10-Q

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 September 30, 2015
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 October 15, 2015 was 406,348,017.


INDEX
 
Page No.
 
 
 
Item 1.
 
 
Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2015 and 2014
 
Consolidated Statements of Comprehensive (Loss) Income for the Three and Nine Months Ended September 30, 2015 and 2014
 
Consolidated Balance Sheets as of September 30, 2015 and December 31, 2014
 
Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2015 and 2014
 
Consolidated Statements of Stockholders’ Equity for the Nine Months Ended September 30, 2015 and 2014
 
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
September 30,
 
Nine months ended September 30,
 
2015
 
2014
 
2015
 
2014
REVENUE
$
1,865.5

 
$
1,841.1

 
$
5,417.6

 
$
5,330.0

 
 
 
 
 
 
 
 
OPERATING EXPENSES:
 
 
 
 
 
 
 
Salaries and related expenses
1,202.2

 
1,195.2

 
3,622.6

 
3,554.0

Office and general expenses
471.4

 
474.6

 
1,379.5

 
1,420.6

Total operating expenses
1,673.6

 
1,669.8

 
5,002.1

 
4,974.6

 
 
 
 
 
 
 
 
OPERATING INCOME
191.9

 
171.3

 
415.5

 
355.4

 
 
 
 
 
 
 
 
EXPENSES AND OTHER INCOME:
 
 
 
 
 
 
 
Interest expense
(21.3
)
 
(20.7
)
 
(62.5
)
 
(63.5
)
Interest income
5.6

 
7.5

 
17.8

 
20.3

Other expense, net
(37.2
)
 
(0.6
)
 
(36.4
)
 
(10.1
)
Total (expenses) and other income
(52.9
)
 
(13.8
)
 
(81.1
)
 
(53.3
)
 
 
 
 
 
 
 
 
Income before income taxes
139.0

 
157.5

 
334.4

 
302.1

Provision for income taxes
61.1

 
65.0

 
137.4

 
128.6

Income of consolidated companies
77.9

 
92.5

 
197.0

 
173.5

Equity in net income of unconsolidated affiliates
0.1

 
0.3

 
0.6

 
0.6

NET INCOME
78.0

 
92.8

 
197.6

 
174.1

Net income attributable to noncontrolling interests
(3.1
)
 
(3.1
)
 
(3.3
)
 
(5.9
)
NET INCOME AVAILABLE TO IPG COMMON STOCKHOLDERS
$
74.9

 
$
89.7

 
$
194.3

 
$
168.2

 
 
 
 
 
 
 
 
Earnings per share available to IPG common stockholders:
 
 
 
 
 
 
 
Basic
$
0.18

 
$
0.21

 
$
0.47

 
$
0.40

Diluted
$
0.18

 
$
0.21

 
$
0.47

 
$
0.39

 
 
 
 
 
 
 
 
Weighted-average number of common shares outstanding:
 
 
 
 
 
 
 
Basic
407.6

 
419.2
 
409.7

 
421.0

Diluted
415.5
 
426.4
 
417.0
 
427.2
 
 
 
 
 
 
 
 
Dividends declared per common share
$
0.120

 
$
0.095

 
$
0.360

 
$
0.285

 
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 (LOSS) INCOME
(Amounts in Millions)
(Unaudited)
 
Three months ended
September 30,
 
Nine months ended September 30,
 
2015
 
2014
 
2015
 
2014
NET INCOME
$
78.0

 
$
92.8

 
$
197.6

 
$
174.1

OTHER COMPREHENSIVE LOSS
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Foreign currency translation:
 
 
 
 
 
 
 
Foreign currency translation adjustments
(109.0
)
 
(113.5
)
 
(218.0
)
 
(89.0
)
Less: reclassification adjustments recognized in net income
14.9

 
0.0

 
13.7

 
(0.9
)
 
(94.1
)
 
(113.5
)
 
(204.3
)
 
(89.9
)
 
 
 
 
 
 
 
 
Available-for-sale securities:
 
 
 
 
 
 
 
Changes in fair value of available-for-sale securities
0.2

 
0.2

 
0.4

 
0.4

Income tax effect
0.0

 
(0.3
)
 
(0.1
)
 
(0.3
)
 
0.2

 
(0.1
)
 
0.3

 
0.1

 
 
 
 
 
 
 
 
Derivative instruments:
 
 
 
 
 
 
 
Changes in fair value of derivative instruments
0.0

 
0.0

 
0.0

 
(0.6
)
Less: recognition of previously unrealized losses included in net income
0.5

 
0.5

 
1.5

 
1.4

Income tax effect
(0.7
)
 
(0.2
)
 
(1.1
)
 
(0.3
)
 
