Item 16. Form 10-K Summary

None.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

		OMNICOM GROUP INC.
February 9, 2017	BY:	/s/ PHILIP J. ANGELASTRO
		Philip J. Angelastro Executive Vice President and Chief Financial Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature	Title	Date
/s/ BRUCE CRAWFORD	Chairman and Director	February 9, 2017
Bruce Crawford
/s/ JOHN D. WREN	Chief Executive Officer and President and Director (Principal Executive Officer)	February 9, 2017
John D. Wren
/s/ PHILIP J. ANGELASTRO	Executive Vice President and Chief Financial Officer (Principal Financial Officer)	February 9, 2017
Philip J. Angelastro
/s/ ANDREW L. CASTELLANETA	Senior Vice President, Chief Accounting Officer (Principal Accounting Officer)	February 9, 2017
Andrew L. Castellaneta
/s/ ALAN R. BATKIN	Director	February 9, 2017
Alan R. Batkin
/s/ MARY C. CHOKSI	Director	February 9, 2017
Mary C. Choksi
/s/ ROBERT CHARLES CLARK	Director	February 9, 2017
Robert Charles Clark
/s/ LEONARD S. COLEMAN, JR.	Director	February 9, 2017
Leonard S. Coleman, Jr.
/s/ SUSAN S. DENISON	Director	February 9, 2017
Susan S. Denison
/s/ MICHAEL A. HENNING	Director	February 9, 2017
Michael A. Henning
/s/ DEBORAH J. KISSIRE	Director	February 9, 2017
Deborah J. Kissire
/s/ JOHN R. MURPHY	Director	February 9, 2017
John R. Murphy
/s/ JOHN R. PURCELL	Director	February 9, 2017
John R. Purcell
/s/ LINDA JOHNSON RICE	Director	February 9, 2017
Linda Johnson Rice
/s/ VALERIE M. WILLIAMS	Director	February 9, 2017
Valerie M. Williams

MANAGEMENT REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Management is responsible for the preparation of the consolidated financial statements and related information of Omnicom Group Inc. (“Omnicom”). Management uses its best judgment to ensure that the consolidated financial statements present fairly, in all material respects, Omnicom’s consolidated financial position and results of operations in conformity with generally accepted accounting principles in the United States.

The financial statements have been audited by an independent registered public accounting firm in accordance with the standards of the Public Company Accounting Oversight Board. Their report expresses the independent accountant’s judgment as to the fairness of management’s reported financial position, results of operations and cash flows. This judgment is based on the procedures described in the second paragraph of their report.

Omnicom management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Securities Exchange Act Rule 13a-15(f). Management, with the participation of our Chief Executive Officer, or CEO, Chief Financial Officer, or CFO, and our agencies, conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on that evaluation, our CEO and CFO concluded that our internal control over financial reporting was effective as of December 31, 2016. There have not been any changes in our internal control over financial reporting during our fourth fiscal quarter that have materially affected or are reasonably likely to affect our internal control over financial reporting.

KPMG LLP, an independent registered public accounting firm that audited our consolidated financial statements included in this Annual Report on Form 10-K, has issued an attestation report on Omnicom’s internal control over financial reporting as of December 31, 2016, dated February 9, 2017.

The Board of Directors of Omnicom has an Audit Committee comprised of six independent directors. The Audit Committee meets periodically with financial management, Internal Audit and the independent auditors to review accounting, control, audit and financial reporting matters.

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Shareholders of

Omnicom Group Inc.:

We have audited the accompanying consolidated balance sheets of Omnicom Group Inc. and subsidiaries (the “Company”) as of December 31, 2016 and 2015, and the related consolidated statements of income, comprehensive income, equity, and cash flows for each of the years in the three-year period ended December 31, 2016. In connection with our audits of the consolidated financial statements, we also have audited financial statement Schedule II. We also have audited Omnicom Group Inc. and subsidiaries’ internal control over financial reporting as of December 31, 2016, based on Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company’s management is responsible for these consolidated financial statements, the related financial statement Schedule II, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on these consolidated financial statements and the related financial statement Schedule II and an opinion on the Company’s internal control over financial reporting based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the consolidated financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Omnicom Group Inc. and subsidiaries as of December 31, 2016 and 2015, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2016, in conformity with U.S. generally accepted accounting principles. Also in our opinion, the related financial statement Schedule II, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2016, based on Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

/s/ KPMG LLP

New York, New York

February 9, 2017

F-2

OMNICOM GROUP INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In millions, except per share amounts)

	December 31,
	2016				2015
ASSETS
Current Assets:
Cash and cash equivalents	$	3,002.2			$	2,605.2
Short-term investments, at cost	20.6				14.5
Accounts receivable, net of allowance for doubtful accounts of $24.9 and $22.5	7,510.8				7,220.9
Work in process	1,125.4				1,122.7
Other current assets	1,063.0				1,017.2
Total Current Assets	12,722.0				11,980.5
Property and Equipment at cost, less accumulated depreciation of $1,233.4 and $1,206.6	674.8				692.7
Equity Method Investments	120.4				136.6
Goodwill	8,976.1				8,676.4
Intangible Assets, net of accumulated amortization of $777.6 and $680.7	427.4				344.8
Other Assets	244.7				279.7
TOTAL ASSETS	$	23,165.4			$	22,110.7
LIABILITIES AND EQUITY
Current Liabilities:
Accounts payable	$	10,476.7			$	9,812.0
Customer advances	1,186.6				1,283.5
Current portion of debt	0.1				1,001.4
Short-term debt	28.7				5.2
Taxes payable	349.6				319.1
Other current liabilities	1,969.2				1,798.4
Total Current Liabilities	14,010.9				14,219.6
Long-Term Debt	4,920.5				3,564.2
Long-Term Liabilities	892.3				800.5
Deferred Tax Liabilities	480.5				469.1
Commitments and Contingent Liabilities (See Note 16)
Temporary Equity - Redeemable Noncontrolling Interests	201.6				167.9
Equity:
Shareholders’ Equity:
Preferred stock, $1.00 par value, 7.5 million shares authorized, none issued	—				—
Common stock, $0.15 par value, 1.0 billion shares authorized, 297.2 and 397.2 million shares issued, 234.7 million and 239.7 million shares outstanding	44.6				59.6
Additional paid-in capital	798.3				859.9
Retained earnings	5,677.2				10,178.2
Accumulated other comprehensive income (loss)	(1,356.0		)		(1,015.4		)
Treasury stock, at cost, 62.5 million and 157.5 million shares	(3,002.1		)		(7,629.9		)
Total Shareholders’ Equity	2,162.0				2,452.4
Noncontrolling interests	497.6				437.0
Total Equity	2,659.6				2,889.4
TOTAL LIABILITIES AND EQUITY	$	23,165.4			$	22,110.7

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

F-3

OMNICOM GROUP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(In millions, except per share amounts)

	Years Ended December 31,
	2016				2015				2014
Revenue	$	15,416.9			$	15,134.4			$	15,317.8
Operating Expenses:
Salary and service costs	11,453.2				11,248.7				11,245.5
Occupancy and other costs	1,218.0				1,242.7				1,356.6
Cost of services	12,671.2				12,491.4				12,602.1
Selling, general and administrative expenses	443.9				431.8				477.2
Depreciation and amortization	292.9				291.1				294.4
	13,408.0				13,214.3				13,373.7
Operating Profit	2,008.9				1,920.1				1,944.1
Interest Expense	209.7				181.1				177.2
Interest Income	42.6				39.6				43.1
Income Before Income Taxes and Income From Equity Method Investments	1,841.8				1,778.6				1,810.0
Income Tax Expense	600.5				583.6				593.1
Income From Equity Method Investments	5.4				8.4				16.2
Net Income	1,246.7				1,203.4				1,233.1
Net Income Attributed To Noncontrolling Interests	98.1				109.5				129.1
Net Income - Omnicom Group Inc.	$	1,148.6			$	1,093.9			$	1,104.0
Net Income Per Share - Omnicom Group Inc.:
Basic	$	4.80			$	4.43			$	4.27
Diluted	$	4.78			$	4.41			$	4.24
Dividends Declared Per Common Share	$	2.15			$	2.00			$	1.90

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

F-4

OMNICOM GROUP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In millions)

	Years Ended December 31,
	2016				2015				2014
Net Income	$	1,246.7			$	1,203.4			$	1,233.1
Other Comprehensive Income (Loss):
Cash flow hedge:
Loss for the period	(48.9		)		(5.6		)		—
Amortization of loss included in interest expense	4.0				—				—
Income tax effect	18.7				2.3				—
	(26.2		)		(3.3		)		—
Defined benefit pension plans and postemployment arrangements:
Unrecognized actuarial losses and prior service cost for the period	(18.3		)		(7.8		)		(48.4		)
Amortization of prior service cost included in periodic benefit expense	7.6				7.5				6.4
Amortization of actuarial losses included in periodic benefit expense	6.4				7.3				3.2
Income tax effect	1.6				(2.8		)		15.5
	(2.7		)		4.2				(23.3		)
Available-for-sale securities:
Unrealized gain for the period	0.2				0.4				0.6
Income tax effect	(0.1		)		(0.1		)		(0.2		)
	0.1				0.3				0.4
Foreign currency translation adjustment	(319.4		)		(427.2		)		(442.4		)
Other Comprehensive Income (Loss)	(348.2		)		(426.0		)		(465.3		)
Comprehensive Income	898.5				777.4				767.8
Comprehensive Income Attributed To Noncontrolling Interests	90.5				80.7				90.4
Comprehensive Income - Omnicom Group Inc.	$	808.0			$	696.7			$	677.4

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

F-5

OMNICOM GROUP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EQUITY

Three Years Ended December 31, 2016

(In millions, except per share amounts)

