IPG 06.30.14 10Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
 
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
 
For the quarterly period ended June 30, 2014
or
 
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number: 1-6686
THE INTERPUBLIC GROUP OF COMPANIES, INC.
(Exact name of registrant as specified in its charter)
Delaware
 
13-1024020
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification No.)

1114 Avenue of the Americas, New York, New York 10036
(Address of principal executive offices) (Zip Code)
(212) 704-1200
(Registrant’s telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes ý    No ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes ý    No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
 
ý
  
Accelerated filer
 
¨
Non-accelerated filer
 
¨
  
Smaller reporting company
 
¨
(Do not check if a smaller reporting company)
  
 
 
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ¨    No ý
The number of shares of the registrant’s common stock outstanding as of July 15, 2014 was 421,397,262.


INDEX
 
Page No.
 
 
 
Item 1.
 
 
 
 
 
Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2014 and 2013
 
Consolidated Statements of Stockholders’ Equity for the Six Months Ended June 30, 2014 and 2013
 
Item 2.
Item 3.
Item 4.
 
 
 
Item 1.
Item 1A.
Item 2.
Item 6.
INFORMATION REGARDING FORWARD-LOOKING DISCLOSURE
This quarterly report on Form 10-Q contains forward-looking statements. Statements in this report that are not historical facts, including statements about management’s beliefs and expectations, constitute forward-looking statements. Without limiting the generality of the foregoing, words such as “may,” “will,” “expect,” “believe,” “anticipate,” “intend,” “could,” “would,” “estimate,” “continue” or comparable terminology are intended to identify forward-looking statements. These statements are based on current plans, estimates and projections, and are subject to change based on a number of factors, including those outlined under Item 1A, Risk Factors, in our most recent annual report on Form 10-K. Forward-looking statements speak only as of the date they are made and we undertake no obligation to update publicly any of them in light of new information or future events.
Forward-looking statements involve inherent risks and uncertainties. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. Such factors include, but are not limited to, the following:
•
potential effects of a challenging economy, for example, on the demand for our advertising and marketing services, on our clients’ financial condition and on our business or financial condition;
•
our ability to attract new clients and retain existing clients;
•
our ability to retain and attract key employees;
•
risks associated with assumptions we make in connection with our critical accounting estimates, including changes in assumptions associated with any effects of a weakened economy;
•
potential adverse effects if we are required to recognize impairment charges or other adverse accounting-related developments;
•
risks associated with the effects of global, national and regional economic and political conditions, including counterparty risks and fluctuations in economic growth rates, interest rates and currency exchange rates; and
•
developments from changes in the regulatory and legal environment for advertising and marketing and communications services companies around the world.
Investors should carefully consider these factors and the additional risk factors outlined in more detail under Item 1A, Risk Factors, in our most recent annual report on Form 10-K.

1
Table of Contents

Part I – FINANCIAL INFORMATION
 
Item 1.
Financial Statements (Unaudited)
THE INTERPUBLIC GROUP OF COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in Millions, Except Per Share Amounts)
(Unaudited)
 
Three months ended
June 30,
 
Six months ended
June 30,
 
2014
 
2013
 
2014
 
2013
REVENUE
$
1,851.4

 
$
1,756.2

 
$
3,488.9

 
$
3,299.2

 
 
 
 
 
 
 
 
OPERATING EXPENSES:
 
 
 
 
 
 
 
Salaries and related expenses
1,170.2

 
1,120.2

 
2,358.8

 
2,252.3

Office and general expenses
485.4

 
461.2

 
946.0

 
914.5

Total operating expenses
1,655.6

 
1,581.4

 
3,304.8

 
3,166.8

 
 
 
 
 
 
 
 
OPERATING INCOME
195.8

 
174.8

 
184.1

 
132.4

 
 
 
 
 
 
 
 
EXPENSES AND OTHER INCOME:
 
 
 
 
 
 
 
Interest expense
(22.6
)
 
(37.5
)
 
(42.8
)
 
(74.3
)
Interest income
6.6

 
5.8

 
12.8

 
12.2

Other (expense) income, net
(11.2
)
 
4.8

 
(9.5
)
 
6.6

Total (expenses) and other income
(27.2
)
 
(26.9
)
 
(39.5
)
 
(55.5
)
 
 
 
 
 
 
 
 
Income before income taxes
168.6

 
147.9

 
144.6

 
76.9

 Provision for income taxes
65.3

 
62.0

 
63.6

 
49.6

Income of consolidated companies
103.3

 
85.9

 
81.0

 
27.3

Equity in net income of unconsolidated affiliates
0.4

 
0.2

 
0.3

 
0.3

NET INCOME
103.7

 
86.1

 
81.3

 
27.6

Net income attributable to noncontrolling interests
(4.3
)
 
(3.3
)
 
(2.8
)
 
(1.1
)
NET INCOME ATTRIBUTABLE TO IPG
99.4

 
82.8

 
78.5

 
26.5

Dividends on preferred stock
0.0
 
(2.9
)
 
0.0
 
(5.8
)
NET INCOME AVAILABLE TO IPG COMMON STOCKHOLDERS
$
99.4

 
$
79.9

 
$
78.5

 
$
20.7

 
 
 
 
 
 
 
 
Earnings per share available to IPG common stockholders:
 
 
 
 
 
 
 
Basic
$
0.24

 
$
0.19

 
$
0.19

 
$
0.05

Diluted
$
0.23

 
$
0.18

 
$
0.18

 
$
0.05

 
 
 
 
 
 
 
 
Weighted-average number of common shares outstanding:
 
 
 
 
 
 
 
Basic
421.1
 
425.1
 
421.9
 
419.7
Diluted
428.1
 
448.3
 
428.5
 
425.1
 
 
 
 
 
 
 
 
Dividends declared per common share
$
0.095

 
$
0.075

 
$
0.190

 
$
0.150

 
The accompanying notes are an integral part of these unaudited financial statements.

