Notes to Consolidated Financial Statements – (continued)
(Amounts in Millions, Except Per Share Amounts)
The following table presents the potential shares excluded from the diluted earnings per share calculation because the effect of including these potential shares would be antidilutive.
Years ended December 31,
Preferred Stock Outstanding 1
Securities excluded from the diluted earnings per share calculation
because the exercise price was greater than the average market price:
Stock options 2
We converted all of our 5 1/4% Series B Cumulative Convertible Perpetual Preferred Stock into common stock in October 2013. For purposes of calculating diluted earnings per share for 2013, the potentially dilutive shares would have been pro-rated based on the period they were outstanding but were antidilutive.
These options were outstanding at the end of the respective periods. In any period in which the exercise price is less than the average market price, these options have the potential to be dilutive, and application of the treasury stock method would reduce this amount.
Note 4: Acquisitions
We continue to evaluate strategic opportunities to expand our industry expertise, strengthen our position in high-growth and key strategic geographical markets and industry sectors, advance technological capabilities and improve operational efficiency through both acquisitions and increased ownership interests in current investments. Our acquisitions typically provide for an initial payment at the time of closing and additional contingent purchase price payments based on the future performance of the acquired entity. We have entered into agreements that may require us to purchase additional equity interests in certain consolidated and unconsolidated subsidiaries. The amounts at which we record these transactions in our financial statements are based on estimates 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, except for foreign currency translation adjustments. The following table presents changes in our redeemable noncontrolling interests.
Years ended December 31,
Balance at beginning of period
Change in related noncontrolling interest balance
Changes in redemption value of redeemable noncontrolling interests:
Redemptions and reclassifications
Redemption value adjustments
Balance at end of period
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 2015, we completed five acquisitions, four of which were included in the Integrated Agency Networks ("IAN") operating segment and one of which was included in the Constituency Management Group ("CMG") operating segment. All