplemental Data [Abstract] | |
Supplemental Data | 13. Supplemental Data The components of operating expenses for the three years ended December 31, 2009 were (dollars in millions): 2009 2008 2007 Salary and service costs $ 8,450.6 $ 9,560.2 $ 9,008.2 Office and general expenses 1,895.2 2,110.3 2,026.7 Total operating expenses $ 10,345.8 $ 11,670.5 $ 11,034.9 Supplemental cash flow data for the three years ended December 31, 2009 were (dollars in millions): 2009 2008 2007 (Increase) decrease in accounts receivable $ 410.9 $ 689.9 $ (508.7 ) (Increase) decrease in work in progress and other current assets 113.9 59.2 (23.7 ) Increase (decrease) in accounts payable (10.2 ) (778.3 ) 450.3 Increase (decrease) in customer advances and other current liabilities (75.9 ) (89.8 ) 18.2 Change in other assets and liabilities, net 125.7 104.7 305.3 Totalchange in operating capital $ 564.4 $ (14.3 ) $ 241.4 Income taxes paid $ 270.4 $ 411.4 $ 303.5 Interest paid 86.8 126.3 87.7 |
Noncontrolling Interests
Noncontrolling Interests | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Noncontrolling Interests [Abstract] | |
Noncontrolling Interests | 14. Noncontrolling Interests Changes in our ownership interests in our less than 100% owned subsidiaries during the three years ended December 31, 2009, were as follows (dollars in millions): 2009 2008 2007 Net income attributed to Omnicom Group Inc $ 793.0 $ 1,000.3 $ 975.7 Transfers (to) from noncontrolling interests: Decrease in additional paid-in capital from sale of shares in noncontrolling interests (0.8 ) Decrease in additional paid-in capital from purchase of shares in noncontrolling interests (25.6 ) Net transfers (to) from noncontrolling interests (25.6 ) (0.8 ) Changes in net income attributed to Omnicom Group Inc. and transfers (to) from noncontrolling interests $ 767.4 $ 1,000.3 $ 974.9 |
Leases
Leases | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Leases [Abstract] | |
Leases | 15. Leases We lease substantially all our office facilities and certain equipment under operating and capital leases that expire at various dates. Certain operating leases provide us with the option to renew for additional periods. Where operating leases contain escalation clauses, rent abatements, and/or concessions, such as rent holidays and landlord or tenant incentives or allowances, we apply them in the determination of straight-line rent expense over the lease term. Leasehold improvements made at inception or during the lease term are amortized over the shorter of the asset life or the lease term, which may include renewal periods where the renewal is reasonably assured, and is included in the determination of straight-line rent expense. Certain operating leases require the payment of real estate taxes or other occupancy costs, which may be subject to escalation. Rent expense for the three years ended December 31, 2009, was (dollars in millions): 2009 2008 2007 Office rent $ 396.0 $ 409.7 $ 407.1 Third party sublease rent (18.9 ) (22.8 ) (22.4 ) Total office rent 377.1 386.9 384.7 Equipment rent 65.6 103.7 110.3 Total rent $ 442.7 $ 490.6 $ 495.0 Future minimum office and equipment base rents under terms of non-cancelable operating and capital leases, reduced by third party sublease rent to be received from existing non-cancelable subleases, are as follows (dollars in millions): Operating Leases Gross Rent Sublease Rent Net Rent 2010 $ 423.2 $ (11.4 ) $ 411.8 2011 334.3 (7.6 ) 326.7 2012 259.2 (4.1 ) 255.1 2013 199.0 (2.8 ) 196.2 2014 167.8 (2.3 ) 165.5 Thereafter 519.2 (5.5 ) 513.7 $ 1,902.7 $ (33.7 ) $ 1,869.0 Capital Leases 2010 $ 19.6 2011 12.3 2012 6.3 2013 3.1 2014 2.9 Thereafter 2.3 Total minimum lease payments $ 46.5 After deducting $3.1 million, which represents the interest component of the minimum lease payments, from our capital lease payments of $46.5 million, the present obligation of the minimum lease payments at December 31, 2009 was $43.4 million. At December 31, 2009, the current and long-term portions of our capital lease obligation were $18.7 million and $24.7 million, respectively. Property under capital leases at December 31, 2009 and 2008 was $69.1 million and $46.5 million, respectively. Amortization expense for property under capital leases was $17.0 million in 2009, $8.5 million in 2008 and $0.8 million in 2007. Accumulated amortization of property under capital leases at December 31, 2009 and 2008 was $27.3 million and $9.8 million respectively. |
Temporary Equity - Redeemable N
Temporary Equity - Redeemable Noncontrolling Interests | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Temporary Equity - Redeemable Noncontrolling Interests [Abstract] | |
Temporary Equity - Redeemable Noncontrolling Interests | 16. Temporary Equity Redeemable Noncontrolling Interests As discussed in Note 2, we adopted EITF D-98 as it related to our redeemable noncontrolling interests. Owners of interests in certain of our subsidiaries have the right in certain circumstances to require us to purchase additional ownership interests at fair values as defined in the applicable agreements. The intent of the parties is to approximate fair value at the time of redemption by using a multiple of earnings, which is consistent with generally accepted valuation practices by market participants in our industry. These contingent redemption rights are embedded in the equity security at issuance, are not free-standing instruments, do not represent a de facto financing and are not under our control. Prior to the adoption of EITF D-98 on January 1, 2009, we did not record these contingent rights in our balance sheet. Assuming that the subsidiaries perform over the relevant periods at their current profit levels, at December 31, 2009, the aggregate estimated maximum amount we could be required to pay in future periods is approximately $215 million, of which approximately $171 million relates to obligations that are currently exercisable by the holders. If these rights are exercised, there would be an increase in the net income attributable to Omnicom Group Inc. as a result of our increased ownership and the reduction of net income attributable to noncontrolling interests. The ultimate amount paid could be significantly different because the redemption amount is primarily dependent on the future results of operations of the subject businesses, the timing of the exercise of these rights and changes in foreign currency exchange rates. |
