Organic growth declined by 11.7% or $424 million, which includes a decline in our third-party service costs of $194 million.
Our EBIT margin in the third quarter was 15.6% as compared to 13.1% in the third quarter of 2019, driving year-over-year growth in operating profit and net income.
Year-to-date, we generated $1.1 billion in free cash flow and paid dividends of $423 million.
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Turning to slide 4 for a summary of our revenue performance for the third quarter, our organic revenue performance was negative $424 million or 11.7% for the quarter.
The decrease was an improvement from the unprecedented decrease of 23% in the second quarter and was in line with our internal expectations throughout the quarter.
The impact of foreign exchange rates increased our revenue by 0.5% in the quarter versus a slightly negative impact we anticipated.
And the impact on revenue from acquisitions net of dispositions was relatively flat or a decrease of 0.3%.
As a result, our reported revenue for the third quarter decreased 11.5% to $3.2 billion when compared to Q3 of 2019.
Turning back to slide 1, our reported operating profit for the quarter was $501 million, up from $473.3 million in Q3 of last year.
The results for the quarter included the benefit of reductions in salary and related costs, which increased operating profit by $68.7 million, related to reimbursements and tax credits under government programs in several countries, including the U.S., Canada, the U.K., Germany, France and others.
Operating margin for the quarter increased 250 basis points to 15.6% compared to point 13.1% in Q3 of last year.
Excluding the benefit of the reductions in salary and related costs from the government reimbursements and tax credits, operating margin for the quarter increased 40 basis points to 13.5%.
EBITA for the quarter was $522 million and EBITA margin was 16.3% compared to 13.6% in Q3 of last year.
Excluding the benefit of the reductions in salary and related costs previously referred to, EBITA margin for the quarter increased 50 basis points to 14.1%.
You will recall we estimated that the severance and real estate actions taken in the second quarter would generate approximately $230 million in savings over the second half of 2020.
We also expected to generate additional savings in excess of $75 million in the second half from reductions in discretionary costs.
As for the details, our salary and service costs are variable and fluctuate with revenue.
Salary and related service costs declined by $223 million in the quarter, reflecting both the impact of our staffing reductions during the second quarter and the impact of the benefits from government reimbursements and tax credits discussed previously.
Third-party service costs, which include expenses incurred with third-party vendors when we act as a principal, when we're performing services for our clients, primarily related to our events, field marketing and merchandising and media businesses, decreased by $194 million in the quarter or 20%.
In comparison, the decrease in third-party service costs in the second quarter year-over-year was nearly $400 million or 40%.
Occupancy and other costs, which are less linked to changes in revenue, declined by approximately $18 million, again reflecting the decrease in the cost structure from the actions taken in the second quarter and from our people not being in our offices during the quarter for the most part.
And SG&A expenses declined by $7 million in the quarter.
Net interest expense for the quarter was $48.5 million, down $800,000 versus Q3 last year and up $1.3 million compared to Q2 2020.
When compared to the third quarter of 2019, our gross interest expense was down $8.4 million resulting from debt refinancing actions over the last 12 months.
This includes the impact of the additional $600 million of 10-year 4.2% senior notes that we issued as liquidity insurance in early April of this year.
As we've discussed on our previous calls this year, these actions reduce the effective interest rate on our senior debt by 60 basis points when compared to Q3 of 2019.
This reduction was offset by a decrease in interest income of $7.6 million versus Q3 of 2019, primarily due to lower interest rates.
When compared to the second quarter of 2020, interest expense increased slightly by $700,000, while interest income was down $600,000.
As we enter the final quarter of the year, we expect that our refinancing activity over the past year plus will continue to more than offset the increase in interest expense, resulting from the issuance of the 4.2% notes this past April.
We expect net interest expense to increase in Q4 of 2020 by approximately $10 million compared to Q4 of 2019, largely driven by an estimated reduction in interest income.
Our effective tax rate for the quarter was 26.7% in line with our expectations.
For the nine months ended September 30, 2020, the rate was 28.5%, an increase from 26% for the comparable period in 2019.
