
Note 8.	Debt and Other Financing Arrangements



	Effective Interest Rate at July 1,		July 1,			December 31,
(Dollars in millions)	2017		2017			2016

Commercial Paper	0.27	%	$	1,538.1		$	953.3
Term Loan			—			825.0
1.85% 5-Year Senior Notes, Due 1/15/2018			—			500.0
Floating Rate 2-Year Senior Notes, Due 8/9/2018 (euro-denominated)	0.12	%	685.6			631.0
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)	1.62	%	485.6			447.0
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	4.72	%	1,000.0			1,000.0
3.60% 10-Year Senior Notes, Due 8/15/2021	4.55	%	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	%	571.3			525.9
3.15% 10-Year Senior Notes, Due 1/15/2023	3.31	%	800.0			800.0
3.00% 7-Year Senior Notes Due 4/15/2023	4.82	%	1,000.0			1,000.0
4.15% 10-Year Senior Notes, Due 2/1/2024	4.16	%	1,000.0			1,000.0
0.75% 8-Year Senior Notes, Due 9/12/2024 (euro-denominated)	0.94	%	1,142.6			1,051.7
2.00% 10-Year Senior Notes, Due 4/15/2025 (euro-denominated)	2.09	%	731.3			673.1
3.65% 10-Year Senior Notes, Due 12/15/2025	3.77	%	350.0			350.0
2.95% 10-Year Senior Notes, Due 9/19/2026	3.19	%	1,200.0			1,200.0
1.45% 10-Year Senior Notes, Due 3/16/2027 (euro-denominated)	1.66	%	571.3			—
1.375% 12-Year Senior Notes, 9/12/2028 (euro-denominated)	1.46	%	685.5			631.0
5.30% 30-Year Senior Notes, Due 2/1/2044	5.37	%	400.0			400.0
Other			12.0			13.0

Total Borrowings at Par Value			16,873.3			16,701.0
Fair Value Hedge Accounting Adjustments			(40.6		)	(49.3		)
Unamortized Premium, Net			34.0			52.2
Unamortized Debt Issuance Costs			(70.6		)	(76.0		)

Total Borrowings at Carrying Value			16,796.1			16,627.9
Less: Short-term Obligations and Current Maturities			1,540.4			1,255.5

Long-term Obligations			$	15,255.7		$	15,372.4

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 11 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 $2.50 billion of unsecured multi-currency revolving credit. The facility expires in July 2021. The agreement calls for interest at either a LIBOR-based rate, a EURIBOR-based rate (for funds drawn in Euro) 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 covenants require the company to maintain a Consolidated Leverage Ratio of debt to EBITDA (as defined in the agreement) below 3.5 to 1.0 beginning in the third quarter of 2017. This ratio may be temporarily increased to 4.5 to 1.0 (with subsequent step down to 3.5 to 1.0) in the event of a qualified acquisition. The agreement also requires the company to maintain 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 July 1, 2017, no borrowings were outstanding under the facility, although available capacity was reduced by approximately $73 million as a result of outstanding letters of credit.

Bridge Financing for Pending Patheon Acquisition

In May 2017, in connection with the agreement to acquire Patheon, the company entered into commitment letters for a 364-day unsecured committed bridge credit facility in the principal amount of $7.3 billion. The commitment under the bridge facility was reduced to $4.3 billion by the net cash proceeds of the company's July 2017 issuance of senior notes (Note 14) and will be further reduced by the aggregate net cash proceeds of any future offering of senior notes, as well as by aggregate commitments received under a proposed new term loan facility and the aggregate net cash proceeds of any future equity issuances or asset sales outside the ordinary course of business (in each case, with certain limited exceptions).

Commercial Paper Programs

The company has commercial paper programs pursuant to which it may issue and sell unsecured, short-term promissory notes (CP Notes). Under the U.S. program, a) maturities may not exceed 397 days from the date of issue and b) the CP Notes are issued on a private placement basis under customary terms in the commercial paper market and are not redeemable prior to maturity nor subject to voluntary prepayment. Under the euro program, maturities may not exceed 183 days and may be denominated in euro, U.S. dollars, Japanese yen, British pounds sterling, Swiss franc, Canadian dollars or other currencies. Under both programs, the CP Notes are issued at a discount from par (or premium to par, in the case of negative interest rates), or, alternatively, are sold at par and bear varying interest rates on a fixed or floating basis. As of July 1, 2017, outstanding borrowings under these programs were $1.54 billion, with a weighted average remaining period to maturity of 52 days and are classified as short-term obligations in the accompanying balance sheet.

Senior Notes

Interest on the floating rate senior notes is payable quarterly. Interest is payable annually on the other euro-denominated senior notes and semi-annually on all other senior notes. 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.

Thermo Fisher Scientific (Finance I) B.V., a wholly-owned finance subsidiary of the company issued the Floating Rate Senior Notes due 2018 included in the table above. This subsidiary has no independent function other than financing activities. The Floating Rate Senior Notes due 2018 are fully and unconditionally guaranteed by the company and no other subsidiaries of the company have guaranteed the obligations.

Interest Rate Swap Arrangements

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 11 for additional information. The following table summarizes the outstanding interest rate swap arrangements on the company's senior notes at July 1, 2017:



	Aggregate Notional Amount		Pay Rate as of
(Dollars in millions)	Aggregate Notional Amount	Pay Rate	July 1, 2017		Receive Rate

4.50% Senior Notes due 2021	1,000.0	1-month LIBOR + 3.4420%	4.4925	%	4.50	%
3.60% Senior Notes due 2021	1,100.0	1-month LIBOR + 2.5150%	3.6739	%	3.60	%
3.00% Senior Notes due 2023	1,000.0	1-month LIBOR + 1.7640%	2.9229	%	3.00	%