Good morning, ladies and gentlemen, and welcome to the Omnicom First Quarter 2014 Earnings Release Conference Call. At this time, all participants are in a listen only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. If you need assistance during the call, (Operator Instructions). As a reminder, this conference call is being recorded. At this time, I would like to now introduce you to today's conference call host, Executive Vice President, Chief Financial Officer of Omnicom Group, Mr. Randall Weisenburger. Please go ahead.

Good morning. Thank you for taking the time to listen to our first quarter 2014 earnings call. We hope everyone has had a chance to review our earnings release. We posted on the omnicomgroup.com website both, our press release and the presentation covering the information that we will be presenting this morning. This call is also being simulcast and will be archived on our website. Before we start, I've been asked to remind everyone to read the forward-looking statements and other information that is included at the end of our investor presentation, and to point out that certain of the statements made today may constitute forward-looking statements and that these statements are our present expectations and actual events or results may differ materially. I would also like to remind you that during the course of the call, we will discuss some non-GAAP measures in talking about Omnicom's performance. You can find the reconciliation of those measures to the nearest comparable GAAP measure in the presentation materials. We're going to begin the call with some remarks from John Wren about both the state of our business and our potential merger with Publicis. Following John's remarks, we will review our financial performance for the first quarter and then both of us will be happy to take your questions.

Good morning. I would like to thank you all for joining our conference call. I am pleased to speak to you about our first quarter business results and update you on the progress we've made on our strategic initiatives. At the end of my remarks for the quarter, I'll update you on the proposed merger with Publicis. Randy and I will be available to answer questions at the end of the prepared remarks. Omnicom's performance continues to consistently demonstrate the strength, diversity and stability of our business. As you know, 2013 ended successfully as markets improved around the world and we met all our stated objectives for the year. I am pleased to report that our excellent performance in 2013 was reflected in the level of bonuses earned by our employees for achieving these objectives. 2014 is off to a very good start. Irrespective of the timing open issues or complexities of the proposed merger, our employees have remained focused on our clients and growth strategies. Importantly, we are on plan to meet our targets for the full year 2014. Now, back to the quarter. Our growth strategies continue to result intangible benefits. During the quarter, we made several strategic acquisitions, we continued to enter into innovative partnerships and made significant progress in advancing our industry-leading digital and data platforms. I'll cover this in more detail in a moment. For the quarter, organic growth was 4.3%. Our year-over-year margins, excluding merger-related expenses, continued to improve. We also continued to invest internally in our talents and agencies to expand our partnerships and to make acquisitions in innovative service areas that will fuel our growth. In many ways, our first quarter results are reaffirmation of our performance in the market improvement we have experience since the second half of 2013. Broadly speaking,…

Thank you. As John detailed, our agencies continue to make excellent progress against both, their strategic and operational objectives. They have continued to make the investments needed to further develop and expand their capabilities, which consistently resulted in the highest organic growth rates in the industry. I think the market now stands at 19 in the last 22 years. Equally important, they have made these investments while establishing a track record of delivering outstanding quarter-to-quarter financial performance for our shareholders. As John also pointed out, our Q1 performance is a great start to keeping that track record going for another year. As we have done for last couple of quarters, this quarter we have again added our third column of numbers labeled non-GAAP. The only difference between the GAAP and non-GAAP figures is that we have excluded the incremental cost and we have incurred related to the potential merger with Publicis in the non-GAAP figures. These costs which are predominantly professional fees totaled $7 million during the quarter. Most of these costs are not tax-deductible, therefore most of the cost flow straight through to net income. This quarter net income was reduced by $6.8 million and EPS was impacted by $0.03. We believe that the non-GAAP figures help in evaluating the performance of our operations. For the presentation, I will focus most of my comments on the non-GAAP column, so we have included the reported numbers side-by-side for easy reference and clarity. Page 1, for the quarter, revenue came in at $3.5 billion. The good news was organic revenue growth, which following another industry-leading year in 2013, increased again this quarter to 4.3%. The bad news was FX continued to be a fairly strong headwinds, negatively impacting revenue by 70 basis points and acquisitions net of dispositions decreased revenue by…

Thank you. (Operator Instructions) Our first question today comes from the line of Craig Huber, representing Huber Research Partners. Please go ahead.

Yes. Good morning. Thanks for taking the questions.

Good morning, Craig.

Randy or John - Hi. Can you just elaborate a little bit further your comments earlier just about what's potentially holding up the merger with Publicis. You mentioned some tax issues and stuff go a little deeper in depth if you would please. Thanks.

