Debt and Credit Agreements (Notes)

12 Months Ended

Dec. 31, 2019

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,
			2019				2018
			Book Value		Fair Value ¹		Book Value		Fair Value ¹
3.50% Senior Notes due 2020 (less unamortized discount and issuance costs of $0.4 and $1.1, respectively)	3.89	%	$	498.5	$	505.4	$	496.6	$	499.9
3.75% Senior Notes due 2021 (less unamortized discount and issuance costs of $0.2 and $1.9, respectively)	3.98	%	497.9		513.5		496.8		503.2
4.00% Senior Notes due 2022 (less unamortized discount and issuance costs of $0.7 and $0.6, respectively)	4.13	%	248.7		258.8		248.2		250.3
3.75% Senior Notes due 2023 (less unamortized discount and issuance costs of $0.5 and $1.3, respectively)	4.32	%	498.2		522.8		497.7		491.4
4.20% Senior Notes due 2024 (less unamortized discount and issuance costs of $0.4 and $1.8, respectively)	4.24	%	497.8		538.1		497.3		492.6
4.65% Senior Notes due 2028 (less unamortized discount and issuance costs of $1.5 and $3.9, respectively)	4.78	%	494.6		564.3		494.0		494.1
5.40% Senior Notes due 2048 (less unamortized discount and issuance costs of $2.7 and $5.4, respectively)	5.48	%	491.9		617.1		491.7		474.1
Term Loan due 2021 - LIBOR plus 1.25%			—		—		400.0		400.0
Other notes payable and capitalized leases			46.3		45.5		38.0		38.0
Total long-term debt			3,273.9				3,660.3
Less: current portion			502.0				0.1
Long-term debt, excluding current portion			$	2,771.9			$	3,660.2


1	See Note 13 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, 2019.



2020	$	502.0
2021	501.4
2022	248.9
2023	498.3
2024	497.8
Thereafter	1,025.5
Total long-term debt	$	3,273.9

Our 3.50% Senior Notes in aggregate principal amount of $500.0 mature on October 1, 2020. We expect to use available cash as well as additional commercial paper as needed. 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, 2019 and 2018, we had total unamortized debt issuance costs of $21.6 and $26.0, 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

Term Loan Agreement

On October 1, 2018, in order to fund the acquisition of Acxiom, we entered into financing arrangements with third-party lenders under a three-year term loan agreement (the "Term Loan Agreement"). We fully paid off the outstanding balance under

the Term Loan Agreement as of December 31, 2019, with payments of $100.0, $200.0 and $100.0, on June 13, 2019, September 9, 2019 and December 12, 2019, respectively.

Credit Agreements

We maintain a committed corporate credit facility, originally dated as of July 18, 2008, which has been amended and restated from time to time (the "Credit Agreement"). 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. On November 1, 2019, we entered into an amendment and restatement (the "Amendment") of the Credit Agreement. Under the Amendment, among other things, the maturity date of the Credit Agreement was extended to November 1, 2024, and the cost structure of the Credit Agreement was changed. The Amendment also removed the interest coverage ratio financial covenant; however, the Company remains subject to the leverage ratio financial covenant, among other customary covenants. At the election of the Company, the leverage ratio financial covenant may be changed to not more than 4.00 to 1.00 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.

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 of $1,500.0, 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 $50.0, or the equivalent in other currencies. Our obligations under the Credit Agreement are unsecured. As of December 31, 2019 and 2018, there were no borrowings under the Credit Agreement; however, we had $8.4 and $8.5 of letters of credit under the Credit Agreement, which reduced our total availability to $1,491.6 and $1,491.5, 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, 2019, the applicable margin was 0.125% for Base Rate advances and 1.125% for Eurocurrency Rate borrowings. 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 on each lender's revolving commitment of 0.125%, which is an annual rate determined based on our credit ratings.

In addition to other and customary covenants, we are required to maintain the financial covenant listed below as of the end of each fiscal quarter for the period of four fiscal quarters then ended pursuant to our Credit Agreement. We were in compliance with our covenant in the Credit Agreement as of December 31, 2019.



		Financial Covenants ¹
Leverage ratio (not greater than): ¹		3.75x


1	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. Pursuant to July 2018 Amendment No. 1 to the Credit Agreement, the maximum leverage ratio decreased from 4.00x to 3.75x on the last day of the fourth full fiscal quarter ending after the Acxiom closing date on October 1, 2018.

We also have uncommitted lines of credit with various banks that permit borrowings at variable interest rates and that 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, 2019 and 2018, the Company had uncommitted lines of credit in an aggregate amount of $1,056.0 and $1,173.1, under which we had outstanding borrowings of $52.4 and $73.7 classified as short-term borrowings on our Consolidated Balance Sheets, respectively. The average amounts outstanding during 2019 and 2018 were $88.0 and $96.4, respectively, with weighted-average interest rates of approximately 5.2% and 4.5%, respectively.

Commercial Paper

The Company is authorized to issue unsecured commercial paper up to a maximum aggregate amount outstanding at any time of $1,500.0. Borrowings under the commercial paper program are supported by the Credit Agreement described above. Commercial paper proceeds are used for working capital and general corporate purposes, including the repayment of maturing indebtedness and other short-term liquidity needs. Commercial paper maturities vary but may not exceed 397 days from the date of issue. As of December 31, 2019 and 2018, there was no commercial paper outstanding. The average amounts outstanding under the program in 2019 and 2018 were $312.9 and $648.7 with weighted-average interest rates of approximately 2.5% and 2.4% and weighted-average maturities of thirteen and twenty-two days, respectively.

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, 2019 and 2018 the amounts netted were $2,274.9 and $2,065.8, respectively.