(0.2
)
 
0.3

 
0.4

 
0.5

 
 
 
 
 
 
 
 
Defined benefit pension and other postretirement plans:
 
 
 
 
 
 
 
Net actuarial gains (losses) for the period
2.8

 
0.0

 
8.5

 
(0.3
)
Less: amortization of unrecognized losses, transition obligation and prior service cost included in net income
1.3

 
2.6

 
7.5

 
7.6

Less: settlement and curtailment losses included in net income
(0.2
)
 
0.0

 
0.0

 
0.0

Other
0.1

 
(0.1
)
 
(0.1
)
 
(0.3
)
Income tax effect
(2.6
)
 
(1.0
)
 
(4.8
)
 
(2.3
)
 
1.4

 
1.5

 
11.1

 
4.7

 
 
 
 
 
 
 
 
Other comprehensive loss, net of tax
(92.7
)
 
(111.8
)
 
(192.5
)
 
(84.6
)
TOTAL COMPREHENSIVE (LOSS) INCOME
(14.7
)
 
(19.0
)
 
5.1

 
89.5

Less: comprehensive income attributable to noncontrolling interests
0.8

 
3.4

 
0.3

 
5.3

COMPREHENSIVE (LOSS) INCOME ATTRIBUTABLE TO IPG
$
(15.5
)
 
$
(22.4
)
 
$
4.8

 
$
84.2


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)
 
September 30,
2015
 
December 31,
2014
ASSETS:
 
 
 
Cash and cash equivalents
$
874.3

 
$
1,660.6

Marketable securities
6.9

 
6.6

Accounts receivable, net of allowance of $61.7 and $59.5, respectively
3,848.3

 
4,376.6

Expenditures billable to clients
1,590.2

 
1,424.2

Other current assets
349.1

 
342.2

Total current assets
6,668.8

 
7,810.2

Property and equipment, net of accumulated depreciation of $987.2
and $1,070.0, respectively
519.2

 
548.2

Deferred income taxes
203.9

 
192.9

Goodwill
3,591.3

 
3,669.2

Other non-current assets
490.9

 
526.7

TOTAL ASSETS
$
11,474.1

 
$
12,747.2

 
 
 
 
LIABILITIES:
 
 
 
Accounts payable
$
5,753.4

 
$
6,558.0

Accrued liabilities
688.9

 
796.0

Short-term borrowings
128.3

 
107.2

Current portion of long-term debt
2.0

 
2.1

Total current liabilities
6,572.6

 
7,463.3

Long-term debt
1,621.3

 
1,623.5

Deferred compensation
462.9

 
527.9

Other non-current liabilities
699.2

 
723.9

TOTAL LIABILITIES
9,356.0

 
10,338.6

 
 
 
 
Redeemable noncontrolling interests
226.5

 
257.4

 
 
 
 
STOCKHOLDERS’ EQUITY:
 
 
 
Common stock
41.5

 
41.2

Additional paid-in capital
1,613.6

 
1,547.5

Retained earnings
1,226.2

 
1,183.3

Accumulated other comprehensive loss, net of tax
(826.2
)
 
(636.7
)
 
2,055.1

 
2,135.3

Less: Treasury stock
(191.3
)
 
(19.0
)
Total IPG stockholders’ equity
1,863.8

 
2,116.3

Noncontrolling interests
27.8

 
34.9

TOTAL STOCKHOLDERS’ EQUITY
1,891.6

 
2,151.2

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
$
11,474.1

 
$
12,747.2

 
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)
 
Nine months ended
September 30,
  
2015
 
2014
CASH FLOWS FROM OPERATING ACTIVITIES:
 
 
 
Net income
$
197.6

 
$
174.1

Adjustments to reconcile net income to net cash used in operating activities:
 
 
 
Depreciation and amortization of fixed assets and intangible assets
116.3

 
121.7

Provision for uncollectible receivables
12.2

 
9.0

Amortization of restricted stock and other non-cash compensation
49.7

 
37.9

Net amortization of bond discounts and deferred financing costs
4.2

 
3.7

Deferred income tax (benefit) provision
(33.7
)
 
49.1

Losses (gains) on sales of businesses
38.1

 
(0.5
)
Other
13.0

 
17.1

Changes in assets and liabilities, net of acquisitions and dispositions, providing (using) cash:
 
 
 
Accounts receivable
308.0

 
623.0

Expenditures billable to clients
(235.1
)
 
(193.2
)
Other current assets
(12.1
)
 
(65.0
)
Accounts payable
(556.1
)
 
(1,015.7
)
Accrued liabilities
(110.3
)
 
(107.2
)
Other non-current assets and liabilities
(47.5
)
 
