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,
			2011				2010
			Book Value		Fair Value ¹		Book Value		Fair Value ¹
7.25% Senior Unsecured Notes due 2011	7.25	%	$	0.0	$	0.0	$	36.3	$	37.0
6.25% Unsecured Notes due 2014 (less unamortized discount of $0.3)	6.29	%	354.3		374.5		353.3		378.0
10.0% Senior Unsecured Notes due 2017 (less unamortized discount of $9.4)	10.38	%	590.6		690.0		589.4		705.0
4.75% Convertible Senior Notes due 2023 (plus unamortized premium of $2.7)	3.50	%	202.7		220.5		205.0		235.0
4.25% Convertible Senior Notes due 2023 (plus unamortized premium of $3.0)	0.58	%	403.0		405.5		417.4		444.4
Other notes payable and capitalized leases			65.1				20.8
Total long-term debt			1,615.7				1,622.2
Less: current portion ²			404.8				38.9
Long-term debt, excluding current portion			$	1,210.9			$	1,583.3


¹	Fair values are derived from trading quotes by institutions making a market in the securities and estimations of value by those institutions using proprietary models.

On March 15, 2012, holders of our 4.25% Convertible Senior Notes due 2023 (the “4.25% 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 December 31, 2011 Consolidated Balance Sheet. The 4.25% Notes are redeemable in whole or in part at our option beginning March 15, 2012. Any 4.25% Notes not repurchased on March 15, 2012 and not called for redemption by us will be reclassified to long-term debt. On August 15, 2011, our 7.25% Senior Unsecured Notes due 2011 (the "2011 Notes") matured. Therefore we included these notes in current portion of long-term debt on our December 31, 2010 Consolidated Balance Sheet.

Annual maturities are scheduled as follows based on the book value as of December 31, 2011.



2012 ¹	$	1.8
2013 ²	16.0
2014	354.4
2015	0.1
2016	0.1
Thereafter	1,243.3
Total long-term debt	$	1,615.7


¹	Holders of our 4.25% Notes may require us to repurchase their notes for cash at par in March 2012. The 4.25% Notes are redeemable in whole or in part at our option beginning March 15, 2012.


²	Holders of our 4.75% Convertible Senior Notes due 2023 (the “4.75% Notes”) may require us to repurchase their notes for cash, stock or a combination, at our election, at par in March 2013.

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, 2011 and 2010, we had unamortized debt issuance costs of $25.5 and $28.3, respectively.

Our debt securities include covenants that, among other things, limit our liens and the liens of our consolidated subsidiaries, but do not require us to maintain any financial ratios or specified levels of net worth or liquidity.

Debt Transactions

7.25% Senior Unsecured Notes due 2011

In August 2011, the remaining $36.3 aggregate principal amount of our 2011 Notes matured, and we paid $37.6 in cash, including accrued and unpaid interest.

Floating Rate Senior Unsecured Notes due 2010

In April 2010, we repurchased $21.4 aggregate principal amount of our Floating Rate Senior Unsecured Notes due 2010 (the "2010 Notes") for $21.5 in cash, which included accrued and unpaid interest. In November 2010, the remaining $192.3 aggregate principal amount of our 2010 Notes matured, and we paid $193.5 in cash, including accrued and unpaid interest.

Convertible Senior Notes

Conversion Features

Our 4.25% Notes and 4.75% Notes (the "Convertible Notes") are convertible into our common stock. The conversion rates of our Convertible Notes are subject to adjustment in specified circumstances, including the payment of cash dividends on our common stock. The conversion rates of our Convertible Notes are also subject to adjustment for certain events arising from stock splits and combinations, stock dividends and certain other actions by us that modify our capital structure. The Convertible Notes provide for an additional “make-whole” adjustment to the conversion rate in the event of a change of control meeting specified conditions.

Our Convertible Notes are convertible at any time if the average price of our common stock for 20 trading days immediately preceding the conversion date is greater than or equal to a specified percentage of the conversion price; this percentage was equal to 116.0% in 2011 and declines 0.5% each year until it reaches 110% at maturity. Each series of our Convertible Notes is also convertible, regardless of the price of our common stock, if: (i) we call that series of Convertible Notes for redemption; (ii) we make specified distributions to shareholders; (iii) we become a party to a consolidation, merger or binding share exchange pursuant to which our common stock would be converted into cash or property (other than securities); or (iv) the credit ratings assigned to that series of Convertible Notes by any two of Moody’s Investor Service, Standard and Poor’s and Fitch Ratings are lower than Ba2, BB and BB, respectively, or that series of Convertible Notes is no longer rated by at least two of these ratings services. As of December 31, 2011, our Convertible Notes were not convertible based on the triggers listed above. As a result of certain conversion features, our Convertible Notes contain embedded derivatives whose fair values as of December 31, 2011 and 2010 were negligible. Our Convertible Notes are also convertible, whether or not the above conditions are met, from February 15, 2023 to March 15, 2023. The Convertible Notes are not considered securities with participation rights in earnings available to IPG common stockholders as there are no features attached to these securities that allow holders to participate in our undistributed earnings.

