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SEC Filings

10-K
INTERPUBLIC GROUP OF COMPANIES, INC. filed this Form 10-K on 02/23/2015
Entire Document
 
Notes to Consolidated Financial Statements – (continued)
(Amounts in Millions, Except Per Share Amounts)

of the future financial performance of the acquired entity, the timing of the exercise of these rights, changes in foreign currency exchange rates and other factors.
For companies acquired, we estimate the fair values of the assets and liabilities based on 100% of the business for consolidation. The purchase price in excess of the estimated fair value of the tangible net assets acquired is allocated to identifiable intangible assets and then to goodwill. Due to the characteristics of advertising, specialized marketing and communication services companies, our acquisitions typically do not have significant amounts of tangible assets since the principal assets we acquire are client relationships and talent. As a result, a substantial portion of the purchase price is primarily allocated to customer lists, trade names and goodwill.
For acquisitions we record deferred payment and redeemable noncontrolling interest amounts on our Consolidated Balance Sheets based on their acquisition-date fair value. Deferred payments are recorded on a discounted basis and adjusted quarterly, if necessary, through operating income or net interest expense, depending on the nature of the arrangement, for both changes in estimate and accretion between the acquisition date and the final payment date. See Note 14 for further information on contingent acquisition obligations. Redeemable noncontrolling interests are adjusted quarterly to their estimated redemption value, but not less than their initial fair value. Any adjustments to the redemption value impacts retained earnings or additional paid-in capital, except for foreign currency translation adjustments. The following table presents changes in our redeemable noncontrolling interests.
 
Years ended December 31,
 
2014
 
2013
 
2012
Balance at beginning of period
$
249.1

 
$
227.2

 
$
243.4

Change in related noncontrolling interest balance
3.2

 
4.6

 
1.1

Changes in redemption value of redeemable noncontrolling interests:
 
 
 
 
 
Additions
18.7

 
16.2

 
0.0

Redemptions and reclassifications
(7.9
)
 
(2.3
)
 
(14.2
)
Redemption value adjustments
(5.7
)
 
3.4

 
(3.1
)
Balance at end of period
$
257.4

 
$
249.1

 
$
227.2


For all acquisitions, if a portion of the deferred payments and purchases of additional interests after the effective date of purchase are contingent upon employment terms, then that amount is accounted separately from the business combination and recognized as compensation expense over the required earn-out period. Payments deemed as compensation are excluded from the fair value purchase price allocation to tangible net assets and intangible assets acquired.
During 2014, we completed eight acquisitions, six of which were included in the Integrated Agency Networks ("IAN") operating segment and two of which were included in the Constituency Management Group ("CMG") operating segment. All acquired agencies have been integrated into one of our global networks or existing agencies. The most significant acquisitions included a global full-service digital agency, a digital agency in the United States and a search marketing agency in the Netherlands. During 2014, we recorded approximately $185.0 of goodwill and intangible assets related to our acquisitions.
During 2013, we completed eleven acquisitions, nine of which were included in the IAN operating segment and two of which were included in the CMG operating segment. All acquired agencies have been integrated into one of our global networks or existing agencies. The most significant acquisitions included a full service digital agency in India, a full service agency in the U.K. and a public relations consultancy in India. During 2013, we recorded approximately $97.0 of goodwill and intangible assets related to these acquisitions.
During 2012, we completed twelve acquisitions, eight of which were included in the IAN operating segment and four of which were included in the CMG operating segment. All acquired agencies have been integrated into one of our global networks or existing agencies. The most significant acquisitions included a healthcare market research and consulting agency and a search marketing agency in the United Kingdom, and a digital healthcare-marketing specialist and a designer of in-store shopping experiences in the United States. During 2012, we recorded approximately $201.0 of goodwill and intangible assets related to these acquisitions.
The results of operations of our acquired companies were included in our consolidated results from the closing date of each acquisition. We did not make any payments in stock related to our acquisitions in 2014, 2013 or 2012.

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