(35.0
)
Net cash used in operating activities
(255.7
)
 
(381.0
)
CASH FLOWS FROM INVESTING ACTIVITIES:
 
 
 
Capital expenditures
(80.7
)
 
(94.4
)
Acquisitions, net of cash acquired
(5.9
)
 
(62.9
)
Proceeds from sales of businesses, investments and fixed assets, net of cash sold
(3.8
)
 
15.9

Net purchases and maturities of short-term marketable securities
(0.1
)
 
(0.5
)
Net cash used in investing activities
(90.5
)
 
(141.9
)
CASH FLOWS FROM FINANCING ACTIVITIES:
 
 
 
Repurchase of common stock
(172.3
)
 
(148.1
)
Common stock dividends
(147.2
)
 
(119.9
)
Acquisition-related payments
(31.8
)
 
(12.7
)
Distributions to noncontrolling interests
(13.1
)
 
(13.9
)
Purchase of long-term debt
(1.0
)
 
(350.1
)
Proceeds from issuance of long-term debt
0.0

 
499.1

Excess tax benefit on share-based compensation
9.0

 
4.9

Exercise of stock options
11.8

 
11.9

Net increase (decrease) in short term bank borrowings
29.4

 
(44.4
)
Other financing activities
3.6

 
(1.6
)
Net cash used in financing activities
(311.6
)
 
(174.8
)
Effect of foreign exchange rate changes on cash and cash equivalents
(128.5
)
 
(43.1
)
Net decrease in cash and cash equivalents
(786.3
)
 
(740.8
)
Cash and cash equivalents at beginning of period
1,660.6

 
1,636.8

Cash and cash equivalents at end of period
$
874.3

 
$
896.0


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, 2014
414.6

 
$
41.2

 
$
1,547.5

 
$
1,183.3

 
$
(636.7
)
 
$
(19.0
)
 
$
2,116.3

 
$
34.9

 
$
2,151.2

Net income
 
 
 
 
 
 
194.3

 
 
 
 
 
194.3

 
3.3

 
197.6

Other comprehensive loss
 
 
 
 
 
 
 
 
(189.5
)
 
 
 
(189.5
)
 
(3.0
)
 
(192.5
)
Reclassifications related to redeemable
    noncontrolling interests
 
 
 
 
 
 
 
 
 
 
 
 


 
4.3

 
4.3

Distributions to noncontrolling interests
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(13.1
)
 
(13.1
)
Change in redemption value of redeemable
    noncontrolling interests
 
 
 
 
 
 
(3.6
)
 
 
 
 
 
(3.6
)
 
 
 
(3.6
)
Repurchase of common stock
 
 
 
 
 
 
 
 
 
 
(172.3
)
 
(172.3
)
 
 
 
(172.3
)
Common stock dividends
 
 
 
 
 
 
(147.2
)
 
 
 
 
 
(147.2
)
 
 
 
(147.2
)
Stock-based compensation
2.4

 
0.3

 
63.1

 
 
 
 
 
 
 
63.4

 
 
 
63.4

Exercise of stock options
1.2

 
0.1

 
11.8

 
 
 
 
 
 
 
11.9

 
 
 
11.9

Shares withheld for taxes
(0.8
)
 
(0.1
)
 
(17.4
)
 
 
 
 
 
 
 
(17.5
)
 
 
 
(17.5
)
Excess tax benefit from stock-based compensation
 
 
 
 
9.0

 
 
 
 
 
 
 
9.0

 
 
 
9.0

Other
 
 
 
 
(0.4
)
 
(0.6
)
 
 
 
 
 
(1.0
)
 
1.4

 
0.4

Balance at September 30, 2015
417.4

 
$
41.5

 
$
1,613.6

 
$
1,226.2

 
$
(826.2
)
 
$
(191.3
)
 
$
1,863.8

 
$
27.8

 
$
1,891.6

 
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)
 
 
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
 
 
 
 
 
 
168.2

 
 
 
 
 
168.2

 
5.9

 
174.1

Other comprehensive loss
 
 
 
 
 
 
 
 
(84.0
)
 
 
 
(84.0
)
 
(0.6
)
 
(84.6
)
Reclassifications related to redeemable
    noncontrolling interests
 
 
 
 
 
 
 
 
 
 
 
 
 
 
6.7

 
6.7

Distributions to noncontrolling interests
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(13.9
)
 
(13.9
)
Change in redemption value of redeemable
    noncontrolling interests
 
 
 
 
 
 
3.0

 
 
 
 
 
3.0

 
 
 
3.0

Repurchase of common stock
 
 
 
 
 
 
 
 
 
 
(148.1
)
 
(148.1
)
 
 
 