	Omnicom Group Inc.
	Common Stock							Additional Paid-in Capital				Retained Earnings				Accumulated Other Comprehensive Income (Loss)				Treasury Stock				Total Shareholders’ Equity				Noncontrolling Interests				Total Equity
	Shares			Par Value
Balance as of December 31, 2013	397.2			$	59.6			$	817.1			$	8,961.2			$	(191.6	)		$	(6,063.9	)		$	3,582.4			$	485.5			$	4,067.9
Net income												1,104.0												1,104.0				129.1				1,233.1
Other comprehensive income (loss)																(426.6		)						(426.6		)		(38.7		)		(465.3		)
Dividends to noncontrolling interests																												(111.3		)		(111.3		)
Acquisition of noncontrolling interests								(64.5		)														(64.5		)		(27.8		)		(92.3		)
Increase in noncontrolling interests from business combinations																												34.5				34.5
Change in temporary equity								7.9																7.9								7.9
Shares issued for conversion of convertible notes								(25.5		)										57.7				32.2								32.2
Common stock dividends declared ($1.90 per share)												(488.3		)										(488.3		)						(488.3		)
Share-based compensation								93.5																93.5								93.5
Stock issued, share-based compensation								(9.9		)										82.3				72.4								72.4
Common stock repurchased																				(1,063.0		)		(1,063.0		)						(1,063.0		)
Balance as of December 31, 2014	397.2			59.6				818.6				9,576.9				(618.2		)		(6,986.9		)		2,850.0				471.3				3,321.3
Net income												1,093.9												1,093.9				109.5				1,203.4
Other comprehensive income (loss)																(397.2		)						(397.2		)		(28.8		)		(426.0		)
Dividends to noncontrolling interests																												(129.4		)		(129.4		)
Acquisition of noncontrolling interests								(38.8		)														(38.8		)		(24.2		)		(63.0		)
Increase in noncontrolling interests from business combinations																												38.6				38.6
Change in temporary equity								11.9																11.9								11.9
Common stock dividends declared ($2.00 per share)												(492.6		)										(492.6		)						(492.6		)
Share-based compensation								99.4																99.4								99.4
Stock issued, share-based compensation								(31.2		)										84.5				53.3								53.3
Common stock repurchased																				(727.5		)		(727.5		)						(727.5		)
Balance as of December 31, 2015	397.2			59.6				859.9				10,178.2				(1,015.4		)		(7,629.9		)		2,452.4				437.0				2,889.4
Net income												1,148.6												1,148.6				98.1				1,246.7
Other comprehensive income (loss)																(340.6		)						(340.6		)		(7.6		)		(348.2		)
Dividends to noncontrolling interests																												(87.2		)		(87.2		)
Acquisition of noncontrolling interests								(87.7		)														(87.7		)		(16.0		)		(103.7		)
Increase in noncontrolling interests from business combinations																												73.3				73.3
Change in temporary equity								(33.0		)														(33.0		)						(33.0		)
Common stock dividends declared ($2.15 per share)												(513.9		)										(513.9		)						(513.9		)
Share-based compensation								93.4																93.4								93.4
Stock issued, share-based compensation								(34.3		)										79.3				45.0								45.0
Common stock repurchased																				(602.2		)		(602.2		)						(602.2		)
Treasury stock retired	(100.0	)		(15.0		)						(5,135.7		)						5,150.7				—								—
Balance as of December 31, 2016	297.2			$	44.6			$	798.3			$	5,677.2			$	(1,356.0	)		$	(3,002.1	)		$	2,162.0			$	497.6			$	2,659.6

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

F-6

OMNICOM GROUP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

	Years Ended December 31,
	2016				2015				2014
Cash Flows from Operating Activities:
Net income	$	1,246.7			$	1,203.4			$	1,233.1
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	177.7				181.8				187.3
Amortization of intangible assets	115.2				109.3				107.1
Amortization of deferred gain on interest rate swaps	(15.4		)		(9.2		)		(7.2		)
Share-based compensation	93.4				99.4				93.5
Excess tax benefit from share-based compensation	(21.2		)		(27.2		)		(29.6		)
Deferred gain from settlement of interest rate swaps	54.2				50.4				—
Deferred loss from settlement of forward-starting interest rate swap	(54.5		)		—				—
Other, net	12.1				6.8				(1.5		)
Increase (decrease) in operating capital	323.0				557.6				(106.2		)
Net Cash Provided By Operating Activities	1,931.2				2,172.3				1,476.5
Cash Flows from Investing Activities:
Capital expenditures	(165.5		)		(202.7		)		(213.0		)
Acquisition of businesses and interests in affiliates, net of cash acquired	(308.8		)		(60.3		)		(74.9		)
Sale (purchase) of short-term investments, net	(7.3		)		(0.5		)		21.0
Net Cash Used In Investing Activities	(481.6		)		(263.5		)		(266.9		)
Cash Flows from Financing Activities:
Change in short-term debt	(1.2		)		(1.1		)		2.1
Proceeds from borrowings	1,389.6				—				747.6
Repayment of debt	(1,000.0		)		—				—
Redemption of convertible debt	—				—				(252.7		)
Dividends paid to common shareholders	(505.4		)		(496.7		)		(468.0		)
Repurchases of common stock	(602.2		)		(727.5		)		(1,063.0		)
Proceeds from stock plans	26.8				20.1				39.3
Acquisition of additional noncontrolling interests	(72.7		)		(33.5		)		(69.5		)
Dividends paid to noncontrolling interest shareholders	(87.2		)		(129.4		)		(111.3		)
Payment of contingent purchase price obligations	(110.5		)		(55.3		)		(83.2		)
Excess tax benefit from share-based compensation	21.2				27.2				29.6
Other, net	(35.5		)		(32.9		)		(29.0		)
Net Cash Used In Financing Activities	(977.1		)		(1,429.1		)		(1,258.1		)
Effect of foreign exchange rate changes on cash and cash equivalents	(75.5		)		(262.6		)		(273.9		)
Net Increase (Decrease) in Cash and Cash Equivalents	397.0				217.1				(322.4		)
Cash and Cash Equivalents at the Beginning of Year	2,605.2				2,388.1				2,710.5
Cash and Cash Equivalents at the End of Year	$	3,002.2			$	2,605.2			$	2,388.1

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

F-7

OMNICOM GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 consolidated financial statements were prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP” or “GAAP”). All intercompany balances and transactions have been eliminated.

The preparation of financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates and assumptions.

2. Significant Accounting Policies

Revenue Recognition. We recognize revenue in accordance with FASB Accounting Standards Codification (“FASB ASC”) Topic 605, Revenue Recognition, and applicable SEC Staff Accounting Bulletins. Substantially all of our revenue is derived from fees for services based on a rate per hour or equivalent basis. Revenue is realized when the service is performed in accordance with the client arrangement and upon the completion of the earnings process. Our primary client arrangements include: fixed fee contracts where revenue is recognized based on the level of effort completed to date, retainer agreements where revenue is recognized on a straight-line basis over the contract period, and media commissions where revenue is recognized when the media is run. Prior to recognizing revenue, persuasive evidence of an arrangement must exist, the sales price must be fixed or determinable, delivery, performance and acceptance must be in accordance with the client arrangement and collection must be reasonably assured. These principles are the foundation of our revenue recognition policy and apply to all client arrangements in each of our service disciplines: advertising, customer relationship management, public relations and specialty communications. Because the services that we provide across each of our disciplines are similar and delivered to clients in similar ways, all of the key elements of our revenue recognition policy apply to client arrangements in each of our four disciplines. Revenue is recorded net of sales, use and value added taxes.

In the majority of our businesses, we act as an agent and record revenue equal to the net amount retained when the fee or commission is earned. Although, in certain markets, we may bear credit risk with respect to these activities, the arrangements with our clients are such that we act as an agent on their behalf. In these cases, costs incurred with third-party suppliers are excluded from our revenue. In certain arrangements, we act as principal and we contract directly with third-party suppliers and media providers and production companies and we are the primary obligor. In these circumstances, revenue is recorded at the gross amount billed since revenue has been earned for the sale of goods or services.

Some of our client arrangements include performance incentive provisions designed to link a portion of our revenue to our performance relative to quantitative and qualitative goals. We recognize performance incentives in revenue when specific quantitative goals are achieved, or when our performance against qualitative goals is determined by the client. We may receive rebates or credits from vendors for transactions entered into on behalf of clients. These rebates or credits are remitted to the clients or in certain international markets retained by us based on the terms of the client contract or local law. Amounts passed on to clients are recorded as a liability and amounts retained by us are recorded as revenue when earned.

Operating Expenses. Operating expenses are comprised of: cost of services, selling, general and administrative (“ SG&A”) expenses and depreciation and amortization. We measure cost of services in two distinct categories: salary and service costs and occupancy and other costs. As a service business, salary and service costs make up the vast majority of our operating expenses and substantially all these costs comprise the essential components directly linked to the delivery of our services. Salary and service costs include employee compensation and benefits, freelance labor and direct service costs, which include third-party supplier costs and client-related travel costs. Occupancy and other costs consist of the indirect costs related to the delivery of our services, including office rent and other occupancy costs, equipment rent, technology costs, general office expenses and other expenses. SG&A expenses, the components of which had been historically included in salary and service costs and occupancy and other costs, primarily consist of third-party marketing costs, professional fees and compensation and benefits and occupancy and other costs of our corporate and executive offices, which includes group-wide finance and accounting, treasury, legal and governance, human resource oversight and similar costs.

F-8

OMNICOM GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Cash and Cash Equivalents. Cash equivalents consist of highly liquid investments consisting of interest-bearing time deposits with original maturities of three months or less. Due to the short-term nature of these investments, carrying value approximates fair value. We have policies governing counterparty credit risk for financial institutions that hold our cash and cash equivalents and we have deposit limits for each institution.

Short-Term Investments. Short-term investments consist of interest-bearing time deposits with maturities of less than twelve months. Short-term investments are carried at cost, which approximates fair value.

Work in Process. Work in process includes costs incurred on behalf of clients in providing advertising and marketing services, including media and production costs, and fees that have not yet been billed. Media and production costs are billed during the production process and fees are normally billed within the next 30 days.

Property and Equipment. Property and equipment are carried at cost and are depreciated over the estimated useful lives of the assets using the straight-line method. The estimated useful lives range from seven to ten years for furniture and three to five years for equipment. Leasehold improvements are amortized on a straight-line basis over the shorter of the related lease term or the estimated useful life of the asset. Property under capital lease is depreciated on a straight-line basis over the lease term.

Equity Method Investments. Investments in companies where we exercise significant influence over the operating and financial policies of the investee and own less than 50% of the equity are accounted for using the equity method. Our proportionate share of the net income or loss of equity method investments is included in results of operations and any dividends received reduce the carrying value of the investment. The excess of the cost of our investment over our proportionate share of the fair value of the net assets of the investee at the acquisition date is recognized as goodwill and included in the carrying amount of the investment. Goodwill in the equity method investments is not amortized. Gains and losses from changes in our ownership interests are recorded in results of operations until control is achieved. Where a change in our ownership interest results in obtaining control, the existing carrying value of the investment is remeasured to the acquisition date fair value and any gain or loss is recognized in results of operations.

Cost Method Investments. Investments in companies where we do not exercise significant influence over the operating and financial policies of the investee and own less than 20% of the equity are accounted for using the cost method. Cost method investments are included in other assets and are carried at cost, which approximates or is less than fair value. The carrying value of our cost method investments was $14.2 million and $21.5 million at December 31, 2016 and 2015, respectively.

We periodically review the carrying value of the equity method and cost method investments to determine if there has been an other-than-temporary decline in carrying value. A variety of factors are considered when determining if a decline in carrying value is other-than-temporary, including the financial condition and business prospects of the investee, as well as our investment intent.

Available-for-Sale Securities. Investments in common stock of publicly traded companies are classified as available-for-sale securities. These investments are included in other assets and are carried at fair value using quoted market prices. Unrealized gains and losses are recorded in accumulated other comprehensive income. The carrying value of the available-for-sale securities was $4.3 million and $4.8 million at December 31, 2016 and 2015, respectively.

Goodwill and Intangible Assets. Goodwill represents the excess of the acquisition cost over the fair value of the net assets acquired. Goodwill is not amortized, but is periodically reviewed for impairment. Intangible assets comprise customer relationships, including the related customer contracts and trade names, and purchased and internally developed software and are amortized over their estimated useful lives ranging from five to twelve years. We consider a number of factors in determining the useful lives and amortization method, including the pattern in which the economic benefits are consumed, as well as trade name recognition and customer attrition. There is no estimated residual value for the intangible assets.

