
Note 9.	Debt and Other Financing Arrangements



	Effective Interest Rate at April 2,		April 2,			December 31,
(Dollars in millions)	2016		2016			2015

Commercial Paper	1.51	%	$	1,228.0		$	49.6
Term Loan	1.57	%	1,000.0			—
2.25% 5-Year Senior Notes, Due 8/15/2016	2.44	%	1,000.0			1,000.0
1.30% 3-Year Senior Notes, Due 2/1/2017	1.25	%	900.0			900.0
1.85% 5-Year Senior Notes, Due 1/15/2018	2.01	%	500.0			500.0
2.15% 3-Year Senior Notes, Due 12/14/2018	2.35	%	450.0			450.0
2.40% 5-Year Senior Notes, Due 2/1/2019	2.59	%	900.0			900.0
6.00% 10-Year Senior Notes, Due 3/1/2020	2.97	%	750.0			750.0
4.70% 10-Year Senior Notes, Due 5/1/2020	4.23	%	300.0			300.0
1.50% 5-Year Senior Notes, Due 12/1/2020 (euro-denominated)	1.61	%	484.1			461.6
5.00% 10-Year Senior Notes, Due 1/15/2021	3.24	%	400.0			400.0
4.50% 10-Year Senior Notes, Due 3/1/2021	3.50	%	1,000.0			1,000.0
3.60% 10-Year Senior Notes, Due 8/15/2021	3.16	%	1,100.0			1,100.0
3.30% 7-Year Senior Notes, Due 2/15/2022	3.43	%	800.0			800.0
2.15% 7-Year Senior Notes, Due 7/21/2022 (euro-denominated)	2.28	%	569.6			543.1
3.15% 10-Year Senior Notes, Due 1/15/2023	3.31	%	800.0			800.0
4.15% 10-Year Senior Notes, Due 2/1/2024	4.16	%	1,000.0			1,000.0
2.00% 10-Year Senior Notes, Due 4/15/2025 (euro-denominated)	2.09	%	729.0			695.2
3.65% 10-Year Senior Notes, Due 12/15/2025	3.77	%	350.0			350.0
5.30% 30-Year Senior Notes, Due 2/1/2044	5.37	%	400.0			400.0
Affymetrix Debt at Fair Value (a)			254.1			—
Other			15.7			16.3

Total Borrowings at Par Value			14,930.5			12,415.8
Fair Value Hedge Accounting Adjustments			59.6			6.2
Unamortized Premium, Net			98.8			104.7
Unamortized Debt Issuance Costs (Note 1)			(52.9		)	(54.7		)

Total Borrowings at Carrying Value			15,036.0			12,472.0
Less: Short-term Obligations and Current Maturities			3,383.0			1,051.8

Long-term Obligations			$	11,653.0		$	11,420.2


(a)	The debt assumed in the acquisition of Affymetrix was substantially repaid in April 2016.

The effective interest rates for the fixed-rate debt include the stated interest on the notes, the accretion of any discount or amortization of any premium, the amortization of any debt issuance costs and, if applicable, adjustments related to hedging.

See Note 12 for fair value information pertaining to the company’s long-term obligations.

Credit Facilities

The company has a revolving credit facility with a bank group that provides for up to $2.00 billion of unsecured multi-currency revolving credit. The facility expires in July 2018. The agreement calls for interest at either a LIBOR-based rate or a rate based on the prime lending rate of the agent bank, at the company’s option. The agreement contains affirmative, negative and financial covenants, and events of default customary for financings of this type. The financial covenant requires the company to maintain a Consolidated Leverage Ratio of debt to EBITDA (as defined in the agreement) below 3.5 to 1.0 and an Interest Coverage Ratio of EBITDA (as defined in the agreement) to interest expense of 3.0 to 1.0. The credit agreement permits the company to use the facility for working capital; acquisitions; repurchases of common stock, debentures and other securities; the refinancing of debt; and general corporate purposes. The credit agreement allows for the issuance of letters of credit, which reduces the amount available for borrowing. If the company borrows under this facility, it intends to leave undrawn an amount equivalent to outstanding commercial paper to provide a source of funds in the event that commercial paper markets are not available. As of April 2, 2016, no borrowings were outstanding under the facility, although available capacity was reduced by approximately $68 million as a result of outstanding letters of credit.

Term Loan

In the first quarter of 2016, in connection with the acquisition of Affymetrix, the company entered into a 364-day unsecured term loan agreement. The term loan agreement called for interest at either a LIBOR-based rate or a rate based on the prime lending rate of the agent bank, at the company’s option. The term loan agreement contains affirmative, negative and financial covenants, and events of default customary for financings of this type. The financial covenant requires the company to maintain a Consolidated Leverage Ratio of debt to EBITDA (as defined in the agreement) below 3.5 to 1.0 and an Interest Coverage Ratio of EBITDA (as defined in the agreement) to interest expense of 3.0 to 1.0. As of April 2, 2016, $1.00 billion was outstanding under the term loan agreement. Borrowings may be prepaid without penalty.

Senior Notes

Interest on the euro-denominated senior notes is payable annually. Interest on each of the other senior notes is payable semi-annually. Each of the notes may be redeemed at a redemption price of 100% of the principal amount plus a specified make-whole premium plus accrued interest. The company is subject to certain affirmative and negative covenants under the indentures governing the senior notes, the most restrictive of which limits the ability of the company to pledge principal properties as security under borrowing arrangements.

In April 2016, the company issued $1.00 billion principal amount of 3.00% Senior Notes due 2023 and used the proceeds to repay all of the 2.25% Senior Notes due 2016. As the company had the ability and intent to refinance the 2.25% Senior Notes, they have been reported as long-term obligations in the accompanying balance sheet as of April 2, 2016. Prior to issuing the 3.00% Senior Notes due 2023, the company had entered into an agreement to hedge its exposure related to the interest rate on the anticipated borrowings (described under the heading "Cash Flow Hedge Arrangements" in Note 12) that was terminated in April 2016. The company had a cash outlay of $75 million early in the second quarter of 2016 associated with termination of the arrangement.

Interest Rate Swap Arrangements

In the first quarter of 2016, the company terminated certain of its fixed to floating rate swap arrangements. The terminated swaps were accounted for as fair value hedges. As a result of terminating these arrangements, the company received $61 million (excluding accrued interest) in cash in the second quarter of 2016. The proceeds were recorded as part of the carrying value of the underlying debt and will be amortized as a reduction to interest expense over the remaining terms of the respective debt instruments. Subsequently, the company entered into new swap arrangements which are included in the table below.

The company has entered into LIBOR-based interest rate swap arrangements with various banks on several of its outstanding senior notes. The aggregate amounts of the swaps are equal to the principal amounts of the notes and the payment dates of the swaps coincide with the interest payment dates of the notes. The swap contracts provide for the company to pay a variable interest rate and receive a fixed rate. The variable interest rates reset monthly. The swaps have been accounted for as fair value hedges of the notes. See Note 12 for additional information. The following table summarizes the outstanding interest rate swap arrangements on the company's senior notes at April 2, 2016:



	Aggregate Notional Amount			Pay Rate as of
(Dollars in millions)	Aggregate Notional Amount		Pay Rate	April 2, 2016		Receive Rate

1.30% Senior Notes due 2017	$	900.0	1-month LIBOR + 0.6616%	1.0956	%	1.30	%
4.50% Senior Notes due 2021	1,000.0		1-month LIBOR + 3.4420%	3.8758	%	4.50	%
3.60% Senior Notes due 2021	1,100.0		1-month LIBOR + 2.5150%	2.9165	%	3.60	%