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Debt and Credit Arrangements (Notes) | 12 Months Ended
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Dec. 31, 2013
Debt Disclosure [Abstract] |
Debt and Credit Arrangements | Debt and Credit Arrangements Long-Term Debt A summary of the carrying amounts and fair values of our debt is listed below.
| Effective Interest Rate |  | December 31,
2013 |  | 2012
| Book Value |  | Fair Value 1 |  | Book Value |  | Fair Value
6.25% Senior Unsecured Notes due 2014 (less unamortized discount of $0.1) | 6.29 | % |  | $ | 351.3 |  |  | $ | 365.6 |  |  | $ | 352.8 |  |  | $ | 372.6 |
2.25% Senior Notes due 2017 (less unamortized discount of $0.6) | 2.30 | % |  | 299.4 |  |  | 293.0 |  |  | 299.3 |  |  | 297.8 |
4.00% Senior Notes due 2022 (less unamortized discount of $2.6) | 4.13 | % |  | 247.4 |  |  | 241.6 |  |  | 247.1 |  |  | 258.7 |
3.75% Senior Notes due 2023 (less unamortized discount of $1.4) | 4.32 | % |  | 498.6 |  |  | 467.3 |  |  | 498.5 |  |  | 499.7 |
10.00% Senior Unsecured Notes due 2017 |  |  | 0.0 |  |  | 0.0 |  |  | 591.9 |  |  | 660.8 |
4.75% Convertible Senior Notes due 2023 |  |  | 0.0 |  |  | 0.0 |  |  | 200.5 |  |  | 202.8 |
Other notes payable and capitalized leases |  |  | 86.7 |  |  | 87.8 |  |  | 87.3 |  |  | 90.8 |
Total long-term debt |  |  | 1,483.4 |  |  |  |  | 2,277.4 |  |  |
Less: current portion 2 |  |  | 353.6 |  |  |  |  | 216.6 |  |  |
Long-term debt, excluding current portion |  |  | $ | 1,129.8 |  |  |  |  | $ | 2,060.8 |  |  |
1 | See Note 12 for information on the fair value measurement of our long-term debt.
2 | We included our 6.25% Senior Unsecured Notes due 2014 (the "6.25% Notes") in the current portion of long-debt on our December 31, 2013 Consolidated Balance Sheet because the 6.25% Notes are scheduled to mature on November 15, 2014. We included our 4.75% Convertible Senior Notes due 2023 (the "4.75% Notes") in the current portion of long-term debt on our December 31, 2012 Consolidated Balance Sheet because holders of the 4.75% Notes had an option to require us to repurchase their Notes for cash, stock, or a combination, at our election, at par on March 15, 2013. The 4.75% Notes were retired in the first quarter of 2013.
Annual maturities are scheduled as follows based on the book value as of December 31, 2013.
2014 | $ | 353.6 |
2015 | 2.2 |
2016 | 2.3 |
2017 | 301.7 |
2018 | 24.8 |
Thereafter | 798.8 |
Total long-term debt | $ | 1,483.4 |
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. We also have recorded debt issuance costs related to certain financing transactions in other assets in our Consolidated Balance Sheets, which are also amortized through interest expense. As of December 31, 2013 and 2012, we had unamortized debt issuance costs of $15.4 and $27.5, 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 10.00% Senior Unsecured Notes due 2017 In July 2013, we redeemed all $600.0 in aggregate principal amount of the 10.00% Senior Unsecured Notes due 2017 (the "10.00% Notes"). Total cash paid to redeem the 10.00% Notes was $630.0. In connection with the redemption of the 10.00% Notes, we recognized a loss on early extinguishment of debt of $45.2, which included a redemption premium of $30.0, the write-off of the remaining unamortized discount of $7.3 and unamortized debt issuance costs of $7.9. The loss on early extinguishment of debt was recorded in other (expense) income, net within our Consolidated Statement of Operations. 4.75% Convertible Senior Notes due 2023 In March 2013, we retired all $200.0 in aggregate principal amount of our 4.75% Notes. Of the amount retired, $199.997 in aggregate principal amount of the 4.75% Notes was converted, at the election of the holders, into Interpublic common stock at a conversion rate of 84.3402 shares (actual number) per $1,000 (actual number) principal amount, or approximately 16.9 shares. 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. In March 2013, we exercised our capped call options and elected net share settlement. We received a total of 1.5 settlement shares from the option counterparties as a result of exercising these options. 2.25% Senior Notes due 2017 In November 2012, we issued $300.0 in aggregate principal amount of 2.25% Senior Notes due 2017 (the "2.25% Notes") at a discount to par. As a result, the 2.25% Notes were reflected on our Consolidated Balance Sheet at a fair value of $299.3 at issuance. The discount of $0.7 and capitalized issuance fees of $2.1 are amortized in interest expense through the maturity date of November 15, 2017. Interest is payable semi-annually in arrears on May 15 th and November 15 th of each year. 3.75% Senior Notes due 2023 In November 2012, we issued $500.0 in aggregate principal amount of 3.75% Senior Notes due 2023 (the "3.75% Notes") at a discount to par. As a result, the 3.75% Notes were reflected on our Consolidated Balance Sheet at a fair value of $498.5 at issuance. The discount of $1.5 and capitalized issuance fees of $3.8 are amortized in interest expense through the maturity date of February 15, 2023. Interest is payable semi-annually in arrears on February 15 th and August 15 th of each year. We applied the proceeds of the 2.25% Notes and 3.75% Notes towards the repurchase and redemption of the 10.00% Notes and the repurchase of common stock into which the 4.75% Notes were converted. 