8-KMaterial AgreementsExhibits & Filings

FAIR ISAAC CORP 8-K Report, Material Agreement (Sep 30, 2011)

Filed September 30, 2011For Securities:FICO

Summary

Fair Isaac Corporation (FICO) announced on September 30, 2011, the execution of a new Credit Agreement, establishing a $200 million unsecured five-year revolving credit facility. This facility, with potential to increase to $300 million, is a significant development for the company's financial flexibility. It is designed to support various strategic initiatives, including refinancing existing debt, funding potential acquisitions, repurchasing stock, and general corporate and working capital needs. The new credit facility offers FICO enhanced financial capacity and operational agility. The terms of the agreement include interest rates tied to either a base rate or an adjusted Eurodollar rate, with applicable margins dependent on the company's leverage ratio. Crucially, the agreement imposes financial covenants, such as maintaining a fixed coverage ratio of at least 2.50:1.00 and a total leverage ratio not exceeding 3.00:1.00, which investors should monitor for ongoing compliance. The facility also includes standard default provisions, with potential for accelerated repayment and increased interest rates if certain conditions are not met.

Key Highlights

  • 1FICO entered into a new $200 million unsecured five-year revolving credit facility on September 27, 2011.
  • 2The credit facility has the potential to be increased to $300 million under specified conditions.
  • 3Proceeds can be used for debt refinancing, acquisitions, share repurchases, and general corporate purposes.
  • 4Interest rates are tied to a base rate or adjusted Eurodollar rate, with margins varying based on the leverage ratio.
  • 5Key financial covenants include a minimum fixed coverage ratio of 2.50:1.00 and a maximum total leverage ratio of 3.00:1.00.
  • 6The agreement includes typical covenants and default provisions, with consequences for non-compliance such as increased interest rates and potential acceleration of debt.

Frequently Asked Questions

The primary purpose of the new $200 million revolving credit facility is to provide Fair Isaac Corporation with financial flexibility. It can be used to refinance existing debt, finance potential acquisitions, repurchase the company's capital stock in compliance with regulations, and support general working capital needs and other corporate purposes.

FICO is required to maintain a fixed coverage ratio of not less than 2.50 to 1.00 and a total leverage ratio of not more than 3.00 to 1.00. These are critical financial covenants that investors should track to ensure the company's ongoing compliance with the credit agreement.

The credit agreement includes customary default provisions. If an event of default occurs, such as a change of control or default on other debt exceeding $25 million, the applicable interest rate on borrowed amounts will increase by 2%, and all outstanding obligations may become immediately due and payable.

The interest rate is determined by one of two methods: either a base rate plus an applicable margin, or an adjusted Eurodollar rate plus an applicable margin. The applicable margin is tiered and depends on FICO's total leverage ratio. For Eurodollar borrowings, margins range from 100 to 162.5 basis points, and for base rate borrowings, they range from 0 to 62.5 basis points.