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,
			2017				2016
			Book Value		Fair Value ¹		Book Value		Fair Value ¹
2.25% Senior Notes due 2017	2.30	%	$	0.0	$	0.0	$	299.4	$	301.4
4.00% Senior Notes due 2022 (less unamortized discount and issuance costs of $1.3 and $1.1, respectively)	4.13	%	247.6		259.0		247.0		258.4
3.75% Senior Notes due 2023 (less unamortized discount and issuance costs of $0.8 and $2.1, respectively)	4.32	%	497.1		513.2		496.6		503.3
4.20% Senior Notes due 2024 (less unamortized discount and issuance costs of $0.7 and $2.6, respectively)	4.24	%	496.7		524.2		496.2		511.6
Other notes payable and capitalized leases			46.2		46.2		65.4		65.4
Total long-term debt			1,287.6				1,604.6
Less: current portion			2.0				323.9
Long-term debt, excluding current portion			$	1,285.6			$	1,280.7


1	See Note 10 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, 2017.



2018	$	2.0
2019	3.1
2020	1.0
2021	0.0
2022	247.6
Thereafter	1,033.9
Total long-term debt	$	1,287.6

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. As of December 31, 2017 and 2016, we had total unamortized debt issuance costs of $13.0 and $12.3, 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.

Long-Term Debt Transactions

2.25% Senior Notes due 2017

In November 2017, we redeemed all $300.0 in aggregate principal amount of the 2.25% Senior Notes due 2017 (the "2.25% Notes"). Total cash paid to redeem the 2.25% Notes was $303.4, which included accrued and unpaid interest of $3.4.

Credit Agreements

We maintain a committed corporate credit facility, which has been amended and restated from time to time (the "Credit Agreement"). The Credit Agreement is a revolving facility, 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. On October 25, 2017, we amended and restated our committed credit agreement, originally dated as of July 18, 2008 (as amended and restated, the "Credit Agreement"), increasing the revolving commitments from $1,000.0 to $1,500.0, or the equivalent in other specified currencies, and extending the Credit Agreement's expiration to October 25, 2022.

We use our Credit Agreement to increase our financial flexibility, to provide letters of credit primarily to support obligations of our subsidiaries and to support our commercial paper program. 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 $50.0, or the equivalent in other currencies. Our obligations under the Credit Agreement are unsecured. As of December 31, 2017 and 2016, there were no borrowings under the Credit Agreement; however, we had $8.4 and $4.9 of letters of credit under the Credit Agreement, which reduced our total availability to $1,491.6 and $995.1, respectively.

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, 2017, the applicable margin was 0.10% for base rate advances and 1.10% 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, 2017, was 0.15% 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. We were in compliance with all of our covenants in the Credit Agreement as of December 31, 2017.



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 for the four quarters then ended.

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 also have uncommitted lines of credit with various banks which permit borrowings at variable interest rates and which are primarily used to fund 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 operations. As of December 31, 2017 and 2016, the Company had uncommitted lines of credit in an aggregate amount of $926.2 and $856.6, under which we had outstanding borrowings of $84.9 and $85.7 classified as short-term borrowings on our Consolidated Balance Sheets, respectively. The average amounts outstanding during 2017 and 2016 were $223.8 and $216.0, respectively, with weighted-average interest rates of approximately 2.9% for both periods.

Commercial Paper

In June 2017, the Company established a commercial paper program under which the Company was authorized to issue unsecured commercial paper up to a maximum aggregate amount outstanding at any time of $1,000.0, which was increased to $1,500.0 on October 25, 2017. Borrowings under the program are supported by the Credit Agreement described above. Proceeds of the commercial paper are used for working capital and general corporate purposes, including the repayment of maturing indebtedness and other short-term liquidity needs. The maturities of the commercial paper vary but may not exceed 397 days from the date of issue. As of December 31, 2017, there was no commercial paper outstanding. From the date the program was first utilized through December 31, 2017, the average amount outstanding under the program was $477.4, with a weighted-average interest rate of 1.5% and a weighted-average maturity of seventeen days.

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, 2017 and 2016 the amounts netted were $1,412.0 and $1,300.6, respectively.