(148.1
)
Common stock dividends
 
 
 
 
 
 
(119.9
)
 
 
 
 
 
(119.9
)
 
 
 
(119.9
)
Stock-based compensation
3.3

 
0.3

 
50.8

 
 
 
 
 
 
 
51.1

 
 
 
51.1

Exercise of stock options
1.0

 
0.1

 
11.9

 
 
 
 
 
 
 
12.0

 
 
 
12.0

Shares withheld for taxes
(0.8
)
 
(0.1
)
 
(14.7
)
 
 
 
 
 
 
 
(14.8
)
 
 
 
(14.8
)
Excess tax benefit from stock-based compensation
 
 
 
 
4.9

 
 
 
 
 
 
 
4.9

 
 
 
4.9

Other
 
 
 
 
(3.7
)
 
(0.6
)
 
 
 
 
 
(4.3
)
 
(1.1
)
 
(5.4
)
Balance at September 30, 2014
535.8

 
$
53.3

 
$
3,024.4

 
$
915.2

 
$
(495.2
)
 
$
(1,414.4
)
 
$
2,083.3

 
$
32.6

 
$
2,115.9

 
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 2014 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. Certain reclassifications have been made to prior-period financial statements to conform to the current-period presentation.

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
 
September 30,
2015
 
December 31,
2014
Book
Value
 
Fair
Value 1
 
Book
Value
 
Fair
Value 1
2.25% Senior Notes due 2017 (less unamortized
discount of $0.3)
2.30%
 
$
299.7

 
$
302.0

 
$
299.6

 
$
301.2

4.00% Senior Notes due 2022 (less unamortized
discount of $2.0)
4.13%
 
248.0

 
252.6

 
247.7

 
255.2

3.75% Senior Notes due 2023 (less unamortized
discount of $1.1)
4.32%
 
498.9

 
493.1

 
498.8

 
499.8

4.20% Senior Notes due 2024 (less unamortized
discount of $0.8)
4.24%
 
499.2
 
498.6
 
499.1
 
509.8
Other notes payable and capitalized leases
 
 
77.5

 
77.5

 
80.4

 
80.4

Total long-term debt
 
 
1,623.3

 
 
 
1,625.6

 
 
Less: current portion
 
 
2.0

 
 
 
2.1

 
 
Long-term debt, excluding current portion
 
 
$
1,621.3

 
 
 
$
1,623.5

 
 

1
See Note 12 for information on the fair value measurement of our long-term debt.
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 September 30, 2015.
Refer to Note 15 for further discussion related to the Credit Agreement.


8
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
September 30,
 
Nine months ended September 30,
 
2015
 
2014
 
2015
 
2014
Net income available to IPG common stockholders - basic and diluted
$
74.9

 
$
89.7

 
$
194.3

 
$
168.2

 
 
 
 
 
 
 
 
Weighted-average number of common shares outstanding - basic
407.6

 
419.2

 
409.7

 
421.0

Add: Effect of dilutive securities
 
 
 
 
 
 
 
Restricted stock, stock options and other equity awards
7.9

 
7.2

 
7.3

 
6.2

Weighted-average number of common shares outstanding - diluted
415.5

 
426.4

 
417.0

 
427.2

 
 
 
 
 
 
 
 
Earnings per share available to IPG common stockholders - basic
$
0.18

 
$
0.21

 
$
0.47

 
$
0.40

Earnings per share available to IPG common stockholders - diluted
$
0.18

 
$
0.21

 
$
0.47

 
$
0.39


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.
During the first nine months of 2015, we completed two acquisitions, including a full-service digital agency in the UK. Of our two acquisitions, one was included in the Integrated Agency Networks (“IAN”) operating segment, and one was included in the Constituency Management Group ("CMG") operating segment. During the first nine months of 2015, we recorded approximately $14.0 of goodwill and intangible assets related to our acquisitions.
During the first nine months of 2014, we completed six acquisitions, consisting of a global digital agency, a full-service digital agency in the United States, a healthcare agency in the United Kingdom, a digital public relations agency based in Sweden, a digital and traditional creative agency in Germany and a search marketing agency based in the Netherlands. Of our six acquisitions, four were included in the IAN operating segment, and two were included in the CMG operating segment. During the first nine months of 2014, we recorded approximately $137.0 of goodwill and intangible assets related to these 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.
 