Commitments and Contingencies
Commitments and Contingencies | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Commitments and Contingent Liabilities [Abstract] | |
Commitments and Contingent Liabilities | 17. Commitments and Contingent Liabilities Legal Proceedings: Beginning on June 13, 2002, several putative class actions were filed against us and certain senior executives in the United States District Court for the Southern District of New York. The actions have since been consolidated under the caption In re Omnicom Group Inc. Securities Litigation, No. 02-CV-4483 (RCC), on behalf of a proposed class of purchasers of our common stock between February 20, 2001 and June 11, 2002. The consolidated complaint alleges, among other things, that our public filings and other public statements during that period contained false and misleading statements or omitted to state material information relating to (1) our calculation of the organic growth component of period-to-period revenue growth, (2) our valuation of and accounting for certain internet investments made by our Communicade Group (Communicade), which we contributed to Seneca Investments LLC (Seneca) in 2001, and (3) the existence and amount of certain contingent future obligations in respect of acquisitions. The complaint seeks an unspecified amount of compensatory damages plus costs and attorneys fees. Defendants moved to dismiss the complaint and on March 28, 2005, the court dismissed portions (1) and (3) of the complaint detailed above. The courts decision denying the defendants motion to dismiss the remainder of the complaint did not address the ultimate merits of the case, but only the sufficiency of the pleading. Defendants have answered the complaint. Discovery concluded in the second quarter of 2007. On April 30, 2007, the court granted plaintiffs motion for class certification, certifying the class proposed by plaintiffs. In the third quarter of 2007 defendants filed a motion for summary judgment on plaintiffs remaining claim. On January 28, 2008, the court granted defendants motion in its entirety, dismissing all claims and directing the court to close the case. On February 4, 2008, the plaintiffs filed a notice of intent to appeal that decision to the United States Court of Appeals for the Second Circuit. The appeal has been fully briefed and oral argument before the Court of Appeals occurred on May 5, 2009. The defendants continue to believe that the allegations against them are baseless and intend to vigorously oppose plaintiffs appeal. Currently, we are unable to determine the outcome of the appeal and the effect on our financial position or results of operations. The outcome of this matter is inherently uncertain and may be affected by future events. Accordingly, there can be no assurance as to the ultimate effect of this matter. We are also involved from time to time in various legal proceedings in the ordinary course of business. We do not presently expect that these proceedings will have a material adverse effect on our consolidated financial position or results of operations. |
Fair Value
Fair Value | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Fair Value [Abstract] | |
Fair Value | 18. Fair Value The following tables present certain information for our financial assets that are measured at fair value on a recurring basis at December 31, 2009 and 2008 (dollars in millions): 2009: Level 1 Level 2 Level 3 Total Assets: Available-for-sale securities $ 4.0 $ 4.0 Liabilities: Forward foreign exchange contracts $ 3.3 3.3 2008: Assets: Available-for-sale securities $ 14.2 $ 14.2 Forward foreign exchange contracts $ 15.8 15.8 At December 31, 2009, available-for-sale securities are included in other assets and forward foreign exchange contracts were included in other current liabilities in our consolidated balance sheet. At December 31, 2008, available-for-sale securities were included in other assets and forward foreign exchange contracts were included in other current assets in our consolidated balance sheet. The following table presents the carrying amounts and fair value of our financial instruments at December 31, 2009 and 2008 (dollars in millions): 2009 2008 Carrying Amount Fair Value Carrying Amount Fair Value Assets: Cash and cash equivalents $ 1,587.0 $ 1,587.0 $ 1,097.3 $ 1,097.3 Short-term investments 7.8 7.8 15.1 15.1 Available-for-sale securities 4.0 4.0 14.2 14.2 Cost method investments 27.3 27.3 36.5 36.5 Liabilities: Short-term borrowings 19.3 19.3 16.2 16.2 Long-term debt and convertible debt 2,238.4 2,324.4 3,057.0 2,827.8 Financial commitments: Forward foreign exchange contracts 3.3 3.3 15.8 15.8 Guarantees 0.3 0.3 The following methods and assumptions were used to estimate the fair value of each class of financial instrument for which it is practicable to estimate that value. Short-term investments: Short-term investments consist primarily of time deposits with financial institutions that we expect to convert into cash in our current operating cycle, generally within one year. Short-term