FINANCING

The carrying value of the components of the Company’s debt as of July 1, 2016 were as follows ($ in millions):



	July 1, 2016
Commercial paper	$	392.9
Variable interest rate Term Facility	500.0
1.80% senior unsecured notes due 2019	297.9
2.35% senior unsecured notes due 2021	744.3
3.15% senior unsecured notes due 2026	889.7
4.30% senior unsecured notes due 2046	546.7
Other	3.3
Long-term debt	$	3,374.8

Proceeds from borrowings under the commercial paper program are typically available for general corporate purposes, including acquisitions. Proceeds from the Company’s initial issuances of commercial paper were used to pay fees and expenses related to the financing activities described below.

The Company received net proceeds, after underwriting discounts and arrangement fees from the issuance of the Notes and Term Facility, of approximately $3.0 billion and used these funds to make a $3.0 billion cash dividend payment to Danaher in connection with the Separation.

Credit Facilities

On June 16, 2016, the Company entered into the Credit Agreement with a syndicate of banks that provides for:


•	a $500 million Term Facility that expires on June 16, 2019. The Company borrowed the entire $500 million of loans under this facility, and


•	a $1.5 billion Revolving Credit Facility that expires on June 16, 2021.

The Revolving Credit Facility is subject to a one-year extension option at the request of the Company and with the consent of the lenders. The Credit Agreement also contains an option permitting the Company to request an increase in the amounts available under the Credit Agreement of up to an aggregate additional $500 million. The obligations under the Credit Agreement were initially guaranteed on an unsecured, unsubordinated basis by Danaher and the guarantee terminated upon the completion of the Separation on July 2, 2016.

Borrowings under the Credit Agreement (other than bid loans under the Revolving Credit Facility) bear interest at a rate equal (at the Company’s option) to either (1) a LIBOR-based rate (the “LIBOR-Based Rate”), or (2) the highest of (a) the Federal funds rate plus 1/2 of 1%, (b) the prime rate and (c) the LIBOR-Based Rate plus 1%, plus in each case a margin that varies according to the Company’s long-term debt credit rating. The Company is obligated to pay an annual facility fee for the Revolving Credit Facility of between 9.0 and 25.0 basis points varying according to the Company's long-term debt credit rating.

The Credit Agreement requires the Company to maintain a consolidated net leverage ratio of debt to Consolidated EBITDA (as defined in the Credit Agreement) of less than 3.50 to 1.00 and a consolidated interest coverage ratio of Consolidated EBITDA to interest expense of greater than 3.50 to 1.00 as of the end of any fiscal quarter, beginning with the fiscal quarter ending September 30, 2016. The Credit Agreement also contains customary representations, warranties, conditions precedent, events of default, indemnities and affirmative and negative covenants. As of July 1, 2016, the Company was in compliance with all covenants under the Credit Agreement that were in effect and the Company had no borrowings outstanding under the Revolving Credit Facility.

On June 21, 2016, the Company borrowed a variable interest rate term loan of $500 million under the Term Facility bearing interest at an initial rate of 1.7694% per annum. The term loan is pre-payable at the option of the Company. Re-borrowing is not permitted once the term loan is repaid.

Commercial Paper Program

The Company generally satisfies any short-term liquidity needs that are not met through operating cash flows and available cash primarily through issuances of commercial paper under its commercial paper program. Under this program, the Company may issue and sell unsecured, short-term promissory notes with maturities not exceeding 397 days. Interest expense on the notes is paid at maturity and is generally based on the ratings assigned to the Company by credit rating agencies at the time of issuance and prevailing market rates measured by reference to LIBOR.

As of July 1, 2016, $393 million of commercial paper was outstanding under this program. As of July 1, 2016, borrowings outstanding under the Company’s commercial paper program had a weighted average annual interest rate of 0.9% and a weighted average remaining maturity of approximately 50 days.

Credit support for the commercial paper program is provided by the Revolving Credit Facility. The availability of the Revolving Credit Facility as a standby liquidity facility to repay maturing commercial paper is an important factor in maintaining the existing credit ratings of the Company’s commercial paper program. The Company expects to limit any borrowings under the Revolving Credit Facility to amounts that would leave sufficient credit available under the facility to allow the Company to borrow, if needed, to repay all of the outstanding commercial paper as it matures.

The Company’s ability to access the commercial paper market, and the related costs of these borrowings, is affected by the strength of the Company's credit rating and market conditions. Any downgrade in the Company’s credit rating would increase the cost of borrowing under the Company’s commercial paper program and the Credit Agreement, and could limit or preclude the Company's ability to issue commercial paper. If the Company’s access to the commercial paper market is adversely affected due to a downgrade, change in market conditions or otherwise, the Company expects it would rely on a combination of available cash, operating cash flow and the Credit Agreement to provide short-term funding. In such event, the cost of borrowings under the Credit Agreement could be higher than the historic cost of commercial paper borrowings.