Sure. I think as we have said consistently, this is a very complex transaction. As a result, there are issues that arise which have to be solved, so there are really great deal challenges. There is a number of gating items as I attempted to explain. From a statutory point of view, we have cleared everywhere, but China, where we are in phase, what they call Phase 3. By comparison, Randy might have a little bit more color on this. (Inaudible) I believe was in Phase 3 for 43 days, 45 days something along those lines and the Chinese will move at the speed chart - Chinese will move, we respond to their questions as they come up and we have to satisfactorily answer all of the regulators questions before we will get approval. With respect to tax, let me turn that one to Mike O'Brien, because it is complex. I do have an understanding of it, but not quite as good as others.

Yes. Craig, I think as John mentioned and I think as everyone knows, the tax structure of our deal is very complex and somewhat unexpectedly or probably very unexpectedly, obtaining regulatory approvals from the various tax authorities has become more difficult than I think we originally anticipated at the time we signed the deal. You have to keep in mind too that our agreements with Publicis have a lot of requirements, there's a lot of conditions and covenants, so there is a lot of moving parts, if you will. You got to remember the new company is to be incorporated in the Netherlands. The agreements required Publicis', Omnicom's principal place of business being the United Kingdom. The agreement calls for the merger to be tax-free in a lot of prospects free to Omnicom, tax free to our shareholders, tax free to Publicis, tax-free to Publicis' shareholders. Finally, our agreements with Publicis require that the new company be a tax resident of the United Kingdom and that's essential for the new company's tax planning going forward. So complying with all these different covenants and conditions, certainly presents certain complexities and challenges. We still have a lot of work ahead of us.

It's not a complete answer to your question, because we don't know. We are tackling these things as we can and as quickly as we can and then we have yet to submit as I said on call the regulatory filings to both, to the SEC and the AFM.

Then unrelated question, Randy, if I could just ask the perform you guys had in the quarter on the organic revenue front and in EBITDA margins of I guess, 14 basis points year-over-year adjusted for the one-time items. Would you expect that similar type performance for the remainder of the year for quorum account please?

Yes. Not 100% sure of that. We are certainly working to drive every efficiency we can from the business, but now we are going to have 14 basis points of margin expansion every quarter, I am not sure. First quarter is a smaller quarter. We have had great results. Our businesses are working, I think, extremely hard both, on the business front and the cost control front, but we are focused predominantly on investing in our core activities, expanding our capabilities to drive revenue growth on a long-term basis. We have gotten hurt this quarter in particularly by other 10-plus basis points because of FX. I noted that, I don't know how prominently it came out of my comments. Most of the time FX is pretty neutral when it comes to margins, but this quarter frankly the markets where FX was negative happen to be markets that have higher than normal or higher than our average margins, so it did have a bit more of a negative impact on margins than what used to be.

Lastly, real quick if I could, your net new client wins bigger in the second quarter, but what was that size please? You usually target about a $1 billion you would hope for?

Yes. We are a little bit under a $1 billion this quarter, largely because of the Vodafone loss. You will get those pretty solid new business period, but as I've always said each quarter you get one or two big wins or one or two big losses and it pushes you sort of above or below that $1 billion marks, so unfortunately this quarter we are a little bit below it.

Great. Thank you.

Thank you.

Our next question today comes from the line of Alexia Quadrani with JPMorgan. Please go ahead.

Thank you. Just a follow-up question on your comment regarding your merger, I guess given the challenges with the tax approvals and the fact that you are guys had to wait at stuff for the Chinese approvals. Would you likely hold off and sign I guess a proxy until you get more clarity on these issues?

Well, that is very complex. As soon as we file our Q, we begun to update our financial statements, we order - we will have to do a little bit of work for the first quarter. Reconciling our GAAP financials to IFRS, so we will continue to work on it.

Okay, then just a follow-up on the cash. I think, we have talked about in the past for, if it wasn't clear, you have to wait till the merger is complete, so within the buyback or just maybe have the filing done, but I guess it sounds like the filing will still be a little raised off here. Should we assume that right now your cash balance will just obviously build or will you go up through maybe acquisitions or other uses of cash or? I guess any commentary you give on that would be great.

Cash flow obviously builds unless we have uses for it. Our acquisition pipeline is pretty full, but as everyone knows, we are pretty discriminating when it comes to acquisitions. We will continue to be very prudent with shareholders' money and make the acquisitions that we think are beneficial for shareholders. The timing of that, you know, frankly is when the acquisitions are ready to close. I don't think it's really possible for us to spend as much money as we are generating with acquisitions, so inevitably I guess that means the cash balances will build.

