How much of the 2000 earnings growth came from the Razorfish sale?

The Razorfish sale contributed a $110.0 million pretax gain, or $63.8 million after tax. Net income including the gain was $498.8 million, and excluding it was $435 million, up 19.9%. Diluted EPS was $2.73 with the gain and $2.40 without it.

How did domestic and international revenue compare?

Domestic revenue rose 28.6% to $3,258.2 million, with acquisitions contributing 10.7% of that increase. International revenue rose 11.5% to $2,896.0 million, but the filing says currency translation reduced it by 11.0%. Net new business and higher revenue from existing clients drove the remaining growth in both regions.

Why did operating cash flow decline in 2000?

Net cash from operating activities was $685.9 million, compared with $972.6 million in 1999. The filing attributes the decline to a smaller increase in accounts payable and an increase in prepaid expenses, primarily higher current deferred tax assets, partly offset by revenue and net income growth.

How concentrated is the client base?

The company had over 5,000 clients in 2000. Its 10 largest clients accounted for 18% of consolidated revenue and its 200 largest for 48%. The largest single client accounted for 5.2% of 2000 consolidated revenue.

What financing did the company complete in early 2001?

In February 2001, the company issued $850 million of zero-coupon Liquid Yield Option Notes due February 7, 2031, with net proceeds of $830.2 million. The notes may be converted into common shares at an initial price of $110.01 per share. The company may be required to purchase them after February 7, 2002, and may redeem them for cash after February 7, 2006.

OMC 10-K FY2000 Annual Report — Revenue, Net Income, EPS

01—Abstract

Summary

Summary of the 10-K filed March 27, 2001. Cited figures are marked; the original filing is the authoritative source.

Omnicom Group Inc. reported record 2000 results, with consolidated revenue rising 20.0% to $6,154.2 million^a from $5,130.5 million in 1999.

Net income reached $498.8 million^b, or $2.73 diluted earnings per share. That figure includes a $110.0 million pretax ($63.8 million after tax) gain from selling part of its Razorfish investment. Excluding that gain, net income was $435 million and diluted EPS was $2.40, up 19.4%.

Domestic revenue grew 28.6%^c, and international revenue grew 11.5%, though the filing notes that currency translation reduced international revenue by 11.0%. The company describes its operating margin as improving to 14.3% from 14.1%, citing operating leverage and cost controls. Cash generation was lower than in 1999.

Net cash from operating activities was $685.9 million^d, compared with $972.6 million in 1999, as the filing attributes the decline to a smaller increase in accounts payable and higher prepaid expenses. Investing outflows were $1,034.6 million, including $884.3 million for acquisitions and investments, net. Financing provided $282.1 million, with net borrowings of $731.5 million and $237.1 million spent repurchasing stock.

In February 2001, the company issued $850 million of zero-coupon Liquid Yield Option Notes due 2031, with net proceeds of $830.2 million. Management states that operating cash flow, capital market access and credit lines are sufficient for its foreseeable cash requirements. The filing reports total assets of $9.89 billion at year end and 56,000 employees.

The company says its 10 largest clients accounted for 18% of 2000 consolidated revenue, and its largest client accounted for 5.2%. It also states that it does not expect pending legal proceedings to have a material adverse effect, and that the value-at-risk analysis of its derivative portfolio indicated immaterial risk of loss.

02—Key points

Key Highlights

Revenue rose 20.0% to $6,154.2 million in 2000, from $5,130.5 million in 1999.
Diluted EPS was $2.73 including a $63.8 million after-tax Razorfish gain, and $2.40 excluding it, up 19.4%.
Net income excluding the Razorfish gain was $435 million, up 19.9%.
Operating margin improved to 14.3% from 14.1%, attributed to operating leverage and cost controls.
Operating cash flow fell to $685.9 million from $972.6 million, while acquisitions and investments used $884.3 million, net.
Issued $850 million of Liquid Yield Option Notes in February 2001 for net proceeds of $830.2 million.
Dividends declared were $0.70 per share in 2000, versus $0.625 in 1999; the quarterly rate was $0.175.

03—Questions

Frequently Asked Questions

How much of the 2000 earnings growth came from the Razorfish sale?
The Razorfish sale contributed a $110.0 million pretax gain, or $63.8 million after tax. Net income including the gain was $498.8 million, and excluding it was $435 million, up 19.9%. Diluted EPS was $2.73 with the gain and $2.40 without it.
How did domestic and international revenue compare?
Domestic revenue rose 28.6% to $3,258.2 million, with acquisitions contributing 10.7% of that increase. International revenue rose 11.5% to $2,896.0 million, but the filing says currency translation reduced it by 11.0%. Net new business and higher revenue from existing clients drove the remaining growth in both regions.
Why did operating cash flow decline in 2000?
Net cash from operating activities was $685.9 million, compared with $972.6 million in 1999. The filing attributes the decline to a smaller increase in accounts payable and an increase in prepaid expenses, primarily higher current deferred tax assets, partly offset by revenue and net income growth.
How concentrated is the client base?
The company had over 5,000 clients in 2000. Its 10 largest clients accounted for 18% of consolidated revenue and its 200 largest for 48%. The largest single client accounted for 5.2% of 2000 consolidated revenue.
What financing did the company complete in early 2001?
In February 2001, the company issued $850 million of zero-coupon Liquid Yield Option Notes due February 7, 2031, with net proceeds of $830.2 million. The notes may be converted into common shares at an initial price of $110.01 per share. The company may be required to purchase them after February 7, 2002, and may redeem them for cash after February 7, 2006.

04—Continue

← View all 10-K filings