We review the carrying value of goodwill for impairment annually at the end of the second quarter of the year and whenever events or circumstances indicate the carrying value may not be recoverable. The impairment evaluation utilizes a two-step test. The first step compares the fair value of each reporting unit, which we identified as our five agency networks, to its carrying value, including goodwill. If the fair value of the reporting unit is equal to or greater than its carrying value, goodwill is not impaired and no further testing is required. If the carrying value exceeds fair value, then the second step of the impairment test is performed in order to determine if the implied fair value of the goodwill of the reporting unit exceeds the carrying value of that goodwill. Goodwill is impaired when the carrying value of the goodwill exceeds its implied fair value. Impaired goodwill is written down to its implied fair value through a non-cash expense recorded in results of operations in the period the impairment is identified.

F-9

OMNICOM GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

We identified our regional reporting units as components of our operating segments, which are our five agency networks. The regional reporting units of each agency network monitor the performance and are responsible for the agencies in their region. They report to the segment managers and facilitate the administrative and logistical requirements of our client-centric strategy for delivering services to clients in their regions. We have concluded that, for each of our operating segments, their regional reporting units had similar economic characteristics and should be aggregated for purposes of testing goodwill for impairment at the operating segment level. Our conclusion was based on a detailed analysis of the aggregation criteria set forth in FASB ASC Topic 280, Segment Reporting, and the guidance set forth in FASB ASC Topic 350, Intangibles - Goodwill and Other. Consistent with our fundamental business strategy, the agencies within our regional reporting units serve similar clients in similar industries, and in many cases the same clients. 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 that are generally limited to personal computers, servers and off-the-shelf software and other overhead costs. Finally, the expected benefits of our acquisitions are typically shared by multiple agencies in various regions as they work together to integrate the acquired agency into our client service strategy. We use the following valuation methodologies to determine the fair value of our reporting units: (1) the income approach, which utilizes discounted expected future cash flows, (2) comparative market participant multiples of EBITDA (earnings before interest, taxes, depreciation and amortization) and (3) when available, consideration of recent and similar acquisition transactions.

Based on the results of the annual impairment test, we concluded that at June 30, 2016 and 2015 our goodwill was not impaired because the fair value of each reporting unit was substantially in excess of its respective net book value. Subsequent to the annual impairment test of goodwill at June 30, 2016, there were no events or circumstances that triggered the need for an interim impairment test.

Debt Issuance Costs. Debt issuance costs are capitalized and amortized in interest expense over the life of the related debt and are presented as a reduction from the carrying amount of debt.

Temporary Equity - Redeemable Noncontrolling Interests. Owners of noncontrolling equity interests in some of our subsidiaries have the right in certain circumstances to require us to purchase all or a portion of their equity interests at fair value as defined in the applicable agreements. The intent of the parties is to approximate fair value at the time of redemption by using a multiple of earnings that is consistent with generally accepted valuation practices used by market participants in our industry. These contingent redemption rights are embedded in the equity security at issuance, are not free-standing instruments, do not represent a de facto financing and are not under our control.

Treasury Stock. Repurchases of common stock are accounted for at cost and are recorded as treasury stock. Reissued treasury stock, primarily in connection with share-based compensation plans, is accounted for at average cost. Gains or losses on reissued treasury stock arising from the difference between the average cost and the fair value of the award are recorded in additional paid-in capital and do not affect results of operations.

Business Combinations. Business combinations are accounted for using the acquisition method and accordingly, the assets acquired, including identified intangible assets, liabilities assumed and any noncontrolling interest in the acquired business are recorded at their acquisition date fair values. In circumstances where control is obtained and less than 100% of a business is acquired, goodwill is recorded as if 100% were acquired. Acquisition-related costs, including advisory, legal, accounting, valuation and other costs are expensed as incurred. Certain acquisitions include an initial payment at closing and provide for future additional contingent purchase price payments (earn-outs), which are recorded as a liability at the acquisition date fair value using the discount rate in effect on the acquisition date. Subsequent changes in the fair value of the liability are recorded in results of operations. Generally, there is no cap on the amount that can be earned under the contingent purchase price arrangements. Payments are not contingent upon future employment. The results of operations of acquired businesses are included in results of operations from the acquisition date.

Noncontrolling Interests. Noncontrolling interests represent equity interests in certain subsidiaries held by third-parties. Noncontrolling interests are presented as a component of equity and the proportionate share of net income attributed to the noncontrolling interests is recorded in results of operations. Changes in noncontrolling interests that do not result in a loss of control are accounted for in equity. Gains and losses resulting from a loss of control are recorded in results of operations.

Foreign Currency Translation and Transactions. Substantially all of our foreign subsidiaries use their local currency as their functional currency. Assets and liabilities are translated into U.S. Dollars at the exchange rate on the balance sheet date and revenue and expenses are translated at the average exchange rate for the period. Translation adjustments are recorded in accumulated other comprehensive income. Net foreign currency transaction gains recorded in results of operations in 2016, 2015 and 2014 were $12.7 million, $4.7 million and $8.7 million, respectively.

F-10

OMNICOM GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Share-Based Compensation. Share-based compensation for restricted stock and stock option awards is measured at the grant date fair value. The fair value of restricted stock awards is determined and fixed on the grant date using the closing price of our common stock and is recorded in additional paid-in capital. The fair value of stock option awards is determined using the Black-Scholes option valuation model. For awards that have a service only vesting condition, compensation expense is recognized on a straight-line basis over the requisite service period. For awards with a performance vesting condition, compensation expense is recognized on a graded-vesting basis. Typically, all share-based awards are settled with treasury stock. See Note 9 for additional information regarding our specific award plans.

Salary Continuation Agreements. Arrangements with certain present and former employees provide for continuing payments for periods up to ten years after cessation of full-time employment in consideration for agreement by the employees not to compete with us and to render consulting services during the postemployment period. Such payments, which are subject to certain limitations, including our operating performance during the postemployment period, represent the fair value of the services rendered and are expensed in such periods.

Severance. The liability for one-time termination benefits, such as severance pay or benefit payouts, is measured and recognized at fair value in the period the liability is incurred. Subsequent changes to the liability are recognized in results of operations in the period of change.

Defined Benefit Pension Plans and Postemployment Arrangements. The funded status of our defined benefit plans is recorded as an asset or liability. Funded status is the difference between the fair value of plan assets and the benefit obligation at December 31, the measurement date, determined on a plan-by-plan basis. The benefit obligation for the defined benefit plans is the projected benefit obligation (“PBO”), which represents the actuarial present value of benefits expected to be paid upon retirement based on estimated future compensation levels. The fair value of plan assets represents the current market value. Overfunded plans where the fair value of plan assets exceeds the benefit obligation are aggregated and recorded as a prepaid pension asset equal to the excess. Underfunded plans where the benefit obligation exceeds the fair value of plan assets are aggregated and recorded as a liability equal to the excess. We record the liability for our postemployment arrangements. The benefit obligation of our postemployment arrangements is the PBO and these arrangements are not funded. The current portion of the benefit obligation for the defined benefit plans and postemployment arrangements, which represents the actuarial present value of benefits payable in the next twelve months that exceed the fair value of plan assets, is recorded in other current liabilities and the long-term portion is recorded in long-term liabilities.

Deferred Compensation. Some of our subsidiaries have individual deferred compensation arrangements with certain executives that provide for payments over varying terms upon retirement, cessation of employment or death. The cost of these arrangements is accrued during the employee’s service period.

Income Taxes. We use the asset and liability method of accounting for income taxes. Under this method, income tax expense is recognized for the amount of taxes payable for the current period and the deferred taxes recognized during the period. Deferred income taxes reflect the temporary difference between assets and liabilities that are recognized for financial reporting purposes and income tax purposes and are recorded as noncurrent. Deferred income taxes are measured using the enacted tax rates that are assumed to be in effect when the differences reverse. Deferred tax assets result from recording expenses in the financial statements which are not currently deductible for tax purposes, such as share-based compensation expense, tax loss and credit carryforwards and differences between the tax basis and book basis of assets and liabilities recorded in connection with acquisitions. Deferred tax liabilities result principally from basis differences arising from deductible goodwill and intangible assets, interest expense on financial instruments which is currently deductible for tax purposes but have not been expensed in the financial statements and tax rate differentials on unremitted foreign earnings. Valuation allowances are recorded where it is more likely than not that all or a portion of a deferred tax asset will not be realized. In assessing the need for a valuation allowance, we evaluate factors such as prior earnings history, expected future earnings, carry-back and carry-forward periods and tax strategies that could potentially enhance the likelihood of the realization of a deferred tax asset.

We have provided U.S. federal and state income taxes on earnings of foreign operations that have not been indefinitely reinvested and we have not provided U.S. federal and state income taxes on the cumulative earnings of foreign subsidiaries that have been indefinitely reinvested. Interest and penalties related to tax positions taken in our tax returns are recorded in income tax expense.

F-11

OMNICOM GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Net Income Per Common Share. Basic net income per common share is based on the weighted average number of common shares outstanding during the period. Diluted net income per common share is based on the weighted average number of common shares outstanding, plus, the dilutive effect of common share equivalents, which include outstanding stock options and restricted stock awards.

Net income per common share is computed using the two-class method, which is an earnings allocation method for computing net income per common share when a company's capital structure includes common stock and participating securities. Certain of the unvested restricted stock awards receive non-forfeitable dividends at the same rate as the common stock and therefore are considered participating securities. Under the two-class method, basic and diluted net income per common share is reduced for a presumed hypothetical distribution of earnings to holders of the unvested restricted stock awards receiving non-forfeitable dividends.

Concentration of Credit Risk. We provide advertising, marketing and corporate communications services to several thousand clients who operate in nearly every sector of the global economy and we grant credit to qualified clients in the normal course of business. Due to the diversified nature of our client base, we do not believe that we are exposed to a concentration of credit risk as our largest client accounted for 3.0% of revenue in 2016.

Derivative Financial Instruments. All derivative instruments, including certain derivative instruments embedded in other contracts, are recorded at fair value. Derivatives qualify for hedge accounting if: the hedging instrument is designated as a hedge at inception, the hedged exposure is specifically identifiable, and exposes us to risk and a change in fair value of the derivative financial instrument and an opposite change in the fair value of the hedged exposure have a high degree of correlation. The method of assessing hedge effectiveness and measuring hedge ineffectiveness is formally documented at hedge inception. Hedge effectiveness is assessed and hedge ineffectiveness is measured at least quarterly throughout the designated hedge period. If the derivative is a hedge, depending on the nature of the hedge, changes in the fair value of the derivative will either be offset against the change in fair value of the hedged asset, liability or firm commitment through results of operations or recognized in other comprehensive income until the hedged item is recognized in results of operations. The ineffective portion of the change in fair value of a derivative used as hedge is recognized in results of operations. We do not use derivative instruments for trading or speculative purposes.

Fair Value. We apply the fair value measurement guidance in FASB ASC Topic 820, Fair Value Measurements and Disclosures, for our financial assets and liabilities that are required to be measured at fair value and for our nonfinancial assets and liabilities that are not required to be measured at fair value on a recurring basis, which includes goodwill and other identifiable intangible assets. The measurement of fair value requires the use of techniques based on observable and unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect our market assumptions. The inputs create the following fair value hierarchy:

•	Level 1 - Unadjusted quoted prices in active markets for identical assets or liabilities.

