___________________________________________________________________________________________________

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_________________________

FORM 10-Q

☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2022

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

_________________________

Commission File Number: 1-10551

OMNICOM GROUP INC.

(Exact name of registrant as specified in its charter)

New York	13-1514814
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)
280 Park Avenue, New York, NY	10017
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (212) 415-3600

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

____________________________________________________________

Securities Registered Pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbols	Name of each exchange on which registered
Common Stock, $0.15 Par Value	OMC	New York Stock Exchange
0.800% Senior Notes due 2027	OMC/27	New York Stock Exchange
1.400% Senior Notes due 2031	OMC/31	New York Stock Exchange
2.250% Senior Notes due 2033	OMC/33	New York Stock Exchange

____________________________________________________________

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☑	Accelerated filer	☐	Non-accelerated filer	☐
Smaller reporting company	☐			Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

_________________________

As of October 12, 2022, there were 203,916,128 shares of Omnicom Group Inc. Common Stock outstanding.

OMNICOM GROUP INC.

QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 2022

TABLE OF CONTENTS

PART I.	FINANCIAL INFORMATION	Page
Item 1.	Financial Statements
	Consolidated Balance Sheets - September 30, 2022 and December 31, 2021	1
	Consolidated Statements of Income - Three and Nine Months Ended September 30, 2022 and 2021	2
	Consolidated Statements of Comprehensive Income - Three and Nine Months Ended      September 30, 2022 and 2021	3
	Consolidated Statements of Equity - Three and Nine Months Ended September 30, 2022 and 2021	4
	Consolidated Statements of Cash Flows - Nine Months Ended September 30, 2022 and 2021	5
	Notes to Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	31
Item 4.	Controls and Procedures	32
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	32
Item 1A.	Risk Factors	32
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	32
Item 6.	Exhibits	33
SIGNATURES		33

FORWARD-LOOKING STATEMENTS

Certain statements in this Quarterly Report on Form 10-Q constitute forward-looking statements, including statements within the meaning of the Private Securities Litigation Reform Act of 1995. In addition, from time to time, the Company or its representatives have made, or may make, forward-looking statements, orally or in writing. These statements may discuss goals, intentions and expectations as to future plans, trends, events, results of operations or financial position, or otherwise, based on current beliefs of the Company’s management as well as assumptions made by, and information currently available to, the Company’s management. Forward-looking statements may be accompanied by words such as “aim,” “anticipate,” “believe,” “plan,” “could,” “should,” “would,” “estimate,” “expect,” “forecast,” “future,” “guidance,” “intend,” “may,” “will,” “possible,” “potential,” “predict,” “project” or similar words, phrases or expressions. These forward-looking statements are subject to various risks and uncertainties, many of which are outside the Company’s control. Therefore, you should not place undue reliance on such statements. Factors that could cause actual results to differ materially from those in the forward-looking statements include: adverse economic conditions, including those caused by the the war in Ukraine; the impact of the COVID-19 pandemic; severe and sustained inflation in countries that comprise our major markets; rising interest rates; supply chain issues affecting the distribution of our clients’ products; international, national or local economic conditions that could adversely affect the Company or its clients; losses on media purchases and production costs incurred on behalf of clients; reductions in client spending, a slowdown in client payments and a deterioration or a disruption in the credit markets; the ability to attract new clients and retain existing clients in the manner anticipated; changes in client advertising, marketing and corporate communications requirements; failure to manage potential conflicts of interest between or among clients; unanticipated changes relating to competitive factors in the advertising, marketing and corporate communications industries; the ability to hire and retain key personnel; currency exchange rate fluctuations; reliance on information technology systems; changes in legislation or governmental regulations affecting the Company or its clients; risks associated with assumptions the Company makes in connection with its critical accounting estimates and legal proceedings; and the Company’s international operations, which are subject to the risks of currency repatriation restrictions, social or political conditions and regulatory environment. The foregoing list of factors is not exhaustive. You should carefully consider the foregoing factors and the other risks and uncertainties that may affect the Company’s business, including those described in Item 1A, “Risk Factors” and Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2021 and in Item 1A, “Risk Factors” and Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this report. Except as required under applicable law, the Company does not assume any obligation to update these forward-looking statements.

i

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

OMNICOM GROUP INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In millions)