I guess, I put it in another way and I am not sure if this is that easy to answer, but has your priorities for use of cash longer term changed or right now it's sort of you are in a bit of a holding pattern. You still will evaluate acquisitions given the full pipeline, but you have always in the past had a preference for share buybacks. Is it too soon given all the plans and mergers to make that depend that statement still a preference or can we - that once everything is set out and you are free to get back in the market that would likely be use of cash.

Just to be clear what I've always stated is we are going to consistently pay dividend and try to increase that dividend pretty regularly. Our next priority is making acquisitions that are beneficial to our shareholders and growing our business. Then we basically use the balance of cash in share repurchases, but our first priority has always been great acquisitions. We generate a lot of free cash. It's frankly difficult to spend that amount of free cash on acquisitions that are accretive for our shareholders, so our historical or recent preference has been to internal development which is a strong focus of every one of our businesses to make sure we have the capabilities necessary to serve our clients.

There is nothing to add to that. Those have consistently been our objectives and the way that we have approached it. Omnicom will continue to do that as long as Omnicom is here. A couple of quarters delay on the share repurchase program. It doesn't alter our long-range [projected] views or strategic plans.

Okay. Thank you very much.

Thank you.

Frankly, because we have cash doesn't mean we are not focused on making sure we pay every bit of attention possible to our own cash management working capital initiatives. Frankly, we have re-doubled those efforts probably each year for the last couple of years.

Thank you very much.

Our next question comes from line of James Dix with Wedbush. Please go ahead.

Thanks very much. Just a couple of things as you think about the combined company kind of after the transaction. I think you've indicated in the past some expectations for higher organic growth of the companies to do that separately maybe in a range of 100 basis points or so. I am just wondering if you could give any more color qualitatively where that growth would come from, any particular types of disciplines, any particular types of regions, just thinking through that, so we can understand where that's coming from. Then just secondly, in terms of the media buying and planning business specifically, how should we think about the greater now potential for that business to get leverage in the market, in particular on the digital marketing side where it would seem the benefits of scale are quite different than in a more traditional areas like (Inaudible). Thanks very much.

Sure. I'll do the first bit last. Certainly, larger media scale is a contributor to growth. Omnicom and separately Publicis are large enough individually by themselves to get as prices as we know it today. What it will do it give us a broader client base from which to go out especially from a individual front - premium type inventory as clients may want and therefore we can service or enter into agreement to get a first look or to do whatever we need to do at that time. Then area by way that we spend a fortune - we spend an appropriate amount of money internally investing in, because if you had a strategy a month ago it's not necessarily the strategy for the future, because the environment is changing so rapidly and so you have to stay on top of it all the time. Scale will help. In terms of our comments and I think I am just going back to our road show and moving consistent since then post the merger, and when I say post the merger I don't mean post the merger, but after the company start to integrate we have a better opportunity than we currently have marginally, but for cross-selling, we are going into new areas, we are doing a number of things. Those are efforts which are embedded and for the principal reasons for Omnicom's consistent growth over the last 19 years and so more clients the (Inaudible) systems, so we look. We have the systems, we have the people that are trained to Omni Systems, of the systems, so we so we look forward to that.

Great. Thanks very much.

Thank you, James.

Our next question today comes from the line of William Bird representing FBR. Please go ahead.

Good morning. Other important open issues related to the deal beyond the three-track cited?

There are multiple issues. I mean, I don't know - important is a qualitative word the most urgent are they gating items that I mentioned.

I mean, it's a large complex transaction, so until the day we close, there is going to be items that are scores of internal staff and attorneys are focused on. There is a lot to be done here, but there was gating items of the other primary focus to getting the deal close.

Thanks. When will you know the outcome on your tax status? Is that knowable and how do you think about plan B should approval not come through?

Well, I think there are scheduled meetings between the two groups, scheduled for beginning in next week with the appropriate experts to determine the next steps about going back to the regulators and what we will need to do what we won't need to do. With respect to a number of items that Michael mentioned, there is no plan B. Those things are requirements to get to a closing.

Thank you.

Thanks, Bill.

We will go to line of Dan Salmon with BMO Capital Markets. Please go ahead.

Good morning guys. I'll maybe return to the questions around media planning and buying a little bit more. Thank you for the data around your growth in search and programmatic media and I was just wondering, John, if you could expand on that a little bit. Just maybe broadly, broad comment as that business accelerates it sort of how you see the future of media buying evolving. Is that group around intellect and elsewhere in the business starts to move up and then maybe just specifically around the growth you are seeing, if that's more a combination of more clients being willing to come and execute their plans like that or an extension of services of Omnicom. I am sure it's a little bit of both and they overlap, but I would love to hear a little bit more on that.