Excluding the impact of these items, the year-to-date effective rate was 26.3%, which was in line with our expectations.
We anticipate that our effective tax rate for the fourth quarter will approximate 27%, excluding the impact of share-based compensation items, which we cannot predict because it is subject to changes in our share price.
Earnings from our affiliates totaled $2.9 million for the quarter, up a bit versus Q3 of last year.
And the allocation of earnings to the minority shareholders was $21.6 million during the quarter, relatively flat with the prior year.
As a result, net income for the third quarter was $313.3 million, up 8% or $23.1 million when compared to Q3 of 2019.
Our diluted share count for the quarter decreased 1.6% versus Q3 of last year to 215.8 million shares, resulting from share repurchases prior to the suspension of our share repurchase program, which we announced toward the end of March.
As a result, our diluted earnings per share for the third quarter was $1.45, which is an increase of $0.13 or 9.8% when compared to our Q3 earnings per share for last year.
These repositioning charges totaled $278 million, which reduced our year-to-date net income by $223 million and diluted earnings per share by $1.03.
Additionally, our results for the nine-months ended September 30 include the benefit of reductions in salary and related costs, which increased operating profit by $117.8 million related to reimbursements and tax credits under the government programs we've previously discussed.
Our reported revenue for the third quarter was $3.2 billion, down $417 million or 11.5% from Q3 of 2019.
These third-party service costs, which fluctuate directly with changes in revenue, declined across all of our disciplines by just under $200 million in Q3 of 2020 versus Q3 of 2019.
The impact of changes in exchange rates increase reported revenue by 0.5% or $18 million in revenue for the quarter.
Looking forward, if currencies stay where they currently are, we anticipate that the FX impact would slightly increase our reported revenue by approximately 50 basis points in Q4.
And for the full year, the FX impact would be negative by about 50 basis points.
The impact of our recent acquisition of DMW in the U.K. that we completed at the beginning of the third quarter, net of our disposition activity, decreased revenue by $11.3 million in the quarter or 0.3%, which was in line with the estimate we made entering the quarter.
Inclusive of the disposition activity through September 30 and not including any acquisitions or dispositions we may complete before the end of the year, we estimate the projected net impact of our acquisition and disposition activity will reduce reported revenue by approximately 50 basis points in the fourth quarter of 2020.
Our organic revenue decreased approximately $424 million or 11.7% in the third quarter when compared to the prior year.
For the second quarter, the split was 56% for advertising, and 44% for marketing services.
As for the organic change by discipline, advertising was down 11.7%, with our media businesses seeing a significant improvement organically compared to the second quarter, when media activity slowed considerably.
CRM consumer experience was down 19% for the quarter.
The strongest performance in the discipline came from our precision marketing agencies, which were down globally around 5%.
CRM execution and support was down 19.4% as our field marketing and non-profit consulting businesses lagged for the quarter.
PR, while mixed by market, was down 3.4%.
And our healthcare agencies continued to turn in strong performances across the portfolio, this quarter up organically 3.8% with growth across all geographic regions.
You can see the quarterly split was 55% in the U.S., 3% for the rest of North America, 10% in the U.K., 17% for the rest of Europe, 12% for Asia-Pacific, 2% in Latin America and 1% for the Middle East and Africa.
In reviewing the details of our performance by region on slide seven, organic revenue in the second quarter in the U.S. was down $227 million or 11.4%, which is an improvement over the Q2 results when organic revenue fell by over 20% domestically.
Outside the U.S., our other North American agencies were down just under 8% or $8 million.
Our U.K. agencies were down $43 million or 12.5%.
The rest of Europe was down 9.6% organically, a significant improvement over Q2 when organic revenue fell nearly 30%.
Ireland, the Netherlands and Spain were down between 10% and 20%, while France continued to lag behind the other markets.
Organic revenue growth in Asia-Pacific for the quarter was negative 12.8%.
Latin America was down 22.3% or $22 million organically in the quarter, driven by the continuing weakness from our agencies in Brazil.
Turning to slides eight, nine and 10, we present our mix of revenue by our clients' industry sector.