Nine months ended
September 30,
 
2015
 
2014
Cost of investment: current-year acquisitions
$
8.3

 
$
87.2

Cost of investment: prior-year acquisitions
31.8

 
13.3

Less: net cash acquired
(2.4
)
 
(24.9
)
Total cost of investment
37.7

 
75.6

Operating expense 1
17.6

 
1.8

Total cash paid for acquisitions 2
$
55.3

 
$
77.4

 
1
Represents cash payments made that were either in excess of the initial value of contingent payments or contingent upon the future employment of the former owners of the acquired companies and are recorded in the operating section of the Consolidated Statements of Cash Flows.
2
Of the total cash paid for acquisitions, $31.8 and $12.7 for the nine months ended September 30, 2015, and 2014, respectively, are classified under the financing section of the unaudited Consolidated Statements of Cash Flows as acquisition-related payments. These amounts relate to deferred payments and increases in our ownership interest for prior acquisitions. $5.9 and $62.9 for the nine months ended September 30, 2015, and 2014, respectively, are

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


classified under the investing section of the unaudited Consolidated Statements of Cash Flows, as acquisitions, net of cash acquired. These amounts relate to initial payments for new transactions.
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.
 
Nine months ended
September 30,
 
2015
 
2014
Balance at beginning of period
$
257.4

 
$
249.1

Change in related noncontrolling interests balance
(9.4
)
 
(6.7
)
Changes in redemption value of redeemable noncontrolling interests:
 
 
 
Additions
0.5

 
22.0

Redemptions and other
(24.4
)
 
(4.5
)
Redemption value adjustments 1
2.4

 
(4.6
)
Balance at end of period
$
226.5

 
$
255.3

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

Note 5:  Supplementary Data
Accrued Liabilities
The following table presents the components of accrued liabilities.
 
September 30,
2015
 
December 31,
2014
Salaries, benefits and related expenses
$
433.2

 
$
510.6

Office and related expenses
47.4

 
51.5

Acquisition obligations
62.5

 
88.1

Interest
17.5

 
18.3

Restructuring and other reorganization-related
3.6

 
5.5

Other
124.7

 
122.0

Total accrued liabilities
$
688.9

 
$
796.0


Other Expense, Net
Results of operations for the three and nine months ended September 30, 2015 and 2014, include certain items that are not directly associated with our revenue-producing operations.
 
Three months ended
September 30,
 
Nine months ended September 30,
 
2015
 
2014
 
2015
 
2014
Loss on early extinguishment of debt
$
0.0

 
$
0.0

 
$
0.0

 
$
(10.4
)
(Losses) gains on sales of businesses and investments
(37.6
)
 
0.1

 
(37.8
)
 
1.2

Vendor discounts and credit adjustments
0.1

 
0.3

 
0.4

 
2.0

Other income (expense), net
0.3

 
(1.0
)
 
1.0

 
(2.9
)
Total other expense, net
$
(37.2
)
 
$
(0.6
)
 
$
(36.4
)
 
$
(10.1
)
Loss on Early Extinguishment of Debt - During the nine months ended September 30, 2014, we recorded a charge of $10.4 related to the redemption of our 6.25% Senior Unsecured Notes.

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


(Losses) Gains on Sales of Businesses and Investments – During the three months ended September 30, 2015, we recognized losses on the sales of businesses on completed dispositions within both our IAN and CMG segments and the classification of certain assets as held for sale within our IAN segment.
As of September 30, 2015, assets held for sale, included in other current assets, was $6.9, primarily consisting of cash and accounts receivable, and liabilities held for sale, included in accrued liabilities, was $17.6, primarily consisting of accounts payable and accrued liabilities, related to sales of businesses expected to be completed within the next twelve months.
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 Income (Expense), net – During the nine months ended September 30, 2015, we recorded a gain related to swap contracts within our Corporate and other segment. During the nine months ended September 30, 2014, we recorded a loss related to an other-than-temporary impairment of an investment in the Asia Pacific region within our IAN segment.

Share Repurchase Program
In February 2015, our Board of Directors (the "Board") authorized a new share repurchase program to repurchase from time to time up to $300.0, excluding fees, of our common stock (the "2015 Share Repurchase Program"), which was in addition to the remaining amount available to be repurchased from the $300.0 authorization made by the Board in February 2014 (the "2014 Share Repurchase Program").
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 share repurchase programs for the nine months ended September 30, 2015 and 2014.
 
Nine months ended
September 30,
 
2015
 
2014
Number of shares repurchased
8.5

 
8.3

Aggregate cost, including fees
$
172.3

 
$
148.1

Average price per share, including fees
$
20.36

 
$
17.91

We fully utilized the 2014 Share Repurchase Program during the third quarter of 2015. As of September 30, 2015, $271.3 remains available for repurchase under the 2015 Share Repurchase Program. The 2015 Share Repurchase Program has no expiration date.