Sure. Well, your first question analytics is the primary and its related services are where we are concentrating Omnicom's efforts, so as to make what we are doing or the strategy and approach we are taking are very focused and controlled and not scattered to the diversity of our company and has proved to be very successful and we have been able to move very quickly in becoming world-class. The marketplace as you know is changing. Clients and data to indicate return on investment are becoming accepting digital buys increasingly every week every day. Some are early adopters, some are little slower to dedicated increasing part of their budget and mobile is just about to take off, and I don't know sitting here today how much of existing budgets mobile will draw, but we are working under the assumption that between display and also to digital venues, it's going to increasingly over the coming years drive more and more of the clients' budget, because we will be able to tell our - the messaging as to who we reach, when we reach them and what the message we are using to reach them is, so a lot of effort, a lot of very successful platforms are being developed, a lot of very innovative partnerships are being entered into and it's ongoing. We mentioned Instagram on the call. I was hoping to have yet another interesting one done before the call and then probably come in the next couple of days, so it's very iterative and it's a very dynamic landscape platform.

Dan, you probably know that as well as anybody. You have done some really great work in the space with some your digital hub work. I think the last one I read I thought you nailed it pretty well.

Thanks and thanks for all that detail John. I appreciate it.

Our next question comes from the line of Doug Arthur with Evercore. Please go ahead.

Yes. Randy, just a question on cost trends. Office and general expenses have been sort of flat to down year-over-year for five quarters. Why is it happening? Is that likely to persist as a trend for the full-year?

Before I answer your questions, let me just point that we are getting pretty close to market open, so we are going to have this to your last call or last question. Frankly, there is a tremendous focus throughout the company, throughout every agency top to bottom and side-to-side focused on increasing the efficiency of our operations. It's a requirement of our clients, it's a requirement in the marketplace to stay competitive. So, frankly we are changing the way offices are being structured, we are changing the way we are managing all of our back office and support costs. We have to obviously continue to deliver to our clients the level of consulting services, because that's frankly what they are buying, but how we are overseeing, how we are housing, how we are managing those operations are getting more and more efficient every day. I'll say unfortunately from the standpoint of our ability to drive efficiencies were already pretty efficient in those areas, so while there is continuous improvement, those improvements can only have a certain degree of ultimate effect, because a relatively small percentage of our total cost.

Great thank.

Does that cover everything you had?

Yes. I mean, I guess, I was just looking for some color on you are implying that you have kind of done everything you can, but is no - slightly up likely to be a trend for the rest of the year.

No. Hopefully, I didn't say that. I didn't mean that we have done everything we can do. I said is, we have done a lot and we are going to continue to focus on and continue to drive those cost improvements. I think those costs are hopefully flat to maybe slightly declining while we were growing revenue. There are mix issues and there are geographic issues when FX bounces around the way it's done in the last, I'll say few quarters. This quarter in particular, some of the places where FX has had its biggest impact are our higher margin countries and therefore it does have a negative impact a little bit on the margins.

Okay. Great. I got it. Thanks.

We have still three minutes, so.

I guess, we will take one more question.

All right, our final question today will come from line of Peter Stabler with Wells Fargo. Please go ahead.

Thanks. A question for John, one of the primary support point you offered for the merger was kind of the rapid evolution the tech landscape. Given then it's been about nine months since the announcement and the tech space and the marketing tech space has been early active, just wondering if you could update your thoughts here and tell us whether things are kind of roughly playing out the way you expected. Thanks very much.

Thank you. Well, I think as Maurice has said, I have said many times. We continue to operate as two separate companies until the merger is approved, and we continue to enter into partnerships to make internal investments as fast as we can absorb them and where we see the - you where the stuff is going and that's what we attempt to do every single day and especially in the digital area and our partnerships with all these technology partners and our importance to them allow us some insights as to where they are going and what is going to be beneficial to our clients and that's how we prioritize our investments. That's just rapidly growing every day. I have a meeting later on today we are all approved - some significant internal spending to support some programs and some platforms that we believe will start to become normalized by the end of the year that will contribute to our growth in the future, so we continue to make those investments, we have a fabulous team and there we go. In terms of what our services are and we know what they're not, because there's a lot of confusion when you listen to people and see how each holding company is described. What we do is, we thought we are actually client-focused and most of our people at this point are digitally, I would say (Inaudible) are digitally competent to a much higher level than was two, three years ago or five years ago and that only improves every single day and Omnicom is very well-positioned. It contributes to our overall growth, because there isn't a campaign or assignment that is significantly digital today, so we continue as I'm sure Publicis does in making investments in this area, because it is the future and that's where the puck is going to go.

Thank you, John.

Okay. Thank you all very much. We appreciate your time. If you follow-up questions, we will be happy to try to take them offline. Have a great day.