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Debt and Other Financing Arrangements
 6 Months Ended
Jun. 27, 2015
Debt And Other Financing Arrangements Disclosure [Abstract]  
Debt and Other Financing Arrangements [Text Block]

Note 9. Debt and Other Financing Arrangements

Effective
Interest Rate at
June 27,June 27,December 31,
(Dollars in millions)201520152014
Commercial Paper1.03%$1,125.0$—
Term Loan1.65%925.01,275.0
4.40% 5-Year Senior Notes, Due 3/1/2015—500.0
3.20% 5-Year Senior Notes, Due 5/1/2015—450.0
5.00% 10-Year Senior Notes, Due 6/1/2015—250.0
3.50% 5-Year Senior Notes, Due 1/15/20161.06%400.0400.0
3.20% 5-Year Senior Notes, Due 3/1/20163.21%900.0900.0
2.25% 5-Year Senior Notes, Due 8/15/20162.29%1,000.01,000.0
1.30% 3-Year Senior Notes, Due 2/1/20170.82%900.0900.0
1.85% 5-Year Senior Notes, Due 1/15/20181.85%500.0500.0
2.40% 5-Year Senior Notes, Due 2/1/20192.44%900.0900.0
6.00% 10-Year Senior Notes, Due 3/1/20202.98%750.0750.0
4.70% 10-Year Senior Notes, Due 5/1/20203.58%300.0300.0
5.00% 10-Year Senior Notes, Due 1/15/20213.25%400.0400.0
4.50% 10-Year Senior Notes, Due 3/1/20213.38%1,000.01,000.0
3.60% 10-Year Senior Notes, Due 8/15/20213.08%1,100.01,100.0
3.30% 7-Year Senior Notes, Due 2/15/20223.30%800.0800.0
3.15% 10-Year Senior Notes, Due 1/15/20233.21%800.0800.0
4.15% 10-Year Senior Notes, Due 2/1/20244.07%1,000.01,000.0
2.00% 10-Year Senior Notes, Due 4/15/2025 (euro-denominated)2.03%714.7774.3
5.30% 30-Year Senior Notes, Due 2/1/20445.30%400.0400.0
Other18.823.2
Total Borrowings at Par Value13,933.514,422.5
Fair Value Hedge Accounting Adjustments(32.9)(0.5)
Unamortized Premium, Net122.9142.0
Total Borrowings at Carrying Value14,023.514,564.0
Less: Short-term Obligations and Current Maturities3,359.82,212.4
Long-term Obligations$10,663.7$12,351.6

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 and, if applicable, adjustments related to hedging.

See Note 12 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 $2.00 billion of unsecured multi-currency revolving credit. The facility expires in July 2018. The agreement calls for interest at either a LIBOR-based rate 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 covenant requires the company to maintain a Consolidated Leverage Ratio of debt to EBITDA (as defined in the agreement) below 4.0 to 1.0, decreasing to 3.5 to 1.0 by August 2015, and 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 June 27, 2015, no borrowings were outstanding under the facility, although available capacity was reduced by approximately $59 million as a result of outstanding letters of credit.

Commercial Paper Program

The company has a U.S. commercial paper program pursuant to which it may issue and sell unsecured, short-term promissory notes (CP Notes). Maturities may not exceed 397 days from the date of issue and the CP Notes rank pari passu with all of the company’s other unsecured and unsubordinated indebtedness. 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. CP Notes are issued at a discount from par, or, alternatively, are sold at par and bear varying interest rates on a fixed or floating basis. As of June 27, 2015, outstanding borrowings under this program were $1.13 billion, with a weighted average remaining period to maturity of 62 days.

Term Loan

In connection with the acquisition of Life Technologies, the company entered into an unsecured term loan agreement. The term loan agreement calls for interest at either a LIBOR-based rate or a rate based on the prime lending rate of the agent bank, at the company’s option. The term loan 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 agreements) below 4.0 to 1.0, decreasing to 3.5 to 1.0 by August 2015, and a minimum interest coverage ratio of 3.0 to 1.0. As of June 27, 2015, outstanding borrowings under the term loan agreement were $0.93 billion all of which were repaid during July 2015.

Senior Notes

Interest on the euro-denominated 2.00% Senior Notes due 2025 is payable annually. Interest on each of the other senior notes is payable semi-annually. Each of the notes may be redeemed at any time 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.

In March 2015, the company redeemed its 5% Senior Notes due June 1, 2015, and recorded a charge of $3 million for the early extinguishment of this debt.

Interest Rate Swap Arrangements

In February 2015, the company entered into LIBOR-based interest rate swap arrangements with various banks on its outstanding 4.70% Senior Notes due May 1, 2020, 4.50% Senior Notes due March 1, 2021 and 3.60% Senior Notes due August 15, 2021. 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 of one-month LIBOR plus a spread of 3.156% (3.3400% at June 27, 2015) and receive a fixed rate of 4.70% on the 4.70% Notes; to pay a variable interest rate of one-month LIBOR plus a spread of 2.868% (3.0520% at June 27, 2015) and receive a fixed rate of 4.50% on the 4.50% Notes; and to pay a variable interest rate of one-month LIBOR plus a spread of 1.937% (2.1225% at June 27, 2015) and receive a fixed rate of 3.60% on the 3.60% Notes. The variable interest rates reset monthly. The swaps have been accounted for as fair value hedges of the notes. See Note 12 for additional information.

In 2013, upon the issuance of $900 million principal amount of 1.30% Senior Notes due 2017, the company entered into LIBOR-based interest rate swap arrangements with various banks. The aggregate amount of the swaps is equal to the principal amount of the 1.30% Notes and the payment dates of the swaps coincide with the payment dates of the 1.30% Notes. The swap contracts provide for the company to pay a variable interest rate of one-month LIBOR plus a spread of 0.6616% (0.8456% at June 27, 2015) and to receive a fixed rate of 1.30%. The variable interest rate resets monthly. The swaps have been accounted for as a fair value hedge of the 1.30% Notes. See Note 12 for additional information.