IPG
    Print Page  Close Window

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)

A reconciliation of the effective income tax rate as reflected in our Consolidated Statements of Operations to the U.S. federal statutory income tax rate is listed below.
 
Years ended December 31,
 
2016
 
2015
 
2014
U.S. federal statutory income tax rate
35.0
%
 
35.0
%
 
35.0
%
 
 
 
 
 
 
Income tax provision at U.S. federal statutory rate
$
290.6

 
$
266.8

 
$
252.3

State and local income taxes, net of U.S. federal income tax benefit
4.3

 
18.3

 
21.4

Impact of foreign operations, including withholding taxes
(23.9
)
 
14.7

 
0.9

Change in net valuation allowance 1
(13.4
)
 
(20.6
)
 
(66.0
)
Divestitures
9.7

 
11.9

 
0.0

U.S. federal tax credits
(44.6
)
 
0.0

 
0.0

Stock compensation
(9.0
)
 
0.0

 
0.0

Increase/(decrease) in unrecognized tax benefits
(22.2
)
 
(6.5
)
 
5.2

Statutory tax rate changes
11.4

 
1.4

 
0.8

Other
(4.9
)
 
(3.2
)
 
1.9

Provision for income taxes
$
198.0

 
$
282.8

 
$
216.5

 
 
 
 
 
 
Effective income tax rate on operations
23.8
%
 
37.1
%
 
30.0
%
 
1
Reflects changes in valuation allowance that impacted the effective income tax rate for each year presented.
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 settlement of 2011 and 2012 income tax audits, which included the recognition of certain previously unrecognized tax benefits of $23.4; the reversal of valuation allowances of $12.2 as a consequence of the disposition of certain businesses in Continental Europe; $10.4 related to the early adoption of the FASB Accounting Standards Update 2016-09, Stock Compensation; and various changes in state income tax laws as well as the recognition of previously unrecognized state tax benefits as a result of a lapse in statute of limitations. The positive impacts to our tax rates were partially offset by a revaluation of deferred tax assets as a result of a statutory tax rate change in Continental Europe, losses in certain foreign jurisdictions where we receive no tax benefit due to 100% valuation allowances and by losses on sales of businesses for which we did not receive a full tax benefit.
In 2015, our effective income tax rate of 37.1% was negatively impacted primarily by losses in certain foreign jurisdictions where we receive no tax benefit due to 100% valuation allowances and from the losses on sales of businesses for which we did not receive a full tax benefit. The negative impacts to our tax rates were partially offset by the recognition of previously unrecognized tax benefits as a result of the reversal of valuation allowances in Continental Europe and the settlement of a 2010 income tax audit.
In 2014, our effective income tax rate of 30.0% was positively impacted from changes to our valuation allowances of $66.0. The primary drivers of the net change were associated with a valuation allowance reversal of $124.8 in one jurisdiction partially offset by the establishment of a valuation allowance of $57.2 in another jurisdiction, both in Continental Europe. In addition, our effective income tax rate was negatively impacted by losses in certain foreign jurisdictions where we receive no tax benefit due to 100% valuation allowances.

55