2
Table of Contents

THE INTERPUBLIC GROUP OF COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Amounts in Millions)
(Unaudited)
 
Three months ended
June 30,
 
Six months ended
June 30,
 
2014
 
2013
 
2014
 
2013
NET INCOME
$
103.7

 
$
86.1

 
$
81.3

 
$
27.6

 
 
 
 
 
 
 
 
OTHER COMPREHENSIVE INCOME (LOSS)
 
 
 
 
 
 
 
Foreign currency translation adjustments
25.5

 
(74.5
)
 
24.5

 
(113.3
)
Less: reclassification adjustments recognized in net income
0.0

 
0.0

 
(0.9
)
 
0.0

 
25.5

 
(74.5
)
 
23.6

 
(113.3
)
 
 
 
 
 
 
 
 
Available-for-sale securities:
 
 
 
 
 
 
 
Changes in market value of available-for-sale securities
0.1

 
0.4

 
0.2

 
0.8

Less: recognition of previously unrealized gains included in net income
0.0

 
(0.4
)
 
0.0

 
(1.4
)
Income tax effect
0.0

 
0.1

 
0.0

 
0.2

 
0.1

 
0.1

 
0.2

 
(0.4
)
 
 
 
 
 
 
 
 
Derivative instruments:
 
 
 
 
 
 
 
Changes in fair value of derivative instruments
0.0

 
0.0

 
(0.6
)
 
0.0

Less: recognition of previously unrealized losses included in net income
0.5

 
0.5

 
0.9

 
0.9

Income tax effect
(0.2
)
 
(0.2
)
 
(0.1
)
 
(0.4
)
 
0.3

 
0.3

 
0.2

 
0.5

 
 
 
 
 
 
 
 
Defined benefit pension and other postretirement plans:
 
 
 
 
 
 
 
Net actuarial gains (losses) for the period
0.0

 
1.1

 
(0.3
)
 
0.0

Less: amortization of unrecognized losses, transition obligation and prior service cost included in net income
2.4

 
2.7

 
5.0

 
5.5

Other
(0.1
)
 
(0.2
)
 
(0.2
)
 
(0.7
)
Income tax effect
(0.7
)
 
(1.3
)
 
(1.3
)
 
(2.0
)
 
1.6

 
2.3

 
3.2

 
2.8

 
 
 
 
 
 
 
 
Other comprehensive income (loss), net of tax
27.5

 
(71.8
)
 
27.2

 
(110.4
)
TOTAL COMPREHENSIVE INCOME (LOSS)
131.2

 
14.3

 
108.5

 
(82.8
)
Less: comprehensive income (loss) attributable to noncontrolling interests
4.0

 
1.5

 
1.9

 
(1.9
)
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO IPG
$
127.2

 
$
12.8

 
$
106.6

 
$
(80.9
)

The accompanying notes are an integral part of these unaudited financial statements.

3
Table of Contents

THE INTERPUBLIC GROUP OF COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Amounts in Millions)
(Unaudited)
 
June 30,
2014
 
December 31,
2013
ASSETS:
 
 
 
Cash and cash equivalents
$
895.1

 
$
1,636.8

Marketable securities
6.3

 
5.3

Accounts receivable, net of allowance of $66.7 and $64.9, respectively
4,272.3

 
4,565.4

Expenditures billable to clients
1,798.6

 
1,536.4

Other current assets
429.3

 
340.1

Total current assets
7,401.6

 
8,084.0

Furniture, equipment and leasehold improvements, net of accumulated
    depreciation of $1,112.1 and $1,111.7, respectively
537.1

 
540.0

Deferred income taxes
171.0

 
144.0

Goodwill
3,714.8

 
3,629.0

Other non-current assets
515.2

 
508.0

TOTAL ASSETS
$
12,339.7

 
$
12,905.0

 
 
 
 
LIABILITIES:
 
 
 
Accounts payable
$
6,414.8

 
$
6,914.2

Accrued liabilities
594.8

 
718.4

Short-term borrowings
126.2

 
179.1

Current portion of long-term debt
2.4

 
353.6

Total current liabilities
7,138.2

 
8,165.3

Long-term debt
1,629.9

 
1,129.8

Deferred compensation
486.9

 
514.3

Other non-current liabilities
616.4

 
595.7

TOTAL LIABILITIES
9,871.4

 
10,405.1

 
 
 
 
Redeemable noncontrolling interests (see Note 4)
246.4

 
249.1

 
 
 
 
STOCKHOLDERS’ EQUITY:
 
 
 
Common stock
53.3

 
53.0

Additional paid-in capital
3,017.2

 
2,975.2

Retained earnings
865.5

 
864.5

Accumulated other comprehensive loss, net of tax
(383.1
)
 
(411.2
)
 
3,552.9

 
3,481.5

Less: Treasury stock
(1,363.6
)
 
(1,266.3
)
Total IPG stockholders’ equity
2,189.3

 
2,215.2

Noncontrolling interests
32.6

 
35.6

TOTAL STOCKHOLDERS’ EQUITY
2,221.9

 
2,250.8

TOTAL LIABILITIES AND EQUITY
$
12,339.7

 
$
12,905.0

 
The accompanying notes are an integral part of these unaudited financial statements.

4
Table of Contents

THE INTERPUBLIC GROUP OF COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in Millions)
(Unaudited)
 
Six months ended
June 30,
  
2014
 
2013
CASH FLOWS FROM OPERATING ACTIVITIES:
 
 
 
Net income
$
81.3

 
$
27.6

Adjustments to reconcile net income to net cash used in operating activities:
 
 
 
Depreciation and amortization of fixed assets and intangible assets
80.7

 
77.4

Provision for uncollectible receivables
5.6

 
7.4

Amortization of restricted stock and other non-cash compensation
26.2

 
24.9

Net amortization of bond discounts and deferred financing costs
2.3

 
4.0

Deferred income tax provision (benefit)
7.3

 
(14.3
)
Other
14.9

 
(11.5
)
Changes in assets and liabilities, net of acquisitions and dispositions, providing (using) cash:
 
 
 
Accounts receivable
327.6

 
330.5

Expenditures billable to clients
(239.4
)
 
(255.7
)
Other current assets
(76.7
)
 
(56.4
)
Accounts payable
(584.5
)
 
(573.4
)
Accrued liabilities
(173.5
)
 
(150.3
)
Other non-current assets and liabilities
(29.0
)
 
(1.6
)
Net cash used in operating activities
(557.2
)
 
(591.4
)
CASH FLOWS FROM INVESTING ACTIVITIES:
 
 
 
Capital expenditures
(58.7
)
 
(46.8
)
Acquisitions, including deferred payments, net of cash acquired
(50.8
)
 
(48.2
)
Proceeds from sales of businesses and investments, net of cash sold
10.5

 
3.1

Net (purchases) sales and maturities of short-term marketable securities
(0.5
)
 
11.6

Other investing activities
0.4

 
(2.1
)
Net cash used in investing activities
(99.1
)
 
(82.4
)
CASH FLOWS FROM FINANCING ACTIVITIES:
 
 
 
Proceeds from issuance of long-term debt
499.1

 
0.0

Purchase of long-term debt
(350.1
)
 