The Company classified its borrowings outstanding under the commercial paper program as of July 1, 2016 as long-term debt in the accompanying Combined Condensed Balance Sheet as the Company had the intent and ability, as supported by availability under the Revolving Credit Facility referenced above, to refinance these borrowings for at least one year from the balance sheet date.

Long-Term Indebtedness

On June 20, 2016, the Company completed the private placement of each of the following series of the Notes to qualified institutional buyers under Rule 144A of the Securities Act of 1933, as amended (the "Securities Act") and outside the United States to non-U.S. persons in compliance with Regulation S under the Securities Act:


•	$300 million aggregate principal amount of senior notes due June 15, 2019 (the “2019 Notes”). The 2019 Notes were issued at 99.893% of their principal amount and bear interest at the rate of 1.80% per year.


•	$750 million aggregate principal amount of senior notes due June 15, 2021 (the “2021 Notes”). The 2021 Notes were issued at 99.977% of their principal amount and bear interest at the rate of 2.35% per year.


•	$900 million aggregate principal amount of senior notes due June 15, 2026 (the “2026 Notes”). The 2026 Notes were issued at 99.644% of their principal amount and bear interest at the rate of 3.15% per year.


•	$350 million aggregate principal amount of senior notes due June 15, 2046 (the “Initial 2046 Notes”). The Initial 2046 Notes were issued at 99.783% of their principal amount and bear interest at the rate of 4.30% per year.


•	$200 million aggregate principal amount of senior notes due June 15, 2046 (the “Additional 2046 Notes” and, together with the Initial 2046 Notes, the “2046 Notes”). The Additional 2046 Notes were issued at 101.564% of their principal amount and bear interest at the rate of 4.30% per year.

Interest on the Notes is payable semi-annually in arrears on June 15 and December 15 of each year, commencing on December 15, 2016. Each series of Notes was initially guaranteed on an unsecured, unsubordinated basis by Danaher and the guarantee terminated upon the completion of the Separation on July 2, 2016.

In connection with the issuance of the Notes, the Company entered into a registration rights agreement, pursuant to which the Company is obligated to use commercially reasonable efforts to file with the SEC, and cause to be declared effective, a registration statement with respect to an offer to exchange each series of Notes for registered notes with terms that are substantially identical to the Notes of such series. Alternatively, if the exchange offers are not available or cannot be completed, the Company would be required to use commercially reasonable efforts to file, and cause to be declared effective, a shelf registration statement to cover resales of the Notes under the Securities Act. If the Company does not comply with these obligations, it will be required to pay additional interest on the Notes.

Debt discounts, premiums and issuance costs totaled $21.4 million as of July 1, 2016 and have been netted against the aggregate principal amounts of the related debt in the carrying value of the components of debt table above. The Company did not make any interest payments on the Notes during the three months and six months ended July 1, 2016.

Covenants and Redemption Provisions Applicable to Notes

The Company may redeem the Notes of the applicable series, in whole or in part, at any time prior to the following dates (the “Call Dates”) by paying the principal amount and the “make-whole” premium specified in the applicable indenture, plus accrued and unpaid interest:



1.80% senior unsecured notes due 2019	June 15, 2019
2.35% senior unsecured notes due 2021	May 15, 2021
3.15% senior unsecured notes due 2026	March 15, 2026
4.30% senior unsecured notes due 2046	December 15, 2045

On or after the Call Dates, the Company may redeem all or any part of the Notes of the applicable series by paying the principal amount, plus accrued and unpaid interest.

If a change of control triggering event occurs, the Company will, in certain circumstances, be required to make an offer to repurchase the Notes at a purchase price equal to 101% of the principal amount, plus accrued and unpaid interest. A change of control triggering event is defined as the occurrence of both a change of control and a rating event, each as defined in the applicable indenture. Except in connection with a change of control triggering event, the Notes do not have any credit rating downgrade triggers that would accelerate the maturity of the Notes.

The Notes contain customary covenants, including limits on the incurrence of certain secured debt and sale/leaseback transactions. None of these covenants are considered restrictive to the Company’s operations and as of July 1, 2016, the Company was in compliance with all the covenants under the Notes.

Other

The minimum principal payments due under the Company's outstanding debt during the next five years are $800 million in 2019 and $750 million in 2021. The remaining approximately $1.8 billion is due thereafter.