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Omnicom Group Annual Report, Year Ended Dec 31, 1995

Filing Date
Filed March 27, 1996
Period End
December 31, 1995
Security
OMC
In the record · 2016–202610-K1110-Q338-K107

OMC filed 11 annual reports (10-K), 33 quarterly reports (10-Q) and 107 current reports (8-K) between 2016 and 2026.

  1. Leadership change8-K · Jul ’17Jul ’17
  2. Material agreement8-K · Jul ’19Jul ’19
  3. Leadership change8-K · Feb ’22Feb ’22
  4. Material agreement8-K · Dec ’25Dec ’25

01—Abstract

Summary

Summary of the 10-K filed March 27, 1996. Cited figures are marked; the original filing is the authoritative source.

Omnicom Group Inc. reported full-year 1995 commissions and fees of $2.26 billiona, up from $1.91 billion in 1994, and net income of $139.96 million, or $1.89 per primary share, compared with $83.49 million (or $1.18 per share after the 1994 cumulative accounting change).

Management attributes the growth to net new business gains, higher spending from existing clients, and acquisitions. Domestic commissions and fees rose 12.8 percent and international revenues rose 24.3 percent, with the weaker U.S. dollar adding 6.7 percent to international revenues. Operating margin, which excludes net interest expense, improved to 12.0 percent from 11.3 percent.

The company describes itself as the third-largest advertising agency group worldwide, operating the BBDO Worldwide, DDB Needham Worldwide and TBWA International networks plus the Diversified Agency Services division. The balance sheet grew over the year. Total assets rose to $3.53 billionb from $3.04 billion, and long-term debt increased to $290.4 million from $199.5 million, largely due to a Deutsche Mark 200 million floating rate bond issued in January 1995.

Cash and cash equivalents reached $314.0 millionc at year end, and shareholders' equity increased to $551.5 million. The company had $374 million in committed lines of credit, of which $18 million was used. Subsequent to year end, it issued Deutsche Mark 100 million of floating rate bonds (approximately $68 million) on March 1, 1996, to be used for general corporate purposes, including reducing commercial paper.

The filing shows a company with working capital pressure typical of agency businesses, as accounts receivable and accounts payable both grew substantially. Management reports no material pending legal proceedings, and the 1995 effective tax rate fell to 40.1 percent from 41.2 percent. The shares, which had been split two-for-one in December 1995, closed the year's fourth quarter at a high of $37d 1/4, and the board declared a quarterly dividend of $.175 per share for April 1996.

02—Key points

Key Highlights

  1. Commissions and fees rose to $2,257.5 million in 1995 from $1,907.8 million in 1994, with international operations contributing $1,140.3 million of the 1995 total.
  2. Net income reached $140.0 million in 1995 versus $83.5 million in 1994, which included a $28.0 million after-tax cumulative effect of an accounting change; primary EPS was $1.89.
  3. Operating profit rose to $270.9 million from $216.1 million, and operating margin improved to 12.0 percent from 11.3 percent.
  4. Total assets increased to $3.53 billion and shareholders' equity to $551.5 million at December 31, 1995.
  5. Long-term debt rose to $290.4 million, driven by a DM 200 million floating rate bond issued January 1995, and the company issued DM 100 million more bonds on March 1, 1996.
  6. Cash and cash equivalents ended 1995 at $314.0 million, up $72.2 million, and $374 million in committed credit lines were available with $18 million drawn.
  7. The 1995 dividend declared totaled $0.66 per share, and the board declared a $0.175 quarterly dividend payable April 3, 1996.

03—Questions

Frequently Asked Questions

  1. How fast did Omnicom's revenue grow in 1995?

    Commissions and fees rose to $2.26 billion in 1995 from $1.91 billion in 1994. Domestic commissions and fees increased 12.8 percent, and international revenues increased 24.3 percent, of which 6.7 percent came from the weaker U.S. dollar.

  2. Did profitability improve?

    Yes. Net income was $139.96 million in 1995 compared with $83.49 million in 1994, and operating margin, which excludes net interest expense, increased to 12.0 percent from 11.3 percent. The 1994 result was reduced by a $28.0 million after-tax cumulative effect of an accounting change.

  3. Is the company taking on more debt?

    Long-term debt increased to $290.4 million at year end 1995 from $199.5 million, mainly due to a Deutsche Mark 200 million floating rate bond issued in January 1995. In March 1996, the company issued a further Deutsche Mark 100 million floating rate bond, about $68 million, to be used for general corporate purposes and to reduce commercial paper.

  4. What are the company's main businesses and how is it organized?

    Omnicom operates three independent agency networks, BBDO Worldwide, DDB Needham Worldwide and TBWA International, along with the Goodby, Silverstein & Partners agency and the Diversified Agency Services division for marketing services and specialty advertising. The filing says the company is ranked third-largest advertising agency group worldwide according to 1995 Advertising Age figures.

  5. How concentrated is the client base?

    The ten largest clients accounted for approximately 21 percent of 1995 commissions and fees, and the largest client accounted for less than 6 percent. The filing states that most of these clients have been with the company for more than ten years.

04—Continue

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