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SEC Filings

10-K
INTERPUBLIC GROUP OF COMPANIES, INC. filed this Form 10-K on 02/21/2017
Entire Document
 
Notes to Consolidated Financial Statements – (continued)
(Amounts in Millions, Except Per Share Amounts)

Note 3:  Earnings Per Share
The following sets forth basic and diluted earnings per common share available to IPG common stockholders.
 
Years ended December 31,
 
2016
 
2015
 
2014
Net income available to IPG common stockholders
$
608.5

 
$
454.6

 
$
477.1

 
 
 
 
 
 
Weighted-average number of common shares outstanding - basic
397.9

 
408.1

 
419.2

Add: Effect of dilutive securities
 
 
 
 
 
Restricted stock, stock options and other equity awards
10.1

 
7.6

 
6.2

Weighted-average number of common shares outstanding - diluted
408.0

 
415.7

 
425.4

 
 
 
 
 
 
Earnings per share available to IPG common stockholders:
 
 
 
 
 
Basic
$
1.53

 
$
1.11

 
$
1.14

Diluted
$
1.49

 
$
1.09

 
$
1.12

As part of the adoption of Financial Accounting Standards Board (the “FASB”) Accounting Standards Update 2016-09, our excess tax benefit is no longer included in our calculation of diluted shares under the treasury stock method, resulting in an increase of 1.0 shares in the effect of dilutive securities for the year ended December 31, 2016.

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 13 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,
 
2016
 
2015
 
2014
Balance at beginning of period
$
251.9

 
$
257.4

 
$
249.1

Change in related noncontrolling interest balance
4.9

 
0.8

 
3.2

Changes in redemption value of redeemable noncontrolling interests:
 
 
 
 
 
Additions
6.8

 
16.5

 
18.7

Redemptions and reclassifications
(14.8
)
 
(25.1
)
 
(7.9
)
Redemption value adjustments
4.0

 
2.3

 
(5.7
)
Balance at end of period
$
252.8

 
$
251.9

 
$
257.4



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