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SEC Filings

10-K
INTERPUBLIC GROUP OF COMPANIES, INC. filed this Form 10-K on 02/21/2017
Entire Document
 

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



EXPENSES AND OTHER INCOME
 
Years ended December 31,
 
2016
 
2015
 
2014
Cash interest on debt obligations
$
(78.4
)
 
$
(74.6
)
 
$
(78.9
)
Non-cash interest
(12.2
)
 
(11.2
)
 
(6.0
)
Interest expense
(90.6
)
 
(85.8
)
 
(84.9
)
Interest income
20.1

 
22.8

 
27.4

Net interest expense
(70.5
)
 
(63.0
)
 
(57.5
)
Other expense, net
(37.3
)
 
(46.7
)
 
(10.2
)
Total (expenses) and other income
$
(107.8
)
 
$
(109.7
)
 
$
(67.7
)
Net Interest Expense
For 2016, net interest expense increased by $7.5 as compared to 2015, primarily due to increased cash interest expense from uncommitted credit lines in order to meet working capital needs.
For 2015, net interest expense increased by $5.5 as compared to 2014, primarily due to lower interest income in the current year. Cash interest expense decreased primarily due to the retirement of our 6.25% Senior Unsecured Notes due 2014 (the "6.25% Notes") in the second quarter of 2014, partially offset by the issuance of our 4.20% Senior Notes due 2024 (the "4.20% Notes") in the second quarter of 2014. Non-cash interest expense increased primarily due to revaluations of mandatorily redeemable noncontrolling interests.

Other Expense, net
Results of operations include certain items that are not directly associated with our revenue-producing operations.
 
Years ended December 31,
 
2016
 
2015
 
2014
(Losses) gains on sales of businesses and investments, net
$
(39.7
)
 
$
(49.6
)
 
$
0.8

Loss on early extinguishment of debt
0.0

 
0.0

 
(10.4
)
Other income (expense), net
2.4

 
2.9

 
(0.6
)
Total other expense, net
$
(37.3
)
 
$
(46.7
)
 
$
(10.2
)
(Losses) Gains on Sales of Businesses and Investments, net – During 2016, the amounts recognized are related to the sales of businesses and the classification of certain assets and liabilities, consisting primarily of accounts receivable and accounts payable, respectively, as held for sale within both our Integrated Agency Networks ("IAN") and Constituency Management Group ("CMG") segments. During 2015, the amounts recognized are related to the sales of businesses within both our IAN and CMG segments and the classification of certain assets and liabilities, consisting primarily of accounts receivable and accounts payable, respectively, as held for sale within our IAN segment. The businesses held for sale as of each year end primarily represent unprofitable, non-strategic agencies which are expected to be sold within the next twelve months.
Loss on Early Extinguishment of Debt – During 2014, we recorded a charge of $10.4 related to the redemption of our 6.25% Notes.


INCOME TAXES
 
Years ended December 31,
 
2016
 
2015
 
2014
Income before income taxes
$
830.2

 
$
762.2

 
$
720.7

Provision for income taxes
$
198.0

 
$
282.8

 
$
216.5

Effective income tax rate
23.8
%
 
37.1
%
 
30.0
%
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 2016, our effective income tax rate of 23.8% was positively impacted by a benefit of $44.6 related to refunds to be claimed on future amended U.S. federal returns for tax years 2014 and 2015 primarily related to foreign tax credits and, to a lesser extent, research and development credits based on the conclusion of multi-year studies; the

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