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Omnicom Group Annual Report, Year Ended Dec 31, 2004

Filing Date
Filed March 15, 2005
Period End
December 31, 2004
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 15, 2005. Cited figures are marked; the original filing is the authoritative source.

Omnicom Group Inc. (NYSE: OMC) filed this combined 2004 annual report on Form 10-K and shareholder report, describing itself as a strategic holding company that provides advertising, marketing and corporate communications services through multiple agencies in all major world markets.

For 2004, revenue rose 13.1% to $9.75 billiona from $8.62 billion, operating profit increased to $1.22 billion from $1.09 billion, and net income grew 14.7% to $723.5 million. Diluted EPS was $3.88 versus $3.37 in 2003. Organic growth contributed $571.3 million, foreign exchange added $390.6 million, and acquisitions added $163.9 million.

Operating margin was 12.5%b for the full year, though the fourth-quarter margin of 14.2% improved on the prior year's 14.1%. Salary and service costs rose to 70.2% of revenue from 68.6%, while office and general expenses fell to 17.3% from 18.8%. Balance sheet and liquidity were solid.

Total assets reached $16.0 billionc and shareholders' equity was $4.08 billion. Cash and cash equivalents were $1.17 billion, and the company had $2.0 billion in unused committed credit facilities. Convertible notes totaled $2.34 billion, and a large share of these can be put to the company for cash at par on specific dates, with $892.3 million potentially due in less than one year.

Management stated that its financial covenants were met by a significant margin and that its cash, liquidity and access to capital markets are sufficient for foreseeable needs. The filing also notes pending securities class actions filed in 2002 and a related shareholder derivative action, whose outcome management cannot currently determine.

02—Key points

Key Highlights

  1. Revenue grew 13.1% to $9,747.2 million in 2004, with organic growth of $571.3 million, foreign exchange of $390.6 million and acquisitions of $163.9 million
  2. Net income rose 14.7% to $723.5 million; diluted EPS increased 15.1% to $3.88 from $3.37
  3. Traditional media advertising was about 43% of revenue (up 11.4%), and CRM about 34% (up 14.0%)
  4. Salary and service costs increased to 70.2% of revenue from 68.6%, while office and general expenses fell to 17.3% from 18.8%
  5. Cash and cash equivalents of $1,165.6 million plus $2.0 billion of unused committed credit facilities; total assets of $16,002.4 million
  6. $2,339.3 million of convertible notes outstanding, with holders able to require cash repurchase at par on set dates; $892.3 million could be due within one year if exercised
  7. Dividends declared rose to $0.90 per share in 2004 from $0.80 in 2003, and the company repurchased $446.5 million of treasury shares

03—Questions

Frequently Asked Questions

  1. How did Omnicom perform financially in 2004?

    Revenue increased 13.1% to $9.75 billion and operating profit rose to $1.22 billion from $1.09 billion. Net income grew 14.7% to $723.5 million, and diluted EPS reached $3.88 compared with $3.37 in 2003.

  2. What drove revenue growth in 2004?

    Organic growth contributed $571.3 million, foreign exchange impacts added $390.6 million, and acquisitions net of disposals added $163.9 million. Domestic revenue grew 10.6%, while international revenue grew 16.0% including currency effects.

  3. Is Omnicom's debt position a concern for investors?

    The company reported that its debt-to-EBITDA ratio was 1.9 times against a covenant maximum of 3.0 times, and its EBITDA-to-interest coverage was 27.1 times against a minimum of 5.0 times. Its credit ratings were A- (S&P), Baa1 (Moody's) and A- (Fitch). However, $2.34 billion of convertible notes can be put to the company for cash on specified dates, and management said it expects to fund any puts from cash and credit facilities.

  4. What legal risks does Omnicom disclose?

    The company faces consolidated securities class actions filed in 2002 in the Southern District of New York, alleging misleading statements about organic growth, internet investments and contingent acquisition obligations. A related shareholder derivative action and a February 2005 shareholder suit assert similar claims. Management said it could not determine the outcome or financial effect.

04—Continue

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