	September 30, 2022		December 31, 2021
	(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents	$	3,198.5	$	5,316.8
Short-term investments	94.9		—
Accounts receivable, net of allowance for doubtful accounts of $19.2 and $21.7	6,532.3		8,472.5
Work in process	1,362.6		1,201.0
Other current assets	841.8		919.2
Total Current Assets	12,030.1		15,909.5
Property and Equipment at cost, less accumulated depreciation of $1,139.2 and $1,165.7	863.1		992.1
Operating Lease Right-Of-Use Assets	1,153.8		1,202.9
Equity Method Investments	64.2		76.3
Goodwill	9,499.7		9,738.6
Intangible Assets, net of accumulated amortization of $806.8 and $856.5	318.8		298.0
Other Assets	202.5		204.4
TOTAL ASSETS	$	24,132.2	$	28,421.8
LIABILITIES AND EQUITY
Current Liabilities:
Accounts payable	$	9,027.8	$	11,897.2
Customer advances	1,358.8		1,644.5
Short-term debt	10.2		9.6
Taxes payable	217.5		263.3
Other current liabilities	2,091.1		2,411.6
Total Current Liabilities	12,705.4		16,226.2
Long-Term Liabilities	913.8		961.5
Long-Term Liability - Operating Leases	917.2		952.1
Long-Term Debt	5,450.6		5,685.7
Deferred Tax Liabilities	502.3		477.3
Commitments and Contingent Liabilities (Note 11)
Temporary Equity - Redeemable Noncontrolling Interests	394.9		345.3
Equity:
Shareholders’ Equity:
Preferred stock	—		—
Common stock	44.6		44.6
Additional paid-in capital	552.1		622.0
Retained earnings	9,452.0		8,998.8
Accumulated other comprehensive income (loss)	(1,734.5)		(1,252.3)
Treasury stock, at cost	(5,567.5)		(5,142.9)
Total Shareholders’ Equity	2,746.7		3,270.2
Noncontrolling interests	501.3		503.5
Total Equity	3,248.0		3,773.7
TOTAL LIABILITIES AND EQUITY	$	24,132.2	$	28,421.8

The accompanying notes to the consolidated financial statements are an integral part of these statements.

1

OMNICOM GROUP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(In millions, except per share amounts)

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Revenue	$	3,443.4	$	3,435.0	$	10,420.9	$	10,433.6
Operating Expenses:
Salary and service costs	2,476.1		2,461.8		7,533.9		7,609.9
Occupancy and other costs	281.0		285.5		874.2		871.0
Charges arising from the effects of the war in Ukraine	—		—		113.4		—
Gain on disposition of subsidiary	—		—		—		(50.5)
Cost of services	2,757.1		2,747.3		8,521.5		8,430.4
Selling, general and administrative expenses	86.4		95.0		294.0		269.9
Depreciation and amortization	53.9		51.1		164.8		157.9
	2,897.4		2,893.4		8,980.3		8,858.2
Operating Profit	546.0		541.6		1,440.6		1,575.4
Interest Expense	52.0		50.7		154.2		184.8
Interest Income	22.9		7.0		42.2		20.1
Income Before Income Taxes and Income From    Equity Method Investments	516.9		497.9		1,328.6		1,410.7
Income Tax Expense	134.7		120.0		383.3		355.1
Income From Equity Method Investments	1.1		2.2		2.6		2.1
Net Income	383.3		380.1		947.9		1,057.7
Net Income Attributed To Noncontrolling Interests	18.8		24.5		61.2		66.1
Net Income - Omnicom Group Inc.	$	364.5	$	355.6	$	886.7	$	991.6
Net Income Per Share - Omnicom Group Inc.:
Basic	$	1.78	$	1.66	$	4.30	$	4.61
Diluted	$	1.77	$	1.65	$	4.27	$	4.58

The accompanying notes to the consolidated financial statements are an integral part of these statements.

2

OMNICOM GROUP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

(In millions)

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Net Income	$	383.3	$	380.1	$	947.9	$	1,057.7
Other Comprehensive Income (Loss):
Cash flow hedge:
Amortization of loss included in interest expense	1.4		1.3		4.2		4.2
Income tax effect	(0.4)		(0.4)		(1.2)		(1.2)
	1.0		0.9		3.0		3.0
Defined benefit pension plans and postemployment arrangements:
Amortization of prior service cost	1.0		1.1		3.1		3.6
Amortization of actuarial losses	1.8		3.4		4.8		9.9
Income tax effect	(1.0)		(1.7)		(3.4)		(5.1)
	1.8		2.8		4.5		8.4
Foreign currency translation adjustment	(261.2)		(132.2)		(520.3)		(121.1)
Other Comprehensive Income (Loss)	(258.4)		(128.5)		(512.8)		(109.7)
Comprehensive Income	124.9		251.6		435.1		948.0
Comprehensive Income Attributed To Noncontrolling Interests	6.0		16.5		30.6		50.5
Comprehensive Income - Omnicom Group Inc.	$	118.9	$	235.1	$	404.5	$	897.5

The accompanying notes to the consolidated financial statements are an integral part of these statements.