•	Level 2 - Unadjusted quoted prices in active markets for similar assets or liabilities; unadjusted quoted prices for identical assets or liabilities in markets that are not active; and model-derived valuations with observable inputs.

•	Level 3 - Unobservable inputs for the asset or liability.

We use unadjusted quoted market prices to determine the fair value of our financial assets and liabilities and classify such items in Level 1. We use unadjusted quoted market prices for similar assets and liabilities in active markets and model-derived valuations and classify such items in Level 2.

In determining the fair value of financial assets and liabilities, we consider certain market valuation adjustments that market participants would consider in determining fair value, including: counterparty credit risk adjustments applied to financial assets and liabilities, taking into account the actual credit risk of the counterparty when valuing assets measured at fair value and credit risk adjustments applied to reflect our credit risk when valuing liabilities measured at fair value. To mitigate the counterparty credit risk, we have a policy of only entering into contracts with carefully selected major financial institutions based on specific minimum credit standards and other factors.

Reclassifications. Certain reclassifications have been made to the prior year financial information to conform to the current year presentation.

F-12

OMNICOM GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

3. Net Income per Common Share

The computations of basic and diluted net income per common share for the three years ended December 31, 2016 were (in millions, except per share amounts):

	2016				2015				2014
Net Income Available for Common Shares:
Net income - Omnicom Group Inc.	$	1,148.6			$	1,093.9			$	1,104.0
Net income allocated to participating securities	(6.5		)		(12.4		)		(20.4		)
	$	1,142.1			$	1,081.5			$	1,083.6
Weighted Average Shares:
Basic	237.9				244.2				253.9
Dilutive stock options and restricted shares	1.3				1.0				1.4
Diluted	239.2				245.2				255.3
Anti-dilutive stock options and restricted shares	—				0.1				0.6
Net Income per Common Share - Omnicom Group Inc.:
Basic	$	4.80			$	4.43			$	4.27
Diluted	$	4.78			$	4.41			$	4.24

4. Business Combinations

In 2016, we completed 5 acquisitions, which increased goodwill $538.5 million. Approximately $49.2 million of the goodwill recorded in 2016 is expected to be deductible for income tax purposes. Further, we acquired additional equity interests in certain majority owned subsidiaries. These acquisitions are accounted for as equity transactions and no additional goodwill was recorded. None of the acquisitions in 2016, either individually or in the aggregate, was material to our results of operations or financial position.

The valuation of the acquired businesses is based on various factors, including specialized know-how, reputation, geographic coverage, competitive position and service offerings, as well as our experience and judgment. Our acquisition strategy is focused on acquiring the expertise of an assembled workforce in order to continue to build upon the core capabilities of our strategic business platforms and agency brands, through the expansion of their geographic area or their service capabilities to better serve our clients. Certain acquisitions include an initial payment at closing and provide for future additional contingent purchase price payments (earn-outs), which are derived using the performance of the acquired entity and are based on predetermined formulas. Contingent purchase price obligations at December 31, 2016 and 2015 were $386.1 million and $322.0 million, respectively, of which $190.8 million and $81.5 million, respectively, is included in other current liabilities.

For each acquisition, we undertake a detailed review to identify other intangible assets that are required to be valued separately. We use several market participant measurements to determine fair value. This approach includes consideration of similar and recent transactions, as well as utilizing discounted expected cash flow methodologies and when available and as appropriate, we use comparative market multiples to supplement our analysis. As is typical for most service businesses, a substantial portion of the intangible asset value we acquire is the specialized know-how of the workforce, which is treated as part of goodwill and is not valued separately. A significant portion of the identifiable intangible assets acquired is derived from customer relationships, including the related customer contracts, as well as trade names. One of the primary drivers in executing our acquisition strategy is the existence of, or the ability to, expand our existing client relationships. The expected benefits of our acquisitions are typically shared across multiple agencies and regions.

F-13

OMNICOM GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

5. Goodwill and Intangible Assets

Goodwill and intangible assets at December 31, 2016 and 2015 were (in millions):

	2016												2015
	Gross Carrying Value				Accumulated Amortization				Net Carrying Value				Gross Carrying Value				Accumulated Amortization				Net Carrying Value
Goodwill	$	9,481.4			$	(505.3	)		$	8,976.1			$	9,205.7			$	(529.3	)		$	8,676.4
Intangible assets:
Purchased and internally developed software	$	342.6			$	(270.2	)		$	72.4			$	310.5			$	(239.9	)		$	70.6
Customer related and other	862.4				(507.4		)		355.0				715.0				(440.8		)		274.2
	$	1,205.0			$	(777.6	)		$	427.4			$	1,025.5			$	(680.7	)		$	344.8

Changes in goodwill for the years ended December 31, 2016 and 2015 were (in millions):

	2016				2015
January 1	$	8,676.4			$	8,822.2
Acquisitions	311.7				35.3
Noncontrolling interests in acquired businesses	74.0				19.3
Contingent purchase price obligations of acquired businesses	152.8				90.1
Foreign currency translation and other	(238.8		)		(290.5		)
December 31	$	8,976.1			$	8,676.4

There were no goodwill impairment losses recorded in 2016 or 2015 and there are no accumulated goodwill impairment losses.

6. Debt

Credit Facilities

At December 31, 2016, our short-term liquidity sources include a $2.5 billion revolving credit facility (“Credit Facility”), domestic and international uncommitted credit lines and the ability to issue up to $2 billion of commercial paper. In July 2016, we extended the term of our Credit Facility to July 31, 2021. The uncommitted credit lines aggregate $1.1 billion and $1.2 billion at December 31, 2016 and 2015, respectively. There were no outstanding commercial paper issuances or borrowings under the Credit Facility or the uncommitted credit lines at December 31, 2016 and 2015.

Available and unused credit lines at December 31, 2016 and 2015 were (in millions):

	2016				2015
Credit Facility	$	2,500.0			$	2,500.0
Uncommitted credit lines	1,132.0				1,157.7
Available and unused credit lines	$	3,632.0			$	3,657.7

The Credit Facility contains financial covenants that require us to maintain a Leverage Ratio of consolidated indebtedness to consolidated EBITDA of no more than 3 times for the most recently ended 12-month period (EBITDA is defined as earnings before interest, taxes, depreciation and amortization) and an Interest Coverage Ratio of consolidated EBITDA to interest expense of at least 5 times for the most recently ended 12-month period. At December 31, 2016, we were in compliance with these covenants as our Leverage Ratio was 2.2 times and our Interest Coverage Ratio was 11.0 times. The Credit Facility does not limit our ability to declare or pay dividends or repurchase our common stock.

F-14

OMNICOM GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Short-Term Debt

Short-term debt at December 31, 2016 and 2015 was $28.7 million and $5.2 million, respectively. The debt represents bank overdrafts and short-term borrowings of our international subsidiaries and the weighted average interest rate was 9.8% and 3.7%, respectively. Due to the short-term nature of this debt, carrying value approximates fair value.

Long-Term Debt

Long-term debt at December 31, 2016 and 2015 was (in millions):

	2016				2015
5.9% Senior Notes due 2016	$	—			$	1,000.0
6.25% Senior Notes due 2019	500.0				500.0
4.45% Senior Notes due 2020	1,000.0				1,000.0
3.625% Senior Notes due 2022	1,250.0				1,250.0
3.65% Senior Notes due 2024	750.0				750.0
3.60% Senior Notes due 2026	1,400.0				—
Other debt	0.1				0.3
	4,900.1				4,500.3
Unamortized premium (discount), net	7.6				10.1
Unamortized debt issuance costs	(24.2		)		(16.9		)
Unamortized deferred gain from settlement of interest rate swaps	84.7				49.9
Fair value adjustment attributed to interest rate swaps	(47.6		)		22.2
	4,920.6				4,565.6
Current portion	(0.1		)		(1,001.4		)
Long-term debt	$	4,920.5			$	3,564.2

Omnicom and its wholly owned finance subsidiary, Omnicom Capital Inc. (“OCI”), are co-obligors under all the senior notes. The senior notes are a joint and several liability of us and OCI and we unconditionally guarantee OCI’s obligations with respect to the senior notes. OCI provides funding for our operations by incurring debt and lending the proceeds to our operating subsidiaries. OCI’s assets 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 us to obtain funds from our subsidiaries through dividends, loans or advances. Our senior notes are senior unsecured obligations that rank equal in right of payment with all existing and future unsecured senior indebtedness.

The contractual maturities of our long-term debt at December 31, 2016 are (in millions):

2017	$	0.1
2018	—
2019	500.0
2020	1,000.0
2021	—
Thereafter	3,400.0
	$	4,900.1

We use fixed-to-floating interest rate swaps to manage our interest cost and structure our long-term debt portfolio to achieve a mix of fixed rate and floating rate debt. Interest rate swaps hedge the risk of changes in fair value of the underlying senior notes attributable to changes in the benchmark LIBOR interest rate. The interest rate swaps qualify and are designated as fair value hedges on the underlying senior notes and have the economic effect of converting the underlying senior notes from fixed rate obligations to floating rate obligations. We receive fixed interest rate payments equal to the coupon interest rate on the underlying senior notes and pay a variable interest rate equal to three-month LIBOR, plus a spread. Gains and losses attributed to changes in the fair value of the swaps substantially offset changes in the fair value of the underlying senior notes attributed to changes in the benchmark interest rate. Accordingly, any hedge ineffectiveness is not material to our results of operations.

F-15

OMNICOM GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

At January 1, 2015, we had a $1.25 billion fixed-to-floating interest rate swap on our 3.625% Senior Notes due 2022 (“2022 Notes”) and a $1.0 billion fixed-to-floating interest rate swap on our 4.45% Senior Notes due 2020 (“2020 Notes”). In October 2015, we settled the swap on the 2020 Notes, realizing a gain of $36.9 million, and reduced the amount of the swap on the 2022 Notes to $1.0 billion, realizing a gain of $13.5 million. On January 19, 2016, we settled the $1.0 billion swap on the 2022 Notes, realizing a gain of $54.2 million. The gains are being amortized in interest expense over the remaining term of the 2020 Notes and the 2022 Notes.

In October 2015, we entered into a $750 million interest rate swap on our 3.65% Senior Notes due 2024 (“2024 Notes”). The spread over the three-month LIBOR interest rate on the 2024 Notes is 1.72%.

We may use forward-starting interest rate swaps to lock in the interest rate of future debt issuances. Forward-starting interest rate swaps qualify and are designated as cash flow hedges on the future debt issuances. On March 26, 2015, in anticipation of refinancing our 5.9% Senior Notes due April 15, 2016 (“2016 Notes”), we entered into a $1.0 billion forward-starting interest rate swap. At December 31, 2015, we recorded a current liability of $5.6 million representing the fair value of the forward-starting interest rate swap. The related unrealized loss of $3.3 million, net of income taxes of $2.3 million, was recorded in accumulated other comprehensive income and almost no hedge ineffectiveness was recorded. As discussed below, the forward-starting interest rate swap was settled in March 2016.