The conversion rates and corresponding conversion prices for our Convertible Notes as of December 31, 2011, 2010 and 2009 are listed below.



	December 31,
	2011		2010		2009
Conversion price	$	12.13	$	12.42	$	12.42
Conversion rate per note (actual number)	82.4612		80.5153		80.5153

During 2011, the conversion rate for our Convertible Notes was adjusted as a result of the cumulative effect of the cash dividends declared and paid on our common stock, which resulted in a corresponding adjustment of the conversion price.

Repurchase / Redemption Options

Holders of our Convertible Notes may require us to repurchase the Convertible Notes on certain dates for cash only, and on other dates for cash or our common stock or a combination of cash and common stock, at our election. Additionally, investors may require us to repurchase our Convertible Notes in the event of certain change of control events that occur prior to dates listed in the table below, for cash or our common stock or a combination of cash and common stock, at our election. At our option, we may redeem our Convertible Notes on or at any time after certain dates for cash. The redemption price in each of these instances will be 100% of the principal amount of the Convertible Notes being redeemed, plus accrued and unpaid interest, if any. The following table details when the repurchase and redemption options occur for our 4.25% and 4.75% Notes.



	4.25% Notes		4.75% Notes
Repurchase options
For cash on		3/15/2012
For cash, common stock or combination on	1)	3/15/2015	1)	3/15/2013
	2)	3/15/2018	2)	3/15/2018
Change of control events occurring prior to		3/15/2012		3/15/2013
Redemption options
For cash on or after		3/15/2012		3/15/2013

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. The strike price and cap price related to the capped call options as of December 31, 2011 and 2010 are listed below.



	December 31,
	2011		2010
Strike price	$	12.13	$	12.42
Cap price	$	17.83	$	18.26

During 2011, 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. As of December 31, 2011, the options give us the right to purchase up to 16.5 shares of our common stock at the strike price, except that the economic value of the net proceeds of exercising the options will not exceed the difference between the strike price and the cap price. Subject to certain limitations, we may elect settlement of the options to occur in cash or in shares. The options will expire on April 2, 2013. During 2010, we paid an aggregate premium of $22.8 for the options, which was recorded as a reduction to additional paid-in capital in the Consolidated Balance Sheet.

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, 2011 and 2010, there were no borrowings under our committed corporate credit facility. However, there were borrowings under the uncommitted facilities made by several of our international subsidiaries. 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, 2011 and 2010 was approximately 5.0%.

A summary of our credit facilities is presented below.



	December 31,
	2011								2010
	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	$	16.2	$	983.8	$	650.0	$	0.0	$	16.2	$	633.8
Uncommitted credit agreements	$	458.3	$	153.5	$	2.6	$	302.2	$	455.2	$	114.8	$	0.1	$	340.3

In May 2011, we entered into an amendment and restatement of our credit agreement originally dated as of July 18, 2008 (the “Credit Agreement”), increasing the commitments of the lenders to $1,000.0 from $650.0, and extending the Credit Agreement's expiration to May 31, 2016. Additionally, the amendments modified our financial covenants, and provided additional flexibility with respect to, or eliminated, certain covenants such as restrictions on acquisitions, capital expenditures and restricted payments. In addition, the cost structure was reduced. 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 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, 2011, the applicable margin is 0.40% for base rate advances and 1.40% 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 of 0.35% on the aggregate lending commitment under the Credit Agreement.

The Credit Agreement includes covenants that, among other things, limit our liens and the liens of our consolidated subsidiaries and limit subsidiary debt, as well as financial covenants. The financial covenants in the Credit Agreement require that we maintain, as of the end of each fiscal quarter, certain financial measures for the four quarters then ended. The table below sets forth the financial covenants in effect as of December 31, 2011 and thereafter.



Interest coverage ratio (not less than): ¹		5.00x
Leverage ratio (not greater than): ²		2.75x


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.

We were in compliance with all of our covenants in the Credit Agreement as of December 31, 2011.

Cash Pooling

We aggregate our net 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, 2011 and 2010 the amounts netted were $1,106.6 and $916.1, respectively.