3

OMNICOM GROUP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EQUITY

(Unaudited)

(In millions, except per share amounts)

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Common Stock, shares issued	297.2		297.2		297.2		297.2
Common Stock, par value	$	44.6	$	44.6	$	44.6	$	44.6
Additional Paid-in Capital:
Beginning Balance	567.0		735.4		622.0		747.8
Net change in noncontrolling interests	2.6		0.3		(7.7)		26.2
Change in temporary equity	3.8		(6.0)		(70.0)		(73.0)
Share-based compensation	21.2		18.7		61.3		57.8
Stock issued, share-based compensation	(42.5)		(39.8)		(53.5)		(50.2)
Ending Balance	552.1		708.6		552.1		708.6
Retained Earnings:
Beginning Balance	9,230.7		8,523.7		8,998.8		8,190.6
Net income	364.5		355.6		886.7		991.6
Common stock dividends declared	(143.2)		(149.3)		(433.5)		(452.2)
Ending Balance	9,452.0		8,730.0		9,452.0		8,730.0
Accumulated Other Comprehensive Income (Loss):
Beginning Balance	(1,488.7)		(1,187.5)		(1,252.3)		(1,213.8)
Other comprehensive income (loss)	(245.8)		(120.4)		(482.2)		(94.1)
Ending Balance	(1,734.5)		(1,307.9)		(1,734.5)		(1,307.9)
Treasury Stock:
Beginning Balance	(5,520.4)		(4,767.4)		(5,142.9)		(4,684.8)
Stock issued, share-based compensation	47.6		42.2		77.6		61.7
Common stock repurchased	(94.7)		(171.1)		(502.2)		(273.2)
Ending Balance	(5,567.5)		(4,896.3)		(5,567.5)		(4,896.3)
Shareholders’ Equity	2,746.7		3,279.0		2,746.7		3,279.0
Noncontrolling Interests:
Beginning Balance	522.6		488.1		503.5		492.5
Net income	18.8		24.5		61.2		66.1
Other comprehensive income (loss)	(12.8)		(8.0)		(30.8)		(15.6)
Dividends to noncontrolling interests	(25.2)		(31.2)		(62.9)		(69.8)
Net change in noncontrolling interests	(2.9)		(0.6)		(18.3)		(37.7)
Increase in noncontrolling interests from business combinations	0.8		—		48.6		37.3
Ending Balance	501.3		472.8		501.3		472.8
Total Equity	$	3,248.0	$	3,751.8	$	3,248.0	$	3,751.8
Dividends Declared Per Common Share	$	0.70	$	0.70	$2.10		$2.10

The accompanying notes to the consolidated financial statements are an integral part of these statements.

4

OMNICOM GROUP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In millions)

	Nine Months Ended September 30,
	2022		2021
Cash Flows from Operating Activities:
Net income	$	947.9	$	1,057.7
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization of right-of-use assets	104.5		98.1
Amortization of intangible assets	60.3		59.8
Amortization of net deferred (gain) loss on interest rate swaps	4.1		(10.2)
Share-based compensation	61.3		57.8
Non-cash charges related to the effects of the war in Ukraine	65.8		—
Gain on disposition of subsidiary	—		(50.5)
Other, net	(11.4)		36.6
Use of operating capital	(1,483.1)		(1,010.7)
Net Cash Provided By (Used In) Operating Activities	(250.6)		238.6
Cash Flows from Investing Activities:
Capital expenditures	(65.6)		(42.6)
Acquisition of businesses and interests in affiliates, net of cash acquired	(276.9)		(25.9)
Other, net	(64.4)		116.6
Net Cash Provided By (Used In) Investing Activities	(406.9)		48.1
Cash Flows from Financing Activities:
Proceeds from borrowings	—		791.7
Repayment of debt	—		(1,250.0)
Change in short-term debt	1.2		6.7
Dividends paid to common shareholders	(437.7)		(443.0)
Repurchases of common stock	(502.2)		(273.2)
Proceeds from stock plans	16.3		8.5
Acquisition of additional noncontrolling interests	(20.8)		(6.3)
Dividends paid to noncontrolling interest shareholders	(62.9)		(69.8)
Payment of contingent purchase price obligations	(32.5)		(16.8)
Other, net	(51.0)		(86.2)
Net Cash Used In Financing Activities	(1,089.6)		(1,338.4)
Effect of foreign exchange rate changes on cash and cash equivalents	(371.2)		(117.6)
Net Decrease in Cash and Cash Equivalents	(2,118.3)		(1,169.3)
Cash and Cash Equivalents at the Beginning of Period	5,316.8		5,600.5
Cash and Cash Equivalents at the End of Period	$	3,198.5	$	4,431.2

The accompanying notes to the consolidated financial statements are an integral part of these statements.