Note 6:  Income Taxes
For the three and nine months ended September 30, 2015, our effective income tax rates of 44.0% and 41.1%, respectively, were 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 reversal of a valuation allowance in Continental Europe. For the nine months ended September 30, 2015, our effective income tax rate of 41.1% was also positively impacted by the recognition of previously unrecognized tax benefits as a result of the settlement of the 2010 U.S. federal income tax audit.
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 $25.0 and $35.0 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.

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


We are effectively settled with respect to U.S. federal income tax audits for 2010 and 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
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.
We issued the following stock-based awards under the 2014 Performance Incentive Plan (the "2014 PIP") during the nine months ended September 30, 2015.
 
Awards
 
Weighted-average
grant-date fair value
(per award)
Stock-settled awards
0.8

 
$
22.04

Performance-based awards
2.9

 
$
20.88

Total stock-based compensation awards
3.7

 
 
During the nine months ended September 30, 2015, the Compensation Committee granted performance cash awards and restricted cash awards, which are adjusted for performance, under the 2014 PIP with a total target value of $32.9 and $1.2, respectively. Cash and equity awards are expensed over the vesting period, which is typically three years.

Note 8:  Restructuring and Other Reorganization-Related Liabilities
2013 Restructuring Plan
In the fourth quarter of 2013, we implemented a cost savings initiative (the "2013 Plan") to better align our cost structure with our revenue, primarily in Continental Europe. All restructuring actions were substantially completed by the end of the first quarter of 2014, with remaining payments expected to be made through 2021.
A summary of the 2013 Plan restructuring liability activity for the nine months ended September 30, 2015 is listed below.
 
December 31, 2014
 
Net Restructuring Reversals
 
Cash Payments
 
Foreign Currency Translation Adjustments
 
September 30, 2015
Severance and termination costs
$
4.4

 
$
0.0

 
$
(1.8
)
 
$
(0.1
)
 
$
2.5

Lease termination costs
2.6

 
(0.1
)
 
(0.7
)
 
(0.1
)
 
1.7

Total
$
7.0

 
$
(0.1
)
 
$
(2.5
)
 
$
(0.2
)
 
$
4.2

Prior Restructuring Plans
During the nine months ended September 30, 2015, we recorded $0.7 of net reversals for the 2003 and 2001 restructuring plans (the "Prior Restructuring Plans") within the IAN segment related to changes in the estimate of lease termination costs. As of September 30, 2015, the remaining liability for the Prior Restructuring Plans was $0.5.

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, 2014
$
(436.3
)
 
$
0.8

 
$
(10.9
)
 
$
(190.3
)
 
$
(636.7
)
Other comprehensive (loss) income before reclassifications
(215.0
)
 
0.4

 
0.0

 
8.4

 
(206.2
)
Amount reclassified from accumulated other comprehensive loss, net of tax
13.7

 
(0.1
)
 
0.4

 
2.7

 
16.7

Balance as of September 30, 2015
$
(637.6
)
 
$
1.1

 
$
(10.5
)
 
$
(179.2
)
 
$
(826.2
)

12
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, 2013
$
(243.7
)
 
$
0.4

 
$
(11.7
)
 
$
(156.2
)
 
$
(411.2
)
Other comprehensive (loss) income before reclassifications
(88.4
)
 
0.4

 
(0.6
)
 
(0.6
)
 
(89.2
)
Amount reclassified from accumulated other comprehensive loss, net of tax
(0.9
)
 
(0.3
)
 
1.1

 
5.3

 
5.2

Balance as of September 30, 2014
$
(333.0
)
 
$
0.5

 
$
(11.2
)
 
$
(151.5
)
 
$
(495.2
)
Amounts reclassified from accumulated other comprehensive loss, net of tax, for the three and nine months ended September 30, 2015 and 2014 are as follows:
 
Three months ended
September 30,
 
Nine months ended September 30,
 
Affected Line Item in the Consolidated Statements of Operations
 
2015
 
2014
 
2015
 
2014
 
Foreign currency translation adjustments
$
14.9

 
$
0.0

 
$
13.7

 
$
(0.9
)
 
Other expense, net
Losses on derivative instruments
0.5

 
0.5

 
1.5

 
1.4

 
Interest expense
Amortization of defined benefit pension and postretirement plans items 1
1.1

 
2.6

 
7.5

 
7.6

 
 
Tax effect
(3.3
)
 
(1.5
)
 
(6.0
)
 
(2.9
)
 
Provision for income taxes
Total amount reclassified from accumulated other comprehensive loss, net of tax
$
13.2

 
$
1.6

 
$
16.7

 
$
5.2

 
 
 
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 that covers certain U.S. employees (the “Domestic Pension Plan”). 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 tables 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 September 30,
2015
 
