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SEC Filings

10-K
INTERPUBLIC GROUP OF COMPANIES, INC. filed this Form 10-K on 02/23/2015
Entire Document
 

Management’s Discussion and Analysis of Financial Condition and Results of Operations - (continued)
(Amounts in Millions, Except Per Share Amounts)



INCOME TAXES
 
Years ended December 31,
 
2014
 
2013
 
2012
Income before income taxes
$
720.7

 
$
468.0

 
$
674.8

Provision for income taxes
$
216.5

 
$
181.2

 
$
213.3

Effective income tax rate
30.0
%
 
38.7
%
 
31.6
%
Our tax rates are affected by many factors, including our worldwide earnings from various countries, changes in legislation and tax characteristics of our income. In 2014, our effective income tax rate of 30.0% was positively impacted from changes to our valuations allowances of $66.0. The primary drivers of the net change were associated with a valuation allowance reversal of $124.8 in one jurisdiction partially offset by the establishment of a valuation allowance of $57.2 in another jurisdiction, both in Continental Europe. In addition, our effective income tax rate was negatively impacted by losses in certain foreign jurisdictions where we receive no tax benefit due to 100% valuation allowances.
In 2013, our effective income tax rate of 38.7% was positively impacted by the recognition of losses attributable to worthless securities in a consolidated subsidiary and the recognition of previously unrecognized tax benefits as a result of the settlement of the 2002-2006 New York State audit cycle. Our effective income tax rate was negatively impacted primarily by losses in certain foreign jurisdictions where we receive no tax benefit due to 100% valuation allowances.
In 2012, our effective income tax rate of 31.6% was positively impacted by the reversals of valuation allowances associated with the Asia Pacific and Continental Europe regions of $26.2 and $21.8, respectively, as well as by a benefit derived from the deduction of foreign tax credits that previously had a full valuation allowance. Our effective income tax rate was negatively impacted by an adjustment of $19.5 associated with the establishment of a previously unrecorded reserve for a tax contingency for the years 2007 through 2010, losses in certain foreign locations where we receive no tax benefit due to 100% valuation allowances and state and local income taxes, net of federal income tax benefit.
See Note 7 to the Consolidated Financial Statements for further information.

EARNINGS PER SHARE
Basic earnings per share available to IPG common stockholders for the years ended December 31, 2014, 2013 and 2012 were $1.14, $0.62 and $1.01 per share, respectively. Diluted earnings per share for the years ended December 31, 2014, 2013 and 2012 were $1.12, $0.61 and $0.94 per share, respectively.
Both basic and diluted earnings per share for the year ended December 31, 2014 included a positive impact of $0.16 per share from the net reversal on valuation allowances on deferred tax assets in Continental Europe. Basic and diluted earnings per share for the year ended December 31, 2014 included a negative impact of $0.01 and $0.02 per share, respectively, from a loss on early extinguishment of debt, net of tax. Basic and diluted earnings per share for the year ended December 31, 2013 included a negative impact of $0.12 and $0.11 per share, respectively, from the effects of restructuring and related costs, net of tax. Basic and diluted earnings per share for the year ended December 31, 2013 included a negative impact of $0.06 per share from a loss on early extinguishment of debt, net of tax. Basic and diluted earnings per share for the year ended December 31, 2012 included a positive impact of $0.14 and $0.12 per share, respectively, from the gain recorded for the sale of our remaining holdings in Facebook, net of tax.


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