Interpublic Group of Cos. (NYSE:IPG) recently reported its first quarter earnings and discussed the following topics in its earnings conference call.
Domestic Organic Growth
Alexia Quadrani – JPMC: Just a couple of questions; first, could you give us any color about, I guess, what domestic organic growth would have looked like if you didn’t have those headwinds. I guess, even generally would it look more like the company-wide number you delivered around your target? And then the second question you mentioned incremental expenses that you are building up in front of the new business wins you recently pulled in but we see some of those expenses in front of maybe a lot of the revenues in the second quarter?
Michael I. Roth – Chairman and CEO: Yeah, let me talk about the headwinds. We had previously said last year for the full year the headwinds would be in the 50 basis points to 100 basis points. However, it was for the year. But we also said it would be front ended. So, you can assume – and since it was more weighted in the U.S. about 2% in the first quarter were the headwind. So, if you take the 2% and add it to the 0.5% that should give you a reasonable idea in terms of what the U.S. organic would have been. I might add that the similar headwinds are in the second quarter, Alexia. As far as the expenses go there is no question that we had pitch expenses in the first quarter which fortunately resulted in new business wins and as indicated we had some additional severance in the first quarter. So, what we do is we obviously spread out incentives and things like that for the full year and we built up some expenses in the first quarter that we expect to see convert to revenue for the balance of the year. Obviously, new business comes on over a period of time. It all doesn’t come in at one particular time, but certainly the expenses that we incurred in the first quarter will give rise to revenue.
Frank Mergenthaler – EVP and CFO: You still have — Alexia, have some pressure in the second quarter because the timing, people are working against these new business opportunities now. And when the revenue comes on stream may be a little bit disjointed with expenses being incurred.
Alexia Quadrani – JPMC: To the extent, a little bit front end loaded in Q2 versus revenue, but did you still see some of the revenue from the new business and I know all this business coming in that, I’m talking about more of the bigger headline wins. We see some of those come in 2Q?
Frank Mergenthaler – EVP and CFO: We’ll see some of it in the second quarter and the rest in the third and fourth quarter.
Auto Plant Base
John Janedis – UBS: Michael, it seems like you’ve got a much broader auto plant base versus a couple of years ago, and I’m wondering has the mindset among clients changed in terms of complex to compete for the business and if so is that a trend across industries?
Michael I. Roth – Chairman and CEO: Yeah. I know, it’s a fair question, John. In the old days, each of the holding companies were sort of vetted to one of the big majors. We still candidly, by agency and I think what it shows is the depth of our talent across all the different agencies that we have. So, clearly McCann is a General Motors agency and we like to think of that will continue obviously by adding the additional Chevy work. But the other strong agencies are out there and yes the competitive nature of this and the conflict issues throughout our industry has been dealt with more on a agency basis than a holding company basis, which frankly is good for us.
John Janedis – UBS: Frank, could you help us think a little bit more aback your margin expansion this year, meaning, you’ve obviously done a great job in O&G over the past few years. But off the 50 bps of margin target for this year, is that split fairly evenly between O&G and SRS?
Frank Mergenthaler – EVP and CFO: I think you’ll see more of it John in the SRS line, as we convert growth.
Michael I. Roth – Chairman and CEO: I might add John. We still have some agencies that are conflict free on the auto side, so we have room to grow here. But of course it’s on an agency by agency basis and we do have other agencies working on General Motors as well. We’re very cognizant of conflict issues.