IPG
    Print Page  Close Window

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)

The components of deferred tax assets and liabilities are listed below.
 
December 31,
 
2014
 
2013
Postretirement/post-employment benefits
$
27.4

 
$
32.5

Deferred compensation
191.2

 
187.2

Pension costs
41.4

 
31.1

Basis differences in fixed assets
(38.5
)
 
(4.1
)
Rent
45.8

 
50.7

Interest
60.9

 
60.7

Accruals and reserves
34.8

 
39.6

Allowance for doubtful accounts
10.8

 
10.8

Basis differences in intangible assets
(412.3
)
 
(402.2
)
Investments in equity securities
(2.6
)
 
48.6

Tax loss/tax credit carry forwards
404.4

 
443.6

Restructuring and other reorganization-related costs
(0.3
)
 
2.6

Other
59.2

 
60.5

Total deferred tax assets, net
422.2

 
561.6

Valuation allowance
(332.2
)
 
(467.3
)
Net deferred tax assets
$
90.0

 
$
94.3

We evaluate the realizability of our deferred tax assets on a quarterly basis. The realization of our deferred tax assets is primarily dependent on future earnings. The amount of the deferred tax assets considered realizable could be reduced or increased in the near future if estimates of future taxable income are lower or greater than anticipated. A valuation allowance is established when it is “more likely than not” that all or a portion of deferred tax assets will not be realized. In circumstances where there is negative evidence, establishment of a valuation allowance is considered. The factors used in assessing valuation allowances include all available evidence, such as past operating results, estimates of future taxable income and the feasibility of tax planning strategies. We believe that cumulative losses in the most recent three-year period represent significant negative evidence, and as a result, we determined that certain of our deferred tax assets required the establishment of a valuation allowance. The deferred tax assets for which an allowance was recognized relate primarily to state and foreign tax loss carryforwards.

The change in the valuation allowance is listed below.
 
Years ended December 31,
 
2014
 
2013
 
2012
Balance at beginning of period
$
467.3

 
$
392.9

 
$
489.9

(Reversed) charged to costs and expenses
(72.8
)
 
65.2

 
(49.5
)
(Reversed) charged to gross tax assets and other accounts
(62.3
)
 
9.2

 
(47.5
)
Balance at end of period
$
332.2

 
$
467.3

 
$
392.9

In 2014, the net decrease was primarily related to a reversal of a valuation allowance for a deferred tax asset of $124.8, where we believe it is now "more likely than not" that the corresponding tax losses will be utilized over an extended period of time, based on implementing an internal financing tax action plan. This was partially offset by the establishment of a valuation allowance of $57.2, where we believe it is no longer "more likely than not" that the corresponding tax losses will be utilized, based on forecasted income not exceeding historical cumulative losses. The amounts charged to gross tax assets and other accounts relate primarily to the effect of foreign currency translation and a reduction to the valuation allowance related to the write-down of a corresponding deferred tax asset.
In 2013, amounts charged to costs and expenses primarily relate to the increase in valuation allowances in the U.S. and Continental Europe regions for existing and additional deferred tax assets. The amounts charged to gross tax assets and other accounts relate primarily to the effect of foreign currency translation.
In 2012, amounts reversed to costs and expenses primarily relate to the net reversal of valuation allowances in the Asia Pacific and Continental Europe regions, based on positive evidence in the form of a sustained pattern of profitability. Amounts reversed to gross tax assets and other accounts relate primarily to the reversal of valuation allowance on foreign tax credits.

59