8-KMaterial AgreementsFinancial Events

INTUIT INC. 8-K Report, Material Agreement (Feb 22, 2012)

Filed February 22, 2012For Securities:INTU

Summary

Intuit Inc. (INTU) has filed an 8-K report detailing the establishment of a new five-year, $500 million revolving credit facility. This new facility, effective February 17, 2012, replaces a previous agreement that was set to expire in March 2012 and has now been terminated. The unsecured credit line provides Intuit with significant financial flexibility, with borrowing costs tied to its senior debt credit ratings and the choice between alternate base rates or LIBOR, plus applicable margins. The primary purpose of this new credit facility is to support Intuit's general corporate purposes, including potential future acquisitions. While the company is not currently drawing on these funds, it retains the ability to do so as strategic opportunities and operational needs arise. The agreement includes customary covenants, such as limitations on subsidiary debt and liens, and maintains key financial ratios (debt to EBITDA not exceeding 3.25:1 and EBITDA to interest payable of at least 3.00:1), indicating a commitment to maintaining a healthy financial structure.

Key Highlights

  • 1Intuit established a new $500 million, five-year unsecured revolving credit facility, effective February 17, 2012.
  • 2This new facility replaces and terminates a previous $500 million credit agreement that was due to expire in March 2012.
  • 3The credit facility has an expiration date of February 17, 2017.
  • 4Borrowing costs are variable, linked to Intuit's senior debt credit ratings, with options for alternate base rate or LIBOR.
  • 5The facility can be used for general corporate purposes, including potential future acquisitions.
  • 6Key financial covenants include maintaining a debt-to-EBITDA ratio of no more than 3.25:1 and an EBITDA-to-interest ratio of at least 3.00:1.
  • 7Up to $100 million of the facility is available in specified foreign currencies.

Frequently Asked Questions

The new $500 million credit facility is intended for Intuit's general corporate purposes, which includes the flexibility to pursue future acquisitions. While Intuit is not currently drawing on the facility, it provides financial capacity for future strategic initiatives and operational needs.

The facility is a five-year unsecured revolving credit line expiring in February 2017. Interest rates are based on either an alternate base rate or LIBOR, plus an applicable margin that varies with Intuit's senior debt credit ratings. Intuit also pays an annual commitment fee. Customary covenants, including debt limitations and financial ratio requirements (debt/EBITDA and EBITDA/interest), are in place.

Intuit replaced its previous $500 million credit agreement, which was set to expire on March 22, 2012, with a new facility that offers a similar aggregate principal amount but with a new five-year term extending to February 17, 2017. This proactive step ensures continued access to credit and potentially more favorable terms or flexibility.

The filing indicates Intuit is maintaining a strong financial position by securing a substantial credit line and adhering to financial covenants. The maintenance of key ratios (debt/EBITDA and EBITDA/interest) suggests the company is focused on prudent financial management, providing investors with confidence in its ability to manage debt and operational earnings.