
Note 10.	Debt and Other Financing Arrangements



	Effective Interest Rate at December 31,		December 31,			December 31,
(Dollars in millions)	2018		2018			2017

Commercial Paper	0.74	%	$	693		$	960
Floating Rate 2-Year Senior Notes, Due 8/9/2018 (euro-denominated)			—			721
2.15% 3-Year Senior Notes, Due 12/14/2018			—			450
2.40% 5-Year Senior Notes, Due 2/1/2019			—			900
Floating Rate 2-Year Senior Notes, Due 7/24/2019 (euro-denominated)	0.10	%	574			600
6.00% 10-Year Senior Notes, Due 3/1/2020	2.96	%	750			750
4.70% 10-Year Senior Notes, Due 5/1/2020	4.23	%	300			300
Floating Rate 2-Year Senior Notes, Due 8/7/2020 (euro-denominated)	0.17	%	688			—
1.50% 5-Year Senior Notes, Due 12/1/2020 (euro-denominated)	1.62	%	487			510
5.00% 10-Year Senior Notes, Due 1/15/2021	3.24	%	400			400
4.50% 10-Year Senior Notes, Due 3/1/2021	6.89	%	1,000			1,000
3.60% 10-Year Senior Notes, Due 8/15/2021	6.66	%	1,100			1,100
3.30% 7-Year Senior Notes, Due 2/15/2022	3.42	%	800			800
2.15% 7-Year Senior Notes, Due 7/21/2022 (euro-denominated)	2.28	%	574			600
3.15% 10-Year Senior Notes, Due 1/15/2023	3.31	%	800			800
3.00% 7-Year Senior Notes, Due 4/15/2023	6.84	%	1,000			1,000
4.15% 10-Year Senior Notes, Due 2/1/2024	4.16	%	1,000			1,000
0.75% 8-Year Senior Notes, Due 9/12/2024 (euro-denominated)	0.94	%	1,147			1,201
2.00% 10-Year Senior Notes, Due 4/15/2025 (euro-denominated)	2.10	%	734			768
3.65% 10-Year Senior Notes, Due 12/15/2025	3.77	%	350			350
1.40% 8.5-Year Senior Notes, Due 1/23/2026 (euro-denominated)	1.53	%	802			840
2.95% 10-Year Senior Notes, Due 9/19/2026	3.19	%	1,200			1,200
1.45% 10-Year Senior Notes, Due 3/16/2027 (euro-denominated)	1.66	%	574			600
3.20% 10-Year Senior Notes, Due 8/15/2027	3.39	%	750			750
1.375% 12-Year Senior Notes, Due 9/12/2028 (euro-denominated)	1.46	%	688			721
1.95% 12-Year Senior Notes, Due 7/24/2029 (euro-denominated)	2.08	%	802			840
2.875% 20-Year Senior Notes, Due 7/24/2037 (euro-denominated)	2.94	%	802			840
5.30% 30-Year Senior Notes, Due 2/1/2044	5.37	%	400			400
4.10% 30-Year Senior Notes, Due 8/15/2047	4.23	%	750			750
Other			21			24

Total Borrowings at Par Value			19,186			21,175
Fair Value Hedge Accounting Adjustments			(93		)	(70		)
Unamortized Discount, Net			(21		)	(2		)
Unamortized Debt Issuance Costs			(82		)	(95		)

Total Borrowings at Carrying Value			18,990			21,008
Less: Short-term Obligations and Current Maturities			1,271			2,135

Long-term Obligations			$	17,719		$	18,873

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 13 for fair value information pertaining to the company’s long-term obligations.

As of December 31, 2018, the annual repayment requirements for debt obligations are as follows:



(In millions)

2019	$	1,271
2020	2,229
2021	2,504
2022	1,377
2023	1,801
2024 and Thereafter	10,004

	$	19,186

As of December 31, 2018 and 2017, short-term obligations and current maturities of long-term obligations in the accompanying balance sheet included $693 million and $960 million, respectively, of commercial paper, short-term bank borrowings and borrowings under lines of credit of certain of the company’s subsidiaries. The weighted average interest rate for short-term borrowings was 0.74% and slightly below 0% at December 31, 2018 and 2017, respectively. In addition to available borrowings under the company’s revolving credit agreements, discussed below, the company had unused lines of credit of $68 million as of December 31, 2018. These unused lines of credit generally provide for short-term unsecured borrowings at various interest rates.

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 facilities of this type. The covenants in our revolving credit facility (the Facility) include a Consolidated Leverage Ratio (total debt-to-Consolidated EBITDA) and a Consolidated Interest Coverage Ratio (Consolidated EBITDA to Consolidated Interest Expense), as such terms are defined in the Facility. Specifically, the company has agreed that, so long as any lender has any commitment under the Facility, any letter of credit is outstanding under the Facility, or any loan or other obligation is outstanding under the Facility, it will maintain a maximum Consolidated Leverage Ratio of 3.5:1.0. The company has also agreed that so long as any lender has any commitment under the Facility or any letter of credit is outstanding under the Facility, or any loan or other obligation is outstanding under the Facility, it will maintain a minimum Consolidated Interest Coverage Ratio of 3.0:1.0 as of the last day of any fiscal quarter. As of December 31, 2018, no borrowings were outstanding under the Facility, although available capacity was reduced by approximately $82 million as a result of outstanding letters of credit.

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 December 31, 2018, outstanding borrowings under these programs were $693 million, with a weighted average remaining period to maturity of 51 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 and 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 2018, Thermo Fisher Scientific (Finance I) B.V., a wholly-owned finance subsidiary of the company, issued the Floating Rate Senior Notes due 2020 included in the table above. This subsidiary has no independent function other than financing activities. The Floating Rate Senior Notes due 2020 are fully and unconditionally guaranteed by the company and no other subsidiaries of the company have guaranteed the obligations.

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 13) that was terminated in April 2016. The company had a cash outlay of $75 million in 2016 associated with termination of the arrangement, included in other financing activities, net, in the accompanying statement of cash flows.

Interest Rate Swap Arrangements

In 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 2016, included in other financing activities, net, in the accompanying statement of cash flows. 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 13 for additional information on the interest rate swap arrangements and related cross-currency interest rate swap arrangements. The following table summarizes the outstanding interest rate swap arrangements on the company's senior notes at December 31, 2018:



	Aggregate Notional Amount		Pay Rate as of
(Dollars in millions)	Aggregate Notional Amount	Pay Rate	December 31, 2018		Receive Rate

4.50% Senior Notes due 2021 (a)	1,000	1-month LIBOR + 3.4420%	5.7913	%	4.50	%
3.60% Senior Notes due 2021	1,100	1-month LIBOR + 2.5150%	4.9701	%	3.60	%
3.00% Senior Notes due 2023 (a)	1,000	1-month LIBOR + 1.7640%	4.2191	%	3.00	%


(a)	The payments on $1.5 billion notional value of these interest rate swaps are offset in part by cross-currency interest rate swaps which effectively reduced the pay rate as of December 31, 2018 from a weighted average of 5.00% to a weighted average of 1.96%.

In 2018, the company entered into $1.5 billion notional value of cross-currency interest rate swaps, which effectively convert a portion of the semi-annual payments related to the variable rate, U.S. dollar denominated, LIBOR-based interest rate swaps to payments on variable rate, euro denominated, EURIBOR-based cross-currency interest rate swaps.