(1.2
)
Repurchase of common stock
(97.3
)
 
(180.6
)
Common stock dividends
(80.1
)
 
(62.7
)
Net (decrease) increase in short term bank borrowings
(52.8
)
 
19.1

Distributions to noncontrolling interests
(12.1
)
 
(7.0
)
Acquisition-related payments
(8.6
)
 
(26.8
)
Preferred stock dividends
0.0

 
(5.8
)
Excess tax benefit on share-based compensation
4.3

 
7.4

Exercise of stock options
10.7

 
31.5

Other financing activities
(2.4
)
 
0.1

Net cash used in financing activities
(89.3
)
 
(226.0
)
Effect of foreign exchange rate changes on cash and cash equivalents
3.9

 
(61.1
)
Net decrease in cash and cash equivalents
(741.7
)
 
(960.9
)
Cash and cash equivalents at beginning of period
1,636.8

 
2,574.8

Cash and cash equivalents at end of period
$
895.1

 
$
1,613.9


The accompanying notes are an integral part of these unaudited financial statements.

5
Table of Contents

THE INTERPUBLIC GROUP OF COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Amounts in Millions)
(Unaudited)
 
 
 
Common Stock
 
Additional
Paid-In
Capital
 
Retained Earnings
 
Accumulated 
Other
Comprehensive
Loss, Net of Tax
 
Treasury
Stock
 
Total IPG
Stockholders’
Equity
 
Noncontrolling
Interests
 
Total
Stockholders’
Equity
 
Shares
 
Amount
 
Balance at December 31, 2013
532.3

 
$
53.0

 
$
2,975.2

 
$
864.5

 
$
(411.2
)
 
$
(1,266.3
)
 
$
2,215.2

 
$
35.6

 
$
2,250.8

Net income
 
 
 
 
 
 
78.5

 
 
 
 
 
78.5

 
2.8

 
81.3

Other comprehensive income (loss)
 
 
 
 
 
 
 
 
28.1

 
 
 
28.1
 
(0.9
)
 
27.2

Reclassifications related to redeemable
    noncontrolling interests
 
 
 
 
 
 
 
 
 
 
 
 


 
6.8

 
6.8

Distributions to noncontrolling interests
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(12.1
)
 
(12.1
)
Change in redemption value of redeemable
    noncontrolling interests
 
 
 
 
 
 
3.0

 
 
 
 
 
3.0

 
 
 
3.0

Repurchase of common stock
 
 
 
 
 
 
 
 
 
 
(97.3
)
 
(97.3
)
 
 
 
(97.3
)
Common stock dividends
 
 
 
 
 
 
(80.1
)
 
 
 
 
 
(80.1
)
 
 
 
(80.1
)
Stock-based compensation
3.2

 
0.3

 
41.5

 
 
 
 
 
 
 
41.8

 
 
 
41.8

Exercise of stock options
0.9

 
0.1

 
10.7

 
 
 
 
 
 
 
10.8

 
 
 
10.8

Shares withheld for taxes
(0.8
)
 
(0.1
)
 
(14.5
)
 
 
 
 
 
 
 
(14.6
)
 
 
 
(14.6
)
Excess tax benefit from stock-based compensation
 
 
 
 
4.3

 
 
 
 
 
 
 
4.3

 
 
 
4.3

Other
 
 
 
 


 
(0.4
)
 
 
 
 
 
(0.4
)
 
0.4

 
0.0

Balance at June 30, 2014
535.6

 
$
53.3

 
$
3,017.2

 
$
865.5

 
$
(383.1
)
 
$
(1,363.6
)
 
$
2,189.3

 
$
32.6

 
$
2,221.9

 
The accompanying notes are an integral part of these unaudited financial statements.

6
Table of Contents

THE INTERPUBLIC GROUP OF COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY – (CONTINUED)
(Amounts in Millions)
(Unaudited)
 
 
Preferred
Stock
 
Common Stock
 
Additional
Paid-In
Capital
 
Retained Earnings
 
Accumulated 
Other
Comprehensive
Loss, Net of Tax
 
Treasury
Stock
 
Total IPG
Stockholders’
Equity
 
Noncontrolling
Interests
 
Total
Stockholders’
Equity
 
Shares
 
Amount
 
Balance at December 31, 2012
$
221.5

 
492.0

 
$
48.8

 
$
2,465.4

 
$
738.3

 
$
(288.0
)
 
$
(765.4
)
 
$
2,420.6

 
$
36.0

 
$
2,456.6

Net income
 
 
 
 
 
 
 
 
26.5

 
 
 
 
 
26.5

 
1.1

 
27.6

Other comprehensive loss
 
 
 
 
 
 
 
 
 
 
(107.4
)
 
 
 
(107.4
)
 
(3.0
)
 
(110.4
)
Reclassifications related to redeemable
    noncontrolling interests
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3.6

 
3.6

Distributions to noncontrolling interests
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(7.0
)
 
(7.0
)
Change in redemption value of redeemable
    noncontrolling interests
 
 
 
 
 
 
 
 
0.6

 
 
 
 
 
0.6

 
 
 
0.6

Repurchase of common stock
 
 
 
 
 
 
 
 
 
 
 
 
(180.6
)
 
(180.6
)
 
 
 
(180.6
)
Common stock dividends
 
 
 
 
 
 
 
 
(62.7
)
 
 
 
 
 
(62.7
)
 
 
 
(62.7
)
Preferred stock dividends
 
 
 
 
 
 
 
 
(5.8
)
 
 
 
 
 
(5.8
)
 
 
 
(5.8
)
Conversion of convertible notes to common stock
 
 
16.9

 
1.7

 
198.3

 
 
 
 
 
 
 
200.0
 
 
 
200.0
Capped call transaction
 
 
 
 
 
 
19.1

 
 
 
 
 
(19.1
)
 
0.0
 
 
 
0.0
Stock-based compensation
 
 
2.4

 
0.4

 
32.1

 
 
 
 
 
 
 
32.5

 
 
 
32.5

Exercise of stock options
 
 
3.5

 
0.4

 
31.5

 
 
 
 
 
 
 
31.9

 
 
 
31.9

Shares withheld for taxes
 
 
(1.5
)
 
(0.2
)
 
(19.4
)
 
 
 
 
 
 
 
(19.6
)
 
 
 
(19.6
)
Excess tax benefit from stock-based compensation
 
 
 
 
 
 
6.8

 
 
 
 
 
 
 
6.8

 
 
 
6.8

Other
 
 
 
 
 
 
1.9

 
(0.4
)
 
 
 
 
 
1.5

 
1.4

 
2.9

Balance at June 30, 2013
$
221.5

 
513.3

 
$
51.1

 
$
2,735.7

 
$
696.5

 
$
(395.4
)
 
$
(965.1
)
 
$
2,344.3

 
$
32.1

 
$
2,376.4

 
The accompanying notes are an integral part of these unaudited financial statements.

