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Debt and Credit Arrangements (Notes) | 9 Months Ended
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Sep. 30, 2012
Debt and Credit Arrangements [Abstract] |
Debt and Credit Arrangements | 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, 2012 |  | December 31, 2011
Book Value |  | Fair Value 1 |  | Book Value |  | Fair Value 1
6.25% Senior Unsecured Notes due 2014 (less unamortized discount of $0.2) | 6.29% |  | $ | 353.1 |  |  | $ | 379.8 |  |  | $ | 354.3 |  |  | $ | 374.5 |
10.00% Senior Unsecured Notes due 2017 (less unamortized discount of $8.4) | 10.38% |  | 591.6 |  |  | 672.0 |  |  | 590.6 |  |  | 690.0 |
4.00% Senior Notes due 2022 (less unamortized discount of $3.0) | 4.13% |  | 247.0 |  |  | 261.0 |  |  | 0.0 |  |  | 0.0 |
4.75% Convertible Senior Notes due 2023 (plus unamortized premium of $1.0) | 3.50% |  | 201.0 |  |  | 220.7 |  |  | 202.7 |  |  | 220.5 |
4.25% Convertible Senior Notes due 2023 |  |  | 0.0 |  |  | 0.0 |  |  | 403.0 |  |  | 405.5 |
Other notes payable and capitalized leases |  |  | 87.5 |  |  | 84.0 |  |  | 65.1 |  |  |
Total long-term debt |  |  | 1,480.2 |  |  |  |  | 1,615.7 |  |  |
Less: current portion 2 |  |  | 217.1 |  |  |  |  | 404.8 |  |  |
Long-term debt, excluding current portion |  |  | $ | 1,263.1 |  |  |  |  | $ | 1,210.9 |  |  |
1 | See Note 11 for information on the fair value measurement of our long-term debt.
2 | On March 15, 2013, holders of our 4.75% Convertible Senior Notes due 2023 (the “4.75% Notes”) may require us to repurchase their notes for cash at par, and accordingly, we included these notes in the current portion of long-term debt on our September 30, 2012 unaudited Consolidated Balance Sheet. The 4.75% Notes are also redeemable in whole or in part at our option beginning March 15, 2013. Any 4.75% Notes neither repurchased on March 15, 2013 nor called for redemption by us will be reclassified to long-term debt. We included our 4.25% Convertible Senior Notes due 2023 (the “4.25% Notes”) in the current portion of long-term debt on our December 31, 2011 Consolidated Balance Sheet because holders of the 4.25% Notes had a repurchase option on March 15, 2012 for cash at par. The 4.25% Notes were retired in the first quarter of 2012.
Debt Transactions 4.00% Senior Notes due 2022 In March 2012, we issued $250.0 in aggregate principal amount of 4.00% Senior Notes due 2022 (the "4.00% Notes") at a discount to par. As a result, the 4.00% Notes were reflected on our unaudited Consolidated Balance Sheet at a fair value of $246.8 at issuance. The discount of $3.2 is amortized through the maturity date of March 15, 2022. Interest is payable semi-annually in arrears on March 15 th and September 15 th of each year, commencing on September 15, 2012. Capitalized direct fees, including commissions and offering expenses, of $2.5 related to the issuance of the 4.00% Notes are amortized in interest expense through the maturity date. Consistent with our other debt securities, the 4.00% 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 applied the proceeds towards the repurchase and redemption of our 4.25% Notes as described below. At any time, at our option, we may redeem all or some of the 4.00% Notes at the greater of the principal amount and a "make-whole" amount, plus, in either case, accrued and unpaid interest to the date of redemption. If we experience a change of control event, we must offer to repurchase the 4.00% Notes in cash at a price equal to not less than 101% of the aggregate principal amount of the 4.00% Notes, plus accrued and unpaid interest to the date of repurchase. 4.25% Convertible Senior Notes due 2023 In March 2012, we retired $400.0 in aggregate principal amount of our 4.25% Notes through redemption, repurchases and conversions into Interpublic common stock. Of the amount retired, $399.6 in aggregate principal amount was redeemed or repurchased for cash at par plus accrued interest of $0.5. The remaining $0.4 in aggregate principal amount of our 4.25% Notes was converted, at the election of the 4.25% Note holders, into Interpublic common stock at a conversion rate of 82.4612 shares (actual number) per $1,000 (actual number) principal amount of the 4.25% Notes, or approximately 30,000 shares (actual number). The retirement of our 4.25% Notes eliminates