5

OMNICOM GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Presentation of Financial Statements

The terms “Omnicom,” “the Company,” “we,” “our” and “us” each refer to Omnicom Group Inc. and its subsidiaries, unless the context indicates otherwise. The accompanying unaudited consolidated financial statements were prepared in accordance with generally accepted accounting principles in the United States, or U.S. GAAP or GAAP, for interim financial information and Article 10 of Regulation S-X of the Securities and Exchange Commission. Accordingly, certain information and footnote disclosure have been condensed or omitted.

In our opinion, the accompanying unaudited consolidated financial statements reflect all adjustments, consisting of normal recurring accruals, considered necessary for a fair presentation, in all material respects, of the information contained herein. These unaudited consolidated financial statements should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2021, or 2021 10-K. Results for the interim periods are not necessarily indicative of results that may be expected for the year.

Risks and Uncertainties

Global economic challenges, including the impact of the war in Ukraine, the COVID-19 pandemic, severe and sustained inflation, rising interest rates, and supply chain disruptions could cause economic uncertainty and volatility. The impact of these issues on our business will vary by geographic market and discipline. We monitor economic conditions closely, as well as client revenue levels and other factors. In response to reductions in revenue, we can take actions to align our cost structure with changes in client demand and manage our working capital. However, there can be no assurance as to the effectiveness of our efforts to mitigate any impact of the current and future adverse economic conditions, reductions in client revenue, changes in client creditworthiness and other developments.

Impact of the War in Ukraine

Historically, we conducted operations in Russia and Ukraine through local agencies in which we held a majority stake. During the first quarter of 2022, the war in Ukraine required us to suspend our business operations in Ukraine. The war resulted in the imposition of sanctions by the United States, the United Kingdom, and the European Union, that affected the cross-border operations of businesses operating in Russia. In addition, Russian regulators imposed currency restrictions and regulations. All of these actions created uncertainty regarding our ability to recover our investment in our operations in Russia, as well as our ability to exercise control over the operations. Therefore, the ability to continue operations in Russia was uncertain. As a result, we sold, or committed to dispose of, all of our businesses in Russia. Accordingly, in the first quarter of 2022, we recorded pretax charges of $113.4 million, which primarily consisted of the net investment in our Russian businesses, and included charges related to the suspension of operations in Ukraine.

Impact of the COVID-19 Pandemic - Update

Beginning in March 2020 and continuing through the first quarter of 2021, our business was impacted by reductions in client spending due to the economic impact related to the COVID-19 pandemic. While mixed by business and geography, the spending reductions impacted all our businesses and markets. Globally, the most impacted businesses were our Experiential discipline, especially in our event marketing businesses, and our Execution & Support discipline, primarily in field marketing. Most of our markets began to improve in April 2021, and the improvement continued through the first nine months of 2022.

2. Revenue

Nature of our services

We provide an extensive range of advertising, marketing and corporate communications services through various client-centric networks that are organized to meet specific client objectives. Our networks and agencies provide a comprehensive range of services in the following fundamental disciplines: Advertising & Media, Precision Marketing, Commerce & Brand Consulting, Experiential, Execution & Support, Public Relations and Healthcare. Advertising & Media includes creative services across digital and traditional media, strategic media planning and buying, and data analytics services. Precision Marketing includes digital and direct marketing, digital transformation and data and analytics. Commerce & Brand Consulting services include brand consulting, strategy and research, retail and ecommerce. Experiential marketing services include live and digital events and experience design and execution. Execution & Support includes field marketing, sales support, digital and physical merchandising and point-of-sale, as well as other specialized marketing and custom communications services. Public Relations services include corporate communications, crisis management, public affairs, and media and media relations services. Healthcare includes advertising and media services to global healthcare and pharmaceutical clients. At the core of all our services is the ability to create or develop a client’s marketing or corporate communications message into content that can be delivered to a target audience across different communications mediums.

6

Revenue by discipline was (in millions):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Advertising & Media	$	1,762.4	$	1,820.6	$	5,362.8	$	5,838.8
Precision Marketing	361.0		309.4		1,059.1		872.4
Commerce & Brand Consulting	239.6		231.3		712.1		667.4
Experiential	123.1		132.7		420.2		345.1
Execution & Support	239.8		258.8		744.6		756.3
Public Relations	391.2		359.4		1,144.3		1,022.8
Healthcare	326.3		322.8		977.8		930.8
	$	3,443.4	$	3,435.0	$	10,420.9	$	10,433.6

Economic factors affecting our revenue

Global economic conditions have a direct impact on our revenue. Adverse economic conditions pose a risk that our clients may reduce, postpone or cancel spending for our services, which would impact our revenue.

