8-KMaterial AgreementsFinancial EventsExhibits & Filings

ADOBE INC. 8-K Report, Material Agreement (Mar 7, 2012)

Filed March 7, 2012For Securities:ADBE

Summary

Adobe Systems Incorporated (ADBE) has filed an 8-K report detailing the execution of a new $1.0 billion senior unsecured revolving credit facility, replacing its previous agreement. This new facility, effective March 2, 2012, matures on March 2, 2017, and offers an option to increase the commitment by an additional $500 million, bringing the total potential credit line to $1.5 billion. The funds are designated for general corporate purposes, providing Adobe with financial flexibility for its operations and strategic initiatives. The terms of the new credit agreement include variable interest rates based on LIBOR or a base rate, plus a margin tied to Adobe's public debt ratings. Commitment fees also apply. Key covenants within the agreement include restrictions on liens and indebtedness, as well as a financial covenant limiting the maximum leverage ratio to 3 to 1. The termination of the prior credit facility and payoff of all associated obligations are also reported.

Key Highlights

  • 1Adobe entered into a new five-year, $1.0 billion senior unsecured revolving credit facility dated March 2, 2012.
  • 2The new credit facility has a maturity date of March 2, 2017.
  • 3There is an option to increase the credit facility's aggregate commitment by an additional $500 million, up to a total of $1.5 billion.
  • 4The facility will be used for general corporate purposes, providing financial flexibility.
  • 5Interest rates are variable, based on LIBOR plus a margin (0.795% to 1.30%) or a base rate plus a margin (0.00% to 0.30%), dependent on Adobe's public debt ratings.
  • 6A financial covenant restricts the maximum leverage ratio to 3 to 1.
  • 7The company terminated and paid off all obligations under its previous credit agreement dated February 16, 2007.

Frequently Asked Questions

This 8-K filing announces Adobe Systems Incorporated's entry into a new, material definitive agreement, specifically a $1.0 billion senior unsecured revolving credit facility, and the termination of its previous credit agreement.

The initial commitment under the new credit facility is $1.0 billion. However, Adobe has the option to request an additional $500 million in commitments, potentially increasing the maximum aggregate loan commitment to $1.5 billion.

Interest rates will be determined by either the London Interbank Offered Rate (LIBOR) plus a margin ranging from 0.795% to 1.30%, or a base rate (defined based on prime rate, federal funds effective rate, and LIBOR) plus a margin ranging from 0.00% to 0.30%. Both margin ranges are dependent on Adobe's public debt ratings.

The credit agreement includes customary representations, warranties, affirmative and negative covenants. Notably, it imposes restrictions on the incurrence of liens and indebtedness, and specifies a financial covenant requiring Adobe not to exceed a maximum leverage ratio of 3 to 1.