7
Table of Contents

Notes to Consolidated Financial Statements
(Amounts in Millions, Except Per Share Amounts)
(Unaudited)
Note 1:  Basis of Presentation
The unaudited Consolidated Financial Statements have been prepared by The Interpublic Group of Companies, Inc. and its subsidiaries (the “Company,” “IPG,” “we,” “us” or “our”) in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) for reporting interim financial information on Form 10-Q. Accordingly, they do not include certain information and disclosures required for complete financial statements. The preparation of financial statements in conformity with U.S. GAAP requires us to make judgments, assumptions and estimates that affect the amounts reported and disclosed. Actual results could differ from these estimates and assumptions. The consolidated results for interim periods are not necessarily indicative of results for the full year and should be read in conjunction with our 2013 Annual Report on Form 10-K.
In the opinion of management, these unaudited Consolidated Financial Statements include all adjustments, consisting only of normal and recurring adjustments necessary for a fair statement of the information for each period contained therein.
Note 2:  Debt and Credit Arrangements
Long-Term Debt
A summary of the carrying amounts and fair values of our long-term debt is listed below.
 
Effective
Interest Rate
 
June 30,
2014
 
December 31,
2013
Book
Value
 
Fair
Value 1
 
Book
Value
 
Fair
Value 1
6.25% Senior Unsecured Notes due 2014
6.29%
 
$
0.0

 
$
0.0

 
$
351.3

 
$
365.6

2.25% Senior Notes due 2017 (less unamortized
discount of $0.5)
2.30%
 
299.5

 
304.7

 
299.4

 
293.0

4.00% Senior Notes due 2022 (less unamortized
discount of $2.4)
4.13%
 
247.6

 
256.9

 
247.4

 
241.6

3.75% Senior Notes due 2023 (less unamortized
discount of $1.3)
4.32%
 
498.7

 
501.8

 
498.6

 
467.3

4.20% Senior Notes due 2024 (less unamortized
discount of $0.9)
4.24%
 
499.1

 
514.4

 
0.0
 
0.0
Other notes payable and capitalized leases
 
 
87.4

 
89.4

 
86.7

 
87.8

Total long-term debt
 
 
1,632.3

 
 
 
1,483.4

 
 
Less: current portion 2
 
 
2.4
 
 
 
353.6

 
 
Long-term debt, excluding current portion
 
 
$
1,629.9

 
 
 
$
1,129.8

 
 

1 
See Note 12 for information on the fair value measurement of our long-term debt.
2 
We included our 6.25% Senior Unsecured Notes due 2014 (the "6.25% Notes") in the current portion of long-term debt on our December 31, 2013 Consolidated Balance Sheet because the 6.25% Notes were scheduled to mature on November 15, 2014. We redeemed the 6.25% Notes prior to their scheduled maturity during the second quarter of 2014.

Debt Transactions
4.20% Senior Notes due 2024
In April 2014, we issued $500.0 in aggregate principal amount of the 4.20% Senior Notes due 2024 (the "4.20% Notes") at a discount to par. As a result, the 4.20% Notes were reflected on our unaudited Consolidated Balance Sheet at a fair value of $499.1 at issuance. The discount of $0.9 and capitalized direct fees, including commissions and offering expenses of $4.4, will be amortized in interest expense through the maturity date of April 15, 2024, using the effective interest method. The net proceeds were $494.7 after deducting discounts, commissions and offering expenses. Interest is payable semi-annually in arrears on April 15th and October 15th of each year, commencing on October 15, 2014. Consistent with our other debt securities, the 4.20% Notes include covenants that, among other things, limit our liens and the liens of certain of our consolidated subsidiaries, but do not require us to maintain any financial ratios or specified levels of net worth or liquidity.
We used the majority of the net proceeds of the 4.20% Notes toward the redemption of our 6.25% Notes as described below.
 

8
Table of Contents
Notes to Consolidated Financial Statements – (continued)
(Amounts in Millions, Except Per Share Amounts)
(Unaudited)


At any time prior to April 15, 2024, at our option, we may redeem all or some of the 4.20% Notes at the greater of 100% of the principal amount or a "make-whole" amount, plus, in either instance, accrued and unpaid interest to the date of redemption. If we experience a change of control event, combined with a specified downgrade in the credit rating, we must offer to repurchase the 4.20% Notes in cash at a price equal to not less than 101% of the aggregate principal amount of the 4.20% Notes, plus accrued and unpaid interest to the date of repurchase.
6.25% Senior Unsecured Notes due 2014
In May 2014, we redeemed all $350.0 in aggregate principal amount of the 6.25% Notes. Total cash paid to redeem the 6.25% Notes was $371.2, which included accrued and unpaid interest of $10.3. In connection with the redemption of the 6.25% Notes, we recognized a loss on early extinguishment of debt of $10.4, which was primarily due to a redemption premium paid to noteholders. The loss on early extinguishment of debt was recorded in other (expense) income, net within our unaudited Consolidated Statement of Operations.
Credit Agreements
We maintain a committed corporate credit facility (the "Credit Agreement") and uncommitted lines of credit to increase our financial flexibility. The Credit Agreement is a revolving facility, expiring in December 2018, under which amounts borrowed by us or any of our subsidiaries designated under the Credit Agreement may be repaid and reborrowed, subject to an aggregate lending limit of $1,000.0 or the equivalent in other currencies. The Company has the ability to increase the commitments under the Credit Agreement from time to time by an additional amount of up to $250.0, provided the Company receives commitments for such increases and satisfies certain other conditions. The aggregate available amount of letters of credit outstanding may decrease or increase, subject to a sublimit on letters of credit of $200.0 or the equivalent in other currencies. Our obligations under the Credit Agreement are unsecured.
We were in compliance with all of our covenants in the Credit Agreement as of June 30, 2014.

9
Table of Contents
Notes to Consolidated Financial Statements – (continued)
(Amounts in Millions, Except Per Share Amounts)
(Unaudited)


Note 3:  Earnings Per Share
The following sets forth basic and diluted earnings per common share available to IPG common stockholders.
 
