What is the primary purpose of this new credit facility?

The $500 million credit facility is intended for Intuit's general corporate purposes, providing financial flexibility for potential future acquisitions or expansion of its business. Intuit is not currently borrowing under this facility but can access it as needed.

What are the interest rate terms for loans under this facility?

Loans will bear interest at either Citibank's base rate or the applicable London Interbank Offered Rate (LIBOR) plus a margin. This margin ranges from 0.180% to 0.575%, depending on Intuit's senior debt credit ratings from Standard & Poor's and Moody's. An additional 0.05% interest may apply if aggregate borrowings and letters of credit exceed $250 million.

Are there any financial restrictions or covenants associated with this credit facility?

Yes, the agreement includes customary negative covenants that limit Intuit's ability to incur liens and its subsidiaries' ability to incur indebtedness. Additionally, Intuit must maintain a consolidated debt to consolidated annual EBITDA ratio of no more than 3.25 to 1.00, and a consolidated annual EBITDA to interest payable ratio of at least 3.00 to 1.00.

What happens if Intuit defaults on its obligations under the Credit Agreement?

The Credit Agreement includes customary events of default. If such an event occurs and continues, the lenders have the right to declare all outstanding advances and other obligations under the agreement immediately due and payable.

INTU 8-K: Material Agreements & Financial Events

Summary

Intuit Inc. (INTU) announced on March 22, 2007, the execution of a Five Year Credit Agreement, establishing a $500 million unsecured credit facility. This facility, which matures on March 22, 2012, is intended for general corporate purposes, including potential future acquisitions and business expansion. While Intuit is not drawing on the facility at this time, it provides significant financial flexibility for future strategic initiatives. The agreement includes provisions for variable interest rates, tied to either Citibank's base rate or LIBOR plus a margin based on Intuit's senior debt credit ratings. The facility also carries customary covenants, including limitations on liens and subsidiary indebtedness, and financial maintenance covenants requiring a debt-to-EBITDA ratio not exceeding 3.25:1.00 and an EBITDA-to-interest payable ratio of at least 3.00:1.00. This demonstrates Intuit's commitment to maintaining a sound financial structure while securing substantial borrowing capacity.

Key Highlights

1Intuit Inc. secured a $500 million unsecured credit facility on March 22, 2007.
2The credit facility has a five-year term, expiring on March 22, 2012.
3Funds are available for general corporate purposes, acquisitions, and business expansion.
4Borrowing costs will be based on either Citibank's base rate or LIBOR plus a margin.
5The margin is variable, ranging from 0.180% to 0.575%, based on Intuit's credit ratings.
6Customary covenants are included, such as limitations on liens and subsidiary debt.
7Financial maintenance covenants require specific debt-to-EBITDA and EBITDA-to-interest coverage ratios.

INTUIT INC. 8-K Report, Material Agreement (Mar 22, 2007)

Summary

Key Highlights

Frequently Asked Questions