2014
 
2015
 
2014
 
2015
 
2014
Service cost
$
0.0

 
$
0.0

 
$
2.7

 
$
3.0

 
$
0.0

 
$
0.0

Interest cost
(4.1
)
 
1.5

 
4.9

 
6.0

 
0.5

 
0.4

Expected return on plan assets
(1.8
)
 
(1.8
)
 
(5.3
)
 
(6.4
)
 
0.0

 
0.0

Settlements and curtailments
0.0

 
0.0

 
(0.2
)
 
0.1

 
0.0

 
0.0

Amortization of:
 
 
 
 
 
 
 
 
 
 
 
Prior service credit
0.0

 
0.0

 
0.0

 
0.0

 
(0.1
)
 
0.0

Unrecognized actuarial losses
0.3

 
1.7

 
1.1

 
0.9

 
0.0

 
0.0

Net periodic cost
$
(5.6
)
 
$
1.4

 
$
3.2

 
$
3.6

 
$
0.4

 
$
0.4



13
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
Nine months ended September 30,
2015
 
2014
 
2015
 
2014
 
2015
 
2014
Service cost
$
0.0

 
$
0.0

 
$
7.6

 
$
7.9

 
$
0.0

 
$
0.0

Interest cost
(1.1
)
 
4.6

 
14.3

 
17.8

 
1.2

 
1.3

Expected return on plan assets
(5.6
)
 
(5.5
)
 
(15.6
)
 
(18.8
)
 
0.0

 
0.0

Settlements and curtailments
0.0

 
0.0

 
0.0

 
0.1

 
0.0

 
0.0

Amortization of:
 
 
 
 
 
 
 
 
 
 
 
Prior service cost (credit)
0.0

 
0.0

 
0.1

 
0.1

 
(0.1
)
 
(0.1
)
Unrecognized actuarial losses
4.4

 
5.0

 
3.1

 
2.6

 
0.0

 
0.0

Net periodic cost
$
(2.3
)
 
$
4.1

 
$
9.5

 
$
9.7

 
$
1.1

 
$
1.2

During the nine months ended September 30, 2015, we contributed $2.6 and $15.9 of cash to our domestic and foreign pension plans, respectively. For the remainder of 2015, we do not expect to make any additional cash contributions to our Domestic Pension Plan and we expect to contribute approximately $7.0 of cash to our foreign pension plans.

Note 11:  Segment Information
As of September 30, 2015, we have two reportable segments: IAN and CMG. IAN is comprised of McCann Worldgroup, Foote, Cone & Belding ("FCB"), Mullen Lowe Group, 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). Segment information is presented consistently with the basis described in our 2014 Annual Report on Form 10-K, except that segment operating income (loss) for the three and nine months ended September 30, 2015 and 2014, respectively, includes a minimal impact of net restructuring and other reorganization-related reversals.


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


Summarized financial information concerning our reportable segments for the three and nine months ended September 30, 2015 and 2014 is shown in the following table.
 
Three months ended
September 30,
 
Nine months ended
September 30,
 
2015
 
2014
 
2015
 
2014
Revenue:
 
 
 
 
 
 
 
IAN
$
1,484.1

 
$
1,459.3

 
$
4,351.3

 
$
4,260.3

CMG
381.4

 
381.8

 
1,066.3

 
1,069.7

Total
$
1,865.5

 
$
1,841.1

 
$
5,417.6

 
$
5,330.0

 
 
 
 
 
 
 
 
Segment operating income (loss):
 
 
 
 
 
 
 
IAN
$
182.9

 
$
164.7

 
$
419.2

 
$
359.1

CMG
48.2

 
47.8

 
109.5

 
107.7

Corporate and other
(39.2
)
 
(41.2
)
 
(113.2
)
 
(111.4
)
Total
$
191.9

 
$
171.3

 
$
415.5

 
$
355.4

 
 
 
 
 
 
 
 
Interest expense
(21.3
)
 
(20.7
)
 
(62.5
)
 
(63.5
)
Interest income
5.6

 
7.5

 
17.8

 
20.3

Other expense, net
(37.2
)
 
(0.6
)
 
(36.4
)
 
(10.1
)
Income before income taxes
$
139.0

 
$
157.5

 
$
334.4

 
$
302.1

 
 
 
 
 
 
 
 
Depreciation and amortization of property and equipment and intangible assets:
 
 
 
 
 
 
 
IAN
$
27.9

 
$
31.0

 
$
87.5

 
$
92.6

CMG
4.9

 
4.9

 
13.9

 
13.8

Corporate and other
5.3

 
5.1

 
14.9

 
15.3

Total
$
38.1

 
$
41.0

 
$
116.3

 
$
121.7

 
 
 
 
 
 