On April 6, 2016, we issued $1.4 billion principal amount of 3.60% Senior Notes due April 15, 2026 (“2026 Notes”). The net proceeds, after deducting the underwriting discount and offering expenses, were $1.387 billion. A portion of the proceeds were used to retire the 2016 Notes at maturity. On March 28, 2016, we settled the outstanding forward-starting interest rate swap for a payment of $54.5 million. The payment is being amortized in interest expense over the term of the 2026 Notes and resulted in an effective interest rate on the 2026 Notes of approximately 4.1%. Concurrent with the issuance of the 2026 Notes, we entered into a $500 million fixed-to-floating interest rate swap on the 2026 Notes. We receive the coupon rate and pay a variable interest rate equal to three-month LIBOR interest rate, plus a spread of 1.982%.

At December 31, 2016, we recorded long-term liabilities of $17.1 million and $30.5 million representing the fair value of the swaps on the 2024 Notes and 2026 Notes, respectively, that was substantially offset by the change in the fair value of the notes. The total principal amount of our fixed rate senior notes at December 31, 2016, was $4.9 billion and the total amount of the fixed-to-floating interest rate swaps was $1.25 billion. The interest rate swaps have the economic effect of converting our debt portfolio to approximately 75% fixed rate obligations and 25% floating rate obligations.

At December 31, 2015, we recorded a long-term receivable of $32.2 million on the swap of the 2022 Notes and a long-term liability of $10.0 million on the swap of 2024 Notes. The receivable and liability represent the fair value of the swaps that are substantially offset by the change in the fair value of the notes.

Convertible Debt

In July 2014, we redeemed the outstanding Convertible Notes due July 31, 2032 ("2032 Notes") for $252.7 million in cash. Prior to redemption, the noteholders converted their notes into 1,217,112 shares of our common stock. There was no convertible debt outstanding at December 31, 2016 and 2015.

Interest Expense

Interest expense for the three years ended December 31, 2016 is composed of (in millions):

	2016				2015				2014
Long-term debt	$	205.5			$	210.2			$	192.7
Interest rate swaps	(13.1		)		(44.1		)		(30.5		)
Amortization of deferred gain on interest rate swaps	(15.4		)		(9.2		)		(7.2		)
Commercial paper	6.8				4.8				2.9
Fees	5.6				5.7				6.2
Other	20.3				13.7				13.1
	$	209.7			$	181.1			$	177.2

F-16

OMNICOM GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

7. Segment Reporting

Our five 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. 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 operating segments, which are our five agency networks, into one reporting segment.

The agency networks' regional reporting units comprise three principal 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 at and for the three years ended December 31, 2016 were (in millions):

		Americas				EMEA				Asia Pacific
2016
Revenue		$	9,597.6			$	4,183.1			$	1,636.2
Long-lived assets and goodwill		6,662.7				2,469.1				519.1
2015
Revenue		$	9,359.0			$	4,203.5			$	1,571.9
Long-lived assets and goodwill		6,103.4				2,737.8				527.9
2014
Revenue		$	9,111.7			$	4,602.5			$	1,603.6
Long-lived assets and goodwill		6,157.8				2,800.8				571.6

The Americas comprises North America, which includes the United States, Canada and Puerto Rico, and Latin America, which includes Mexico. EMEA comprises Europe, the Middle East and Africa. Asia Pacific comprises Australia, China, India, Japan, Korea, New Zealand, Singapore and other Asian countries. Revenue in the United States in 2016, 2015 and 2014 was $8,627.8 million, $8,526.7 million and $8,185.9 million, respectively.

8. Equity Method Investments

Income from our equity method investments was $5.4 million, $8.4 million and $16.2 million in 2016, 2015 and 2014, respectively. Our proportionate share in their net assets at December 31, 2016 and 2015 was $38.6 million and $45.3 million, respectively. Our equity method investments are not material to our results of operations or financial position; therefore, summarized financial information is not required to be presented.

9. Share-Based Compensation Plans

Share-based incentive awards are granted to employees under the 2013 Incentive Award Plan (“2013 Plan”), which is administered by the Compensation Committee of the Board of Directors (“Compensation Committee”). Awards include stock options, restricted stock and other stock awards. The maximum number of shares of common stock that can be granted under the 2013 Plan is 33 million shares plus any shares awarded under the 2013 Plan and any prior plan that have been forfeited or have expired. Stock option awards reduce the number of shares available for grant on a one-for-one basis and all other awards reduce the number of shares available for grant by 3.5 shares for each share awarded. The terms of each award and the exercise date are determined by the Compensation Committee. The 2013 Plan does not permit the holder of an award to elect cash settlement under any circumstances. At December 31, 2016, there were 30,308,073 shares available for grant under the 2013 Plan. If all shares available for grant were for awards other than stock options, shares available for grant would be 8,659,449.

F-17

OMNICOM GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Share-based compensation expense in 2016, 2015 and 2014 was $93.4 million, $99.4 million and $93.5 million, respectively. At December 31, 2016, unamortized share-based compensation that will be expensed over the next five years is $173.2 million. We record a deferred tax asset for the share-based compensation expense recognized for financial reporting purposes that has not been deducted on our income tax return. Historically, the excess of the actual tax deduction over the deferred tax asset was recorded in additional paid-in capital. As a result of the application of ASU 2016-09, Compensation - Stock Compensation: Improvements to Employee Share-Based Payment Accounting (“ASU 2016-09”) (see Note 20), effective January 1, 2017, all excess tax benefits and tax deficiencies related to share-based compensation will be recognized in results of operations. The excess tax benefit or deficiency will be calculated as the difference between the grant date price and the price of our common stock on the vesting or exercise date. As a result, the effect on tax expense is dependent on the price of our common stock and it is not possible to estimate the impact of the new standard on income tax expense.

Stock Options

The exercise price of stock option awards cannot be less than 100% of the market price of our common stock on the grant date and the option term cannot exceed ten years from the grant date. Generally, stock option awards vest over three years from the grant date as follows: 30%, 30% and 40%.

Stock option activity for the three years ended December 31, 2016 was:

	2016					2015					2014
	Shares			Weighted Average Exercise Price		Shares			Weighted Average Exercise Price		Shares			Weighted Average Exercise Price
January 1	1,140,547			$28.86		1,652,140			$27.97		2,643,680			$26.39
Granted	—					—					60,000			$66.16
Exercised	(420,790	)		$30.56		(511,593	)		$25.98		(1,046,540	)		$26.19
Forfeited	—					—					(5,000	)		$23.40
December 31	719,757			$27.88		1,140,547			$28.86		1,652,140			$27.97
Exercisable December 31	695,757			$26.54		1,074,547			$26.47		1,526,140			$24.95

Options outstanding and exercisable at December 31, 2016 were:

				Options Outstanding							Options Exercisable
Exercise Price Range				Shares			Weighted Average Remaining Contractual Life		Weighted Average Exercise Price		Shares			Weighted Average Exercise Price
$23.00	to	$24.00		647,757			2.2 years		$23.40		647,757			$23.40
$66.00	to	$71.00		72,000			7.4 years		$68.04		48,000			$68.99
				719,757							695,757

Restricted Stock

Restricted stock activity for the three years ended December 31, 2016 was:

	2016			2015			2014
January 1	4,349,105			5,040,641			6,090,697
Granted	1,100,396			1,208,964			915,922
Vested	(1,438,386	)		(1,631,343	)		(1,619,444	)
Forfeited	(209,010	)		(269,157	)		(346,534	)
December 31	3,802,105			4,349,105			5,040,641
Weighted average grant date fair value of shares granted in the period	$73.16			$64.49			$64.92
Weighted average grant date fair value at December 31	$61.72			$55.08			$50.98

F-18

OMNICOM GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Generally, restricted shares vest ratably over five years from the grant date provided the employee remains employed by us. Restricted shares may not be sold, transferred, pledged or otherwise encumbered until the forfeiture restrictions lapse. Under most circumstances, the employee forfeits the shares if employment ceases prior to the end of the restriction period.

Performance Restricted Stock Units

The Compensation Committee grants certain employees performance restricted stock units (“PRSUs”). Each PRSU represents the right to receive one share of common stock on vesting. The ultimate number of PRSUs received by the employee depends on the Company's average return on equity over a three year period compared to the average return on equity of a peer group of principal competitors over the same period. The PRSUs vest three years from the grant date. The PRSUs have a service and performance vesting condition and compensation expense is recognized on a graded-vesting basis. Over the performance period, compensation expense is adjusted upward or downward based on our estimate of the probability of achieving the performance target for the portion of the awards subject to the performance vesting condition. We have assumed that substantially all the PRSUs will vest.

PRSU activity for the three years ended December 31, 2016 was:

	2016							2015							2014
	Shares			Weighted Average Grant Date Fair Value				Shares			Weighted Average Grant Date Fair Value				Shares			Weighted Average Grant Date Fair Value
January 1	534,456			$	66.05			622,859			$	56.16			681,555			$	51.19
Granted	153,492			83.23				161,625			77.68				188,621			69.89
Distributed	(225,567	)		55.20				(239,387	)		48.94				(165,562	)		48.56
Forfeited	—			—				(10,641	)		48.87				(81,755	)		61.76
December 31	462,381			$	77.05			534,456			$	66.05			622,859			$	56.16

Employee Stock Purchase Plan

The employee stock purchase plan (“ESPP”) enables employees to purchase our common stock through payroll deductions over each plan quarter at 95% of the market price on the last trading day of the plan quarter. Purchases are limited to 10% of eligible compensation as defined by the Employee Retirement Income Security Act of 1974 (“ERISA”). Shares purchased by employees in 2016, 2015 and 2014 were 97,935 shares, 111,849 shares and 113,293 shares, respectively. All shares purchased were treasury stock, for which we received $7.8 million, $7.8 million and $8.0 million, respectively. At December 31, 2016, there were 8,868,299 shares available under the ESPP.

10. Income Taxes

We file a consolidated U.S. federal income tax return and income tax returns in various state and local jurisdictions. Our subsidiaries file tax returns in various foreign jurisdictions. Our principal foreign jurisdictions include the United Kingdom, France and Germany. The Internal Revenue Service has completed its examination of our federal tax returns through 2012. Tax returns in the United Kingdom, France and Germany have been examined through 2012, 2010 and 2009, respectively.

Income before income taxes for the three years ended December 31, 2016 was (in millions):

	2016				2015				2014
Domestic	$	805.2			$	803.3			$	739.9
International	1,036.6				975.3				1,070.1
	$	1,841.8			$	1,778.6			$	1,810.0

F-19

OMNICOM GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Income tax expense (benefit) for the three years ended December 31, 2016 was (in millions):

	2016				2015				2014
Current:
Federal	$	381.8			$	342.3			$	356.1
State and local	12.6				29.9				38.1
International	332.1				324.5				344.8
	726.5				696.7				739.0
Deferred:
Federal	(88.2		)		(86.7		)		(106.4		)
State and local	12.0				12.1				(2.3		)
International	(49.8		)		(38.5		)		(37.2		)
	(126.0		)		(113.1		)		(145.9		)
	$	600.5			$	583.6			$	593.1

The reconciliation from the statutory U.S. federal income tax rate to our effective tax rate is:

	2016			2015			2014
Statutory U.S. federal income tax rate	35.0	%		35.0	%		35.0	%
State and local income taxes, net of federal income tax benefit	0.9			1.5			1.3
International tax rate differentials	(4.0	)		(3.7	)		(3.3	)
Other	0.7			—			(0.2	)
Effective tax rate	32.6	%		32.8	%		32.8	%

The international tax rate differentials are primarily attributed to our earnings in the U.K., China, Canada, the United Arab Emirates and Brazil being taxed at different rates than the U.S. statutory tax rate.