Three months ended
June 30,
 
Six months ended
June 30,
 
2014
 
2013
 
2014
 
2013
Net income available to IPG common stockholders - basic
$
99.4

 
$
79.9

 
$
78.5

 
$
20.7

Adjustments: Effect of dilutive securities
 
 
 
 
 
 
 
Preferred stock dividends 1
0.0
 
2.9
 
0.0
 
0.0
Net income available to IPG common stockholders - diluted
$
99.4

 
$
82.8

 
$
78.5

 
$
20.7

 
 
 
 
 
 
 
 
Weighted-average number of common shares outstanding - basic
421.1
 
425.1

 
421.9
 
419.7

Add: Effect of dilutive securities
 
 
 
 
 
 
 
Restricted stock, stock options and other equity awards
7.0
 
6.1
 
6.6
 
5.4
Preferred stock outstanding 1
0.0
 
17.1
 
0.0
 
0.0
Weighted-average number of common shares outstanding - diluted
428.1
 
448.3

 
428.5
 
425.1

 
 
 
 
 
 
 
 
Earnings per share available to IPG common stockholders - basic
$
0.24

 
$
0.19

 
$
0.19

 
$
0.05

Earnings per share available to IPG common stockholders - diluted
$
0.23

 
$
0.18

 
$
0.18

 
$
0.05

 
1 
We converted all of our 5 1/4% Series B Cumulative Convertible Perpetual Preferred Stock (the "Series B Preferred Stock") into common stock in October 2013.
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.
 
Three months ended
June 30,
 
Six months ended
June 30,
 
2014
 
2013
 
2014
 
2013
4.75% Notes 1
0.0
 
0.0
 
0.0
 
6.6
Preferred stock 2
0.0
 
0.0
 
0.0
 
17.1
Total
0.0

 
0.0

 
0.0

 
23.7

 
 
 
 
 
 
 
 
Securities excluded from the diluted earnings per share calculation
because the exercise price was greater than the average market price:
 
 
 
 
 
 
 
Stock options 3
0.0

 
0.2

 
0.0

 
1.3

 
1 
We retired all of our outstanding 4.75% Convertible Senior Notes due 2023 (the "4.75% Notes") in March 2013. For purposes of calculating diluted earnings per share, the potentially dilutive shares are pro-rated based on the period they were outstanding but were antidilutive.
2 
We converted all of our Series B Preferred Stock into common stock in October 2013.
3 
These options are 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, foreign currency exchange rates and other factors.

10
Table of Contents
Notes to Consolidated Financial Statements – (continued)
(Amounts in Millions, Except Per Share Amounts)
(Unaudited)


During the first half of 2014, we completed four acquisitions, consisting of a global digital agency, a digital agency in the United States, a healthcare agency in the United Kingdom and a digital public relations agency based in Sweden. Of our four acquisitions, two were included in the Integrated Agency Networks (“IAN”) operating segment and two were included in the Constituency Management Group ("CMG") operating segment. During the first half of 2014, we recorded approximately $90.0 of goodwill and intangible assets related to these acquisitions.
During the first half of 2013, we completed eight acquisitions, including a full-service digital agency in India, a public relations consultancy in India and a mobile marketing agency in Australia. Of our eight acquisitions, seven were included in the IAN operating segment and one was included in the CMG operating segment. During the first half of 2013, we recorded approximately $66.0 of goodwill and intangible assets related to those acquisitions.
The results of operations of our acquired companies were included in our consolidated results from the closing date of each acquisition. Details of cash paid for current and prior years' acquisitions are listed below.
 
Six months ended
June 30,
 
2014
 
2013
Cost of investment: current-year acquisitions
$
63.7

 
$
51.9

Cost of investment: prior-year acquisitions
9.0

 
27.8

Less: net cash acquired
(13.3
)
 
(4.7
)
Total cost of investment
$
59.4

 
$
75.0

Operating expense 1
0.1

 
0.0

Total cash paid for acquisitions 2
$
59.5

 
$
75.0

 
1 
Represents cash payments made that were either in excess of the contractual value or contingent upon the future employment of the former owners of acquired companies.
2 
Of the total cash paid, $8.6 and $26.8 for the six months ended June 30, 2014, and 2013, respectively, are classified under the financing section of the unaudited Consolidated Statements of Cash Flows within acquisition-related payments. These amounts relate to increases in our ownership interests in our consolidated subsidiaries, as well as deferred payments for acquisitions that closed on or after January 1, 2009. Of the total cash paid, $50.8 and $48.2 for the six months ended June 30, 2014, and 2013, respectively, are classified under the investing section of the unaudited Consolidated Statements of Cash Flows within acquisitions, including deferred payments, net of cash acquired. These amounts relate to initial payments for new transactions and deferred payments for acquisitions that closed prior to January 1, 2009.

Many of our acquisitions also include provisions under which the noncontrolling equity owners may require us to purchase additional interests in a subsidiary at their discretion. The following table presents changes in our redeemable noncontrolling interests.
 
Six months ended
June 30,
 
2014
 
2013
Balance at beginning of period
$
249.1

 
$
227.2

Change in related noncontrolling interests balance
(6.8
)
 
(3.6
)
Changes in redemption value of redeemable noncontrolling interests:
 
 
 
Additions
7.9

 
12.5

Redemptions and other
(2.9
)
 
(2.1
)
Redemption value adjustments 1
(0.9
)
 
(3.0
)
Balance at end of period
$
246.4

 
$
231.0

 
1
Redeemable noncontrolling interests are reported at their estimated redemption value in each reporting period, but not less than their initial fair value. Any adjustment to the redemption value impacts retained earnings or additional paid-in capital, except adjustments as a result of currency translation.


11
Table of Contents
Notes to Consolidated Financial Statements – (continued)
(Amounts in Millions, Except Per Share Amounts)
(Unaudited)


Note 5:  Supplementary Data
Accrued Liabilities
The following table presents the components of accrued liabilities.
 
June 30,
2014
 
December 31,
2013
Salaries, benefits and related expenses
$
346.4

 
$
467.2

Office and related expenses
54.7

 
56.9

Acquisition obligations
60.4

 
12.8

Interest
17.8

 
16.0

Restructuring and other reorganization-related
10.4

 
46.7

Other
105.1

 
118.8

Total accrued liabilities
$
594.8

 
$
718.4


Other (Expense) Income, Net
Results of operations for the three and six months ended June 30, 2014 and 2013 include certain items that are not directly associated with our revenue-producing operations.
 
