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SEC Filings

10-Q
INTERPUBLIC GROUP OF COMPANIES, INC. filed this Form 10-Q on 10/26/2017
Entire Document
 

Management’s Discussion and Analysis of Financial Condition and Results of Operations - (continued)
(Amounts in Millions, Except Per Share Amounts)
(Unaudited)


The table below sets forth the financial covenants in effect as of September 30, 2017.
 
 
Four Quarters Ended
 
 
 
Four Quarters Ended
Financial Covenants
 
September 30, 2017
 
EBITDA Reconciliation
 
September 30, 2017
Interest coverage ratio (not less than) 1
 
5.00x
 
Operating income
 
$
941.0

Actual interest coverage ratio
 
18.05x
 
Add:
 
 
Leverage ratio (not greater than) 1
 
3.50x
 
Depreciation and amortization
 
253.6

Actual leverage ratio
 
1.76x
 
EBITDA 1
 
$
1,194.6

 
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 for the four quarters then ended.
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 international operations. As of September 30, 2017, the Company had uncommitted lines of credit in an aggregate amount of $916.8, under which we had outstanding borrowings of $152.5 classified as short-term borrowings on our Consolidated Balance Sheet. The average amount outstanding during the third quarter of 2017 was $124.7, with a weighted-average interest rate of approximately 3.1%.
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. On October 25, 2017, the Company increased the maximum aggregate amount outstanding at any time under our commercial paper program to $1,500.0. Borrowings under the program are supported by the Credit Agreement described above. Proceeds of the commercial paper will be used for working capital and general corporate purposes, including the repayment of maturing indebtedness, as described above, 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 September 30, 2017, the Company had outstanding commercial paper of $359.3 classified as short-term borrowings on our Consolidated Balance Sheet. The average amount outstanding under the program during the third quarter of 2017 was $488.2, with a weighted-average interest rate of 1.4% and a weighted-average maturity of fourteen days. See Note 14 to the unaudited Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for further information.
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 that 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 unaudited Consolidated Balance Sheets reflect cash, net of bank overdrafts, under all of our pooling arrangements, and as of September 30, 2017, the amount netted was $1,567.0.

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