Income tax expense in 2016, 2015 and 2014 includes $2.3 million, $1.1 million and $1.7 million, respectively, of interest, net of tax benefit, and penalties related to tax positions taken on our tax returns. At December 31, 2016 and 2015, the accrued interest and penalties were $11.9 million and $8.4 million, respectively.

The components of deferred tax assets and liabilities at December 31, 2016 and 2015 were (in millions):

	2016				2015
Deferred tax assets:
Compensation	$	307.5			$	293.8
Tax loss and credit carryforwards	88.5				113.3
Basis differences from acquisitions	24.3				37.1
Basis differences from short-term assets and liabilities	36.2				27.2
Other	18.7				26.9
Deferred tax assets	475.2				498.3
Valuation allowance	(3.0		)		(35.3		)
Net deferred tax assets	$	472.2			$	463.0
Deferred tax liabilities:
Goodwill and intangible assets	$	802.7			$	729.5
Financial instruments	132.3				197.3
Unremitted foreign earnings	15.9				9.9
Basis differences from investments	1.8				(4.6		)
Deferred tax liabilities	$	952.7			$	932.1
Net deferred tax liabilities	$	480.5			$	469.1

F-20

OMNICOM GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The American Recovery and Reinvestment Act of 2009 provided an election where qualifying cancellation of indebtedness income for debt reacquired in 2009 and 2010 was deferred and included in taxable income from 2014 to 2018. In 2009 and 2010, we redeemed $1.4 billion of our debt resulting in a tax liability of approximately $329 million. Through December 31, 2016, we paid $197 million of the liability and the remainder will be paid ratably in 2017 and 2018. Substantially all the deferred tax liability for financial instruments at December 31, 2016 and 2015, relates to the reacquired debt.

As a result of the conversion of the 2032 Notes (see Note 6), in 2014 we paid $66.2 million, representing the excess of the accreted value of the notes for income tax purposes over the conversion value and reclassified $32.2 million, representing the difference between the issue price of the notes and the conversion value, from long-term deferred tax liabilities to additional paid-in capital.

We have concluded that it is more likely than not that we will be able to realize our net deferred tax assets in future periods because results of future operations are expected to generate sufficient taxable income. The valuation allowance of $3.0 million and $35.3 million at December 31, 2016 and 2015, respectively, relates to tax loss and credit carryforwards in the United States and international jurisdictions. The reduction in the valuation allowance year-over-year is primarily related to a change in tax law as it relates to certain domestic earnings. Tax loss and credit carryforwards for which there is no valuation allowance are available for periods ranging from 2017 to 2036, which is longer than the forecasted utilization of such carryforwards.

We have not provided U.S. federal income and foreign withholding taxes on approximately $2.4 billion of cumulative undistributed earnings of certain foreign subsidiaries. We intend to indefinitely reinvest these earnings in our international operations for working capital requirements and expansion in the region and we currently have no plans to repatriate these funds. We cannot determine the amount of taxes and foreign tax credits associated with the future repatriation of such earnings and therefore cannot quantify the tax liability.

In 2016, the sustained strength of the U.S. Dollar against substantially all foreign currencies impacted the translation of approximately $1.3 billion of the cumulative undistributed earnings of certain foreign operations that are not indefinitely reinvested. The foreign tax credits on those earnings substantially offset the U.S. federal tax liability on any repatriation. We have provided $15.9 million of residual U.S. taxes on those earnings. Changes in international tax rules or changes in U.S. tax rules and regulations covering international operations and foreign tax credits may affect our future reported financial results or the way we conduct our business.

A reconciliation of our unrecognized tax benefits at December 31, 2016 and 2015 is (in millions):

	2016				2015
January 1	$	113.0			$	139.8
Additions:
Current year tax positions	20.0				5.8
Prior year tax positions	6.5				0.2
Reduction of prior year tax positions	(21.9		)		(25.1		)
Settlements	(0.7		)		(6.0		)
Foreign currency translation	—				(1.7		)
December 31	$	116.9			$	113.0

The majority of the liability for uncertain tax positions is recorded in long-term liabilities. At December 31, 2016 and 2015, approximately $71.0 million and $52.2 million, respectively, of the liability for uncertain tax positions would affect our effective tax rate upon resolution of the uncertain tax positions.

11. Pension and Other Postemployment Benefits

Defined Contribution Plans

Our domestic and international subsidiaries provide retirement benefits for their employees primarily through defined contribution profit sharing and savings plans. Contributions to the plans vary by subsidiary and have generally been in amounts up to the maximum percentage of total eligible compensation of participating employees that is deductible for income tax purposes. Contribution expense in 2016, 2015 and 2014 was $108.5 million, $105.7 million and $108.4 million, respectively.

F-21

OMNICOM GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Defined Benefit Pension Plans

Two of our U.S. businesses and several of our non-U.S. businesses sponsor noncontributory defined benefit pension plans. These plans provide benefits to employees based on formulas recognizing length of service and earnings. The U.S. plans cover approximately 900 participants, are closed to new participants and do not accrue future benefit credits. The non-U.S. plans, which include plans required by local law, cover approximately 6,700 participants and are not covered by ERISA.

We have a Senior Executive Restrictive Covenant and Retention Plan (“Retention Plan”) for certain executive officers of Omnicom selected by the Compensation Committee. The Retention Plan is a non-qualified deferred compensation severance plan that was adopted to secure non-competition, non-solicitation, non-disparagement and ongoing consulting services from such executive officers and to strengthen the retention aspect of executive officer compensation. The Retention Plan provides annual payments upon termination following at least seven years of service with Omnicom or its subsidiaries to the participants or to their beneficiaries. A participant’s annual benefit is payable for 15 consecutive calendar years following termination, but in no event prior to age 55. The annual benefit is equal to the lesser of (i) the participant’s final average pay times an applicable percentage, which is based upon the executive’s years of service as an executive officer, not to exceed 35% or (ii) $1.5 million adjusted for cost-of-living, beginning with the second annual payment, not to exceed 2.5% per year. The Retention Plan is not funded and benefits are paid when due.

The components of net periodic benefit expense for the three years ended December 31, 2016 were (in millions):

	2016				2015				2014
Service cost	$	7.8			$	5.3			$	6.8
Interest cost	7.8				7.6				8.2
Expected return on plan assets	(3.7		)		(4.0		)		(4.2		)
Amortization of prior service cost	4.5				4.3				4.3
Amortization of actuarial losses	5.3				5.7				2.3
	$	21.7			$	18.9			$	17.4

Included in accumulated other comprehensive income at December 31, 2016 and 2015 were unrecognized actuarial losses and unrecognized prior service cost of $98.0 million ($60.0 million net of income taxes) and $95.0 million ($59.0 million net of income taxes), respectively, that have not yet been recognized in net periodic benefit cost. The unrecognized actuarial gains and losses and unrecognized prior service cost included in accumulated other comprehensive income and expected to be recognized in net periodic benefit cost in 2017 is $10.0 million.

The weighted average assumptions used to determine net periodic benefit expense for the three years ended December 31, 2016 were:

	2016			2015			2014
Discount rate	3.7	%		3.5	%		4.5	%
Compensation increases	2.0	%		1.9	%		1.8	%
Expected return on plan assets	4.8	%		5.7	%		5.8	%

The expected long-term rate of return for plan assets for the U.S. plans is based on several factors, including current and expected asset allocations, historical and expected returns on various asset classes and current and future market conditions. A total return investment approach using a mix of equities and fixed income investments maximizes the long-term return. This strategy is intended to minimize plan expense by achieving long-term returns in excess of the growth in plan liabilities over time. The discount rate used to compute net periodic benefit cost is based on yields of available high-quality bonds and reflects the expected cash flow as of the measurement date. The expected returns on plan assets and discount rates for the non-U.S. plans are based on local factors, including each plan’s investment approach, local interest rates and plan participant profiles.

Experience gains and losses and the effects of changes in actuarial assumptions are generally amortized over a period no longer than the expected average future service of active employees.

F-22

OMNICOM GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Our funding policy is to contribute amounts sufficient to meet minimum funding requirements in accordance with the applicable employee benefit and tax laws that the plans are subject to, plus such additional amounts as we may determine to be appropriate. In 2016, 2015 and 2014, we contributed $6.6 million, $4.2 million, $3.2 million, respectively, to our defined benefit pension plans. We do not expect our contributions for 2017 to differ materially from our 2016 contributions.

At December 31, 2016 and 2015, the benefit obligation, fair value of plan assets and funded status of our defined benefit pension plans were (in millions):

	2016				2015
Benefit Obligation:
January 1	$	234.8			$	222.7
Service cost	7.8				5.3
Interest cost	7.8				7.6
Amendments, curtailments and settlements	—				3.8
Actuarial losses	13.3				5.9
Benefits paid	(9.4		)		(7.2		)
Foreign currency translation	(3.2		)		(3.3		)
December 31	$	251.1			$	234.8
Fair Value of Plan Assets:
January 1	$	68.9			$	74.4
Actual return on plan assets	4.9				(0.5		)
Employer contributions	6.6				4.2
Benefits paid	(9.4		)		(7.2		)
Foreign currency translation and other	(2.4		)		(2.0		)
December 31	$	68.6			$	68.9
Funded Status December 31	$	(182.5	)		$	(165.9	)

At December 31, 2016 and 2015, the funded status was classified as follows (in millions):

	2016				2015
Other assets	$	4.2			$	5.4
Other current liabilities	(5.1		)		(4.6		)
Long-term liabilities	(181.6		)		(166.7		)
	$	(182.5	)		$	(165.9	)

The accumulated benefit obligation for our defined benefit pension plans at December 31, 2016 and 2015, was $240.8 million and $226.0 million, respectively.

At December 31, 2016 and 2015, plans with benefit obligations in excess of plan assets were (in millions):

	2016				2015
Benefit obligation	$	241.3			$	215.9
Plan assets	54.6				44.6
	$	186.7			$	171.3

The weighted average assumptions used to determine the benefit obligation at December 31, 2016 and 2015, were:

	2016			2015
Discount rate	3.5	%		3.8	%
Compensation increases	2.0	%		2.0	%

F-23

OMNICOM GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

At December 31, 2016, the estimated benefits expected to be paid over the next 10 years are (in millions):

2017	$	9.0
2018	8.8
2019	9.7
2020	12.6
2021	15.2
2022 - 2026	87.7

The fair value of plan assets at December 31, 2016 and 2015 was (in millions):

2016	Level 1				Level 2				Level 3				Total
Cash	$	1.6											$	1.6
Mutual funds	39.0												39.0
Unit trusts	23.5												23.5
Insurance contracts									$	4.3			4.3
Other					$	0.2							0.2
	$	64.1			$	0.2			$	4.3			$	68.6

2015
Cash	$	1.8											$	1.8
Mutual funds	39.7												39.7
Unit trusts	22.9												22.9
Insurance contracts									$	4.2			4.2
Other					$	0.3							0.3
	$	64.4			$	0.3			$	4.2			$	68.9

Mutual funds and unit trusts are publicly traded and are valued using quoted market prices. The mutual funds and unit trusts include investments in equity and fixed income securities. Insurance contracts primarily consist of guaranteed investment contracts. Other investments primarily consist of commingled short-term investment funds.