Revenue in our geographic markets was (in millions):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Americas:
North America	$	1,969.0	$	1,821.8	$	5,777.5	$	5,751.7
Latin America	77.3		72.5		224.9		206.1
EMEA:
Europe	908.2		1,024.3		2,925.1		3,009.5
Middle East and Africa	62.0		58.1		208.8		160.6
Asia-Pacific	426.9		458.3		1,284.6		1,305.7
	$	3,443.4	$	3,435.0	$	10,420.9	$	10,433.6

The Americas is comprised of North America, which includes the United States, Canada and Puerto Rico, and Latin America, which includes South America and Mexico. EMEA is comprised of Europe, the Middle East and Africa. Asia-Pacific includes Australia, Greater China, India, Japan, Korea, New Zealand, Singapore and other Asian countries. Revenue in the United States for the three months ended September 30, 2022 and 2021 was $1,847.8 million and $1,705.2 million, respectively, and revenue in the United States for the nine months ended September 30, 2022 and 2021 was $5,415.2 million and $5,414.2 million, respectively.

Contract assets and liabilities

Work in process includes contract assets, unbilled fees and costs, and media and production costs. Contract liabilities primarily consist of customer advances. Work in process and contract liabilities were (in millions):

	September 30, 2022		December 31, 2021		September 30, 2021
Work in process:
Media and production costs	$	678.4	$	731.1	$	653.0
Contract assets and unbilled fees and costs	684.2		469.9		596.6
	$	1,362.6	$	1,201.0	$	1,249.6
Contract liabilities:
Customer advances	$	1,358.8	$	1,644.5	$	1,325.8

Work in process represents accrued costs incurred on behalf of customers, including media and production costs, and fees and other third-party costs that have not yet been billed. Media and production costs are billed during the production process in accordance with the terms of the client contract. Contract assets primarily include incentive fees, which are not material and will be billed to clients in accordance with the terms of the client contract. Substantially all unbilled fees and costs will be billed within the next 30 days. Contract liabilities primarily represent advance billings to customers in accordance with the terms of the client contracts, principally for the reimbursement of third-party costs that are generally incurred in the near term. There were no impairment losses to the contract assets recorded in the three or nine months ended September 30, 2022 and 2021.

7

3. Net Income per Share

The computations of basic and diluted net income per share were (in millions, except per share amounts):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Net Income - Omnicom Group Inc.	$	364.5	$	355.6	$	886.7	$	991.6
Weighted Average Shares:
Basic	205.0		214.0		206.2		215.0
Dilutive stock options and restricted shares	1.3		1.4		1.4		1.4
Diluted	206.3		215.4		207.6		216.4
Anti-dilutive stock options and restricted shares	5.1		0.7		4.3		0.7
Net Income per Share - Omnicom Group Inc.:
Basic	$1.78		$1.66		$4.30		$4.61
Diluted	$1.77		$1.65		$4.27		$4.58

4. Goodwill and Intangible Assets

Goodwill and intangible assets were (in millions):

	September 30, 2022						December 31, 2021
	Gross Carrying Value		Accumulated Amortization		Net Carrying Value		Gross Carrying Value		Accumulated Amortization		Net Carrying Value
Goodwill	$	9,978.7	$	(479.0)	$	9,499.7	$	10,259.6	$	(521.0)	$	9,738.6
Intangible assets:
Purchased and internally developed software	$	362.2	$	(302.7)	$	59.5	$	382.2	$	(318.7)	$	63.5
Customer related and other	763.4		(504.1)		259.3		772.3		(537.8)		234.5
	$	1,125.6	$	(806.8)	$	318.8	$	1,154.5	$	(856.5)	$	298.0

Changes in goodwill were (in millions):

	Nine Months Ended September 30,
	2022		2021
January 1	$	9,738.6	$	9,609.7
Acquisitions	212.8		6.9
Noncontrolling interests in acquired businesses	48.5		37.3
Contingent purchase price obligations of acquired businesses	8.7		88.0
Dispositions	(19.6)		(21.7)
Foreign currency translation	(489.3)		(118.7)
September 30	$	9,499.7	$	9,601.5

We completed our annual goodwill impairment test as of June 30, 2022. The market assumptions used in our assessment reflected the current economic environment (see Note 1- Risks and Uncertainties). Based on the results of our impairment test, we concluded that at June 30, 2022 our goodwill was not impaired.

5. Debt

Credit Facilities

We have a $2.5 billion multi-currency revolving credit facility, or Credit Facility, with a termination date of February 14, 2025. In addition, we have the ability to issue up to $2 billion of U.S. Dollar denominated commercial paper and issue up to the equivalent of $500 million in British Pounds or Euro under a Euro commercial paper program. Certain of our international subsidiaries have uncommitted credit lines aggregating $556.7 million, which are guaranteed by Omnicom. These facilities provide additional liquidity sources for operating capital and general corporate purposes. During the nine months ended September 30, 2022, there were no borrowings under the Credit Facility, and there were no commercial paper issuances.