Three months ended
June 30,
 
Six months ended
June 30,
 
2014
 
2013
 
2014
 
2013
Loss on early extinguishment of debt
$
(10.4
)
 
$
0.0

 
$
(10.4
)
 
$
0.0

Gains on sales of businesses and investments
0.3

 
0.5

 
1.1

 
2.7

Vendor discounts and credit adjustments
0.2

 
0.3

 
1.7

 
0.5

Other (expense) income, net
(1.3
)
 
4.0

 
(1.9
)
 
3.4

Total other (expense) income, net
$
(11.2
)
 
$
4.8

 
$
(9.5
)
 
$
6.6

Loss on Early Extinguishment of Debt – During the second quarter of 2014, we recorded a charge of $10.4 related to the redemption of our 6.25% Notes. See Note 2 to the unaudited Consolidated Financial Statements for further information.
Sales of Businesses and Investments – During the six months ended June 30, 2014, we recognized gains from the sale of a business within our IAN segment and the sale of investments in Rabbi Trusts. During the six months ended June 30, 2013, the gains on sales of businesses and investments primarily related to a gain recognized from the sale of marketable securities in the Asia Pacific region within our IAN segment.
Vendor Discounts and Credit Adjustments – In connection with the liabilities related to vendor discounts and credits established as part of the restatement we presented in our 2004 Annual Report on Form 10-K, these adjustments reflect the reversal of certain of these liabilities primarily where the statute of limitations has lapsed, or as a result of differences resulting from settlements with clients or vendors.
Other (Expense) Income, net – During the six months ended June 30, 2014, we recorded an other-than-temporary impairment on an investment in an unconsolidated affiliate in the Asia Pacific region within our IAN segment. During the second quarter of 2013, other income, net primarily included a non-cash gain on re-measurement to fair value of an equity interest in an affiliate, located in the Asia Pacific region within our CMG segment, upon acquiring a controlling interest.

Share Repurchase Program
In February 2013, our Board of Directors (the "Board") authorized a share repurchase program to repurchase from time to time up to $300.0, excluding fees, of our common stock (the "2013 Share Repurchase Program"). In March 2013, the Board authorized an increase in the amount available under our 2013 Share Repurchase Program up to $500.0, excluding fees, of our common stock to be used towards the repurchase of shares resulting from the conversion to common stock of the 4.75% Notes. In February 2014, our Board authorized a new share repurchase program to repurchase from time to time up to $300.0, excluding fees, of our common stock (the "2014 Share Repurchase Program").

12
Table of Contents
Notes to Consolidated Financial Statements – (continued)
(Amounts in Millions, Except Per Share Amounts)
(Unaudited)


We may effect such repurchases through open market purchases, trading plans established in accordance with SEC rules, derivative transactions or other means. We expect to continue to repurchase our common stock in future periods, although the timing and amount of the repurchases will depend on market conditions and other funding requirements.
The following table presents our share repurchase activity under our 2013 and 2014 Share Repurchase Programs for the six months ended June 30, 2014, and 2013.
 
Six months ended
June 30,
 
2014
 
2013
Number of shares repurchased
5.6
 
13.7

Aggregate cost, including fees
$
97.3

 
$
180.6

Average price per share, including fees
$
17.51

 
$
13.22

As of June 30, 2014, $321.3 remains available for repurchase under the share repurchase programs. The share repurchase programs have no expiration date.
Note 6:  Income Taxes
For the three and six months ended June 30, 2014, our effective income tax rate of 38.7% and 44.0%, respectively, was negatively impacted primarily by losses in certain foreign jurisdictions where we receive no tax benefit due to 100% valuation allowances.
We have various tax years under examination by tax authorities in various countries, and in various states, such as New York, in which we have significant business operations. It is not yet known whether these examinations will, in the aggregate, result in our paying additional taxes. We believe our tax reserves are adequate in relation to the potential for additional assessments in each of the jurisdictions in which we are subject to taxation. We regularly assess the likelihood of additional tax assessments in those jurisdictions and, if necessary, adjust our reserves as additional information or events require.
With respect to all tax years open to examination by U.S. federal, various state and local, and non-U.S. tax authorities, we currently anticipate that total unrecognized tax benefits will decrease by an amount between $30.0 and $40.0 in the next twelve months, a portion of which will affect our effective income tax rate, primarily as a result of the settlement of tax examinations and the lapsing of statutes of limitations.
We are effectively settled with respect to U.S. income tax audits for years prior to 2009. With limited exceptions, we are no longer subject to state and local income tax audits for years prior to 2004, or non-U.S. income tax audits for years prior to 2006.
Note 7:  Incentive Compensation Plans
2014 Performance Incentive Plan
We issue stock-based compensation and cash awards to our employees under a plan established by the Compensation and Leadership Talent Committee of the Board of Directors (the “Compensation Committee”) and approved by our shareholders. In May 2014, our shareholders approved the 2014 Performance Incentive Plan (the “2014 PIP”), replacing the 2009 Performance Incentive Plan (the “2009 PIP”) and previous incentive plans. The number of shares of common stock initially available for grants of all equity awards under the 2014 Plan will be 28.8. Pursuant to the terms of the 2014 PIP, the number of shares that may be awarded to any one participant for each type of award is limited to 2.0. The vesting period of awards granted is generally commensurate with the requisite service period. We generally issue new shares to satisfy the exercise of stock options or the distribution of other stock-based awards.
Additionally, under the 2014 PIP, we have the ability to issue performance cash awards. The performance cash awards are granted to certain employees who otherwise would have been eligible to receive performance-based stock awards. These awards have a service period vesting condition and a performance vesting condition. The amount of the performance cash award received by an employee with a performance vesting condition can range from 0% to 300% of the target amount of the original grant value. Performance cash awards generally vest in three years. A committee of the Board of Directors may grant performance cash awards to any eligible employee; however, no employee can receive more than $10.0 during a performance period.

13
Table of Contents
Notes to Consolidated Financial Statements – (continued)
(Amounts in Millions, Except Per Share Amounts)
(Unaudited)


We issued the following stock-based awards under the 2009 PIP and 2014 PIP during the six months ended June 30, 2014.
 
Awards
 
Weighted-average
grant-date fair value
(per award)
Stock-settled awards
1.1

 
$
17.67

Performance-based awards
3.5

 
$
16.55

Total stock-based compensation awards
4.6

 
 
During the six months ended June 30, 2014, the Compensation Committee granted performance cash awards under the 2009 PIP and 2014 PIP with a total target value of $31.3 and $1.1 and restricted cash awards with a total target value of $4.8 and $0.4, respectively. Cash awards are amortized over the vesting period, typically three years.
Note 8:  Restructuring and Other Reorganization-Related Liabilities
In the fourth quarter of 2013, the Company implemented a cost savings initiative (the "2013 Plan") to better align our cost structure with our revenue, primarily in Continental Europe. During the six months ended June 30, 2014, we recorded $0.2 of net reversals related to the 2013 Plan, which was included in office and general expenses within our unaudited Consolidated Statements of Operations. All restructuring actions were substantially completed by the end of the first quarter of 2014, with remaining payments expected to be made through 2017.
A summary of the 2013 Plan restructuring liability activity is listed below.
 