Changes in the fair value of plan assets measured using Level 3 inputs at December 31, 2016 and 2015 were (in millions):

	2016				2015
January 1	$	4.2			$	3.7
Actual return on assets	0.2				0.1
Purchases, sales and settlements, net	(0.1		)		0.4
December 31	$	4.3			$	4.2

The weighted average asset allocations at December 31, 2016 and 2015 were:

	2016						2015
	Target Allocation			Actual Allocation			Actual Allocation
Cash	4	%		3	%		3	%
Mutual funds	54	%		57	%		58	%
Unit trusts	35	%		34	%		33	%
Insurance contracts	6	%		6	%		6	%
Other	1	%		—	%		—	%
	100	%		100	%		100	%

F-24

OMNICOM GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Risk tolerance for these plans is established through consideration of plan liabilities, funded status and evaluation of the overall investment environment. The investment portfolios contain a diversified blend of equity and fixed-income investments. Equity investments are diversified across geography and market capitalization through investment in large and medium capitalization U.S. and international equities and U.S. and international debt securities. Investment risk is measured and monitored on an ongoing basis through annual liability measurements, and periodic asset/liability studies and investment portfolio reviews.

Postemployment Arrangements

We have executive retirement agreements under which benefits will be paid to participants or to their beneficiaries over periods up to ten years beginning after cessation of full-time employment. Our postemployment arrangements are unfunded and benefits are paid when due.

The components of net periodic benefit expense for the three years ended December 31, 2016 were (in millions):

	2016				2015				2014
Service cost	$	3.9			$	4.8			$	3.8
Interest cost	3.5				4.3				4.5
Amortization of prior service cost	3.1				3.2				2.1
Amortization of actuarial losses	1.1				1.6				0.9
	$	11.6			$	13.9			$	11.3

Included in accumulated other comprehensive income at December 31, 2016 and 2015 were unrecognized actuarial losses and unrecognized prior service cost of $51.0 million ($30.0 million net of income taxes) and $49.0 million ($29.0 million net of income taxes), respectively, that have not yet been recognized in the net periodic benefit cost. The unrecognized actuarial gains and losses and unrecognized prior service cost included in accumulated other comprehensive income and expected to be recognized in net periodic benefit cost in 2017 is $4.6 million.

The weighted average assumptions used to determine net periodic benefit expense for the three years ended December 31, 2016 were:

	2016			2015			2014
Discount rate	4.1	%		3.8	%		4.7	%
Compensation increases	3.5	%		3.5	%		3.5	%

Experience gains and losses and effects of changes in actuarial assumptions are amortized over a period no longer than the expected average future service of active employees.

At December 31, 2016 and 2015, the benefit obligation was (in millions):

	2016				2015
January 1	$	115.9			$	122.1
Service cost	3.9				4.8
Interest cost	3.5				4.3
Amendments	5.6				(0.6		)
Actuarial (gain) loss	0.6				(6.0		)
Benefits paid	(9.2		)		(8.7		)
December 31	$	120.3			$	115.9

At December 31, 2016 and 2015, the liability was classified as follows (in millions):

	2016				2015
Other current liabilities	$	8.1			$	9.3
Long-term liabilities	112.2				106.6
	$	120.3			$	115.9

F-25

OMNICOM GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The weighted average assumptions used to determine the benefit obligation at December 31, 2016 and 2015 were:

	2016			2015
Discount rate	3.9	%		4.1	%
Compensation increases	3.5	%		3.5	%

At December 31, 2016, the estimated benefits expected to be paid over the next 10 years are (in millions):

2017	$	8.1
2018	8.2
2019	6.9
2020	5.8
2021	5.5
2022 - 2026	30.5

12. Supplemental Cash Flow Data

The change in operating capital for the three years ended December 31, 2016 was (in millions):

	2016				2015				2014
(Increase) decrease in accounts receivable	$	(376.5	)		$	(1,063.6	)		$	(227.1	)
(Increase) decrease in work in process and other current assets	(89.7		)		(74.7		)		(14.2		)
Increase (decrease) in accounts payable	741.9				1,443.7				231.3
Increase (decrease) in customer advances and other current liabilities	36.3				203.9				(24.0		)
Change in other assets and liabilities, net	11.0				48.3				(72.2		)
	$	323.0			$	557.6			$	(106.2	)
Income taxes paid	$	570.4			$	540.1			$	610.1
Interest paid	$	216.7			$	173.9			$	188.6

As a result of the conversion of the 2032 Notes (see Note 6), in 2014 we issued 1,217,112 shares of our common stock to satisfy the conversion premium. Based on the closing prices of our common stock on the settlement dates, the issuances resulted in a non-cash pretax financing activity of $89.2 million, net of a cash tax benefit of $32.2 million (see Note 10).

13. Noncontrolling Interests

Changes in the ownership interests in our less than 100% owned subsidiaries for the three years ended December 31, 2016 were (in millions):

	2016				2015				2014
Net income attributed to Omnicom Group Inc.	$	1,148.6			$	1,093.9			$	1,104.0
Transfers (to) from noncontrolling interests:
Increase in additional paid-in capital from sale of shares in noncontrolling interests	2.0				1.7				6.3
Decrease in additional paid-in capital from purchase of shares in noncontrolling interests	(89.7		)		(40.5		)		(70.8		)
Net transfers (to) from noncontrolling interests	(87.7		)		(38.8		)		(64.5		)
Change from net income attributed to Omnicom Group Inc. and transfers (to) from noncontrolling interests	$	1,060.9			$	1,055.1			$	1,039.5

F-26

OMNICOM GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

14. Leases

We lease substantially all our office space under operating leases and equipment under operating and capital leases. Office leases may include renewal options. In circumstances where the exercise of a renewal option is reasonably assured at the inception of the lease, the renewal period is included in the determination of the lease term. Office leases may also include scheduled rent increases and concessions, such as rent abatements and landlord incentives and tenant improvement allowances. Scheduled rent increases are recognized on a straight-line basis over the lease term and concessions are recorded as deferred rent and are amortized in rent expense on a straight-line basis over the lease term. Certain office leases require payment of real estate taxes and other occupancy costs and these costs are not included in rent expense. Leasehold improvements made at inception or during the lease term are amortized over the shorter of the asset life or the lease term, which may include renewal periods where the renewal is reasonably assured.

Rent expense for the three years ended December 31, 2016 was (in millions):

	2016				2015				2014
Office base rent	$	339.7			$	342.5			$	373.1
Third party sublease rent	(5.6		)		(11.0		)		(11.2		)
Net office rent	334.1				331.5				361.9
Equipment rent	21.0				22.6				27.9
	$	355.1			$	354.1			$	389.8

Future minimum payments under non-cancelable operating leases, reduced by third party sublease rent receivable from existing non-cancelable subleases, and capital leases are (in millions):

	Operating Leases				Capital Leases
2017	$	299.5			$	26.2
2018	232.1				19.3
2019	197.4				14.8
2020	157.5				11.1
2021	131.0				5.7
Thereafter	550.9				1.3
Minimum lease payments	1,568.4				78.4
Sublease rent	(7.8		)
Net rent	$	1,560.6
Interest component					(4.4		)
Present value of minimum lease payments					$	74.0

Property under capital lease and capital lease obligations at December 31, 2016 and 2015 were (in millions):

	2016				2015
Property under capital lease:
Cost	$	184.8			$	154.6
Accumulated depreciation	(110.2		)		(100.4		)
	$	74.6			$	54.2
Capital lease obligations:
Current	$	24.2			$	22.8
Long-term	49.8				35.2
	$	74.0			$	58.0

Depreciation expense for property under capital lease in 2016, 2015 and 2014 was $27.2 million, $26.5 million and $26.1 million, respectively.

F-27

OMNICOM GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

15. Temporary Equity - Redeemable Noncontrolling Interests

Owners of noncontrolling equity interests in some of our subsidiaries have the right in certain circumstances to require us to purchase all or a portion of their equity interest at fair value as defined in the applicable agreements. Assuming that the subsidiaries perform over the relevant periods at their current profit levels, at December 31, 2016 the aggregate estimated maximum amount we could be required to pay in future periods is $201.6 million, of which $163.9 million is currently exercisable by the holders. If these rights are exercised, there would be an increase in the net income attributable to Omnicom as a result of our increased ownership interest and the reduction of net income attributable to noncontrolling interests. The ultimate amount paid could be significantly different because the redemption amount is primarily dependent on the future results of operations of the subject businesses, the timing of the exercise of these rights and changes in foreign currency exchange rates.

16. 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.

In addition, on December 14, 2016, two of our subsidiaries received subpoenas from the U.S. Department of Justice Antitrust Division concerning its ongoing investigation of video production and post-production practices in the advertising industry. The Company is fully cooperating with the investigation. While the ultimate effect of the investigation is inherently uncertain, we do not at this time believe that the investigation will have a material adverse effect on our results of operations or financial position. However, the ultimate resolution of these matters could be different from our current assessment and the differences could be material.

17. Equity

In December 2016, we retired 100 million shares of our treasury stock, which reduced the number of common shares issued and treasury shares held. Upon retirement, the excess of the average cost of the treasury stock over the par value of the common stock was charged to retained earnings. Accordingly, the balance sheet at December 31, 2016 reflects a reduction in common stock, retained earnings and treasury stock. The retirement of the treasury stock had no impact on shareholders’ equity or common stock outstanding. The retired treasury shares are included in the authorized but unissued common shares.

Changes in accumulated other comprehensive income (loss), net of income taxes, for the years ended December 31, 2016 and 2015 were (in millions):

	Cash Flow Hedge				Available-for-Sale Securities				Defined Benefit Pension Plans and Postemployment Arrangements				Foreign Currency Translation				Total
January 1, 2015	$	—			$	(1.2	)		$	(92.1	)		$	(524.9	)		$	(618.2	)
Other comprehensive income (loss) before reclassifications	(3.3		)		0.3				(4.7		)		(398.4		)		(406.1		)
Reclassification from accumulated other comprehensive income (loss)	—				—				8.9				—				8.9
December 31, 2015	(3.3		)		(0.9		)		(87.9		)		(923.3		)		(1,015.4		)
Other comprehensive income (loss) before reclassifications	(28.5		)		0.1				(11.0		)		(311.8		)		(351.2		)
Reclassification from accumulated other comprehensive income (loss)	2.3				—				8.3				—				10.6
December 31, 2016	$	(29.5	)		$	(0.8	)		$	(90.6	)		$	(1,235.1	)		$	(1,356.0	)

F-28

OMNICOM GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

18. Fair Value

Financial assets and liabilities measured at fair value on a recurring basis at December 31, 2016 and 2015 were (in millions):

2016	Level 1				Level 2				Level 3				Total
Assets:
Cash and cash equivalents	$	3,002.2											$	3,002.2
Short-term investments	20.6												20.6
Available-for-sale securities	4.3												4.3
Interest rate and foreign currency derivative instruments					$	0.2							0.2
Liabilities:
Interest rate and foreign currency derivative instruments					$	48.9							$	48.9
Contingent purchase price obligations									$	386.1			386.1