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 Consolidated Balance Sheet at a fair value of $246.8 at issuance. The discount of $3.2 and capitalized issuance fees of $2.5 are 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. We applied the net proceeds towards the repurchase and redemption of our 4.25% Convertible Senior Notes due 2023 (the "4.25% Notes"). 4.25% Convertible Senior Notes due 2023 In March 2012, we retired $400.0 in aggregate principal amount of our 4.25% Notes. 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 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 eliminated approximately 33.0 shares of common stock from our eligible diluted share count annually. At any time, at our option, we may redeem all or some of the 2.25% Notes, the 3.75% Notes and the 4.00% Notes at the greater of the principal amount of the notes to be redeemed or 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, coupled with a specified downgrade in the credit rating of the applicable series, we must offer to repurchase each series of these notes in cash at a price equal to not less than 101% of the aggregate principal amount of such notes, plus accrued and unpaid interest to the date of repurchase. Interest Rate Swaps We enter into interest rate swaps to manage our exposure to changes in interest rates. In March and April 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 qualified for hedge accounting as cash flow hedges, and, as such, the effective portion of the losses on the swaps was recorded in other comprehensive income and the ineffective portion of the losses on the swaps was recorded in other income, net. In November 2012, we terminated these swaps when we issued our 3.75% Notes. We paid $24.0 in cash to settle the swaps, which was classified under the financing section of our Consolidated Statements of Cash Flows, and recognized a charge of $2.1, which was included as a component of other (expense) income, net in our Consolidated Statement of Operations. The deferred losses on the swaps of $21.9 are being amortized as an increase to interest expense over the term of the 3.75% Notes. For the year ended December 31, 2013, we reclassified $1.7 from accumulated other comprehensive loss into interest expense. Within the next twelve months, we expect to reclassify approximately $1.8 from accumulated other comprehensive loss into interest expense in our Consolidated Statement of Operations. 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, 2013 and 2012, there were no borrowings under our committed corporate credit facility. However, there were borrowings under some of the uncommitted facilities. We have guaranteed the repayment of some of these borrowings made by certain subsidiaries. The weighted-average interest rate on outstanding balances under the uncommitted credit facilities as of December 31, 2013 and 2012 was approximately 4.0%. A summary of our credit facilities is presented below.
|  | December 31,
|  | 2013 |  | 2012
|  | 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 |  |  | $ | 14.3 |  |  | $ | 985.7 |  |  | $ | 1,000.0 |  |  | $ | 0.0 |  |  | $ | 15.1 |  |  | $ | 984.9 |
Uncommitted credit agreements |  | $ | 700.2 |  |  | $ | 179.1 |  |  | $ | 4.2 |  |  | $ | 516.9 |  |  | $ | 317.2 |  |  | $ | 172.1 |  |  | $ | 3.3 |  |  | $ | 141.8 |
In December 2013, we amended and restated our credit agreement, originally dated as of July 18, 2008 (as amended and restated as of December 12, 2013, the "Credit Agreement"). The amendment extends the Credit Agreement's expiration to December 12, 2018, reduced costs and provides additional flexibility with respect to certain covenants such as restrictions on acquisitions, liens, and subsidiary debt. 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 $1,000.0 or the equivalent in other currencies. The Company continues to have 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, 2013, the applicable margin is 0.275% for base rate advances and 1.275% 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 0.250%. We also pay a facility fee at an annual rate of 0.225% on the aggregate lending commitment under the Credit Agreement. We were in compliance with all of our covenants in the Credit Agreement as of December 31, 2013. The financial covenants in the Credit Agreement require that we maintain the following financial covenants listed below as of December 31, 2013 and thereafter.
Interest coverage ratio (not less than): 1 |  | 5.00x
Leverage ratio (not greater than): 2 |  | 3.25x
1 | The interest coverage ratio is defined as EBITDA, as defined in the Credit Agreement, to net interest expense plus cash dividends on convertible preferred stock for the four quarters then ended.
2 | 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.
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 the other agencies owe the bank, and the bank provides for overdrafts as long as the net balance for all the 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, 2013 and 2012 the amounts netted were $1,415.3 and $1,166.3, respectively.

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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 505 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21475-112644 Reference 2: 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 3: 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 + Details
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