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Debt and Other Financing Arrangements
 9 Months Ended
Oct. 02, 2021
Debt Disclosure [Abstract]  
Debt and Other Financing Arrangements [Text Block]
Note 7.    Debt and Other Financing Arrangements
Effective Interest Rate at October 2,October 2,December 31,
(Dollars in millions)202120212020
2.15% 7-Year Senior Notes, Due 7/21/2022 (euro-denominated)
$— $611 
3.00% 7-Year Senior Notes, Due 4/15/2023
— 1,000 
4.15% 10-Year Senior Notes, Due 2/1/2024
— 1,000 
0.75% 8-Year Senior Notes, Due 9/12/2024 (euro-denominated)
0.94 %1,159 1,222 
0.125% 5.5-Year Senior Notes, Due 3/1/2025 (euro-denominated)
0.42 %928 977 
4.133% 5-Year Senior Notes, Due 3/25/2025
4.32 %1,100 1,100 
2.00% 10-Year Senior Notes, Due 4/15/2025 (euro-denominated)
2.10 %742 782 
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 %812 855 
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 %580 611 
1.75% 7-Year Senior Notes, Due 4/15/2027 (euro-denominated)
1.97 %696 733 
3.20% 10-Year Senior Notes, Due 8/15/2027
3.39 %750 750 
0.50% 8.5-Year Senior Notes, Due 3/1/2028 (euro-denominated)
0.78 %928 977 
1.375% 12-Year Senior Notes, Due 9/12/2028 (euro-denominated)
1.46 %696 733 
1.750% 7-Year Senior Notes, Due 10/15/2028
1.89 %700 — 
1.95% 12-Year Senior Notes, Due 7/24/2029 (euro-denominated)
2.08 %812 855 
2.60% 10-Year Senior Notes, Due 10/1/2029
2.74 %900 900 
4.497% 10-Year Senior Notes, Due 3/25/2030
5.31 %1,100 1,100 
0.875% 12-Year Senior Notes, Due 10/1/2031 (euro-denominated)
1.14 %1,043 1,099 
2.00% 10-Year Senior Notes, Due 10/15/2031
2.23 %1,200 — 
2.375% 12-Year Senior Notes, Due 4/15/2032 (euro-denominated)
2.55 %696 733 
2.875% 20-Year Senior Notes, Due 7/24/2037 (euro-denominated)
2.94 %812 855 
1.50% 20-Year Senior Notes, Due 10/1/2039 (euro-denominated)
1.73 %1,043 1,099 
2.80% 20-Year Senior Notes, Due 10/15/2041
2.90 %1,200 — 
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 
1.875% 30-Year Senior Notes, Due 10/1/2049 (euro-denominated)
1.99 %1,159 1,222 
Other 77 5 
Total Borrowings at Par Value
21,833 21,919 
Fair Value Hedge Accounting Adjustments
— 25 
Unamortized Discount
(107)(102)
Unamortized Debt Issuance Costs
(128)(114)
Total Borrowings at Carrying Value
21,598 21,728 
Finance Lease Liabilities
109 7 
Less: Short-term Obligations and Current Maturities
19 2,628 
Long-term Obligations
$21,688 $19,107 
The effective interest rates for the fixed-rate debt include the stated interest on the notes, the accretion of any discount and the amortization of any debt issuance costs.
See Note 10 for fair value information pertaining to the company’s long-term borrowings.
In connection with the agreement to acquire PPD (Note 2), the company had a cash outlay of $35 million in 2021 associated with obtaining bridge financing commitments, included in other financing activities, net, in the accompanying statement of cash flows. The bridge commitments were terminated in October 2021 upon the issuances of senior notes. The company intends to finance the purchase price with cash on hand and the net proceeds from issuances of debt, including the
senior notes issued in October 2021. The company is currently evaluating a future debt offering and the timing of such transaction is subject to market and other conditions.
Credit Facilities
The company has a revolving credit facility (the Facility) with a bank group that provides for up to $3.00 billion of unsecured multi-currency revolving credit. The Facility expires on December 4, 2025. The revolving credit agreement calls for interest at either a LIBOR-based rate (or LIBOR successor 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 the Facility include a Consolidated Net Interest Coverage Ratio (Consolidated EBITDA to Consolidated Net 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 minimum Consolidated Interest Coverage Ratio of 3.5:1.0 as of the last day of any fiscal quarter. As of October 2, 2021, no borrowings were outstanding under the Facility, although available capacity was reduced by approximately $4 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 October 2, 2021, there were no outstanding borrowings under these programs.
Senior Notes
Interest is payable annually on the 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. The company was in compliance with all covenants at October 2, 2021.
In the first quarter of 2021, the company redeemed some of its existing senior notes. In connection with these redemptions, the company incurred $197 million of losses on the early extinguishment of debt included in Other Income (Expense) on the accompanying statement of income. Upon redemption of the senior notes, the company terminated the related fixed to floating rate interest rate swap arrangements and received $22 million, included in other financing activities, net, in the accompanying statement of cash flows.
October 2021 Debt Issuances
Early in the fourth quarter, the company issued the following senior notes:
(In millions)Principal Value Issued
Floating Rate 18-Month Senior Notes, Due 4/18/2023
$1,000 
Floating Rate 2-Year Senior Notes, Due 10/18/2023
$500 
0.797% 2-Year Senior Notes, Due 10/18/2023
$1,350 
Floating Rate 3-Year Senior Notes, Due 10/18/2024
$500 
1.215% 3-Year Senior Notes, Due 10/18/2024
$2,500 
0.80% 9-Year Senior Notes, Due 10/18/2030 (euro-denominated)
€1,750 
1.125% 12-Year Senior Notes, Due 10/18/2033 (euro-denominated)
€1,500 
1.625% 20-Year Senior Notes, Due 10/18/2041 (euro-denominated)
€1,250 
2.00% 30-Year Senior Notes, Due 10/18/2051 (euro-denominated)
€750 
Thermo Fisher Scientific (Finance I) B.V. (Thermo Fisher International), a wholly-owned finance subsidiary of the company, issued the 0.80% Senior Notes due 2030, the 1.125% Senior Notes due 2033, the 1.625% Senior Notes due 2041 and the 2.00% Senior Notes due 2051 included in the table above (collectively, the “Euronotes”) in a registered public offering. The company has fully and unconditionally guaranteed all of Thermo Fisher International’s obligations under the Euronotes and all of Thermo Fisher International’s other debt securities, and no other subsidiary of the company will guarantee these obligations. Thermo Fisher International is a “finance subsidiary” as defined in Rule 13-01(a)(4)(vi) of the Exchange Act, with no assets or operations other than those related to the issuance, administration and repayment of the Euronotes and other debt securities issued by Thermo Fisher International from time to time. The financial condition, results of operations and cash flows of Thermo Fisher International are consolidated in the financial statements of the company.