 
December 31, 2013
 
Net Restructuring (Reversals) Charges
 
Cash Payments
 
June 30, 2014
Severance and termination costs
 
$
46.5

 
$
(0.4
)
 
$
(36.5
)
 
$
9.6

Lease termination costs
 
3.9

 
0.2

 
(0.6
)
 
3.5

Other exit costs
 
0.5

 
0.0

 
(0.4
)
 
0.1

Total
 
$
50.9

 
$
(0.2
)
 
$
(37.5
)
 
$
13.2

Net restructuring reversals related to the 2013 Plan for the six months ended June 30, 2014, were comprised of net reversals of approximately $0.2 at CMG.
Prior Restructuring Plans
The 2007, 2003 and 2001 restructuring plans (the "Prior Restructuring Plans") with current quarter activity included net charges that are adjustments primarily resulting from changes in management’s estimates relating to sublease rental income assumptions. For the six months ended June 30, 2014 and 2013, the Prior Restructuring Plans incurred net restructuring and other reorganization-related charges of $0.4 and $0.2, respectively. As of June 30, 2014, the remaining liability for the Prior Restructuring Plans was $1.4.
Note 9:  Accumulated Other Comprehensive Loss, Net of Tax
The following tables present the changes in accumulated other comprehensive loss, net of tax by component.
 
Foreign Currency Translation Adjustments
 
Available-for-Sale Securities
 
Derivative Instruments
 
Defined Benefit Pension and Other Postretirement Plans
 
Total
Balance as of December 31, 2013
$
(243.7
)
 
$
0.4

 
$
(11.7
)
 
$
(156.2
)
 
$
(411.2
)
Other comprehensive income (loss) before reclassifications
25.4

 
0.2

 
(0.6
)
 
(0.5
)
 
24.5

Amount reclassified from accumulated other comprehensive loss, net of tax
(0.9
)
 
0.0

 
0.8

 
3.7

 
3.6

Balance as of June 30, 2014
$
(219.2
)
 
$
0.6

 
$
(11.5
)
 
$
(153.0
)
 
$
(383.1
)

14
Table of Contents
Notes to Consolidated Financial Statements – (continued)
(Amounts in Millions, Except Per Share Amounts)
(Unaudited)


 
Foreign Currency Translation Adjustments
 
Available-for-Sale Securities
 
Derivative Instruments
 
Defined Benefit Pension and Other Postretirement Plans
 
Total
Balance as of December 31, 2012
$
(130.1
)
 
$
0.8

 
$
(12.7
)
 
$
(146.0
)
 
$
(288.0
)
Other comprehensive (loss) income before reclassifications
(110.3
)
 
0.8

 
0.0

 
(0.7
)
 
(110.2
)
Amount reclassified from accumulated other comprehensive loss, net of tax
0.0

 
(1.2
)
 
0.5

 
3.5

 
2.8

Balance as of June 30, 2013
$
(240.4
)
 
$
0.4

 
$
(12.2
)
 
$
(143.2
)
 
$
(395.4
)
Amounts reclassified from accumulated other comprehensive loss, net of tax for the three and six months ended June 30, 2014 and 2013 are as follows:
 
Three months ended
June 30,
 
Six months ended
June 30,
 
Affected Line Item in the Consolidated Statements of Operations
 
2014
 
2013
 
2014
 
2013
 
Foreign currency translation adjustments
$
0.0

 
$
0.0

 
$
(0.9
)
 
$
0.0

 
Other (expense) income, net
Gains on available-for-sale securities
0.0

 
(0.4
)
 
0.0

 
(1.4
)
 
Other (expense) income, net
Losses on derivative instruments
0.5

 
0.5

 
0.9

 
0.9

 
Interest expense
Amortization of defined benefit pension and postretirement plans items 1
2.4

 
2.7

 
5.0

 
5.5

 
 
Tax effect
(0.9
)
 
(1.4
)
 
(1.4
)
 
(2.2
)
 
Provision for income taxes
Total amount reclassified from accumulated other comprehensive loss, net of tax
$
2.0

 
$
1.4

 
$
3.6

 
2.8

 
 
 
1 
These accumulated other comprehensive loss components are included in the computation of net periodic cost. See Note 10 for further information.
Note 10:  Employee Benefits
We have a defined benefit pension plan (the “Domestic Pension Plan”) that covers certain U.S. employees. We also have numerous funded and unfunded plans outside the U.S. The Interpublic Limited Pension Plan in the U.K. is a defined benefit plan and is our most material foreign pension plan in terms of the benefit obligation and plan assets. Some of our domestic and foreign subsidiaries provide postretirement health benefits and life insurance to eligible employees and, in certain cases, their dependents. The domestic postretirement benefit plan is our most material postretirement benefit plan in terms of the benefit obligation. Certain immaterial foreign pension and postretirement benefit plans have been excluded from the table below.
The components of net periodic cost for the Domestic Pension Plan, the significant foreign pension plans and the domestic postretirement benefit plan are listed below.
 
Domestic Pension Plan
 
Foreign Pension Plans
 
Domestic
Postretirement Benefit Plan
Three months ended June 30,
2014
 
2013
 
2014
 
2013
 
2014
 
2013
Service cost
$
0.0

 
$
0.0

 
$
2.4

 
$
2.6

 
$
0.0

 
$
0.0

Interest cost
1.5

 
1.3

 
5.9

 
5.2

 
0.5

 
0.3

Expected return on plan assets
(1.8
)
 
(1.9
)
 
(6.2
)
 
(4.8
)
 
0.0

 
0.0

Amortization of:
 
 
 
 
 
 
 
 
 
 
 
Prior service cost (credit)
0.0

 
0.0

 
0.1

 
0.1

 
(0.1
)
 
0.0

Unrecognized actuarial losses
1.6

 
1.9

 
0.8

 
0.7

 
0.0

 
0.0

Net periodic cost
$
1.3

 
$
1.3

 
$
3.0

 
$
3.8

 
$
0.4

 
$
0.3



15
Table of Contents
Notes to Consolidated Financial Statements – (continued)
(Amounts in Millions, Except Per Share Amounts)
(Unaudited)