The Credit Facility contains a financial covenant that requires us to maintain a Leverage Ratio of consolidated indebtedness to consolidated EBITDA (earnings before interest, taxes, depreciation, amortization and non-cash charges) of no more than 3.5 times for the most recently ended 12-month period. At September 30, 2022, we were in compliance with this covenant as our Leverage Ratio was 2.3 times. The Credit Facility does not limit our ability to declare or pay dividends or repurchase our common stock.

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Short-Term Debt

Short-term debt of $10.2 million and $9.6 million at September 30, 2022 and December 31, 2021, respectively, represented bank overdrafts and short-term borrowings primarily of our international subsidiaries. Due to the short-term nature of this debt, carrying value approximates fair value.

Long-Term Debt

Long-term debt was (in millions):

	September 30, 2022		December 31, 2021
3.65% Senior Notes due 2024	$	750.0	$	750.0
3.60% Senior Notes due 2026	1,400.0		1,400.0
€500 million 0.80% Senior Notes due 2027	488.0		568.6
2.45% Senior Notes due 2030	600.0		600.0
4.20% Senior Notes due 2030	600.0		600.0
€500 million 1.40% Senior Notes due 2031	488.0		568.6
2.60% Senior Notes due 2031	800.0		800.0
£325 million 2.25% Senior Notes due 2033	359.6		439.8
	5,485.6		5,727.0
Unamortized discount	(9.2)		(10.8)
Unamortized debt issuance costs	(26.6)		(31.8)
Unamortized deferred gain from settlement of interest rate swaps	0.8		1.3
	$	5,450.6	$	5,685.7

Our 2.45% Senior Notes due 2030, 4.20% Senior Notes due 2030 and 2.60% Senior Notes due 2031 are senior unsecured obligations of Omnicom that rank equal in right of payment with all existing and future unsecured senior indebtedness.

Omnicom and its wholly owned finance subsidiary, Omnicom Capital Inc., or OCI, are co-obligors under our 3.65% Senior Notes due 2024 and 3.60% Senior Notes due 2026. These notes are a joint and several liability of Omnicom and OCI, and Omnicom unconditionally guarantees OCI’s obligations with respect to the notes. OCI provides funding for our operations by incurring debt and lending the proceeds to our operating subsidiaries. OCI’s assets primarily consist of cash and cash equivalents and intercompany loans made to our operating subsidiaries, and the related interest receivable. There are no restrictions on the ability of OCI or Omnicom to obtain funds from our subsidiaries through dividends, loans or advances. Such notes are senior unsecured obligations that rank equal in right of payment with all existing and future unsecured senior indebtedness.

Omnicom and OCI have, jointly and severally, fully and unconditionally guaranteed the obligations of Omnicom Finance Holdings plc, or OFH, a U.K.-based wholly owned subsidiary of Omnicom, with respect to the €500 million 0.80% Senior Notes due 2027 and the €500 million 1.40% Senior Notes due 2031, collectively the Euro Notes. OFH’s assets consist of its investments in several wholly owned finance companies that function as treasury centers, providing funding for various operating companies in Europe, Brazil, Australia and other countries in the Asia-Pacific region. The finance companies’ assets consist of cash and cash equivalents and intercompany loans that they make or have made to the operating companies in their respective regions and the related interest receivable. There are no restrictions on the ability of Omnicom, OCI or OFH to obtain funds from their subsidiaries through dividends, loans or advances. The Euro Notes and the related guarantees are senior unsecured obligations that rank equal in right of payment with all existing and future unsecured senior indebtedness of OFH and each of Omnicom and OCI, respectively.

Omnicom has fully and unconditionally guaranteed the obligations of Omnicom Capital Holdings plc, or OCH, a U.K.-based wholly owned subsidiary of Omnicom, with respect to the £325 million 2.25% Senior Notes due 2033, or the Sterling Notes. OCH’s assets consist of its investments in several wholly owned finance companies that function as treasury centers, providing funding for various operating companies in EMEA, Australia and other countries in the Asia-Pacific region. The finance companies’ assets consist of cash and cash equivalents and intercompany loans that they make or have made to the operating companies in their respective regions and the related interest receivable. There are no restrictions on the ability of Omnicom or OCH to obtain funds from their subsidiaries through dividends, loans or advances. The Sterling Notes and the related guarantee are senior unsecured obligations that rank equal in right of payment with all existing and future unsecured senior indebtedness of OCH and Omnicom, respectively.

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6. Segment Reporting

Our branded agency networks operate in the advertising, marketing and corporate communications services industry, and are organized into agency networks, virtual client networks, regional reporting units and operating groups or practice areas. Our networks, virtual client networks and agencies increasingly share clients and provide clients with integrated services. The main economic components of each agency are employee compensation and related costs and direct service costs and occupancy and other costs which include rent and occupancy costs, technology costs and other overhead expenses. Therefore, given these similarities, we aggregate our six operating segments, which are our agency networks, into one reporting segment.

