Financing

9 Months Ended

Sep. 27, 2019

FINANCING

As of September 27, 2019, the Company was in compliance with all of its debt covenants. The components of the Company’s debt were as follows ($ in millions):



	September 27, 2019		December 31, 2018
U.S. dollar-denominated commercial paper	$	—	$	72.8
Euro-denominated commercial paper (€2.7 billion and €2.1 billion, respectively)	2,933.2		2,377.5
1.0% senior unsecured notes due 2019 (€600.0 million aggregate principal amount) (the “2019 Euronotes”)	—		687.0
2.4% senior unsecured notes due 2020	499.2		498.5
5.0% senior unsecured notes due 2020 (the “2020 Assumed Pall Notes”)	382.8		386.7
Zero-coupon LYONs due 2021	34.6		56.2
0.352% senior unsecured notes due 2021 (¥30.0 billion aggregate principal amount) (the “2021 Yen Notes”)	277.6		273.2
1.7% senior unsecured notes due 2022 (€800.0 million aggregate principal amount) (the “2022 Euronotes”)	872.6		913.2
Floating rate senior unsecured notes due 2022 (€250.0 million aggregate principal amount) (the “Floating Rate 2022 Euronotes”)	272.9		285.7
Envista senior unsecured term loan facility due 2022 (the “Envista Term Loan Facility”)	648.6		—
Envista senior unsecured term loan facility due 2022 (€600.0 million aggregate principal amount) (the “Envista Euro Term Loan Facility”)	655.6		—
0.5% senior unsecured bonds due 2023 (CHF 540.0 million aggregate principal amount) (the “2023 CHF Bonds”)	546.0		550.7
2.5% senior unsecured notes due 2025 (€800.0 million aggregate principal amount) (the “2025 Euronotes”)	871.7		912.6
3.35% senior unsecured notes due 2025	497.1		496.8
0.2% senior unsecured notes due 2026 (€1.3 billion aggregate principal amount) (the “2026 Biopharma Euronotes”)	1,357.5		—
0.3% senior unsecured notes due 2027 (¥30.8 billion aggregate principal amount) (the “2027 Yen Notes”)	284.4		279.9
1.2% senior unsecured notes due 2027 (€600.0 million aggregate principal amount) (the “2027 Euronotes”)	651.5		682.0
0.45% senior unsecured notes due 2028 (€1.3 billion aggregate principal amount) (the “2028 Biopharma Euronotes”)	1,355.6		—
1.125% senior unsecured bonds due 2028 (CHF 210.0 million aggregate principal amount) (the “2028 CHF Bonds”)	216.0		218.1
0.75% senior unsecured notes due 2031 (€1.8 billion aggregate principal amount) (the “2031 Biopharma Euronotes”)	1,900.7		—
0.65% senior unsecured notes due 2032 (¥53.2 billion aggregate principal amount) (the “2032 Yen Notes”)	491.1		483.4
1.35% senior unsecured notes due 2039 (€1.3 billion aggregate principal amount) (the “2039 Biopharma Euronotes”)	1,349.2		—
4.375% senior unsecured notes due 2045	499.4		499.3
1.8% senior unsecured notes due 2049 (€750.0 million aggregate principal amount) (the “2049 Biopharma Euronotes”)	810.3		—
Other	197.2		66.7
Total debt	17,604.8		9,740.3
Less: currently payable	1,068.6		51.8
Long-term debt	$	16,536.2	$	9,688.5

For additional details regarding the Company’s debt financing, refer to Note 10 of the Company’s financial statements as of and for the year ended December 31, 2018 included in the Company’s 2018 Annual Report.

The Company satisfies any short-term liquidity needs that are not met through operating cash flow and available cash primarily through issuances of commercial paper under its U.S. dollar and euro-denominated commercial paper programs. Until August

27, 2019, credit support for the commercial paper programs was generally provided by the Company’s $4.0 billion unsecured, multi-year revolving credit facility with a syndicate of banks that was scheduled to expire on July 10, 2020 (the “Superseded Credit Facility”), which was also available for working capital and other general corporate purposes. During the duration of the Superseded Credit Facility, no borrowings were outstanding under the Superseded Credit Facility and the Company was in compliance with all covenants thereunder. Effective as of August 27, 2019, credit support for the Company’s U.S. dollar and euro-denominated commercial paper programs is provided by the 2020 Credit Facilities, as described below. In addition, the Company has also entered into reimbursement agreements with various commercial banks to support the issuance of letters of credit.

As of September 27, 2019, borrowings outstanding under the Company’s euro-denominated commercial paper program had a weighted average annual interest rate of negative 0.2% and a weighted average remaining maturity of approximately 42 days. There were no borrowings outstanding under the Company’s U.S. dollar-denominated commercial paper program as of September 27, 2019.