investments are carried at cost, which approximates fair value. Available-for-sale securities: Available-for-sale securities are carried at quoted market prices. Cost method investments: Cost method investments are carried at cost, which approximates or is less than fair value. See Note 8 for additional information about these investments. Short-term borrowings: Short-term borrowings consist of bank overdrafts of our international subsidiaries. Due to the short-term nature of these instruments, carrying value approximates fair value. Long-term debt and convertible debt: Our long-term debt includes fixed rate debt and convertible debt. The fair value of these instruments is based on quoted market prices. Financial commitments: The estimated fair values of derivative positions in forward foreign exchange contracts are based upon quotations received from third party banks and represent the net amount required to terminate the |
Derivative Instruments and Hedg
Derivative Instruments and Hedging Activities | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Derivative Instruments and Hedging Activities [Abstract] | |
Derivative Instruments and Hedging Activities | 19. Derivative Instruments and Hedging Activities Our derivative activities are confined to risk management activities related to our international operations. We enter into short-term forward foreign exchange contracts which mitigate the foreign exchange risk of our intercompany cash movements between subsidiaries operating in different currency markets from that of our treasury centers from which they borrow or invest. Changes in market value of the forward contracts are included in our results of operations and are offset by the corresponding change in value of the underlying asset or liability being hedged. The terms of these contracts are generally 90 days or less. At December 31, 2009 and 2008, the aggregate amount of intercompany receivables and payables subject to this hedge program was $900.7 million and $588.2 million, respectively. The table below summarizes by major currency the notional principal amounts of the Companys forward foreign exchange contracts outstanding at December 31, 2009 and 2008. The buy amounts represent the U.S. Dollar equivalent of commitments to purchase the respective currency, and the sell amounts represent the U.S. Dollar equivalent of commitments to sell the respective currency. See Note 18 for a discussion of the value of these instruments. (Dollars in millions) Notional Principal Amount 2009 2008 Company Buys Company Sells Company Buys Company Sells U.S. Dollar $ 0.3 $ 444.3 $ 51.2 $ 214.7 British Pound 8.3 0.6 9.8 1.8 Euro 288.8 3.8 3.8 7.8 Japanese Yen 105.6 0.6 186.1 57.2 Other 45.7 2.7 51.0 4.8 $ 448.7 $ 452.0 $ 301.9 $ 286.3 Also, we manage the foreign exchange fluctuations that may be caused by our intercompany cash movements by entering into short-term forward foreign exchange contracts which mitigate the foreign exchange risk of the U.S. Dollar commercial paper issued by our London treasury center, whose functional currency is the British Pound. At December 31, 2009, we had no forward contracts outstanding relating to this activity as there was no commercial paper issuances outstanding. We have established a centralized reporting system to evaluate the effects of changes in interest rates, currency exchange rates and other relevant market risks. We periodically determine the potential loss from market risk by performing a value-at-risk computation. Value-at-risk analysis is a statistical model that utilizes historic currency exchange and interest rate data to measure the potential impact on future earnings of our existing portfolio of derivative financial instruments. The value-at-risk analysis we performed on our December 31, 2009 portfolio of derivative financial instruments indicated that the risk of loss was immaterial. Counterparty risk arises from the inability of a counterparty to meet its obligations. To mitigate counterparty risk, we entered into derivative contracts with major well-known banks and financial institutions that have credit ratings at least equal to our credit rating. The for |
Subsequent Events
Subsequent Events | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Subsequent Events [Abstract] | |
Subsequent Events | 20. Subsequent Events We have evaluated events subsequent to the balance sheet through February 19, 2010, the filing date of our Annual Report on Form 10-K for the year ended December 31, 2009. There have not been any material events that have occurred that would require adjustment to or disclosure in our consolidated financial statements. The following table sets forth a summary of the Companys unaudited quarterly results of operations for the years ended December 31, 2009 and 2008, in millions of dollars, except for per share amounts. |
SCHEDULE II - VALUATION AND QUA
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS [Abstract] | |
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS | SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS For the Three Years Ended December 31, 2009 (Dollars in millions) Column A Column B Column C Column D Column D Column E Description Balance at Beginning of Period Charged to Costs and Expenses Removal of Uncollectible Receivables (1) Translation Adjustments (Increase) Balance at End of Period Valuation accounts deducted from assets to which they apply -- Allowance for doubtful accounts: December 31, 2009 $ 59.9 $ 24.9 $ 26.7 $ (1.4) $ 59.5 December 31, 2008 54.7 26.5 17.9 3.4 59.9 December 31, 2007 50.5 21.2 19.5 (2.5) 54.7 (1) Net of acquisition date balances in allowance for doubtful accounts of companies acquired of $0.1 million and $0.4 million in 2008 and 2007, respectively. |