The agency networks' regional reporting units comprise three geographic regions: the Americas, EMEA and Asia-Pacific. The regional reporting units monitor the performance and are responsible for the agencies in their region. Agencies within the regional reporting units serve similar clients in similar industries and, in many cases, the same clients, and have similar economic characteristics.

Revenue and long-lived assets and goodwill by geographic region were (in millions):

	Americas		EMEA		Asia-Pacific
September 30, 2022
Revenue - Three months ended	$	2,046.3	$	970.2	$	426.9
Revenue - Nine months ended	6,002.4		3,133.9		1,284.6
Long-lived assets and goodwill	7,753.2		3,039.2		724.2
September 30, 2021
Revenue - Three months ended	$	1,894.3	$	1,082.4	$	458.3
Revenue - Nine months ended	5,957.8		3,170.1		1,305.7
Long-lived assets and goodwill	7,567.2		2,991.1		686.1

7. Income Taxes

Our effective tax rate for the nine months ended September 30, 2022 increased period-over-period to 28.8% from 25.2%. The higher effective tax rate for 2022 was predominantly the result of the non-deductibility of the $113.4 million charges recorded in the first quarter of 2022, arising from the effects of the war in Ukraine, as well as a related additional net charge of $4.8 million. These charges were partially offset by the tax benefit arising from our share-based compensation awards. The effective tax rate for the nine months ended September 30, 2021 reflects a nominal tax applied to the book gain on the disposition of subsidiary resulting from the excess of tax over book basis and a reduction in income tax expense of $11.7 million primarily related to the favorable settlements of uncertain tax positions in certain jurisdictions.

On August 16, 2022, the Inflation Reduction Act of 2022, or IRA, was signed into law. Among other things, the IRA imposes a 15% corporate alternative minimum tax for tax years beginning after December 31, 2022, levies a 1% excise tax on net stock repurchases after December 31, 2022, and provides tax incentives to promote clean energy. Historically, during the year we have made discretionary share repurchases. Beginning in 2023, these purchases would be subject to the excise tax. Based on the historical net repurchase activity the excise tax and the other provisions of the IRA are not expected to have a material impact on our results of operations or financial position. However, we are still in the process of analyzing the provisions of the IRA.

At September 30, 2022, our unrecognized tax benefits were $162.3 million. Of this amount, approximately $157.2 million would affect our effective tax rate upon resolution of the uncertain tax positions.

8. Pension and Other Postemployment Benefits

Defined Benefit Pension Plans

The components of net periodic benefit expense were (in millions):

	Nine Months Ended September 30,
	2022		2021
Service cost	$	2.3	$	3.9
Interest cost	2.8		2.7
Expected return on plan assets	(0.7)		(0.8)
Amortization of prior service cost	0.3		0.5
Amortization of actuarial losses	2.9		7.0
	$	7.6	$	13.3

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We contributed $0.4 million and $0.5 million to our defined benefit pension plans in each of the nine months ended September 30, 2022 and 2021, respectively.

Postemployment Arrangements

The components of net periodic benefit expense were (in millions):

	Nine Months Ended September 30,
	2022		2021
Service cost	$	3.3	$	3.6
Interest cost	2.0		1.6
Amortization of prior service cost	2.8		3.1
Amortization of actuarial losses	1.9		2.9
	$	10.0	$	11.2

9. Charges Arising from the Effects of the War in Ukraine

As discussed in Note 1, in the first quarter of 2022, we recorded pretax charges arising from the effects of the war in Ukraine of $113.4 million, which included cash charges of $47.6 million, primarily consisting of the loss on the disposition of the net investment in our Russian businesses, as well as impairment and other charges related to the suspension of operations in Ukraine.

10. Supplemental Cash Flow Data

The change in operating capital was (in millions):

	Nine Months Ended September 30,
	2022		2021
(Increase) decrease in accounts receivable	$	1,235.4	$	343.6
(Increase) decrease in work in process and other current assets	(319.2)		(308.6)
Increase (decrease) in accounts payable	(2,048.4)		(1,071.3)
Increase (decrease) in customer advances, taxes payable and other current liabilities	(335.4)		(86.2)
Change in other assets and liabilities, net	(15.5)		111.8
Increase (decrease) in operating capital	$	(1,483.1)	$	(1,010.7)
Income taxes paid	$	341.4	$	320.2
Interest paid	$	103.5	$	157.4

Interest paid for the nine months ended September 30, 2021 includes a $37.7 million cash payment on the early redemption in May 2021 of all the outstanding $1.25 billion principal amount of 3.625% Senior Notes due 2022.