Turning to our cash flow performance on slide 11, you can see that in the first nine months of 2020, we generated $1.14 billion in free cash flow, excluding changes in working capital, down when compared to the same period in 2019.
But the $412 million generated in the third quarter was up a bit versus the $394 million generated during Q3 of 2019.
As for our primary uses of cash on slide 12, dividends paid to our common shareholders were $423 million, effectively unchanged when compared to last year.
Dividends paid to our noncontrolling interests shareholders decreased to $58 million.
Capital expenditures in the first nine months of the year were $50 million, down when compared to last year.
Acquisitions, including earnout payments, totaled just under $105 million and stock repurchases, net of the proceeds received from stock issuances under our employee share plans, totaled just over $216 million, a decrease compared to last year, reflecting the suspension of our share repurchase program in mid-March.
As a result of our continuing efforts to prudently manage the use of our cash, we were able to generate $284 million in free cash flow during the first nine months of 2020, $141 million of which was generated in the third quarter alone.
Turning to our capital structure as of September 30, our total debt was a little under $5.8 billion, up $670 million since this time last year.
Major components of the change were the retirement of $600 million of dollar-denominated senior notes, which were due earlier this year, replacing those borrowings with $1.2 billion of 10-year senior notes due in 2030, along with the FX impact of converting the EUR1 billion of euro-denominated borrowings into dollars at the balance sheet date.
Versus December 31, 2019, gross debt at the end of the quarter was up $641 million, primarily as a result of the $600 million issuance of U.S.-denominated senior notes in early April.
Our net debt position at the end of the quarter was just over $2.5 billion, up about $1.7 billion compared to year-end December 31, 2019, an improvement of $166 million for the comparative prior-year last 12-month period, reflecting the results of our improved cash management.
The increase in net debt since December 31, 2019 was a result of the use of working capital of about $1.8 billion, plus the impact of FX on our cash and debt balances, which increased net debt by $120 million.
Partially offsetting those increases was the free cash flow we generated during the first nine months of the year of $284 million.
Over the past 12 months, our net debt is down $166 million, primarily driven by our excess free cash flow of approximately $500 million.
Offsetting this was the reduction in operating capital during the past 12 months of approximately $230 million and the negative impact of FX, which totaled around $55 million.
As for our debt ratios, our total debt-to-EBITDA ratio was 3.1 times and our net debt-to-EBITDA ratio was 1.4 times.
And finally moving to our historical returns on page 14.
For the last 12 months, our return on invested capital ratio was 17.7%, while our return on equity was 37.7%, both reflecting the decline in operating results, driven by the economic effects of the pandemic, as well as the impact of repositioning charges we took back in the second quarter.

Summary:
Organic growth declined by 11.7% or $424 million, which includes a decline in our third-party service costs of $194 million.
Our EBIT margin in the third quarter was 15.6% as compared to 13.1% in the third quarter of 2019, driving year-over-year growth in operating profit and net income.
Turning to slide 4 for a summary of our revenue performance for the third quarter, our organic revenue performance was negative $424 million or 11.7% for the quarter.
The impact of foreign exchange rates increased our revenue by 0.5% in the quarter versus a slightly negative impact we anticipated.
As a result, our reported revenue for the third quarter decreased 11.5% to $3.2 billion when compared to Q3 of 2019.
Operating margin for the quarter increased 250 basis points to 15.6% compared to point 13.1% in Q3 of last year.
As for the details, our salary and service costs are variable and fluctuate with revenue.
As we enter the final quarter of the year, we expect that our refinancing activity over the past year plus will continue to more than offset the increase in interest expense, resulting from the issuance of the 4.2% notes this past April.
As a result, our diluted earnings per share for the third quarter was $1.45, which is an increase of $0.13 or 9.8% when compared to our Q3 earnings per share for last year.
The impact of changes in exchange rates increase reported revenue by 0.5% or $18 million in revenue for the quarter.
Our organic revenue decreased approximately $424 million or 11.7% in the third quarter when compared to the prior year.
As for the organic change by discipline, advertising was down 11.7%, with our media businesses seeing a significant improvement organically compared to the second quarter, when media activity slowed considerably.