 
Domestic Pension Plan
 
Foreign Pension Plans
 
Domestic
Postretirement Benefit Plan
Six months ended June 30,
2014
 
2013
 
2014
 
2013
 
2014
 
2013
Service cost
$
0.0

 
$
0.0

 
$
4.9

 
$
5.1

 
$
0.0

 
$
0.0

Interest cost
3.1

 
2.7

 
11.8

 
10.6

 
0.9

 
0.8

Expected return on plan assets
(3.7
)
 
(3.9
)
 
(12.4
)
 
(9.6
)
 
0.0

 
0.0

Amortization of:
 
 
 
 
 
 
 
 
 
 
 
Prior service cost (credit)
0.0

 
0.0

 
0.1

 
0.1

 
(0.1
)
 
0.0

Unrecognized actuarial losses
3.3

 
4.0

 
1.7

 
1.4

 
0.0

 
0.0

Net periodic cost
$
2.7

 
$
2.8

 
$
6.1

 
$
7.6

 
$
0.8

 
$
0.8


During the six months ended June 30, 2014, we contributed $1.5 and $12.6 of cash to our domestic and foreign pension plans, respectively. For the remainder of 2014, we expect to contribute approximately $1.0 and $12.0 of cash to our domestic and foreign pension plans, respectively.
Note 11:  Segment Information
We have two reportable segments, IAN and CMG. IAN is comprised of McCann Worldgroup, FCB (Foote, Cone & Belding), Lowe & Partners, IPG Mediabrands, our digital specialist agencies and our domestic integrated agencies. CMG is comprised of a number of our specialist marketing services offerings. We also report results for the “Corporate and other” group. The profitability measure employed by our chief operating decision maker for allocating resources to operating divisions and assessing operating division performance is segment operating income (loss). The segment information is presented consistently with the basis described in our 2013 Annual Report on Form 10-K, except that segment operating income (loss) for the three and six months ended June 30, 2014 and 2013, respectively, includes the impact of net restructuring and other reorganization-related charges (reversals). See Note 8 for further information on net restructuring and other reorganization-related liabilities.

16
Table of Contents
Notes to Consolidated Financial Statements – (continued)
(Amounts in Millions, Except Per Share Amounts)
(Unaudited)


Summarized financial information concerning our reportable segments is shown in the following table.
 
Three months ended
June 30,
 
Six months ended
June 30,
 
2014
 
2013
 
2014
 
2013
Revenue:
 
 
 
 
 
 
 
IAN
$
1,496.0

 
$
1,435.7

 
$
2,811.7

 
$
2,676.8

CMG
355.4

 
320.5

 
677.2

 
622.4

Total
$
1,851.4

 
$
1,756.2

 
$
3,488.9

 
$
3,299.2

 
 
 
 
 
 
 
 
Segment operating income (loss):
 
 
 
 
 
 
 
IAN
$
184.0

 
$
169.2

 
$
195.5

 
$
146.6

CMG
41.3

 
34.6

 
58.8

 
48.6

Corporate and other
(29.5
)
 
(29.0
)
 
(70.2
)
 
(62.8
)
Total
195.8

 
174.8

 
184.1

 
132.4

 
 
 
 
 
 
 
 
Interest expense
(22.6
)
 
(37.5
)
 
(42.8
)
 
(74.3
)
Interest income
6.6

 
5.8

 
12.8

 
12.2

Other (expense) income, net
(11.2
)
 
4.8

 
(9.5
)
 
6.6

Income before income taxes
$
168.6

 
$
147.9

 
$
144.6

 
$
76.9

 
 
 
 
 
 
 
 
Depreciation and amortization of fixed assets and intangible assets:
 
 
 
 
 
 
 
IAN
$
30.2

 
$
31.6

 
$
61.7

 
$
62.5

CMG
4.6

 
3.9

 
8.8

 
7.7

Corporate and other
5.4

 
3.7

 
10.2

 
7.2

Total
$
40.2

 
$
39.2

 
$
80.7

 
$
77.4

 
 
 
 
 
 
 
 
Capital expenditures:
 
 
 
 
 
 
 
IAN
$
17.2

 
$
13.5

 
$
31.1

 
$
23.5

CMG
3.1

 
3.1

 
5.6

 
4.1

Corporate and other
11.8

 
12.4

 
22.0

 
19.2

Total
$
32.1

 
$
29.0

 
$
58.7

 
$
46.8

 
 
 
 
 
 
 
 
 
June 30,
2014
 
December 31,
2013
 
 
 
 
Total assets:
 
 
 
 
 
 
 
IAN
$
11,175.2

 
$
11,425.1

 
 
 
 
CMG
1,326.2

 
1,203.8

 
 
 
 
Corporate and other
(161.7
)
 
276.1

 
 
 
 
Total
$
12,339.7

 
$
12,905.0

 
 
 
 
 

17
Table of Contents
Notes to Consolidated Financial Statements – (continued)
(Amounts in Millions, Except Per Share Amounts)
(Unaudited)


Note 12:  Fair Value Measurements
Authoritative guidance for fair value measurements establishes a fair value hierarchy which requires us to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. There are three levels of inputs that may be used to measure fair value:
Level 1
  
Unadjusted quoted prices in active markets for identical assets or liabilities. An active market for the asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.
 
 
Level 2
  
Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
 
 
 
Level 3
  
Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
Financial Instruments that are Measured at Fair Value on a Recurring Basis
We primarily apply the market approach to determine the fair value of financial instruments that are measured at fair value on a recurring basis. There were no changes to our valuation techniques used to determine the fair value of financial instruments during the six months ended June 30, 2014. The following tables present information about our financial instruments measured at fair value on a recurring basis as of June 30, 2014, and December 31, 2013, and indicates the fair value hierarchy of the valuation techniques utilized to determine such fair value.
 
June 30, 2014
 
Balance Sheet Classification
 
Level 1
 
Level 2
 
Level 3
 
Total
 
Assets
 
 
 
 
 
 
 
 
 
Cash equivalents
$
435.5

 
$
0.0

 
$
0.0

 
$
435.5

 
Cash and cash equivalents
Short-term marketable securities
6.3

 
0.0

 
0.0

 
6.3

 
Marketable securities
Long-term investments
0.5

 
0.0

 
0.0

 
0.5

 
Other non-current assets

Total
$
442.3

 
$
0.0

 
$
0.0

 
$
442.3

 
 
 
 
 
 
 
 
 
 
 
 
As a percentage of total assets
3.6
%
 
0.0
%
 
0.0
%
 
3.6
%