Non-cash increase in lease liabilities (in millions):

	Nine Months Ended September 30,
	2022		2021
Operating leases	$	217.4	$	111.2
Finance leases	$	55.9	$	47.9

11. Commitments and Contingent Liabilities

In the ordinary course of business, we are involved in various legal proceedings. We do not presently expect that these proceedings will have a material adverse effect on our results of operations or financial position.

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12. Accumulated Other Comprehensive Income (Loss)

Changes in accumulated other comprehensive income (loss), net of income taxes were (in millions):

	Cash Flow Hedge		Defined Benefit Pension Plans and Postemployment Arrangements		Foreign Currency Translation		Total
	Nine Months Ended September 30, 2022
January 1	$	(16.1)	$	(90.4)	$	(1,145.8)	$	(1,252.3)
Other comprehensive income (loss) before reclassifications	—		—		(489.7)		(489.7)
Reclassification from accumulated other comprehensive    income (loss)	3.0		4.5		—		7.5
September 30	$	(13.1)	$	(85.9)	$	(1,635.5)	$	(1,734.5)

	Nine Months Ended September 30, 2021
January 1	$	(20.1)	$	(123.2)	$	(1,070.5)	$	(1,213.8)
Other comprehensive income (loss) before reclassifications	—		—		(105.5)		(105.5)
Reclassification from accumulated other comprehensive    income (loss)	3.0		8.4		—		11.4
September 30	$	(17.1)	$	(114.8)	$	(1,176.0)	$	(1,307.9)

13. Fair Value

Financial assets and liabilities measured at fair value on a recurring basis were (in millions):

	September 30, 2022
	Level 1		Level 2		Level 3		Total
Assets:
Cash and cash equivalents	$	3,198.5					$	3,198.5
Short-term investments			$	94.9			94.9
Marketable equity investments	0.9						0.9
Liabilities:
Foreign currency derivatives			$	0.2			$	0.2
Contingent purchase price obligations					$	137.1	137.1

	December 31, 2021
	Level 1		Level 2		Level 3		Total
Assets:
Cash and cash equivalents	$	5,316.8					$	5,316.8
Marketable equity investments	1.1						1.1
Foreign currency derivatives			$	0.3			0.3
Liabilities:
Foreign currency derivatives			$	0.1			$	0.1
Contingent purchase price obligations					$	167.1	167.1

Changes in contingent purchase price obligations were (in millions):

	Nine Months Ended September 30,
	2022		2021
January 1	$	167.1	$	71.9
Acquisitions	10.7		92.3
Revaluation and interest	—		0.7
Payments	(32.7)		(16.8)
Foreign currency translation	(8.0)		(1.5)
September 30	$	137.1	$	146.6

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The carrying amount and fair value of our financial assets and liabilities were (in millions):

	September 30, 2022				December 31, 2021
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Assets:
Cash and cash equivalents	$	3,198.5	$	3,198.5	$	5,316.8	$	5,316.8
Short-term investments	94.9		94.9		—		—
Marketable equity securities	0.9		0.9		1.1		1.1
Non-marketable equity securities	5.6		5.6		6.5		6.5
Foreign currency derivatives	—		—		0.3		0.3
Liabilities:
Short-term debt	$	10.2	$	10.2	$	9.6	$	9.6
Foreign currency derivatives	0.2		0.2		0.1		0.1
Contingent purchase price obligations	137.1		137.1		167.1		167.1
Long-term debt	5,450.6		4,851.4		5,685.7		6,011.6

Short-term investments of $94.9 million at September 30, 2022 represent time deposits with original maturities ranging from 91 to 364 days. These investments are classified as held-to-maturity securities because we have the positive intent and ability to hold until maturity. Held-to-maturity securities are carried at amortized cost, which approximates fair value. Fair value is based on observable interest rates for similar securities.

The estimated fair value of the foreign currency derivatives is determined using model-derived valuations, taking into consideration foreign currency rates and counterparty credit risk. The estimated fair value of the contingent purchase price obligations is calculated in accordance with the terms of each acquisition agreement and is discounted. The fair value of debt is based on quoted market prices.

14. New Accounting Standards

In October 2021, the FASB issued ASU 2021-08, Accounting for Contract Assets and Contract Liabilities From Contracts With Customers, or ASU 2021-08, that requires acquiring companies to apply ASC 606 to recognize and measure contract assets and contract liabilities from contracts with customers acquired in a business combination consistent with those recorded by the acquiring company. ASU 2021-08 is effective January 1, 2023, and early adoption is permitted. Contracts with customers in the advertising and marketing business are typically short duration contracts. To the extent we acquire companies in the advertising and marketing communications business, we do not expect this standard to have a material impact on our results of operations or financial position.

15. Subsequent Events