The Company repaid the €600 million aggregate principal amount of the 2019 Euronotes and accrued interest upon their maturity on July 8, 2019 using proceeds from the issuance of euro-denominated commercial paper. The Company has classified the 2.4% senior unsecured notes due 2020 and the 2020 Assumed Pall Notes as short-term debt as of September 27, 2019 since the Company plans to extinguish these obligations in the fourth quarter of 2019 (refer to Note 4 for additional information). The Company has classified approximately $2.9 billion of its borrowings outstanding under the euro-denominated commercial paper program as of September 27, 2019 as long-term debt in the accompanying Consolidated Condensed Balance Sheet as the Company had the intent and ability, as supported by availability under the 2020 Credit Facilities, to refinance these borrowings for at least one year from the balance sheet date.

Debt discounts, premiums and debt issuance costs totaled $86 million and $19 million as of September 27, 2019 and December 31, 2018, respectively, and have been netted against the aggregate principal amounts of the related debt in the components of debt table above.

2019 Debt Issuances

Long-Term Indebtedness Related to the Pending GE Biopharma Acquisition

On September 18, 2019, DH Europe Finance II S.a.r.l. (“Danaher International II”), a wholly-owned finance subsidiary of the Company, completed the underwritten public offering of senior unsecured notes due 2026, 2028, 2031, 2039 and 2049 (collectively the “Biopharma Euronotes”). The following summarizes the key terms of the offering (€ in millions):



	Aggregate Principal Amount		Stated Annual Interest Rate		Issue Price (as % of Principal Amount)		Maturity Date	Interest Payment Dates (in arrears)
2026 Biopharma Euronotes	€	1,250.0	0.200	%	99.833	%	March 18, 2026	March 18
2028 Biopharma Euronotes	€	1,250.0	0.450	%	99.751	%	March 18, 2028	March 18
2031 Biopharma Euronotes	€	1,750.0	0.750	%	99.920	%	September 18, 2031	September 18
2039 Biopharma Euronotes	€	1,250.0	1.350	%	99.461	%	September 18, 2039	September 18
2049 Biopharma Euronotes	€	750.0	1.800	%	99.564	%	September 18, 2049	September 18

The Biopharma Euronotes are fully and unconditionally guaranteed by the Company. The Company received net proceeds from the Biopharma Euronotes, after underwriting discounts and commissions and offering expenses, of approximately €6.2 billion (approximately $6.8 billion based on currency exchange rates as of the date of the pricing of the notes). The Company plans to use the proceeds from the Biopharma Euronotes to fund a portion of the pending GE Biopharma Acquisition. Pending completion of the GE Biopharma Acquisition, the Company has invested the net proceeds in short-term bank deposits and/or interest-bearing, investment-grade securities.

Long-Term Indebtedness Related to Envista

In September 2019, the Company received net cash distributions of approximately $2.0 billion from Envista as consideration for the Company’s contribution of assets to Envista in connection with the Envista IPO. Envista financed these cash payments through the issuance of common stock and proceeds from approximately $1.3 billion of term debt, consisting of $650 million aggregate principal amount of borrowings under a three-year, senior unsecured term loan facility with variable interest rates and €600 million aggregate principal amount of borrowings under a three-year, senior unsecured term loan facility with variable interest rates (together, the “Envista Debt”). In addition, Envista entered into a revolving credit agreement with a syndicate of banks providing for a five-year $250 million senior unsecured revolving credit facility (the “Envista Credit

Facility”). Envista had no borrowings outstanding under the Envista Credit Facility as of September 27, 2019. As of September 27, 2019, Danaher owns 80.6% of the common stock of Envista, and as a result, the Company consolidates Envista and therefore the Company’s Consolidated Condensed Balance Sheet as of September 27, 2019 includes the Envista Debt. As of September 27, 2019, Envista was in compliance with all covenants under the Envista Credit Facility.

364-Day and Five-Year Revolving Credit Facilities

On August 27, 2019, the Company replaced the Superseded Credit Facility with a $5.0 billion unsecured revolving credit facility with a syndicate of banks that expires on August 27, 2024, subject to a one-year extension option at the request of the Company with the consent of the lenders (the “Five-Year Facility”). The Five-Year Facility also contains an expansion option permitting Danaher to request up to five increases of up to an aggregate additional $2.5 billion from lenders that elect to make such increase available, upon the satisfaction of certain conditions. At the same time, the Company entered into a $5.0 billion 364-day unsecured revolving credit facility with a syndicate of banks that expires on August 26, 2020 (the “Scheduled Termination Date”) (the “364-Day Facility” and together with the Five-Year Facility, the “2020 Credit Facilities”), to provide additional liquidity support for issuances under the Company’s U.S. dollar and euro-denominated commercial paper programs. The Company may elect, upon the payment of a fee equal to 0.75% of the principal amount of the loans then outstanding and, upon the satisfaction of certain conditions, to convert any loans outstanding on the Scheduled Termination Date into term loans that are due and payable one year following the Scheduled Termination Date. The increase in the size of the Company’s commercial paper programs, as supported by the 2020 Credit Facilities, provides capacity for the Company to use proceeds from the commercial paper programs to fund a portion of the pending GE Biopharma Acquisition.

