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Omnicom Group Annual Report, Year Ended Dec 31, 2001

Filing Date
Filed March 28, 2002
Period End
December 31, 2001
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 28, 2002. Cited figures are marked; the original filing is the authoritative source.

Omnicom Group Inc. (NYSE: OMC) reported its 2001 annual results in this Form 10-K, which also serves as its 2001 annual report to shareholders.

Revenue rose 11.9% to $6,889.4 milliona from $6,154.2 million in 2000, with domestic revenue up 14.1% to $3,717.0 million and international revenue up 9.5% to $3,172.4 million. Foreign exchange reduced international revenue by $174.0 million. Operating margin declined to 14.1% from 14.3% in 2000 (excluding the Razorfish gain), reflecting the effects of September 11th and weaker economic conditions.

Net income rose 1.0% to $503.1 millionb including the 2000 Razorfish gain, and diluted EPS was $2.70 versus $2.73 in 2000. The company's balance sheet grew, with total assets of $10.62 billion at year-end 2001 versus $9.85 billion a year earlier. Goodwill and other intangibles rose to $3.93 billion from $2.99 billion.

Net cash from operating activities was $775.6 millionc, while investing activities used $947.9 million, including $818.8 million for acquisitions. Omnicom made 39 acquisitions in 2001 with an aggregate cost of $844.7 million. Long-term convertible debentures stood at $850.0 million after the February 2001 issuance of zero-coupon notes due 2031, and a further $900.0 million of zero-coupon notes due 2032 were issued in March 2002.

The filing describes Omnicom as one of the largest marketing and corporate communications companies in the world, with over 1,500 subsidiary agencies in more than 100 countries and over 57,000 employees. Revenue is roughly evenly split between U.S. and non-U.S. operations, and the 10 largest clients accounted for 17% of 2001 consolidated revenue. Management noted that the company's dividend rose to $0.20d per quarter in 2001.

02—Key points

Key Highlights

  1. Revenue increased 11.9% to $6,889.4 million in 2001 from $6,154.2 million in 2000.
  2. Net income was $503.1 million, and diluted EPS was $2.70, compared with $2.73 in 2000 including the Razorfish gain.
  3. Operating margin declined to 14.1% from 14.3% in 2000 (excluding the Razorfish gain), primarily due to September 11th and weaker economic conditions.
  4. Acquisitions totaled $844.7 million across 39 deals in 2001, and goodwill and other intangibles rose to $3.93 billion.
  5. Operating cash flow was $775.6 million in 2001, versus $685.9 million in 2000.
  6. Convertible notes: $850.0 million of zero-coupon notes due 2031 were issued in February 2001, and $900.0 million of zero-coupon notes due 2032 were issued in March 2002.
  7. Client concentration is low: the largest client was 5.4% of revenue, and the 10 largest were 17%.

03—Questions

Frequently Asked Questions

  1. How did Omnicom perform financially in 2001?

    Revenue grew 11.9% to $6,889.4 million, and net income rose 1.0% to $503.1 million including the 2000 Razorfish gain. Diluted EPS was $2.70 versus $2.73 in 2000. Excluding the Razorfish gain, net income grew 15.7% to $503.1 million from $435.0 million, and diluted EPS rose 12.5% to $2.70 from $2.40.

  2. What impact did September 11th have on the business?

    The filing states that September 11th caused disruptions in client spending, including cancellations and postponements, and that operating margins deteriorated in the third quarter because the company had limited ability to adjust its cost structure quickly. Management said the company did not believe September 11th permanently impacted any of its agencies.

  3. What debt and financing activity did Omnicom undertake?

    In February 2001, Omnicom issued $850.0 million of zero-coupon convertible notes due 2031. In March 2002, it issued $900.0 million of zero-coupon convertible notes due 2032, with net proceeds of $905.0 million. Of those proceeds, $280.6 million was used to repurchase 3.0 million common shares. The company also redeemed its 2 1/4% convertible debentures on December 31, 2001, and the company stated it had $1.0 billion and $500 million revolving credit facilities.

  4. How concentrated is Omnicom's client base?

    The filing says Omnicom had over 5,000 clients in 2001. The 10 largest clients accounted for 17% of consolidated revenue and the 200 largest for 48%. The single largest client accounted for 5.4% of revenue, and no other client accounted for more than 2.5%.

  5. What dividend and share information did Omnicom report?

    Dividends declared were $0.775 per share in 2001, up from $0.700 in 2000. The quarterly dividend rose to $0.200 per share in Q2 2001, and the company paid $0.200 in Q1 2002. The common shares trade on the New York Stock Exchange under the symbol OMC, and there were 3,756 holders of record as of March 26, 2002.

04—Continue

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