2015
Assets:
Cash and cash equivalents	$	2,605.2											$	2,605.2
Short-term investments	14.5												14.5
Available-for-sale securities	4.8												4.8
Interest rate and foreign currency derivative instruments					$	32.4							32.4
Liabilities:
Interest rate and foreign currency derivative instruments					$	15.9							$	15.9
Contingent purchase price obligations									$	322.0			322.0

Changes in contingent purchase price obligations for the years ended December 31, 2016 and 2015 were (in millions):

	2016				2015
January 1	$	322.0			$	300.7
Acquisitions	165.3				98.9
Revaluation and interest	18.0				21.8
Payments	(103.7		)		(58.6		)
Deferred payment	—				(21.4		)
Foreign currency translation	(15.5		)		(19.4		)
December 31	$	386.1			$	322.0

The carrying amount and fair value of our financial assets and liabilities at December 31, 2016 and 2015 were (in millions):

	2016								2015
	Carrying Amount				Fair Value				Carrying Amount				Fair Value
Assets:
Cash and cash equivalents	$	3,002.2			$	3,002.2			$	2,605.2			$	2,605.2
Short-term investments	20.6				20.6				14.5				14.5
Available-for-sale securities	4.3				4.3				4.8				4.8
Interest rate and foreign currency derivative instruments	0.2				0.2				32.4				32.4
Cost method investments	14.2				14.2				21.5				21.5
Liabilities:
Short-term debt	$	28.7			$	28.7			$	5.2			$	5.2
Interest rate and foreign currency derivative instruments	48.9				48.9				15.9				15.9
Contingent purchase price obligations	386.1				386.1				322.0				322.0
Long-term debt, including current portion	4,920.6				5,035.1				4,565.6				4,655.9

F-29

OMNICOM GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The estimated fair value of the foreign currency and interest rate derivative instruments is determined using model-derived valuations, taking into consideration foreign currency rates for the foreign currency derivatives and readily observable inputs for LIBOR interest rates and yield curves to derive the present value of the future cash flows for the interest rate derivatives and counterparty credit risk for each. 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 long-term debt is based on quoted market prices.

19. Derivative Instruments and Hedging Activities

We manage our exposure to foreign exchange and interest rate risk through various strategies, including the use of derivative financial instruments. We use forward foreign exchange contracts as economic hedges to manage the cash flow volatility arising from foreign exchange rate fluctuations. We use interest rate swaps to manage our interest expense and structure our debt portfolio to achieve a mix of fixed rate and floating rate debt. We do not use derivative instruments for trading or speculative purposes. Using derivative instruments exposes us to the risk that counterparties to the derivative contracts will fail to meet their contractual obligations. To mitigate counterparty credit risk, we have a policy of only entering into derivative contracts with carefully selected major financial institutions based on specific minimum credit standards and other factors.

We evaluate the effects of changes in foreign currency exchange rates, interest rates and other relevant market risks on our derivative instruments. We periodically determine the potential loss from market risk on our derivative instruments by performing a value-at-risk, or VaR, analysis. VaR is a statistical model that utilizes historical currency exchange and interest rate data to measure the potential impact on future earnings of our derivative financial instruments assuming normal market conditions. The VaR model is not intended to represent actual losses but is used as a risk estimation and management tool. Based on the results of the model, we estimate with 95% confidence a maximum one-day change in the net fair value of our derivative financial instruments at December 31, 2016 was not significant.

Foreign Exchange Risk

As an integral part of our global treasury operations, we centralize our cash and use multicurrency pools to manage the foreign exchange risk that arises from imbalances between subsidiaries and their respective treasury centers from which they borrow or invest funds. However, in certain circumstances, subsidiaries borrowing or investing with a treasury center operating in a different currency creates a foreign exchange exposure. At December 31, 2016 and 2015, we had outstanding forward foreign exchange contracts with an aggregate notional amount of $99.0 million and $22.1 million, respectively, to manage the foreign exchange risk associated with these activities. Additionally, there are circumstances where revenue and expense transactions are not denominated in the same currency. In these instances, amounts are either promptly settled or hedged with forward foreign exchange contracts. At December 31, 2016 and 2015, we had outstanding forward foreign exchange contracts with an aggregate notional amount of $94.0 million and $85.9 million, respectively, to manage the foreign exchange risk of these activities. The fair value of the forward foreign contracts at December 31, 2016 and 2015 was a net liability of $1.1 million and $0.1 million, respectively. As terms of our forward foreign exchange contracts are generally less than 90 days, they are included in other current assets and other current liabilities as appropriate.

Foreign currency derivative instruments are designated as fair value hedges; therefore, any gain or loss in fair value incurred on those instruments is recorded in results of operations and is generally offset by decreases or increases in the fair value of the underlying exposures. By using these financial instruments, we reduced financial risk of adverse foreign exchange changes by foregoing any gain (reward) which might have occurred if the markets moved favorably.

Interest Rate Risk

We use interest rate swaps to manage our interest cost and structure our long-term debt portfolio to achieve a mix of fixed rate and floating rate debt. Based on market conditions, we may terminate the swaps to reduce our exposure to rising interest rates or to monetize any gain and lock in a reduction in interest expense over the term of the underlying debt. At December 31, 2016 and 2015, the total amount of the fixed-to-floating interest rate swaps was $1.25 billion and $1.75 billion, respectively. See Note 6 for a discussion of our interest rate swaps, including the fair value of the swaps and the effect on the senior notes.

F-30

OMNICOM GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

20. New Accounting Standards

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”), which will replace all existing revenue recognition guidance under U.S. GAAP. On July 9, 2015, the FASB approved a one-year deferral of the effective date of ASU 2014-09 to all annual and interim periods beginning after December 15, 2017. ASU 2014-09 provides for one of two methods of transition: retrospective application to each prior period presented or recognition of the cumulative effect of retrospective application of the new standard as of the beginning of the period of initial application. We plan to apply ASU 2014-09 on January 1, 2018. Presently, we are not yet in a position to conclude on the transition method we will choose. Based on our initial assessment, the impact of the application of the new standard will likely result in a change in the timing of our revenue recognition for performance incentives received from clients. Performance incentives are currently recognized in revenue when specific quantitative goals are achieved, or when our performance against qualitative goals is determined by the client. Under the new standard, we will be required to estimate the amount of the incentive that will be earned at the inception of the contract and recognize the incentive over the term of the contract. While performance incentives are not material to our revenue, this will result in an acceleration of revenue recognition for certain contract incentives compared to the current method. Additionally, in certain of our businesses we record revenue as a principal and include certain third-party pass-through and out-of-pocket costs, which are billed to clients in connection with our services, in revenue. In March 2016, the FASB issued further guidance on principal versus agent considerations. We are currently evaluating the impact of the principal versus agent guidance on our revenue and cost of service; however, we do not expect the change, if any, to have a material effect on our results of operations.

In January 2016, the FASB issued FASB ASU 2016-01, Financial Instruments - Overall: Recognition and Measurement of Financial Assets and Liabilities (“ASU 2016-01”), which will require equity investments, except equity method investments, to be measured at fair value and any changes in fair value will be recognized in results of operations. ASU 2016-01 is effective for annual and interim periods beginning after December 15, 2017 and early application is not permitted. ASU 2016-01 provides for the recognition of the cumulative effect of retrospective application of the new standard in the period of initial application. We will apply ASU 2016-01 on January 1, 2018 and we expect that the application of the new standard will not have a significant impact on our results of operations or financial position.

In February 2016, the FASB issued ASU 2016-02, Leases (“ASU 2016-02”), which eliminates the current tests for lease classification under U.S. GAAP and requires lessees to recognize the right-to-use assets and related lease liabilities on the balance sheet. ASU 2016-02 is effective for annual and interim periods beginning after December 15, 2018 and early application is permitted. ASU 2016-02 provides for a modified retrospective application for leases existing at, or entered into after, the earliest comparative period presented in the financial statements. We will apply ASU 2016-02 on January 1, 2019. While we are not yet in a position to assess the full impact of the application of the new standard, we expect that the impact of recording the lease liabilities and the corresponding right-to-use assets will have a significant impact on our total assets and liabilities with a minimal impact on our equity.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), which changes the impairment model for most financial assets. The new model uses a forward-looking expected loss method, which will generally result in earlier recognition of allowances for losses. ASU 2016-13 is effective for annual and interim periods beginning after December 15, 2019 and early adoption is permitted for annual and interim periods beginning after December 15, 2018. We will apply ASU 2016-13 on January 1, 2020. However, we are not yet in a position to assess the impact of the new standard on our results of operations or financial position.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows: Clarification of Certain Cash Receipts and Cash Payments (“ASU 2016-15”), which eliminates the diversity in practice related to the classification of certain cash receipts and payments in the statement of cash flows, by adding or clarifying guidance on eight specific cash flow issues. ASU 2016-15 is effective for annual and interim reporting periods beginning after December 15, 2017 and early adoption is permitted. ASU 2016-15 provides for retrospective application for all periods presented. We will apply ASU 2016-15 on January 1, 2018 and we expect that the application of the new standard will not have a significant impact on our results of operations, financial position or classification of cash flows.

F-31

OMNICOM GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

On January 1, 2017, we applied ASU 2016-09, which requires all excess tax benefits and tax deficiencies related to share-based compensation be recognized in results of operations on the applicable vesting or exercise date (see Note 9). ASU 2016-09 also changed the classification of such tax benefits or tax deficiencies in the statement of cash flows from a financing activity to an operating activity on a prospective basis.

21. Subsequent Events

We have evaluated events subsequent to the balance sheet date and determined there have not been any events that have occurred that would require adjustment to or disclosure in the consolidated financial statements.

F-32

OMNICOM GROUP INC. AND SUBSIDIARIES

Selected Quarterly Financial Data (Unaudited)

(In millions, except per share amounts)

The unaudited selected quarterly financial data for the years ended December 31, 2016 and 2015 were:

	Quarter
	First				Second				Third				Fourth
Revenue
2016	$	3,499.1			$	3,884.9			$	3,791.1			$	4,241.8
2015	3,469.2				3,805.3				3,706.6				4,153.3
Operating Expenses
2016	3,107.0				3,323.1				3,338.0				3,639.9
2015	3,091.5				3,266.7				3,278.3				3,577.8
Operating Profit
2016	392.1				561.8				453.1				601.9
2015	377.7				538.6				428.3				575.5
Net Income - Omnicom Group Inc.
2016	218.4				326.1				253.8				350.3
2015	209.1				313.9				239.3				331.6
Net Income Per Share Omnicom Group Inc. - Basic
2016	0.90				1.36				1.06				1.47
2015	0.84				1.27				0.97				1.35
Net Income Per Share Omnicom Group Inc. - Diluted
2016	0.90				1.36				1.06				1.47
2015	0.83				1.26				0.97				1.35

F-33

OMNICOM GROUP INC. AND SUBSIDIARIES

SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

For the Three Years Ended December 31, 2016

(In millions)

Description	Balance Beginning of Period				Charged to Costs and Expenses				Removal of Uncollectible Receivables				Translation Adjustment Increase (Decrease)				Balance End of Period
Valuation accounts deducted from assets:
Allowance for Doubtful Accounts:
December 31, 2016	$	22.5			$	10.2			$	(7.4	)		$	(0.4	)		$	24.9
December 31, 2015	24.9				4.4				(5.4		)		(1.4		)		22.5
December 31, 2014	32.6				8.5				(14.9		)		(1.3		)		24.9

S-1