Borrowings under the Five-Year Facility bear interest as follows: (1) Eurocurrency Rate Committed Loans (as defined in the Five-Year Facility) bear interest at a variable rate equal to the London inter-bank offered rate plus a margin of between 58.5 and 100.0 basis points, depending on Danaher’s long-term debt credit rating; (2) Base Rate Committed Loans and Swing Line Loans (each as defined in the Five-Year Facility) bear interest at a variable rate equal to the highest of (a) the Federal funds rate (as published by the Federal Reserve Bank of New York from time to time) plus 50 basis points; (b) Bank of America’s “prime rate” as publicly announced from time to time and (c) the Eurocurrency Rate (as defined in the Five-Year Facility) plus 100 basis points; and (3) Bid Loans (as defined in the Five-Year Facility) bear interest at the rate bid by the particular lender providing such loan. In addition, Danaher is required to pay a per annum facility fee of between 4.0 and 12.5 basis points (depending on Danaher’s long-term debt credit rating) based on the aggregate commitments under the Five-Year Facility, regardless of usage.

Borrowings under the 364-Day Facility bear interest as follows: (1) Eurodollar Rate Loans (as defined in the 364-Day Facility) bear interest at a variable rate per annum equal to the London inter-bank offered rate plus a margin of between 59.5 and 100.5 basis points, depending on Danaher’s long-term debt credit rating; and (2) Base Rate Loans (as defined in the 364-Day Facility) bear interest at a variable rate per annum equal to the highest of (a) the Federal funds rate (as published by the Federal Reserve Bank of New York from time to time) plus 50 basis points, (b) Bank of America’s “prime rate” as publicly announced from time to time and (c) the Eurodollar Rate (as defined in the 364-Day Facility) plus 100 basis points, plus in each case a margin of up to 0.5 basis points depending on Danaher’s long-term debt credit rating. In addition, Danaher is required to pay a per annum facility fee of between 3.0 and 12.0 basis points (depending on Danaher’s long-term debt credit rating) based on the aggregate commitments under the 364-Day Facility, regardless of usage.

The 2020 Credit Facilities require the Company to maintain a consolidated leverage ratio (as defined in the facilities) of 0.65 to 1.00 or less. Borrowings under the 2020 Credit Facilities are prepayable at the Company’s option at any time in whole or in part without premium or penalty.

The Company’s obligations under the 2020 Credit Facilities are unsecured. The Company has unconditionally and irrevocably guaranteed the obligations of each of its subsidiaries in the event a subsidiary is named a borrower under either of the 2020 Credit Facilities. Each of the 2020 Credit Facilities contain customary representations, warranties, conditions precedent, events of default, indemnities and affirmative and negative covenants. The 2020 Credit Facilities are available for liquidity support for Danaher’s expanded U.S. dollar and euro commercial paper programs, as discussed above, and for general corporate purposes.

Guarantors of Debt

The Company has guaranteed long-term debt and commercial paper issued by certain of its wholly-owned subsidiaries. The 2019 Euronotes, 2022 Euronotes, Floating Rate 2022 Euronotes, 2025 Euronotes and 2027 Euronotes were issued by DH Europe Finance S.a.r.l., formerly known as DH Europe Finance S.A. (“Danaher International”). The 2026 Biopharma Euronotes, 2028 Biopharma Euronotes, 2031 Biopharma Euronotes, 2039 Biopharma Euronotes and 2049 Biopharma Euronotes were issued by Danaher International II. The 2023 CHF Bonds and 2028 CHF Bonds were issued by DH Switzerland Finance S.A. (“Danaher Switzerland”). The 2021 Yen Notes, 2027 Yen Notes and 2032 Yen Notes were issued by DH Japan Finance S.A. (“Danaher Japan”). Each of Danaher International, Danaher International II, Danaher Switzerland and Danaher Japan are wholly-owned finance subsidiaries of Danaher Corporation. All of the outstanding and future securities issued by each of these entities, as well as the 2020 Assumed Pall Notes, are or will be fully and unconditionally guaranteed by the Company and these guarantees rank on parity with the Company’s unsecured and unsubordinated indebtedness.

LYONs Redemption

During the nine-month period ended September 27, 2019, holders of certain of the Company’s LYONs converted such LYONs into an aggregate of 891 thousand shares of the Company’s common stock, par value $0.01 per share. The Company’s deferred tax liability of $9 million associated with the book and tax basis difference in the converted LYONs was transferred to additional paid-in capital as a result of the conversions.