 
 
Capital expenditures:
 
 
 
 
 
 
 
IAN
$
23.0

 
$
20.8

 
$
55.4

 
$
51.9

CMG
2.3

 
2.7

 
5.8

 
8.3

Corporate and other
5.6

 
12.2

 
19.5

 
34.2

Total
$
30.9

 
$
35.7

 
$
80.7

 
$
94.4

 
 
 
 
 
 
 
 
 
September 30,
2015
 
December 31,
2014
 
 
 
 
Total assets:
 
 
 
 
 
 
 
IAN
$
9,998.3

 
$
11,080.9

 
 
 
 
CMG
1,350.6

 
1,346.8

 
 
 
 
Corporate and other
125.2

 
319.5

 
 
 
 
Total
$
11,474.1

 
$
12,747.2

 
 
 
 
 


15
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 nine months ended September 30, 2015. The following tables present information about our financial instruments measured at fair value on a recurring basis as of September 30, 2015, and December 31, 2014, and indicate the fair value hierarchy of the valuation techniques utilized to determine such fair value.
 
September 30, 2015
 
Balance Sheet Classification
 
Level 1
 
Level 2
 
Level 3
 
Total
 
Assets
 
 
 
 
 
 
 
 
 
Cash equivalents
$
133.2

 
$
0.0

 
$
0.0

 
$
133.2

 
Cash and cash equivalents
Short-term marketable securities
6.9

 
0.0

 
0.0

 
6.9

 
Marketable securities
Long-term investments
0.5

 
0.0

 
0.0

 
0.5

 
Other non-current assets
Total
$
140.6

 
$
0.0

 
$
0.0

 
$
140.6

 
 
 
 
 
 
 
 
 
 
 
 
As a percentage of total assets
1.2
%
 
0.0
%
 
0.0
%
 
1.2
%
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities
 
 
 
 
 
 
 
 
 
Mandatorily redeemable noncontrolling interests 1
$
0.0

 
$
0.0

 
$
44.1

 
$
44.1

 
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2014
 
Balance Sheet Classification
 
Level 1
 
Level 2
 
Level 3
 
Total
 
Assets
 
 
 
 
 
 
 
 
 
Cash equivalents
$
901.4

 
$
0.0

 
$
0.0

 
$
901.4

 
Cash and cash equivalents
Short-term marketable securities
6.6

 
0.0

 
0.0

 
6.6

 
Marketable securities
Long-term investments
0.5

 
0.0

 
0.0

 
0.5

 
Other non-current assets
Total
$
908.5

 
$
0.0

 
$
0.0

 
$
908.5

 
 
 
 
 
 
 
 
 
 
 
 
As a percentage of total assets
7.1
%
 
0.0
%
 
0.0
%
 
7.1
%
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities
 
 
 
 
 
 
 
 
 
Mandatorily redeemable noncontrolling interests 1
$
0.0

 
$
0.0

 
$
32.8

 
$
32.8

 
 
 
1
Relates to unconditional obligations to purchase additional noncontrolling equity shares of consolidated subsidiaries. Fair value measurement of the obligations was based upon the amounts payable as if the forward contracts were settled. The amounts redeemable within the next twelve months are classified in accrued liabilities; any interests redeemable thereafter are classified in other non-current liabilities.

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


The following table presents additional information about financial instruments measured at fair value on a recurring basis and for which we utilized Level 3 inputs to determine fair value for the three and nine months ended September 30, 2015 and 2014.
 
Three months ended
September 30,
 
Nine months ended
September 30,
Liabilities
2015
 
2014
 
2015
 
2014
Mandatorily redeemable noncontrolling interests -
   Balance at beginning of period
$
44.9

 
$
28.7

 
$
32.8

 
$
27.0

Level 3 additions
1.9

 
0.0

 
23.7

 
2.5

Level 3 reductions
(3.9
)
 
0.0

 
(15.3
)
 
(0.6
)
Realized losses/(gains) included in net income
1.4

 
0.1

 
2.3

 
(0.1
)
Foreign currency translation
(0.2
)
 
0.0

 
0.6

 
0.0

Mandatorily redeemable noncontrolling interests -
   Balance at end of period
$
44.1

 
$
28.8

 
$
44.1

 
$
28.8

Realized losses/(gains) included in net income for mandatorily redeemable noncontrolling interests are reported as a component of interest expense in the unaudited Consolidated Statements of Operations.
Financial Instruments that are not Measured at Fair Value on a Recurring Basis
The following table presents information about our financial instruments that are not measured at fair value on a recurring basis as of September 30, 2015, and December 31, 2014, and indicates the fair value hierarchy of the valuation techniques utilized to determine such fair value.