approximately 33.0 shares of common stock from our eligible diluted share count annually. Convertible Senior Notes The conversion rate of our 4.75% Notes is subject to adjustment in specified circumstances, including any payment of cash dividends on our common stock. During the second quarter of 2012, the conversion rate for our 4.75% Notes was adjusted from 82.4612 (actual number) to 83.3669 (actual number) as a result of the cumulative effect of the cash dividends declared and paid on our common stock during the first half of 2012, resulting in a corresponding adjustment of the conversion price from $12.13 to $12.00. There was no adjustment required to the conversion rate in the third quarter of 2012. Capped Call In November 2010, we purchased capped call options to hedge the risk of price appreciation on the shares of our common stock into which our 4.75% Notes are convertible. During the second quarter of 2012, the strike price and cap price related to the capped call options were adjusted due to the payment of cash dividends on our common stock. There was no adjustment required to the strike price and cap price in the third quarter of 2012. As of September 30, 2012, the options give us the right to purchase up to 16.7 shares of our common stock at a strike price of $12.00 per share (previously $12.13), except that the economic benefit to us of exercising the options will not exceed the difference between the strike price and the adjusted cap price of $17.64 per share (previously $17.83). Interest Rate Swaps We enter into interest rate swaps to manage our exposure to changes in interest rates. During the first nine months of 2012, we entered into forward-starting interest rate swap agreements with an aggregate notional amount of $300.0 to effectively lock in the benchmark rate for a forecasted issuance of debt to occur prior to December 31, 2013. These swaps qualify for hedge accounting as cash flow hedges, and, as such, the effective portion of gains or losses on the swaps are recorded in other comprehensive income and recognized in earnings over the life of the related debt issuance or when the hedged transaction is determined to be ineffective. The following table presents the fair value of our interest rate swap agreements on our unaudited Consolidated Balance Sheets.
Derivative liabilities |  | Classification |  | September 30, 2012 |  | December 31, 2011
Interest rate swap agreements |  | Accrued liabilities |  | $ | 22.3 |  |  | $ | 0.0 |
The following table presents the effect of our interest rate swap agreements on our unaudited Consolidated Statements of Comprehensive Income and our unaudited Consolidated Statements of Operations.
|  |  |  | Three months ended September 30, |  | Nine months ended September 30,
|  | Classification |  | 2012 |  | 2011 |  | 2012 |  | 2011
Loss recognized in other comprehensive income (effective portion) |  | Other comprehensive income |  | $ | (3.6 | ) |  | $ | 0.0 |  |  | $ | (22.2 | ) |  | $ | 0.0 |
Loss recognized in earnings (ineffective portion) |  | Other income, net |  | 0.0 |  |  | 0.0 |  |  | (0.1 | ) |  | 0.0 |
Amount reclassified from accumulated other comprehensive loss into earnings 1 |  |  |  | 0.0 |  |  | 0.0 |  |  | 0.0 |  |  | 0.0 |
1 | As of September 30, 2012, the estimated amount of deferred net losses that is reported in accumulated other comprehensive loss that is expected to be reclassified into earnings within the next twelve months is $0.7. This expectation is based on the anticipated timing of the hedged transactions.
Credit Facilities We maintain a committed corporate credit facility to increase our financial flexibility (the "Credit Agreement"). The Credit Agreement is a revolving facility expiring in May 2016, 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 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, 2012.

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- Definition The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02.19,20,22) -URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21475-112644 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 02 -Paragraph 19, 20, 22 -Article 5 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 129 -Paragraph 2, 4 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. + Details
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