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		December 31,
			2015				2014
			Book Value		Fair Value ¹		Book Value		Fair Value ¹
2.25% Senior Notes due 2017 (less unamortized discount and issuance costs of $0.3 and $0.9, respectively)	2.30	%	$	298.8	$	299.3	$	298.3	$	301.2
4.00% Senior Notes due 2022 (less unamortized discount and issuance costs of $2.0 and $1.6, respectively)	4.13	%	246.4		250.9		245.9		255.2
3.75% Senior Notes due 2023 (less unamortized discount and issuance costs of $1.1 and $2.9, respectively)	4.32	%	496.0		484.8		495.5		499.8
4.20% Senior Notes due 2024 (less unamortized discount and issuance costs of $0.8 and $3.4, respectively)	4.24	%	495.8		496.4		495.0		509.8
Other notes payable and capitalized leases			75.2		75.2		80.3		80.3
Total long-term debt			1,612.2				1,615.0
Less: current portion			1.9				2.1
Long-term debt, excluding current portion			$	1,610.3			$	1,612.9


1	See Note 11 for information on the fair value measurement of our long-term debt.

Annual maturities are scheduled as follows based on the book value as of December 31, 2015.



2016	$	1.9
2017	323.3
2018	1.8
2019	1.8
2020	0.9
Thereafter	1,282.5
Total long-term debt	$	1,612.2

For those debt securities that have a premium or discount at the time of issuance, we amortize the amount through interest expense based on the maturity date or the first date the holders may require us to repurchase the debt securities, if applicable. A premium would result in a decrease in interest expense and a discount would result in an increase in interest expense in future periods.

Additionally, we have debt issuance costs related to certain financing transactions which are also amortized through interest expense. In April 2015, the Financial Accounting Standards Board (the "FASB") issued Accounting Standards Update No. 2015-03 which requires debt issuance costs to be presented as a direct deduction from the carrying value of the associated debt liability rather than as separate assets on the balance sheet. The FASB later issued guidance in August 2015 stating that debt issuance costs related to line-of-credit arrangements may be presented as an asset and subsequently amortized ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement. We have adopted this amended guidance as of the quarter ended December 31, 2015. As a result of this adoption, $8.9 and $10.6 of debt issuance costs were reclassified from Other non-current assets to Long-term debt in our Consolidated Balance Sheets as of December 31, 2015 and 2014, respectively. Debt issuance costs associated with our committed corporate credit facility continue to be recorded within Other non-current assets in our Consolidated Balance Sheets. As of December 31, 2015 and 2014, we had total unamortized debt issuance costs of $15.0 and $16.6, respectively.

Our debt securities 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.

Debt Transactions

6.25% Senior Unsecured Notes due 2014

In May 2014, we redeemed all $350.0 in aggregate principal amount of our 6.25% Senior Unsecured Notes due 2014 (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, primarily due to a redemption premium. The loss on early extinguishment of debt was recorded in Other expense, net within our Consolidated Statement of Operations.

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 Consolidated Balance Sheets 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 above.

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.

Credit Agreements

We maintain a committed corporate credit facility and uncommitted credit facilities with various banks that permit borrowings at variable interest rates. As of December 31, 2015 and 2014, there were no borrowings under our committed corporate credit facility. However, there were borrowings under some of the uncommitted facilities to manage working capital needs. We have guaranteed the repayment of some of these borrowings made by certain subsidiaries. If we lose access to these credit lines, we would have to provide funding directly to some of our international operations. The weighted-average interest rate on outstanding balances under the uncommitted credit facilities as of December 31, 2015 and 2014 was approximately 3% and 5%, respectively.

A summary of our credit facilities is presented below.



	December 31,
	2015								2014
	Total Facility		Amount Outstanding		Letters of Credit		Total Available		Total Facility		Amount Outstanding		Letters of Credit		Total Available
Committed credit agreement	$	1,000.0	$	0.0	$	3.7	$	996.3	$	1,000.0	$	0.0	$	16.0	$	984.0
Uncommitted credit agreements	$	744.5	$	150.1	$	1.1	$	593.3	$	740.3	$	107.2	$	3.9	$	629.2

On October 20, 2015, we amended and restated our credit agreement, originally dated as of July 18, 2008 (as amended and restated, the "Credit Agreement"). The Credit Agreement is a revolving facility, with a maturity date of October 20, 2020, 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.

Under the Credit Agreement, we can elect to receive advances bearing interest based on either the base rate or the Eurocurrency rate (each as defined in the Credit Agreement) plus an applicable margin that is determined based on our credit ratings. As of December 31, 2015, the applicable margin was 0.30% for base rate advances and 1.30% for Eurocurrency rate advances. Letter of credit fees accrue on the average daily aggregate amount of letters of credit outstanding, at a rate equal to the applicable margin for Eurocurrency rate advances, and fronting fees accrue on the aggregate amount of letters of credit outstanding at an annual rate of 0.25%. We also pay a facility fee at an annual rate that is determined based on our credit ratings, which as of December 31, 2015, was 0.20% on the aggregate lending commitment under the Credit Agreement.

In addition to other and customary covenants, the Credit Agreement requires that we maintain the financial covenants listed below as of the end of each fiscal quarter for the period of four fiscal quarters then ended.



Interest coverage ratio (not less than): ¹		5.00x
Leverage ratio (not greater than): ²		3.50x


1	The interest coverage ratio is defined as EBITDA, as defined in the Credit Agreement, to net interest expense.

The leverage ratio is defined as debt as of the last day of such fiscal quarter to EBITDA, as defined in the Credit Agreement, for the four quarters then ended. The leverage ratio may be changed to not more than 4.00 to 1 at our election for four consecutive fiscal quarters, beginning with the fiscal quarter in which there is an occurrence of one or more acquisitions with an aggregate purchase price of at least $200.0.

We were in compliance with all of our covenants in the Credit Agreement as of December 31, 2015.

Cash Pooling

We aggregate our domestic cash position on a daily basis. Outside the United States, we use cash pooling arrangements with banks to help manage our liquidity requirements. In these pooling arrangements, several IPG agencies agree with a single bank that the cash balances of any of the agencies with the bank will be subject to a full right of set-off against amounts other agencies owe the bank, and the bank provides for overdrafts as long as the net balance for all agencies does not exceed an agreed-upon level. Typically, each agency pays interest on outstanding overdrafts and receives interest on cash balances. Our Consolidated Balance Sheets reflect cash, net of bank overdrafts, under all of our pooling arrangements, and as of December 31, 2015 and 2014 the amounts netted were $1,608.3 and $1,590.7, respectively.